What is an advantage that is realized by a company as a part of first-mover advantages chegg

First-Mover and Late-Mover Advantage Definition

First mover and late mover advantages refer to the competitive advantage of the organizations to work as a strong brand and attain a greater market share.

Overview of First-Mover And Late-Mover Advantage

First mover advantage can be identified as benefits for the organizations to enter into the market with the significant benefit of a new product. The competition is poor due to which organizations gain an extensive market share. It helps the firms promote a strong brand image, including greater consumer loyalty and lack of competitors in the market. Initially, the first movers focus on a capitalization strategy to gain a larger market share, but they emphasize loyal consumers with the established market share. It promotes the organizations to work effectively organizations with the support of loyal consumers and quality products.

Late movers can provide significant advantages to the firms through their capability of producing the perfect product that is required in the market. The organizations can also utilize demographic surveys to evaluate the needs of the consumers and enhance the quality of the products accordingly that can maximize the sale. Late mover advantage is based on utilizing the knowledge regarding reducing manufacturing costs of the product for maximum organization benefits. Thus, it can also focus on developing a suitable product or service that can target maximum consumers and work as an appealing factor. It can allow the firms to learn from the mistakes and decisions of other firms. Through effective research and understanding of the market, the organizations can easily judge the consumers’ taste to enter the market with a greater benefit.

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What you'll learn:

• First-Mover and Late-Mover Advantage Definition
• Overview of First-Mover And Late-Mover Advantage
• Mechanisms that Promote First-Mover Advantage
• Disadvantages Of The First Mover
• Disadvantages of the Last Mover

Mechanisms that Promote First-Mover Advantage

The first-mover advantage is primarily based on three major factors:

• Control of resources: One of the major first-mover advantages is based on the capability of the firm to control the resources of the organization. It promotes a greater quality for the organization to enhance its ability with the first entry into the market. Considering the research and supply chain, the first-mover firm can easily evaluate the needs and desires of the target population and focus on the products to produce them according to the consumer’s needs. It mostly focuses on firm's opportunity to discourage the entry of other organizations with unique innovation.

• Technology leadership: Majorly, the first-mover firms focus on the new technology and products innovation. It works as a technology leader for the firm by providing a unique breakthrough based on research and development. It is specifically for sustainable cost advantage that helps in maintaining a sustained business.

• Consumer switching costs: The first mover organizations find pleasure with the buyer-switching costs as the consumers can easily move to a new brand with a unique product advantage. If a company produces a new product first, most of the consumers can stay with the organization rather than other firms who copy the technology or products of the first firm.

Disadvantages Of The First Mover

First movers can attain several advantages, but apart from these benefits, they also follow some disadvantages which can be seen behind the unsuccessful business operations of the firm. Some of the major disadvantages of the first movers are as follows:

• Change in consumer needs or technology: The technology is rapidly changing, creating a major impact on first movers. Sometimes first-mover can identify that the product generated initially is inferior, wherein the last movers benefit from this issue. Effective market research about the products of first movers can provide numerous ideas to the last movers.

• Free-riding influence: The first movers have the advantage of freely positioning into the market wherein it works as an advantage for the late movers to research into a similar area. It provides a significant impact on the competition that can promote imitation cost.

• Uncertainty in the market: A greater risk can be seen for the first movers as they can potentially invest a higher amount in the innovation. It is uncertain for the first movers whether the consumers will adopt the product or not.

• High investment costs: Unique and innovative products are based on high investment costs ,which increases the pressure on the firms to maintain an effective position in the market.

Disadvantages of the Last Mover

Late movers can face several disadvantages in the market based on the research and development costs, competition with established brands, and risk of the added features in the products. However, first-mover firms can establish a well-known brand in the market, creating a threat for the last movers to compete in the marketplace. Nevertheless, it is not easy to move the consumers for a similar product.

It is also based on the timing of the firms to avoid uncertainty in the market, but it can also impact the firm’s investment. Sometimes it is observed that the firms can also be invested in the dying product without proper research, which is a loss for the firm.