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’.
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.
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.