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Case type 10

Competitive response

A rival has acted; decide how to respond by comparing profit under each option and knowing the break-even point, rather than reacting on reflex.

17 min1 lesson Last reviewed
Start the lesson Competitive response

How do you approach a competitive response case?

  • Understand what the rival did and why, list the real options (including doing nothing), and compare profit under each option before you choose.
  • The most common mistake: matching a rival's price cut by reflex, without comparing the profit of each option.
  • Diagnose the real size and cause of the threat before choosing a response, and pick the option that is best after the rival reacts, not the one that feels good right now.
By the end you will be able to
  • Understand a rival's move before reacting
  • Compare options on profit and find the break-even volume loss
  • Avoid a reflexive price war and set a sensible trigger to revisit