You are probably aware of the benefits and drawbacks of being a first mover, but there are still some fallacies surrounding the first mover business. This article will dispel all of these myths and provide the most comprehensive explanation of the first mover business.
Let’s start by explaining what the term “first mover business” truly means.
What is “First Mover Business”?
A firm that attempts to attain an impregnable market position by being the first to establish itself in a certain market is referred to as a ‘First Mover’ in business. You get to show the world what a market should be like by being the first one to enter it.
We believe there is a value to being the first to market if you truly understand how to commercialize the product. Being the first to the market allows you to secure exclusive alliances and distribution channels. Aside from that, there are other advantages to owning the first-mover company. So following that, we’ll further go through some first-mover benefits in the article.
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Benefits of First Mover Business
It’s vital to emphasize that the first-mover advantage only applies to major businesses that enter a market initially. Here are some of the benefits of being the first to market:
1. Brand Recognition
Even after second-movers and later-movers have hit the market, brand recognition draws new clients. In the history of business, firms like Coca-Cola, STP, and Kellogg’s have reaped the benefits of being first to market.
2. Control of Resources
Exclusive contracts with essential suppliers, talent, strategic location, and other resources are available to first movers. On the other hand, fast followers may have the resources to overtake early movers in some instances.
3. Customer Loyalty
A first-mover company builds a base of devoted clients who are more inclined to buy the company’s products again. On the other hand, customers and clients would have to put in more work and, perhaps, pay more money to transfer brands in the future. Furthermore, early movers often profit from a captive customer base.
4. Strong Supplier Relationship
The first-mover has a one-of-a-kind chance to develop partnerships with suppliers, employ a broader selection of accessible website domains, and hire important personnel. As a result, early movers have an advantage over competitors in obtaining exclusive deals with suppliers.
5. Extra Development Time
First, movers have more time to refine their product or service and determine the new item’s market price. Most of the time, the first mover gains enough market share and a strong enough client base to keep the majority of the market.
Isn’t it unjust to view only one side of the story? As a result, we’ll go through some of the downsides of being a first mover. Only then will you be able to plan the ideal approach for your first-mover company.
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Disadvantages of a First-Mover Business
1. Higher Investment
It is costly to educate a new market. To build new markets, the early movers must make significant investments.
As a result, the first mover cannot profit from its original investment and pioneering efforts, as another business may enter the market and take control.
2. Greater Market Risk
Because businesses are operating in new markets, first movers are prone to making blunders. Furthermore, because consumers are hesitant to test new items, the chance of rejection is considerable. This means less money will be available for other initiatives and investments, putting the entire company in danger.
3. Imitation by Competitors
Followers can duplicate first-mover abilities and technology pretty easily. As a result, followers can catch up to early movers by using more complex production processes. Typically, pioneers who develop new markets receive around 7% of the markets they create. The remainder goes to the imitators.
4. Existing Inertia
Firms that have extensively invested in fixed assets are less able to adapt to market changes because they lack the financial resources to do so. These businesses are less likely to adapt to a changing and competitive environment. Overall, some businesses are overly fixated on the “now” and unable to project into the future in order to maintain their existing market dominance.
You may not be the greatest, but you have a good chance of competing with the best if you are first. Being a first-mover has undeniably significant top-line advantages. However, everything has its negatives, and the first mover industry is no exception. However, if you approach it correctly, you will always have an advantage over your competition.
Being the first to market is only worthwhile if the risks outweigh the benefits. Competitors that want to profit from the success of the first movers in a certain industry nearly generally follow them. As a result, if the first-mover does not take advantage of its advantage, other newcomers will be able to compete.
There is a proper time frame to join the market with a high-quality product, and this is typically only achievable if you launch after extensive study. So get a head start and go forward with good methods and preparation in this subject, and you will undoubtedly succeed.
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