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Advantages and disadvantages of being a first mover in an industry

  • Unless later entrants can learn how to produce at these lower costs faster than the first entrant did, the first entrant will have a cost advantage;
  • Here are two examples of followers who were able to outmaneuver the first movers and walk away with a larger market share;
  • For example, a company using Windows operating systems is unlikely to change to another operating system, because of the costs associated with retraining employees;
  • Another way that a first mover may benefit from technology leadership is by applying for patents for their technology to try to prevent other companies from copying it.

She teaches online and campus-based Business courses. Have you ever heard the marketing term 'first mover' and wondered what it meant? Perhaps you are familiar with the term, but would like to learn more about the benefits and drawbacks to being a first mover. Let's take a closer look.

  • First movers are also called market pioneers;
  • Examples of businesses that obtained a first mover advantage include innovators such as Amazon and eBay;
  • Followers can utilize newer technologies that become available, while first movers may be heavily invested in older technologies;
  • Other examples of successful first movers include:

What are First Movers? You've probably heard of the old adage, 'The early bird gets the worm. A company that is the first to establish itself in a given market or industry, the proverbial 'early bird,' is known as the first mover.

Advantages There are some advantages to being a first mover. Here are some of them: First movers have the potential to make a lasting impression on customers, which can lead to brand recognition and brand loyalty.

First-Mover: Advantages, Disadvantages & Examples

First movers have more time to refine their processes and to perfect their products or services. First movers may have an advantage in controlling resources, such as a strategic location or an exclusive contract with key suppliers or talented employees.

First movers may have a sustainable advantage when there is a high cost involved for customers to switch brands at a later date. Disadvantages There are also some disadvantages to being a first mover, such as: First movers bear the economic burden of developing a new market that followers into the market can exploit. Followers into the market can learn from the mistakes of the first movers, allowing them to reduce their risk and avoid making costly mistakes. Followers may be able to examine the processes of the first movers and modify them for greater efficiency and cost reduction.

Followers can utilize newer technologies that become available, while first movers may be heavily invested in older technologies.

  1. Patents appear to protect first-mover advantages in some industries, such as pharmaceuticals.
  2. A stronger advantage from technology leadership arises when the first mover can establish their product as the industry standard, making it more difficult for followers to gain customer acceptance. By the time other retailers established an online bookstore presence, Amazon had achieved significant brand name recognition and parlayed its first-mover advantage into marketing a range of additional, unrelated products.
  3. First movers have more time to refine their processes and to perfect their products or services.
  4. Followers can utilize newer technologies that become available, while first movers may be heavily invested in older technologies. First movers sometimes rigidly adhere to their original path, even when it isn't working, which opens the door for followers to move in with a revised version of the product that better serves the market's needs.

First movers sometimes rigidly adhere to their original path, even when it isn't working, which opens the door for followers to move in with a revised version of the product that better serves the market's needs. First movers may be driven by a fear of missed opportunities, leading them to launch a new product or service before the market is ready Real-World Examples So what will be your marketing strategy? Will you lead the way as a first mover, or will you wait until the ground work has been laid and then jump into the market?

Advantages and disadvantages of being a first mover in an industry

Let's take a look at some well-known companies that used the first mover marketing strategy to achieve a sustainable competitive advantage. A prime example of a successful first mover is Coca-Cola, or Coke.

Coke was invented in 1896 by John S. When Caleb Bradham invented Pepsi-Cola thirteen years later, Coke was already selling a million gallons per year. For over a hundred years, Pepsi has been trying to play catch-up in the cola beverage market, but first mover Coca-Cola continues to dominate the market. Other examples of successful first movers include: Can you think of any others? Remember, though, being a first mover is not a guarantee of a sustainable competitive advantage. Here are two examples of followers who were able to outmaneuver the first movers and walk away with a larger market share.