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.
What are First Movers?
You’ve probably heard of the old adage, ‘The early bird gets the worm.’ But what does that have to do with marketing strategies in today’s highly competitive markets?
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. First movers hope to gain a sustainable competitive advantage by establishing themselves before any competitors enter the market.
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 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.
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.
- 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
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?
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. Pemberton. 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. In 2014, the Coca-Cola brand was valued at $79 billion dollars . . . a very juicy worm, indeed!
Other examples of successful first movers include:
- eBay — the first online auction service
- Kleenex — the first facial tissues
- Amazon — the first major online bookstore
These three powerhouses were able to capitalize on first-mover advantages to become household names! 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.
Atari was a first mover in home video game consoles, but Nintendo jumped into the market with their Nintendo Entertainment System (NES) that addressed several weak points in the Atari platform, and they quickly gained the lion’s share of the market. The NES was launched in the United States in 1985 and, by 1990, 30% of the homes in the U.S. had a Nintendo Entertainment System.
Tagamet was the first mover in a new class of anti-ulcer drugs. Zantac followed, and they were able to focus their advertising message on the advantages of their drug over Tagamet, since Tagamet had already paved the way in educating the public on the benefits of drugs to treat ulcers. Zantac was introduced in 1981 and, by 1988, it was the largest selling prescription drug in the world.
As you can see, each marketing strategy has its own advantages and disadvantages. It is important to weigh your options in planning your strategy for long-term success.
Let’s review. First movers are companies that are the first to establish themselves in a given market or industry. First movers are usually followed by competitors who want to enter the market to capitalize on the original company’s success. Followers may have a lot to overcome, as the first mover will likely have established brand recognition and brand loyalty, and may possess a strong competitive advantage by controlling necessary resources.
On the other hand, followers may incur lower costs by entering a market that is already developed. They can also learn from the predecessor’s mistakes and reduce their risks. It may be possible for them to make changes or adopt new technologies that better serve the customer’s needs. There is no one correct marketing strategy that will guarantee success every time.
First Movers – Advantages/Disadvantages
|Lasting impression on customers, brand recognition||May be stuck with the entire economic development burden; possibility of launching new products before they are ready|
|More time to refine the process and perfect the product||Followers learn from first movers’ mistakes; could be stuck on original path even when it stops working|
|Control of resources, locations, supplies, contracts, and/or talent||Followers might make modifications to ease costs and speed up processes|
|Cost advantage if customer chooses to switch brands later||Followers not stuck with old technologies due to heavy investment|
|Examples of First Movers||Description|
|eBay||First online auction service|
|Kleenex||The first facial tissue|
|Amazon||Started as the first online bookstore|
Subsequent to watching and reviewing this lesson on first movers, take some time to:
- Characterize a first mover
- Determine the advantages and disadvantages of being a first mover
- Identify famous real-world examples of first movers