I suggest reading through "The Strategy & Tactics of Pricing: A Guide to Profitable Decision Making" by Thomas T. Nagle, and Reed K. Holden.
There is a chapter on the use of competitor information in pricing decisions, including how to factor reaction, customer response, and strategic concerns. There's even a Q/A section to estimate pricing sensitivity in your market without resorting to extensive and time consuming statistical demand modeling.
They also discuss ways to combat customer erosion from competitor price cuts.
It's been a few months, and I was wondering if that book was helpful to you.
I've done some projects on pricing myself recently, though not really in the CI field as much as just price-setting and cost calculations. The book was incredibly helpful to me, and I was wondering how it helped on your more strategic project.
I've done some interesting work (at least I think so :)) on pricing, especially the dynamics of pricing as a part of competitive strategy. It's in both business war gaming and what we call Decision Tournaments(tm). Take a look, if you like, at descriptions of both here. We've applied those techniques in many industries, though most often in pharmaceuticals.
If you're in pharma, you might also want to check out "Elements of Pharmaceutical Pricing" by Mick Kolassa. Mmick is CEO of Medical Marketing Economics.
I know it's been a long time since you posted your question, but pricing is always coming up as a key topic so I thought I'd reply anyway.