If similar competitors vie for the same customers in a marketplace,they are likely to escalate their competitive strategy through a reactive series of actions and responses.

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New entry into markets, whether by start-ups or by incumbent firms, nearly always threatens existing competitors. This is true in part because, except in very new markets, nearly every market need is already being met, either directly or indirectly, by existing firms. As a result, the competitive actions of a new entrant are very likely to provoke a competitive response from companies that feel threatened. This, in turn, is likely to evoke a reaction to the response. As a result, a competitive dynamic of action and response begins among the firms competing for the same customers in a given marketplace.

If Similar Competitors Vie for the Same Customers in a Marketplace,they