first-mover advantage

Definition:
Sometimes referred to as a 'pioneering advantage' these are the additional benefits thought to accrue to the first firm to enter a market. Most of the literature on this subject deals with innovation or new product development where advantages are seen to come from pre-empting competition, setting industry standards etc. There is evidence to suggest that first mover advantages may be illusory, particularly where the innovation is radical when followers may move in with improved versions of the innovation as the market enters the early stage of the growth cycle and displace the pioneer. The latter was certainly true of the launch of established brands into East European markets (a market development strategy). Pioneer brands enjoyed buoyant sales initially but their novelty value was lower than their high prices and repeat purchase did not occur. Followers learned from this experience and formed partnerships with domestic firms with lower costs and establishes distribution channels.

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