What is the First Mover Advantage?The first-mover advantage refers to an advantage gained by a company that first introduces a product or service to the market. The first-mover advantage enables a company to establish strong brand recognition and product/service loyalty before other entrants.It is important to note that the first-mover advantage only refers to a large company that moves into a market. For example, Amazon was not the first company to sell books online. However, it was the first company to achieve significant scale in that line of business.Advantages of Being a First MoverThere are several advantages to being the first business to execute a strategy.Companies that are first movers can often:
- Establish their product as the industry standard
- Tap into consumers first and make a strong impression, which can lead to brand recognition and brand loyalty
- Control resources, such as basing themselves in a strategic location, establishing a premium contract with key suppliers, or hiring talented employees
- Gain an advantage when there is a high switching cost for consumers to switch to later entrants
- Technology leadership
- Control of resources
- Buyer switching costs
- The first mover may invest heavily in persuading consumers to try a new product. Later entrants would benefit from these informed buyers and would not need to spend as much on educating consumers.
- Later entrants can avoid mistakes made by the first mover.
- If the first mover cannot capture consumers with their products, later entrants can take advantage of this.
- Later entrants can reverse-engineer new products and make them better or cheaper.
- Later entrants can identify areas of improvement left by the first mover and take advantage of them.
- Southwest Airlines
- Starbucks
Evita Veigas
3 min read