First-mover Advantage

Description of First-mover Advantage. Explanation.

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Definition First-mover Advantage. Description.

First-mover Advantage is the competitive edge gained by the first significant company to introduce a product or service in a market. Although there are certainly benefits associated with being the first or at least the first significant or early in an market, but this may or may not actually translate into business success.

Like always, being the first-mover only makes sense if the rewards justify the risks. Some industries reward first-movers with near-monopoly status and high margins. Other industries don't, allowing late-movers the chance to compete more effectively and efficiently against early entrants.

It is important to recognize that first-mover status is not an end in itself, but rather the beginning of a longer and much more complex strategy in which the initial advantage has to be defended against competitors and imitators.

The main drawbacks of trying to be the first mover are:

High Costs (technology, R&D, distribution channels, marketing know-how).
High Risks (is the judgment that X will be a killer product valid?)

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End of description First-mover Advantage. An explanation.