Predicting Price-Setting Strategies
Sometime you need to wait until you determine the pricing of competitors. The reason why is simply because you do not know their pricing structure. For example, you could consider Pepsi and Coca-Cola, they do not predict the pricing of each other. They observe in one week what the prices of the competitor is and the following week they reduce the prices in a similar way. This is in large why you see alternative sales over the week for each Pepsi and Coca-Cola. Watch it and you will be amazed how this works perfectly. The challenge here comes to mind is who would be the first mover for the price reduction? What I mean is assume that you have a 4th of July weekend and both have reduced their prices for the event, how can you determine who would be the first mover the following week?