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Competitive response

Ashutosh asked on Jul 11, 2018 - 3 answers


In a case based on competitive response:

1) Under what conditions do you decide to steal your competitor's managment?

2) What does moving the product upmarket/downmarket mean?

3) What if your competitor introduces a new and better product and has a patent for it?

4) Under what conditions should one suggest the client to do nothing and should I suggest so in an interview?

Thanks in advance

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replied on Jul 11, 2018
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  1. If you can't find the management with similar capabilities on the market / can't grow internally. But be aware of the possible legal consequences (e.g. Uber case)
  2. It means expanding your product line to for the new audience (Upmarket = premium, downmarket = mass / discount). You decide to make that move either as a logical step to grow the revenues of if the competition in your current segment is too tight (e.g. if your direct competitor has very cheap advertising and you can't compete and you decide to move upmarket into the premium segment and better quality)
  3. You can either think of some alternative technical solution or move to a different segment
  4. It may be the case if the two other competitors have a price war for example. I haven't seen any examples like this in the cases


Thanks a lot Vlad!!! However, what was the issue with Uber and its management team. I don't know about that — Ashutosh on Jul 11, 2018 (edited)

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replied on Jul 11, 2018
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Hi Ashutosh,

I have replied to your questions below.

1) In general you have three ways to provide a counteract competitors: (i) create a partnership that is mutual beneficial; (ii) fight against them, either on your current product or with new products; (iii) leave the market or segment. Stealing the competitor’s management will be one of the possible solutions to satisfy option (ii). You can do this for two reasons:

  • to find resources you could not otherwise find and/or
  • to decrease the strength of a competitor.

You can find a similar example in what football teams do when they buy the best football player from a competitor in the same league – they both manage to acquire a resource they could not find otherwise and make the competitor weaker.

2) As Vlad said, it means to reposition your product/service offer to people available to spend more (upmarket) or less (downmarket)

3) There are several things you should consider:

  • Is the new product really competing with you? Sometimes an apparently competing product won’t really affect you since it is directed to a different customer based or has different features/price/distribution channels
  • Is the new product going against your goal? Maybe the new product is marginally affecting your revenues, but the market is growing so much that you would still meet your long-term expectations in terms of your target objective
  • In case you react, you should consider one of the options under point 1

3) You should suggest inaction so far that the client would achieve his/her goal doing nothing (eg goal is to keep current revenues as they are, and in the end the competitor won’t affect us in revenues). Most of the time though you should at least mention long-term risks of inaction; also, generally speaking, inaction is a very rare conclusion in competitor response cases.



Anonymous A replied on Jul 11, 2018

This sounds interesting. What is the case called?

The case was a competitive response in the beginning where the competitor had slashed prices and had gained market share, more like the beginning of a price war. In the end,it turned out that we had to reduce our costs but I just thought about how differently the case could have ended and what are the scenarios required to make that happen. — Ashutosh on Jul 11, 2018

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