After reading chapter 10 in the text, I was wondering how a company would actually go about signalling to competitors what it intended to do involving pricing strategies. I don't recall ever catching onto a company's "hints" in any reading I've ever done. This could however be because I wasn't looking. I found an article published by a game theories strategy website that outlined Kraft's attempt at signalling its competitors. Kraft like many other companies faces a prisoners' dilemma in their pricing strategy. In the outlook section of their press release they said:
"We're realizing better alignment between pricing and input costs, and
volumes to date have held up well. At the same time, raw materials costs
continue to escalate and the economic environment remains unsettled."
If I were to casually read this, I probably wouldn't have got much out of it. However this is an attempt by Kraft to signal to it's competitors that they too can raise their prices and move to a more profitable position than they are currently in. How the competitors take this news and act on it is beyond Kraft's control. Competitors could see this as a chance to keep prices low and steal market share from Kraft, or they could raise prices to raise profits. However, if they keep prices low, chances are Kraft will also drop their prices back to competitive levels. This will result in lower profits for both Kraft and it's competitors, which is better for you and I as consumers.