First-mover advantage (first-to-market)

First-mover advantage, also called first-to-market, is the benefit a company gains by being first to market with a new PRODUCT or service. First-mover advantage is part of MARKETING STRATEGY—the coordination of product, pricing, promotion, and distribution decisions for each target market. In the late 1990s many of the frenetic marketing efforts of DOT-COMS were based on the idea of first-mover advantage. The first company offering a new INTERNET product or service gained significant publicity, attracted additional financial support, and created a BARRIER TO ENTRY for other potential competitors. As Latin American Internet expert Lucas Graves states, “It’s absolutely true that nothing can make up for first-mover-advantage, and the proof is that Yahoo! remains where it is today and eBay remains where it is, despite the entry of many other companies into those vertical categories.” First-mover advantage is based on attracting consumer innovators—customers who purchase a product as soon as it reaches the market. Often people are consumer innovators in specific categories of products. Serious photographers try out the latest equipment, committed golfers are always looking for something new, and fashion-conscious consumers keep abreast of the latest styles. With today’s Internet communications technology, consumer innovators quickly evaluate and recommend or reject products. Marketers recognize that word-of-mouth referrals from consumer innovators can ensure the success of their new product. First-mover advantage is offset by the potential for mistakes from rushing a product or concept to the marketplace. An old saying in marketing is, “You only have one chance to make a first impression.” Many dot-coms and other companies died quickly when the promised benefits of their new products did not meet consumer expectations.