First Mover Case Study

Question B

First movers and market followers

First movers – “A form of competitive advantage that a company earns by being the first to enter a specific market or industry” (Investopedia, 2015). Being a first mover allows a company to achieve more brand recognition and customer loyalty, however there is a high risk of being a first mover, since the market has not been tested there is no way of knowing how the consumer will react to the product or services provided by the company. With the high risk there is also high gain, since the organization provides a unique product it can capture a large consumer base if it’s well received.

Market followers – “A company that allows other more dominant firms to lead the way within the marketplace that

which has grown immensely over the past 10 years under the leadership of Steve Jobs. He was a visionary and a great innovator, he was able to create services that were innovative and ahead of its time. One example of this is the creation of iTunes. By using iTunes users were able to download original digital songs and play it on their iPods. This was a alternative to the technology of CD’s and CD player at that time. These creations by Jobs, not only secured Apple as a market leader but it also helped the music industry, which in turn supported many artist who were able to make money through each

This allows the market follower to learn more about consumer preferences and exploit that information. In the mobile industry, Ericson was the first mover and the company focused intensively on innovation which was not well received by consumers. Nokia however, was able to exploit this situation by focusing on design which was the user preference of that time. This allowed Nokia, who was a market follower to gain a largest share in the mobile phone industry. (Department of Business Studies, 2004)

“Numerous early entrants within the Internet “market maker” and “broker” categories remain successful to date (e.g., eBay, E*TRADE, Expedia, Monster.com), as have pioneers that accumulated large portfolios of patents (e.g., Amazon, Yahoo)”. (Marvin B. Lieberman, David B. Montgomery, 2002)

“Approximately 500 brands in 50 product categories are analyzed. The results show that almost half of market pioneers fail...” (Golder, Peter N; Tellis, Gerard J JMR, 2003). There is always a risk in business whether the company is a first mover or a market follower. It can’t be clearly defined with absolute certainty that a business will succeed or fail due to which part of this spectrum it falls