Understanding the probability of response to competitive actions

Abstract

Purpose

The interdependence of firms in the marketplace implies that the effectiveness of an action cannot be valued without considering potential reactions. Therefore, the main objectives of this paper are to analyse the effect of the initiating company characteristics on the perceived attributes of its action and to understand the effect of these dimensions on the number of companies that respond to it.

Design/methodology/approach

Based on action‐reaction dynamics, a series of hypotheses was theoretically justified inking the characteristics of the actor with the dimensions of its action, and these dimensions with the probability of response from rivals. Their validity with data obtained from a survey of marketing managers of Spanish companies was checked, using a variety of statistical techniques.

Findings

Results indicate that the probability of reaction is influenced by the level of visible threat of action. Further findings indicate that the leadership position of the actor has an indirect influence on the probability of response.

Research limitations/implications

The size of the sample and the measures used are both limited. Also, the explanatory capacity of the model could be improved by considering new variables.

Practical implications

Prior knowledge of the probability of a reaction is an important input for the managerial process of strategic planning, capable of improving the success rate in implementing actions and thereby the competitive position.

Originality/value

Few research studies of competitive interaction have focused on the probability of response, into which this paper offers an insight.

Citation

Otero‐Neira, C. and Varela‐González, J.A. (2005), "Understanding the probability of response to competitive actions", Marketing Intelligence & Planning, Vol. 23 No. 5, pp. 455-469. https://doi.org/10.1108/02634500510612636