Contemplating the Responses of Competitors
Businesses need to understand their external environment to create a competitive advantage. An external analysis includes understanding the changes in the industry a company has ventured into and any factors that could affect its operations (Prowle & Lucas, 2016). One of the main factors that impact the success of every business is competition. Stiff competition may limit a business’s revenues and profit by reducing sales. Some companies also invest a lot of resources in marketing when facing stiff competition. According to Hitt et al. (2014), organizations also use competitive rivalry to initiate their competitive actions and respond to competitors’ actions. One of the limitations of a marketing strategy that does not contemplate competitors’ responses is focusing on the wrong capabilities. A competitor’s response is essential in understanding the areas where the company needs to improve to meet customers’ needs and improve an attractive position in the market. Therefore, it is vital to implement competitors’ responses to improve products and services to create a competitive advantage.
The second limitation is reduced market share because of intensified competition and loss of customers when the company fails to meet customers’ needs. The main risk of a marketing strategy that does not contemplate competitors’ responses is limiting first-mover benefits because of limited awareness of the level of competition and the ability to use core competencies and capabilities to gain a competitive advantage. Notably, insight into a competitor’s response about the high price of an organization’s products and services may alter an organization’s actions. For example, an organization can move from improving product quality to attracting more customers to focusing on reducing the price of the products and services and offering discounts to retain existing customers based on their market position.
References
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2014). Strategic management: Concepts and cases: Competitiveness and globalization. Cengage Learning.
Prowle, M., & Lucas, M. (2016). Internal and external analysis of the business and its environment. Management Accounting in the Contemporary Business World, 151-172. https://doi.org/10.1007/978-1-137-38777-6_9.
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Question 
Contemplating the Responses of Competitors
What are the limitations and risks of a marketing strategy that does not contemplate the responses of your competitors? Provide an example of how insight into a competitor’s response to your action might alter your action.