Second-mover Strategy

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Summary

What is a Second-mover Strategy? Meaning.

A Second-mover Strategy is created to benefit from (quickly) following the first-mover. Often, the second mover is actually able to capture a greater market share, despite having entered later. Compared to a first mover, this strategy has some advantages:

  • Lower research and development budgets. The second-mover firm can learn from the experiences of the first mover firm, and

  • Lower marketing budgets are necessary to educate the public about a new type of product.

As a result, the second-mover can use its scale and resources to focus on making a superior product or out-marketing the first mover.

Furthermore, second-movers often overwhelm the first movers by taking the first-moverís product from their niche consumer market to a mass market. They know the importance of timing in terms of understanding when a market is ready to accept a dominant design, and they enter the market just as the dominant design is about to emerge. They polish the dominant design, and use their size to capture the market.
 

Another term for second mover firms is "Fast Follower" or also: "Fast Second". Microsoft is a classical and extremely successful example of a company that is embracing this strategy.


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Hi, do you know of a famous case or an interesting example of the pros and cons of opting for a second-mover strategy?
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The Importance of Customer Differences in Markets with Network Effects: the Limits of Scale

Network Effect, Network Strategy, First Mover Advantage, Second-mover Strategy, Customer Intimacy, Market Segmentation
The network effect (Metcalfe's Law) is the phenomenon that the value of a product or service increases (exponentially) w (...)
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How to Sustain Competitive Advantage?

Business Strategy, Sustaining Competitive Advantage, Sustainable Competitive Advantage,
This presentation is about the question how a competitive advantage can be sustained. The presentation begins with compe (...)

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Compare with: First-mover Advantage  |  Strategic Window  |  Blue Ocean Strategy  |  Competitive Environment  |  Organizational Resilience  |  Entrepreneurial Organization  |  Experience Curve Effects

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