What is the first-mover advantage?
💬
Definition of the first-mover advantage
First mover advantage refers to the competitive edge a business earns by being the first to launch with a certain product or service.
By launching first, a business often becomes synonymous with that product or service, thereby securing a place in consumers’ minds and lives, even when newer offers arrive on the scene.
eBook
Leveraging
Product Strategy
Read now
A good example of first-mover advantage involves Netflix. When Netflix launched video streaming in 2007, it offered consumers an entirely new way to enjoy entertainment. Today, even with Amazon Prime, Hulu, and other streaming services trying to keep up, Netflix retains an unbeatable market share and dedicated customer base through their competitive advantage. Being a first-mover can also come at a cost which is called the first-mover disadvantage.
FAQs
What Kind of First-Mover Advantage? A first-mover advantage can be simply defined as a firm's ability to be better off than its competitors as a result of being first to market in a new product category.
What is the first-mover advantage quizlet? ›
A market participant has first-mover advantage if it is the first person and gains a competitive advantage through control of resources. With this advantage, first-movers can be rewarded with huge profit margins and a monopoly-like status.
What is the first-mover advantage process? ›
A first - mover advantage is the process of gathering information about the competitive environment, including competitors plans, activities, and products to improve a company's ability to succeed.
What is an example of a first mover? ›
What is first-mover advantage example? An example of a first mover is Amazon, the first generator of the online store for books. Also, Amazon was able to attain significant brand recognition before the entry of other competitive firms.
Which one of the following describes first mover advantages? ›
A first-mover advantage can happen when a player takes an early, aggressive position in a market or competition. This can lead to the second player adopting a less aggressive strategy as their best response, as the first mover has already secured a strong position.
What is the first-mover advantage? ›
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 to the market.
What is a strong first-mover advantage? ›
Advantages of Being a First-Mover
Being the first in the market means that you can set the standards for the industry an establish a dominant market share. This head start could make it much harder for future competitors to catch up.
What is the risk of first-mover advantage? ›
What are the advantages and disadvantages of being a first mover? Advantages include the ability to establish a strong brand and gain market share. Disadvantages include high development costs, educating the market, and the potential for being surpassed by later entrants.
How do you use first-mover advantage in a sentence? ›
We lost a lot of 'first-mover advantage' because we couldn't move quickly enough.
What is an example of a first mover failure? ›
Take, for example, Nokia. The Finnish phone manufacturer was a first mover in the mobile phone industry and dominated the market for many years. However, they failed to keep up with the shift towards smartphones and lost their position as a market leader.
Amazon created the first online bookstore, which was immensely successful. By the time other retailers established an online bookstore presence, Amazon had achieved significant brand recognition and parlayed its first-mover advantage into marketing a range of additional, unrelated products.
What companies benefited from the first-mover advantage? ›
Examples of first mover companies
- Amazon is considered one of the most innovative companies - Forbes ranks it second among other innovators. ...
- eBay became a first-mover in the mid-1990s with its online auction platform. ...
- Netflix is also a great example of a company that achieved a first mover advantage.
Coca-Cola wasn't the first fizzy drink to enter the marketplace. Other brands, like Dr Pepper, were already in existence. However, when Coca-Cola launched in 1886, it immediately captured the largest market share, making it a first mover.
What is the opposite of first-mover advantage? ›
Second movers, also known as improvers and late movers, capitalize on learning from the mistakes of their predecessors and improving upon an already existing, familiar market. They can reverse-engineer new products to make them better and cheaper, eventually capturing the first movers' market share.
What is an example of a first-mover advantage game theory? ›
In many situations, it pays to determine the firm's level of output first, before other firms in the industry can decide how much to produce. Game theory demonstrates how many real-world firms determine their output levels in an oligopoly. Ethanol provides a good example of the first-mover advantage.
What is the first-mover advantage evolution? ›
First movers can convert their initial advantage into a long-term economic moat. However, they also are at risk of overestimating those advantages. Evolution in the market or the technology used to serve it can erase years of work put into developing the product and the market in the first place.
Which of the following advantages is derived from being a first mover '? ›
First-mover advantage is the competitive edge a business gains by introducing a new product or service to the market before competitors. Being first can enable a company to: Gain strong brand recognition and consumer loyalty.
