This document discusses factors to consider when responding to a competitor's price change, including the product's life cycle stage, its importance to the company's portfolio, and the competitor's intentions and resources. It advises that in homogeneous markets, companies should find ways to enhance their product or meet price reductions only if it benefits the industry. For non-homogeneous markets, the document suggests determining why the competitor changed prices, if the change is temporary or permanent, and considering the impact on the company's market and profits of not responding, as well as likely responses from competitors to different reaction strategies.