First-mover Advantage

First-mover advantage 1 In business, economics, or marketing, 'first-mover advantage', or 'FMA', is the advantage gained by the initial (first- moving) significant occupant of a market segment. It may be also referred to as 'Technological Leadership'. This advantage may stem from the fact that the first entrant can gain control of resources that followers may not be able to match.

First-mover advantage - Mechanisms leading to first-mover advantages 1 First-mover advantages can arise from three primary sources. All other things equal, the following are the three primary sources of first-mover advantages.Lieberman, M. and D. Montgomery, ‘First-mover advantages’, Strategic Management Journal, Volume 9, Summer

First-mover advantage - Technological leadership 1 The diffusion of innovation can diminish the first-mover advantages over time, and can be triggered via workforce mobility, publication of research, informal technical communication, reverse engineering, plant tours, etc

First-mover advantage - Preemption of scarce assets 1 When scale economies are large, first-mover advantages are typically enhanced.

First-mover advantage - Endogeneity of first-mover opportunities 1 First-mover advantages are typically the result of two things: technical proficiency and luck. A company does not have the ability to decide to pioneer, though high investments in research and development can help.

First-mover advantage - Endogeneity of first-mover opportunities 1 Large increases in the birth rate in the years that Procter and Gamble’s first disposable diapers were released also added to their industry profits and first- mover advantage.

First-mover advantage - Issues for future research 1 This is still much more research that can be done to provide future generations of marketing teams with concrete evidence to allow for the idea of first-mover advantages to be completely feasible to the world of business.

First-mover advantage - Theoretical and conceptual Issues 1 The biggest issue that arises from the assumptions that have already been drawn is that the despite the evidence found, the fundamental question of how or why these first-mover advantages even occur is still unanswered and unexplored to this day

First-mover advantage - Empirical issues 1 Lastly, the length of time that a first-mover advantage has until it expires would be vital to any company that is attempting to determine whether or not they should take the chance of being the first to market a particular type of product

First-mover advantage - Implications for managers 1 Different studies have produced varying results in respect to whether or not first- mover advantages, on the whole, exist and provide a profitable result for pioneers

First-mover advantage - Implications for managers 1 They must also remember that first-mover advantages are not everlasting; eventually the competition will manage to take at least some piece of the marketing pie

First-mover advantage - Implications for managers 1 Some attempt to go head-to-head against the product hoping that increased spending in advertisement is enough to counteract the first-mover advantages

First-mover advantage - Second-mover advantage 1 Often second-movers are able to overwhelm first movers by taking the first- mover’s product from a niche consumer market to mass markets. While firms may enjoy a first-mover advantage if they jump out to an early lead and hold onto it, the notion that winners are always the first to enter the market is a misconception.

Console manufacturer - First-mover advantage 1 Despite this trend, in releasing the Xbox 360 before its competitors’ products were released, Microsoft hoped to benefit greatly from the first-mover advantage – and its gamble paid off, shipping around 6 million units before the others launched

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