Honestly, I think the best way is to fight back, but only if you're defending yourself (meaning, don't start any physical altercations first until they make the first move). It lets the bully know that you won't let anyone fuck with you, and lets everyone else witnessing it know the same. If you defend yourself, they'll stop because bullies only go after people they think are vulnerable and won't do anything about it.
Anti -bullying policies need to be implemented. Once the school is alerted, more should be done to supervise and closely monitor the situation.