The idea
In repeated competition, a move can trigger responses over several periods. Use each rival’s public pricing history, capacity and commercial incentives to model alternative responses. A targeted response may preserve more contribution than a market-wide cut. No single response strategy works in every market. Make pricing decisions independently and use public information for competitor analysis.
Use it thoughtfully
- Read each competitor's last five reactions.
- Answer targeted moves with targeted responses.
- Never discuss prices with competitors.
An example
ILLUSTRATIVE EXAMPLE: A new entrant cuts prices in two cities. An incumbent responds with a retention offer in those cities only, rather than a national cut.
A question to try
Which competitor in your market has spare capacity and a reason to buy growth right now?
A useful framework is a starting point, not a guarantee. Effects vary with the audience, product and situation. Use truthful evidence, respect customer choice, and test the result.