First-Mover Disadvantage
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What is the First Mover Disadvantage
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.
