Market Signals & Competitive Move

Market Signal: Any action by a competitor which provides a

direct or indirect indication of its intentions, motives, goals or
internal situation.

Bluffs

Could be Warnings

Earnest commitments to courses

of action.

It is essential to understand market signals in order to ensure

proper competitive analysis.
 TYPES OF MARKT SIGNALS
1. Prior Announcement moves: Such as, declaration to set up a
plant, or cut price etc. Form, character or timing of
announcement can be potent signals.

Prior Announcement can serve the following purposes :

a. Stake out a commitment to take action to preempt other
competitors: e.g., capacity expansion which will meet the
demand gap.
b. Seeking to get buyers to wait for its new product rather than
buy a competitors product.
c. Threats of actions to be taken if a competitor follows through
with a planned move e.g., threatening to cut price if a
competitive cuts price.
d. To test competitors sentiments: Announcing a new warranty
progrmme. If competitors react favourably, the company may go
ahead. If they express dissatisfaction, the programme may be
dropped.
Communicating pleasure or displeasure with competitors;
moves some approach to indicate pleasure.
Conciliatory steps aimed at minimizing provocation e.g.,
explaining why price cuts has become a necessity or almost a
compulsion.
Avoid costly simultaneously moves e.g., Announcement of
expansion plan may lead to delayed scheduling by competitor.
Communicating with financial community, to boost stock price.
To generate internal support to cut further internal debate.
 How to recognize the Market Signals
If Then, it is
* The step is genuinely to provide long term lasting Preemptive
benefit to competitor.

* If there are few benefits to competitors could have Conciliation

gained more through surprise move (An action, which
could have created much more damage than it has
done).
* If genuine proposals have been recently cancelled, Bluff; may be
and an unsually big proposal is made; And the Co. have designed to trick
history of making false announcements in the past. competitor to
commit more
resources etc.
*Announcement press release intended for public, Commitment
speeches by management, to security analysts etc.

*Announcements in specialized journals Low commitment

2. Announcement after the fact
- on audited hard data
- Non-auditable data like
market share,
- announcing capacity though
reaching such capacity may
be possible after 2nd/3rd Stage.
3. Public discussions of industry
by competitors:
-genuine
-Not totally accepted
- genuine
Work together with common
assumptions and minimize
warfare. Also Price discipline.

Danger: Sometimes competitors may have ill motives of making

their own assumptions and data acceptable. So please check the
basic data.

Praising competitors To create collective image

for industry.
4. Competitors explanation of their moves to get others to
see logic or
To preempt
To express commitment
5. Competitors strategy relative to what they
could have done Aggressive/Conciliatory
Veiled
6. Manner of Implementation:
- Price change in the heart of competitors - Aggressiveness
product line
- Price change in peripheral product - Cooperative
- Implementing in rush time - Aggressive/Committed
- Implementing in slack time - Experimenting

(These may also indicate the extent of penalty the competitor wants
to inflict).
7. Divergence from industry : e.g, - Aggressiveness
discounting products which have
never been discounted.
8. Cross parry : To react in a different
area, than the area in which the prime move
is made.
- In not so important area - To counter indirectly not
to trigger a set of distinctive
moves.
- In bread and butter area - Serious warning
( Cross parry used to discipline initiator).
9. Fighting brand: To punish or threatening - * Major warning
to punish the source of threat. * Threat that the
initiator has to eat
his `humble pie.
(A competing brand, now in shelf).
Using History to Identify Signals

-Do certain activities by sales force always precede a product

change?
-Do product introductions occur after a national sales meeting?
-Do price changes in existing products take place immediately
after introduction of a new product?

-Does the competitor announce capacity addition after its

capacity utilization touches a certain figure?

Of course, it must be appreciated that once in a while the history

may not repeat itself. To that extent other contingent plans must
be made.