Competitive Response Case Interview Example With Answer

A competitive response case interview example gives you a client whose rival just cut its price, launched a product or entered its market, and asks what the client should do. This one is a competitor price cut case interview: a mobile carrier's rival cuts its price 20%, and matching would cost $240M a year to protect $72M of contribution.

This guide covers how to size the customers at risk, four responses priced on one payoff table, a 2x2 matrix for the rival's reply and the scoring table.

The rule it teaches: pick the response that costs least against the profit it protects.

The case prompt: Granitel Mobile

Granitel Mobile is a made-up client with made-up numbers, built so you can check every step.

Prompt (what the interviewer says): "Our client is Granitel Mobile, a regional mobile carrier with two million subscribers. Last week a new low-cost rival, Brightwave, cut its monthly plan price by 20%. The CEO has asked how Granitel should respond. What would you recommend?"

What is a competitive response case interview?

It differs from a plain pricing case because the price question is forced by someone else, and from a profitability case because profit has not fallen yet. The risk is in the future, so you estimate it. The 3Cs framework (customer, competitor, company) and Porter's Five Forces tell you what to check; this page shows what a complete answer looks like with the numbers filled in.

There are two variants. In a reactive case the move has happened ("a rival just cut price 20%"). In an anticipatory case it may happen ("a rival is rumored to enter; should we prepare?"). Both use the same steps. Competitive response is one of the case types listed in the case interview types guide, and it often hides inside other prompts: telecom and TMT cases, airlines and retail all use it.

Competitive response practice cases at a glance

How a competitive response case works: you size what the rival's move puts at risk, compare responses on one payoff table, then recommend one and say what would change your mind.

Practice it live: Wildcat Wings is a medium case where a rival airline changes how it sells in-flight food and the CEO asks whether to follow. It is a different client with its own data, not the Granitel case below. It has 8 questions, 2 with math, 5 exhibits. An AI interviewer runs it out loud, shows each exhibit when you reach it and scores the debrief. Your first full case is free when you create an account.

All three were written or adapted for Road to Offer; more are in the case library, 92 cases in all. Every debrief scores seven categories: structure (25% of the score), quantitative analysis (20%), business judgment (15%), and problem understanding, exhibit reading, communication and synthesis (10% each).

What do you do first when a competitor makes a move?

Answer three questions in this order, out loud, before you list any responses.

1. What exactly did the competitor do, and why? A price cut can mean a cost advantage, a land grab funded by investors, or a clearance. Each implies a different rival lifetime for the cut.
2. How much does it hurt our client, in dollars? Find who can actually switch, how many will, and what each customer is worth.
3. What can the client afford to do? Cash, cost position and capacity decide which responses are real.

Candidates who jump to "we should lower our price too" skip question 2, and question 2 is where the case is won. Use the clarifying questions step to get the facts for it.

Which responses can the client choose from?

Put the full menu on the page before you evaluate any of it. Doing nothing is on the list, and it is the baseline every other option has to beat.

For a deeper look at how price levers behave, see pricing strategy cases.

Competitive response case interview example: Granitel Mobile

Clarifying questions and the interviewer's answers

• "What is Granitel's price and cost today?" The standard plan is $50 a month. Variable cost per subscriber is $20 a month. Fixed costs are $520M a year.
• "What is Brightwave's new price, and can it sustain it?" The matching plan is now $40. Assume it can hold that price for at least a year.
• "Does Brightwave cover our whole footprint?" No. Its network reaches about 70% of Granitel's area, and the numbers below already net that out.
• "Are all subscribers equally likely to leave?" No. Research says 25% of subscribers are price sensitive, and 40% of those will switch within a year if Granitel does nothing. Everyone else will stay.
• "What is the goal?" Protect annual operating profit. Ignore brand effects for now.

Exhibit 1: Granitel today (annual)

The interviewer's data gives contribution of 2,000,000 x $360 = $720M, less $520M of fixed cost, for $200M of profit.

Exhibit 2: Who is at risk

Structure

A strong opening, in the interviewer's words: "I would split the answer into the threat, the options and the rival's reaction. First, how much contribution is truly at risk. Second, what each of four responses costs: match, hold, defend the exposed segment, and differentiate. Third, whether the rival can punish whatever we choose." That is a competitive version of the 3Cs: customer (who leaves), competitor (what they do next), company (what we can afford).

Step 1: Size the threat

If Granitel holds, 200,000 subscribers leave (500,000 x 40%). Each is worth $360 a year of contribution.

• Contribution lost: 200,000 x $360 = $72M a year
• Share of profit: $72M / $200M = 36%

That is real money, but it is 10% of the base, not the whole business. Say that sentence out loud; it frames every option that follows.

Step 2: Price each response

Match. Cut the plan to $40 for all two million subscribers. Contribution falls from $30 to $20 a month, so each subscriber is worth $240 a year.

• Contribution: 2,000,000 x $240 = $480M, down $240M from $720M
• Profit: $200M - $240M = -$40M, a loss

Hold. Change nothing and lose 200,000 subscribers: -$72M, leaving a profit of $128M.

Defend the exposed segment. Offer the 500,000 at-risk subscribers $6 a month off ($72 a year), which cuts their switching rate from 40% to 10%. Assume some leakage: 10% of the other 1.5 million (150,000) find the offer and claim it.

