1.What are the advantages of becoming First Movers in business?

Answer:

A first mover is a service or product that gains a competitive advantage by being the first to market with
a product or service. Being first typically enables a company to establish strong brand recognition and
customer loyalty before competitors enter the arena. Other advantages include additional time to
perfect its product or service and setting the market price for the new item.

First movers in an industry are almost always followed by competitors that attempt to capitalize on the
first mover's success and gain market share. Most often, the first mover has established sufficient
market share and a solid enough customer base that it maintains the majority of the market.

Being the first to develop and market a product comes with many prime advantages that strengthen a
company's position in the marketplace. For example, a first mover often gains exclusive agreements
with suppliers, sets industry standards, and develops strong relationships with retailers. Other
advantages include:

a. Brand name recognition is the main first-mover advantage. Not only does it engender loyalty among
existing customers, but it also draws new customers to a company's product, even after other
companies have entered the market. Brand name recognition also positions companies to diversify
offerings and services. Examples of dominant brand name recognition of a first mover include soft drink
colossus Coca-Cola (NYSE: KO), auto-additive giant STP (NYSE: ENR), and boxed-cereal titan Kellogg
(NYSE: K).

b. Economies of scale, particularly those regarding manufacturing or technology-based products, is a

massive advantage for first movers. The first mover in an industry has a longer learning curve, which
frequently enables it to establish a more cost-efficient means of producing or delivering a product
before it competes with other businesses.

c. Switching costs let a first mover build a strong business foundation. Once a customer has purchased
the first mover's product, switching to a rival product may be cost prohibitive. For example, a company
using the Windows operating system likely would not change to another operating system, because of
the costs associated with retraining employees, among other costs.

2. What are the challenges of becoming First Movers?

Being the first business in an industry may not always guarantee an advantage,

The Disadvantages of First Movers, are:

a. The first mover may invest heavily in persuading consumers to try a new product. Later entrants
would benefit from these informed buyers and would not need to spend as much on educating
consumers.

b. Later entrants can avoid mistakes made by the first mover.

c. If the first mover is unable to capture consumers with their products, later entrants can take
advantage of this.
d. Later entrants can reverse-engineer new products and make them better or cheaper.

e. Later entrants can identify areas of improvement left by the first mover and take advantage of them.

3. What does a First Mover do in order to survive the market?

First movers in an industry are almost always followed by competitors that attempt to capitalize on the
first mover's success and gain market share. Most often, the first mover has established sufficient
market share and a solid enough customer base that it maintains the majority of the market.

Key Takeaways

a. A first mover is a company that gains competitive advantage by being the first to bring a new product
or service to market.

b. First movers typically establish strong brand recognition and customer loyalty.

c. Advantages of first movers include time to develop economies of scale—cost-efficient ways of

producing or delivering a product.

d. Disadvantages of first movers include the risk of products being copied or improved upon by the
competition.

e. Amazon and eBay are examples of companies that enjoy first-mover status.

Source:

Lim, Sandra. “First Mover Definition.” Investopedia, updated May 8, 2019,

https://www.investopedia.com/terms/f/firstmover.asp