1. First-Mover (Dis)Advantages Prof. Markus Christen INSEAD Singapore May/June 2007 Prof. Markus Christen INSEAD Singapore May/June 2007

2. Market Driving Strategies - May/June 2007 © Prof. Markus Christen Session 13 - 2 First-Mover Advantage  “Be first to market” is one of the most enduring strategic principles in marketing market share of mature consumer goods businesses (in the PIMS database) –pioneers: 29% –early followers: 17% –late entrants: 12% market share of mature industrial goods businesses (in the PIMS database) –pioneers: 29% –early followers: 21% –late entrants: 15%

3. Market Driving Strategies - May/June 2007 © Prof. Markus Christen Session 13 - 3 First-Mover Advantage  Definition Pioneer: Firm that enters/creates a market first Market Entry: Product launch at a large scale Advantage: Long-term competitive advantage (sustainable)  Typical Examples ProAgainst Coca ColaKirsch’s No-cal Cola Sony WalkmanBowmar (pocket calculators) PolaroidEMI CAT scan Tagamet Commodore

4. Market Driving Strategies - May/June 2007 © Prof. Markus Christen Session 13 - 4 Consumer-Based Sources

5. Market Driving Strategies - May/June 2007 © Prof. Markus Christen Session 13 - 5 Operation-Based Sources

6. Market Driving Strategies - May/June 2007 © Prof. Markus Christen Session 13 - 6 First-Mover Disadvantage

7. Market Driving Strategies - May/June 2007 © Prof. Markus Christen Session 13 - 7 Pioneering: Empirical Results  Long-term consumer advantage higher market share  Long-term cost disadvantage higher average cost  Short-term profit advantage that dissipates over time due to a declining market share advantage time profit advantage B-2-B Consumer Goods approx. 10 years

8. Market Driving Strategies - May/June 2007 © Prof. Markus Christen Session 13 - 8 Rule 15: First-Mover Advantage There is NO automatic first-mover profit advantage.