A first mover strategy or a first mover firm is the one entering the new Market and developing some new product or service before its competitors. The term first mover implies that the particular firm is the first one to initiate some strategic move.
There are additional first mover advantages that is discussed here.
As per the first mover theory, it refers to a specific service or product gaining a competitive advantage in a particular sector. As the first mover firm is the first, it usually allows the firm to set up a strong brand reputation as well as customer loyalty before competitors start entering the arena. Some additional benefits of the first mover strategy include receiving extra time for perfecting the product or service and determining the product price for the all-new market.
If you are a first mover firm in the given Industry, you will always be followed by competitors attempting to capitalize on the overall success of the first mover firms while gaining market share. In most cases, the first mover firm might have already established ample market share along with a relevant customer base for ensuring its majority in the given market.
As the first mover firm is the first one to develop as well as market a specific service or product, there are several benefits attached, such as it helps in strengthening the position of the firm in the given marketplace. For instance, a first mover firm is always known to gain exclusive agreements or offers with suppliers. Additionally, the firm is also capable of setting industry standards and developing strong relationships with the respective retailers.
Some of the additional advantages are:
It will allow the first mover to develop a reliable business foundation. Once the customer has purchased a product from the first mover firm, switching to the competitive product might be cost-restricted.
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It is aimed at specific industries including the ones delivering technology and Manufacturing products. The first mover in the given industry features a longer Learning Curve. Eventually, it allows the first movers to set up an affordable way of manufacturing or delivering items before these will be competing with other similar businesses.
This mechanism delivers maximum loyalty and engagement amongst existing customers. In addition to this, it is also capable of drawing new customers to the products or services of the company. With brand name recognition, firms are also enabled to diversify the respective offerings. Some of the instances of dominant first-mover brand name recognition include Coca-Cola and others.
Some of the leading businesses following the first mover strategy include Amazon, eBay, and Coca-Cola. As they were first in the industry, they were capable of maximizing the returns on investment almost instantly.