I've been bullied many times when in elementary and middle school up to 8th grade without reacting but just reporting the bullying to my parents.
I was bullied for the same reasons as the majority: I was smarter than the average, not very sociable and a bit fat.
Well, anyways I had little problems as each time a new guy tried to bully me my mother, who ironically was a bully in her youth, called the other kids' parents and that solved everything, except with two guys.
The first guy bullied me more verbally than physically and the parent calling routine went through twice with no effect on him whatsoever (I think he bullied his parents too). The first day he tried to attack me physically however I fought back and 'stabbed' his hands with my nails, with the net effect of a scar and damaged tendons. After that he became mild as a puppy.
The second one actually stopped after the second call, but a couple years ago (I'm 20, btw) he tried to bully me when in company of his friends because he was participating in a competition where I was a judge.
After my persistent indifference to his verbal attacks he went closer and closer still trying. The moment he was a foot away from me insulting me and going with a your mom joke I exploded. I started to shout against him *VERY* loud insulting him and, when I (6', 234lbs) went closer as he (5'9, approx 180lbs) was backing up with the blankest stare you could imagine, he started to go away, slowly at first but always faster saying that I don't want to mess with him blah blah, with me following.
After that he started to run and his friends held me while he ran away. Then they, recognizing that he'd been an asshole, tried to calm me down and convince me that it was not a big deal.
He doesn't talk to me very much except one time when with some friends he tried to say that he didn't chicken out that time and me diplomatically saying that we didn't actually fight, but that he abandoned first the field to avoid it. He didn't reply.
When I grew up, however, I became more and more cynical yet sociable and this made me into the popular ones. I have never bullied anyone, anyways, and nobody tried to bully me when in high school because my friends are almost the same size as me and they are more aggressive than I am.
At the same time I've grown an interest in martial arts and became a good jujutsuka, getting soon a black belt.
As for what I do when bullied, first I try to cool the situation off, then, if that doesn't work I ignore them. If for some reason they get to piss me off, well, I stand up and fight and damn the consequences.