What is the first-mover advantage?

First-mover advantage is an advantage gained by being the first company to introduce a product or service to the market. Being a first-mover positions a company to establish strong brand recognition and brand loyalty before competitors enter the market. First movers can also set industry standards, control scarce resources, such as supplier contracts or talent, and lock in consumers where it is inconvenient or costly for consumers to switch to a new brand later. The investment and momentum of first movers may also discourage competitors from committing resources required to compete in the market.

What is the first-mover disadvantage?

The first-mover disadvantages include the investment required to educate consumers about the offering, the chance of later-movers learning from and avoiding mistakes made by the first-mover, and late-movers reverse-engineering first-mover offerings to make them better and cheaper.

What are examples of companies who were successful first-movers?

Examples of successful first-movers include:

  • Coca-Cola, which introduced Coke 13 years ahead of Pepsi, quickly becoming a market favorite, and building market share,
  • Amazon, which was the first major online bookseller who offered low prices and fast shipping that incumbents Barnes & Noble and Borders couldn’t match.