First-mover Disadvantage

CONTENTS

What is the First Mover Disadvantage

What is the First Mover Disadvantage

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Definition of First-Mover Disadvantage

The ‘first mover’ is a business that enters the market with a new product or service, before other rivals. Often, this is a good thing (known as a first-mover advantage). But being the ‘first’ can also throw up challenges. These challenges are referred to as ‘first-mover disadvantage’.

To most, first-mover advantage sounds ideal because being first to market may mean educating your audience on what a new product does, or encouraging a new type of behavior. For example, the iPhone.

Or, a first-mover may need to invest greatly in new technology or production capabilities to bring the product to market — an investment with limited certainty of success.

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If the product or service does take off, then rivals will soon follow. And herein lies another first-mover disadvantage, known as ‘free-rider effect’. Where the first mover has had to educate and invest in the product or service’s success, rivals can hop on their coattails and launch with much less effort.

General FAQ

What is the strategic disadvantage of being a first-mover?

There are multiple strategic disadvantages of being a first mover. One of the simplest is that employees may start working for a competitor or launch their own enterprise, taking their knowledge of the first mover’s strategies, technologies, and plans with them. This can give the competing business valuable insight that dulls the first mover’s edge. Another strategic disadvantage is that first movers tread new ground and develop a new market, paving the way for other companies to move in and exploit it. These followers will be able to learn from the first mover’s errors and, potentially, achieve better results.

What is first-mover advantage?

First-mover advantage refers to the advantages an innovating business may gain through the early acquisition of resources or technological breakthroughs. First movers can achieve a competitive edge over other brands and secure a large segment of the relevant market(s).

What is an example of first-mover disadvantage?

AltaVista is a great example of first-mover disadvantage in action. Launched in 1995, AltaVista was one of the first internet search engines. It rose to popularity in 1997, thanks to its use of natural language terms. However, as the years went on, AltaVista continued to add to its functionality, introducing community-oriented features alongside search. Although AltaVista was diversifying to keep up with emerging competitors, it ultimately lost the user-centric simplicity it was known for. At a similar time, Google launched with its ultra-simple approach to search. And, unfortunately for AltaVista, the rest is history.

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