A manufacturer of high-quality medical testing equipment introduces a vastly improved version of its best-selling diagnostic device at a price 5 percent higher than that of the older model it replaces. For three months, the new model is successful, gaining rave reviews from customers and increased market share. One month later, prices in the sector collapse and the company has to discount its superior new product just to maintain its traditional market share.

A highly regarded manufacturer of commercial paper prides itself on delivering extremely consistent quality and service. That consistency notwithstanding, the company is baffled by vacillations in its market share that accompany shifts from tight to loose supply in the industry.

A consumer packaged goods company executes one of the most common business tactics—it matches a competitor's price on a large contract to supply a leading food retailer. In the months that follow, a bitter price war breaks out, destroying almost all of the industry's profitability in this product category.

These disparate cases have at least one thing in common: apparently sound marketing strategies and tactics that produced unexpected and costly results. But could they have been avoided? Here we will explore how these and other common and...