• Discount to those who stay: 450,000 x $72 = $32.4M
• Leakage: 150,000 x $72 = $10.8M
• Subscribers still lost: 50,000 x $360 = $18.0M
• Total cost: -$61.2M, profit $138.8M

Differentiate. Offer the at-risk group extra data plus a streaming add-on that costs Granitel $4 a month ($48 a year) and that customers value more than the $6 discount. Churn among them falls from 40% to 15%, with the same 10% leakage.

• Cost of the perk for those who stay: 425,000 x $48 = $20.4M
• Leakage: 150,000 x $48 = $7.2M
• Subscribers still lost: 75,000 x $360 = $27.0M
• Total cost: -$54.6M, profit $145.4M

Exhibit 3: Payoff comparison (change in annual profit versus today)

The reconciliation check: every row's operating profit equals $200M plus the change, and the "vs Hold" column equals each change minus -$72M.

Step 3: Test the break-even

Matching pays only if holding would cost more than matching. Matching costs $240M. Each lost subscriber costs $360. So matching breaks even at $240M / $360 = 666,667 subscribers, one in three of the base (33.3%).

Granitel is expected to lose 200,000, a tenth of the base. And even if every one of the 500,000 price-sensitive subscribers left, the loss would be 500,000 x $360 = $180M, still below $240M. Matching cannot pay on these facts, whatever the exact churn rate. This is the sentence that earns the quant mark: a bound, not a point estimate.

What if the rival reacts to your move? A 2x2 payoff matrix

Before recommending, anticipate the second move. Suppose Brightwave could cut again, to $35. If that happens, the price-sensitive pool widens to 40% of the base (800,000) and half of them would leave a holding Granitel (400,000). If Granitel has already matched at $40, only 50,000 would leave, because the extra gap is small.

The cells: holding and losing 200,000 is -$72M; holding when the pool widens loses 400,000 x $360 = -$144M; matching is -$240M with nobody lost; matching and then losing 50,000 at $240 each is -$240M - $12M = -$252M.

Holding beats matching in both columns, so holding dominates matching and you can recommend against matching without predicting Brightwave. Do not read the table as good news: if Brightwave escalates, Granitel's profit falls to $56M, which is why the best answer is not "hold" but "hold and defend with something fenced", the differentiate row above.

How would you recommend it? The synthesis

Say it like this, in about 30 seconds. See how to synthesize a case for the full pattern.

"I recommend Granitel does not match the price cut. Matching would cost $240M a year to protect $72M of contribution and would turn a $200M profit into a $40M loss. Instead, offer the at-risk segment a fenced value bundle that costs about $54.6M a year, $17.4M better than doing nothing, and keep the headline price at $50. The main risks are leakage beyond the target group and Brightwave cutting again, which is why I would test the bundle in one region first. I would revisit if losses run well above the 200,000 we expect, and matching only makes sense above 666,667 lost subscribers, one in three."

That answer has a recommendation, three numbers, two risks and a trigger. Next steps to name: pilot in one region, track churn weekly among the at-risk group, and review pricing if churn exceeds the plan.

Quick second example: when do you follow a price cut?

The same logic in thirty seconds. A meal-kit company has 400,000 subscribers at $60 a box and earns $24 of contribution per box. A rival cuts price 10%, which is $6 a box. Matching gives away $6 on every box to protect only the boxes that would be lost. Break-even: $6 / $24 = 25%. Match only if you expect to lose more than a quarter of your customers. If you expect 8%, hold or defend narrowly.

The general rule for any price cut: break-even churn share = discount per unit / contribution per unit. If the number is large, matching is expensive and rarely right. If a rival has cut price by half of your margin or more, you are near the point where matching starts to make sense.

How is a competitive response case scored?

What mistakes do candidates make?

A related trap: confusing a competitive response case with a break-even case. You do use break-even logic, but the question is what to do about a rival, not whether a project pays back. Practice the arithmetic with case interview math practice and see the full set of walkthroughs in case interview examples. For the wider toolkit, the case interview frameworks guide shows where this one fits, and airline case interviews cover a common setting for competitive moves. Firm guides for BCG practice cases and Bain interviews show the style each firm uses.

How do you practice a competitive response case out loud?

Competitive response case interview FAQ

What is a competitive response case interview? It is a case where a rival has already acted, for example with a price cut or a launch, and you decide what the client should do. Size the exposure first, then compare matching, holding, defending and differentiating.

Can you give me an example of a competitive response case interview question? "A regional mobile carrier's new rival has cut its price by 20%. How should the carrier respond?" The worked example above answers it.

Should you always match a competitor's price cut? No. Matching gives the discount to everyone. In the example it cost $240M to protect $72M.

Is doing nothing ever right? Yes, as a baseline it often beats matching. A fenced, targeted defense usually beats it.

How do you structure the case? Move, impact in dollars, options, rival's reply, recommendation with a trigger.

How do you model a price war? Use a 2x2 payoff table of your move against the rival's reply. If one option wins in every column, it dominates.

How we checked the numbers

Granitel Mobile is a fictional carrier and every number in this case was invented for the example. We recomputed every figure on this page before publishing (checked 2026-11-07): profit, break-even, each option's cost and the payoff matrix. No outside statistics are used, so there is nothing external to source.