First mover disadvantage

First mover disadvantage

We’ve heard of first mover advantage where the first company to venture into the market benefits from an early entry, building a brand, creating customer loyalty and so forth.

Is there also a first mover disadvantage? I believe so. Some markets are as adaptive as other markets and the factors could be culture, consumer lifestyle, lack of awareness, risk factor, technology adoption, access to technology among others. Take for example, a market like Nepal. Nepal leapfrogged from having most of the population with no phones to having smartphones to majority of the population. Yet many new tech innovations or products fail to get traction once they launch. Consumers are not as embracing as it might seem. A company will spend lots of money on marketing to sell its products/services. Yet most of the marketing budget will be spent on just creating awareness and their funds will run dry soon. The next company with similar product/service comes around having benefited from the first company’s marketing spend. Another company comes around who can leverage from the earlier two companies’ experience. We don’t know when the tipping point comes and the product/service catches fire but it can be said that first mover advantages don’t always benefit the initiator.

Yes, most times it’s best to be the first one to penetrate the market. Sometimes it’s best to wait a bit to put your best work forward.

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