Research by Marketing Professor Joe Urbany and colleagues suggests that managers pay far too little attention to competitive reactions. Across a variety of decisions—both ones actually made and future judgments in a simulation—they found only 6 percent of managers calculating competitors’ reactions.
In follow up research, they surveyed corporate executives to figure out why. The consensus was that decision-makers avoid ambiguity or uncertainty when making decisions in order to concentrate on measures more easily quantified and valued.
How can you turn marketing managers’ attention to this area? One tool is scenario analysis in which the planning team is asked to assume different future scenarios and to try to predict decision outcomes. Role-playing is another powerful tool. “Have members of the team actually play the role of your competitor, plotting out their strategy taking into account their inside knowledge of your firm,” says Urbany. “This makes explicit our thinking about competitors’ reaction patterns and whether they matter in our planning.”