This includes specifics about the product that you’re offering, the distribution, the manufacturing process, and the marketing. When you’re the first in a market, you have the complete freedom to define your own industry standards. Let’s see some of the pros and cons of being first-to-market.Īspects of the First Mover Advantage Setting up industry norms But this is not obligatory and often depends on various circumstances. Most often, the first mover has established sufficient market share and a solid enough customer base that it maintains the majority of the market. The benefits of being a pioneer in a market are so many, that they are described as the first-mover advantage.įirst movers in an industry are almost always followed by competitive companies that attempt to capitalize on the first mover’s success and gain market share. They present a product or a service that is one-of-a-kind and fulfills market needs that no one has previously satisfied. What is First-mover Advantage?Īs the name suggests, the term first mover defines companies who enter a certain market before anyone else. This begs the question – is it truly better to be the trailblazer in a certain field or does this come with a significant amount of risk? Before delving into the nitty-gritty, let’s define the concepts of first movers and the first-mover advantage. By comparison, the first movers failed 47% of the time. That makes sense – it’s only logical that if you offer something no one else does, then you alone will reap all the benefits…right? Unfortunately, things are not so clear-cut when it comes to comparing those that come first and those that closely follow them.Īccording to research by Peter Golder and Gerard Tellis, start-ups who are early to a market, but not the first ones, fail at a rate of about 8%. In the tech sphere, being the “first” is often considered not only a prerequisite but a guarantee for success. So much so, that the business world uses a special term for this type of relation – first-mover advantage. While first movers face new and unexpected challenges, competitors that launch later can capitalize on some of the mistakes done by the trailblazer company, or even imitate and improve some of their offerings.Being the first company to enter a marketplace is certainly connected to success. In addition, being the first mover of a particular market often implies that they have to deal with the additional cost and overhead related to unexplored markets. Consumer sentiment can be both positive or negative, and if the company fails to provide a secure and valuable service or product, there will certainly be a feeling of deception among its early adopters. Before the reputation and user base is eventually established, there is no guarantee that the product will be favorably received. However, being a first mover has its own disadvantages. In other words, a company that is not a “first mover” will need much more resources and energy to “convince” users to migrate. This may be one of the many reasons users are not always willing to change from their current exchange of choice to a newly launched one - especially if the services provided are reliable and efficient. Because these companies and their networks are directly dependent on their visibility and reputation, capturing a large user base at early stages can make for a significant lead.Ĭoncerning cryptocurrency exchanges, the migration from an established trading platform to another involves transactional costs and also some risks. Such an advantage is notably important in the cryptocurrency industry, as blockchain-based projects and cryptocurrencies exchanges compete for the relatively limited market share and user base. By virtue of being the first to launch, there is an uncontested opportunity to establish brand recognition, market share, and consumer loyalty before other businesses and products eventually enter the space as competitors. The first mover advantage refers to the competitive advantage of the first project to bring a service or product into a new and unexplored market or industry.
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