First to market advantage: it’s a winner, right?

First-to-market or first mover advantage can enable a business to dominate a market sector by setting the price, establishing strong brand recognition, customer loyalty, economies of scale, and supplier relationships before other players enter the market. Research confirms that consumer inertia and the effort of switching providers often inhibit customers from changing to another supplier.  So, the first-to-market advantage is always a winner, right?  Well, its not that simple, explains Joss Evans CEO, Innovic.

The first-to-market advantage is much more nuanced and contested. Studies have identified two factors that influence a first mover’s fate: the pace at which the technology of the product in question is evolving and the pace at which the market for that product is expanding.

Knowing how fast or slow the technology and the market is moving are crucial factors in determining the first mover’s likelihood of success with the resources it possesses.  First movers generally require deep pockets to maintain a competitive advantage over the longer term.

The first-to-market advantage

History shows that being first isn’t always an advantage, particularly in technology fields.

The first mover has all the expenses of R&D, educating consumers and the costs of setting up something completely new.  Later entrants can learn from the first mover’s mistakes and refine and enhance their offerings.

In fact, being a first mover is inherently risky, and in many cases, the first mover is overtaken by latecomers, who offer a better or cheaper product or service.

First-movers overtaken

Motorola has been overtaken by Samsung, Apple and others in the mobile phone space and IBM’s lead in the PC market is now a distant memory.  Google now has over 90 per cent of the search market, but it wasn’t the first search engine.  It was just more efficient and effective than lots of other search facilities from Archie through to Yahoo, Alto Vista and many more.

The message is … you don’t always have to be first to be successful.

Article originally posted on:https://www.flyingsolo.com.au/startup/setting-business-goals/first-to-market-advantage-its-a-winner-right/