|Question:||How can I predict how my competition will react to my terrific new product?|
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|There's no fool-proof way to predict competitive reactions. Nevertheless, academics and professionals have developed some frameworks that may help you at least come up with some possible reactions that competitors may have.|
One of the most effective frameworks has its roots in game theory. This analytical technique has you thinking through all the reactions of your opponent, much like a chess player would do before finally moving a particular chess piece. Likewise, by thinking through all the possible reactions of your competitors to various actions you might take, you greatly improve your ability to make the right decision.
Ultimately, the best way to think is backwards, starting with the desired end of the game. In fact, the way game theorists typically solve their problems is with backward induction.
Thinking backwards is very hard, so a good framework for helping you think through these possible reactions may include the following questions:
Is the competitor vulnerable to your action?
Will it provoke a response?
How effective would this response be?
Do you have an effective counter-response?
Are you vulnerable to actions your competitor might make, and do you have effective responses?