In Brief

  • When you enter the market as a first mover, you are on your own to educate the market about your products. This applies to every first mover; no matter how fantastic your product is in comparison to existing options on the market, it will not matter if your target audience is unfamiliar with your brand. 
  • Being a first mover has a high opportunity cost because it takes more time and effort to grow your brand. It will take a significant amount of resources to develop your brand in the market, and there are no assurances that it will succeed in the end. 
  • As long as you have a genuine faith in your vision and are backed by a huge resources and a solid team, you’ll prevail.

It’s Not All Sunshine and Rainbows

In 1988, M. B. Lieberman and D. B. Montgomery introduce us to “First-Mover Advantages”. It refers to companies that are the first to market, giving them a competitive advantage over other companies, resources, or technology that come after them. In the long run, pioneering can lead to market dominance and bigger profits than average. Thus, this creates a widely held belief that being first almost always provides strategic advantages. Many companies strive to be the first in their industry or product category, but many fail to recognize that First Mover Advantage (FMA) is not always sunshine and rainbows.

First Mover (Dis)advantages

Based on our experiences with clients, we found that while there may be advantages to being first, the costs sometimes outweigh the benefits. To give you some context, we were working on a groundbreaking project to develop a warehouse dedicated for digital entrepreneurs and UMKM. We saw a fundamental problem in the market which is cost efficiency, and we’ve done extensive research to show that our product will solve it. But, along with the many benefits that come with being the first to market, we also faced challenges that required us to strengthen our strategy based on our condition as a first mover. As a result, we’ll outline some of the challenges to which you should pay attention as a first mover

Becoming First Would be Extraordinarily Expensive

When you enter the market as a first mover, you are on your own to educate the market about your products. This applies to every first mover; no matter how fantastic your product is in comparison to existing options on the market, it will not matter if your target audience is unfamiliar with your brand. This implies you’ll have to spend a lot of money to educate the market regarding your brand. To raise brand awareness, you will need to put in twice the work to develop an integrated marketing strategy that covers every customer touch-points since people really have zero knowledge that this kind of product exist.

It doesn’t end there. The bigger the disruption that you create on the existing market, the bigger the challenges to shift the market behaviour to your brand as they’re already used to the existing solutions. This means you’ll need to plan for yet another massive investment in order to build a promotional campaign or any initiatives that make your product more accessible for consumers. Because, no matter how fantastic your product is, you still need to make some serious efforts to reform their behaviour so that they are willing to break away from their usual habits pattern and try your products, as well as determine how your products can better solve their existing problems than the products or services that they currently use.

On top of that, not only will you be on your own in terms of educating the market, you will also not have any prior experience to fall back on. Implying that being the first in an industry or product category entails making many mistakes. You are expected to encounter a string of failed initiatives, meaning that you must be prepared to endure a higher trial and error cost than a latecomer. Not only that, you need to also remember that you are racing against time as you need to re-invest all of your resource into developing another strategy that works before you run out of it.

So, should I not be the first mover?

Well, being a first mover has a high opportunity cost because it takes more time and effort to grow your brand. It will take a significant amount of resources to develop your brand in the market, and there are no assurances that it will succeed in the end. However, industrial titans such as Apple, Google, and Coca-Cola are all first-movers, hinting that nothing extraordinary ever comes from comfort. As long as you have a genuine faith in your vision and are backed by a huge resources and a solid team, you’ll prevail.

“In the long run, pioneering can lead to market dominance and bigger profits than average. But, it’s not always sunshine and rainbows.”

– ANDREW SOEHARTONO, SENIOR CONSULTANT