Realizing The First Mover Advantage
A first mover is a company that gains a competitive advantage by being the first to launch a particular product or service. This First Mover Advantage (FMA) allows companies to establish their presence in a market before any competitors, giving them a significant edge over competition.
FMA and Branding
The most significant advantage of first movers is brand recognition. Companies that are first in the market are those that people remember more often. In some cases, the brand name becomes synonymous with the product, which brings tremendous, long-term benefits. For example, huge brands such as Coca-Cola and Kellogg’s have leveraged FMA to become world leaders in their respective markets.
FMA allows companies to build uncontested customer loyalty. Without any competition, marketing can achieve remarkable levels of efficiency and reach.
Supply Chain Advantages
Being the first in a market allows a company to gain exclusive agreements with suppliers and retailers, and establish industry standards for every company that comes after them.
This means that first movers can effectively control the conditions of a market before everyone else.
In addition to influencing the supply chain, first movers have the luxury of experimenting and identifying the most cost-efficient approaches without worrying about competition. By the time competitors enter the market, the first mover can already be an established name.
Challenges of FMA
However, first movers face several challenges unique to their position. The most obvious drawback of first movers is that competitors can just copy their products and enter the market easier than the first mover.
While first movers have to create everything from scratch, competitors only have to imitate and improve upon the first mover’s processes to enter the market. This means that competitors might be able to penetrate a market with less cost, albeit having to deal with the superior brand recognition of the first mover.