The Use of History in Identifying Market Signals

Studying the historical relationship between a firm‘s announcements and its moves, or between other varieties of potential signals and the subsequent outcomes, can greatly improve one‘s ability to read signals accurately. Searching for signs a competitor may have inadvertently given before making changes in the past can also help to uncover new types of unconscious signals unique to that competi-tor. Do certain activities by the sales force always precede a product change? Do product introductions always occur after a national sales meeting? Do price changes in the existing line always precede the introduction of a new product? Does the competitor always an-nounce capacity addition when its level of capacity utilization reaches a certain figure?

Of course, in interpreting such signals there is always the possi-bility of divergence from past behavior; ideally a full competitor analysis will uncover economic and organizational reasons why such a divergence might occur ahead of time.

Source: Porter Michael E. (1998), Competitive Strategy_ Techniques for Analyzing Industries and Competitors, Free Press; Illustrated edition.

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