First-mover advantage

Under time -based competition strategies in business administration, particularly in strategic marketing and innovation management, strategies, analyzes that deal with the date of market introduction of (new) products. Opposing positions with respect to market entry are the pioneer strategy on the one hand and the follower strategy on the other.

Terms

  • In a pioneering company (English: First Mover or First short ) is a new product at the time of launch no technically similar competing product against. With a pioneering strategy, companies try to gain a competitive advantage through early market introduction ( first mover advantage, short FMA). Concrete examples of the pioneering strategy are the personal digital assistant "Newton" by Apple (1993 ) and the anti -lock braking system for passenger cars Bosch (1978).
  • A follow- member company (English: Late mover or follower) comes only after the pioneering company in the market. A follower strategy is aimed at competitive advantage by a subsequent market entry. Examples of companies as IBM followers are in the market for personal computers (1981, competition with the Apple II, 1977) and Siemens in the market for kidney stones (1986, competing with Dornier lithotripter, 1980). Sequence member company often are additionally categorized into: Early versus late follower: Early start follower already relatively shortly after the pioneer companies selling competing products. Late follower occur only in markets where technical and economic problems are eliminated early and already a large number of providers exist. However, objective demarcation criteria are loud Gerpott rarely mentioned in the literature.
  • Imitative versus modifying follower: An imitative follower mimics the Product Innovation of the pioneer company. Properties of the pioneering and original product are widely adopted. Although a follower of modifying retains the provisions introduced by the First product technology, but offers even a noticeably better product.

Frequently in the literature not only of (all) the first provider is defined as first of the reasoning, but early providers of stragglers distinguished (Early versus Late Movers Movers )

Chances of pioneer strategy

Both the supply and the demand side may enjoy a pioneer strategy give competitive advantages:

  • Economies of scale and experience curve: Successful pioneers can achieve higher market share and higher sales volumes. This can result in accordance with the experience curve concept to lower unit costs. This leads to the possibility of a deterrence strategy by limit pricing ( predatory pricing ) against followers may result.
  • Securing scarce resources: Pioneers can resources at an early stage "occupy" and use exclusively in favorable cases. Examples are long-term relationships with suppliers and trading partners.
  • Recovery exclusivity rights by: failure by the pioneer to protect its new processes and products through patents comprehensive, it can follower away from the competition benefit or licensing agreements.
  • Set technological standards: Early providers offer greater influence on the enforcement of ( quasi) standards.
  • Image building advantages in the customer: Innovative pioneers have the chance to reputation benefits (" Technology Pioneer", etc.).
  • Achieve higher prices: Meeting pioneers as temporary "quasi- monopoly " with their products on demand earlier buyers, relatively high selling prices can be achieved.

Chances of the follower strategy

The pioneering strategy does not necessarily lead to lasting success in the market. Often, the success of follow- member company results with the risks that exist for pioneering companies:

  • Free Rider Effects: followers may benefit in the market development of the pioneer investments, such as when the building of new infrastructure is required or skepticism of the customers are to be removed to a new product.
  • Error prevention and cherry-picking: follower can observe negative customer reactions and avoid mistakes of the pioneers. The strategy of follow- member company to focus on markets that have proved particularly attractive because of the activities of pioneering company is called cherry-picking.
  • Inertia of pioneers: First successful pioneers can be lazy and afraid to replace first successful product generations in time. This gives ( modifying ) followers the chance to overtake early leader.

Influence the market situation

The chances of a pioneering strategy or risks of a follower strategy are dependent on the specific market and competition situation, but also the product characteristics. The probability of success of a pioneering strategy rises among others ...

  • ... At a quick price erosion,
  • In ... a fast diffusion curve for the new product,
  • ... With a short marketing period ( short market cycle ),
  • With already known ... customer groups for the new product,
  • At ... pronounced network effects,
  • ... At a high technological product complexity.

Empirical results

In the 1970s and 1980s, dominated the scientific discussion empirical work that supported the majority an advantage of the pioneer strategy. In particular, the studies of Tellis / Golder showed in the 1990s disadvantages of pioneer strategy. A general advantages of the pioneer strategy towards the follower strategy is thus not given according Gerpott.

Experience curve effects
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