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Advantages Of The First Mover Vs. Market Follower

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1.0 First Mover Vs. Market Follower
1.1 What is First Mover?
It is a form of competitive advantage that a company gain its fame and money by being the first to enter a specific market or industry. Being the first often allows a company to acquire superior brand recognition, as well as customer loyalty. The company also has more time to make perfect its product or services before other competitors come along.

For examples of first movers include innovative companies such as eBay and Coca-Cola. eBay was the first company to take auctions process online in 1995. Coca-Cola in the other place was the first cola producer whom started off selling cough mixture but then realized consumers prefer drinking it as soda, hence came up with the idea to …show more content…

A company is able to increase sales quickly is able to reduce the average cost of the product, over other competitors. This allows the first company to have more flexibility with pricing, either reducing the price to make it less attractive for new entrants (increasing barriers to entry) or increasing the margin and therefore profit while prices remain fixed, this additional profit can then be used for further innovation. The first-mover can also take advantage of the learning curve effect. First-mover advantage can be further successful if the company is able to achieve lock-in of its installed-base. Thus once lock-in occurs, it is more difficult for other marketers to attract those customers away from the first marketer. Risks of being the first mover include the opportunity for others to imitate and follow best practices (learn from any …show more content…

In order to be a first-mover, an organisation must be a pioneer batch of business ideas, and this means incurring costs in terms of time and investment. For example Sony, technology must be invented, distribution systems have to be established and knowledge about new markets must be learned from scratch, sometimes it may be painful. For those who comes later to the market, the costs of acquiring all this knowledge can be much lower: products can be reverse engineered to discover their secrets and then improved on or experienced staff can be head hunted from the first-mover firm to impart and share their knowledge and etc.

3.0 Benefits of Market Follower

Reduce risks
By focusing on what works and what does not. Hence will not repeat the costly mistakes of competitors but yet still grows its customer base.

Avoid extra costs
Imitation can be just as effective and profitable as innovation. Market leaders take on costs of research and development, distribution, and consumer education. However a market follower piggybacks on the tactics that work best for the leader and gain its opportunity to appeal in a competitor’s consumer base. Instead of trying to be the best or most popular company, a market follower focuses on leverages its own successes to grow the business.

Capitalize on the successes of market

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