Question

If every new product has a first-mover advantage, then why do product fail?

Answer 1

First mover advantage :- The first mover advantage refers to an advantage gained by a company that first introduces a product or service to the market. The first mover advantage enables a company to establish strong brand recognition and product / service loyalty before other entrants to the market.

It is important to note that the first mover advantage only refers to a large company that moves into a market. For example, Amazon was not the first company to sell books online. However, it was the first company to achieve significant scale in that line of business.

Advantages :- Companies that are first movers can often :-

1. Establish their product as the industry standard.

2. Be able to tap into consumers first and make a strong impression, which can lead to brand recognition and brand loyalty.

3. May be able to control resources, such as basing themselves in a strategic location, establishing a premium contract with key suppliers or hiring talented employees.

4. Can gain an advantage when there is a high switching cost for consumers to switch to later standards.

Disadvantages :- Being the first business in an industry may not always guarantee an advantage.

1. The first mover may invest heavily in persuading consumers to try a new product. Later, entrants would benefit from these informed buyers and would not need to spend as much as educating consumers.

2. Later, entrants can avoid mistakes made by the first mover.

3. If the first mover is unable to capture consumers with their products, later entrants can take advantage of this.

4. Later, entrants can reverse engineer new products and make them better or cheaper.

5. Later entrants can identify areas of improvement left by the first mover and take advantage of them.

Some other reasons for failure of a product are :-

1. Failure to understand what the consumer wants.

2. Targeting the wrong group.

3. Product is not solving any real problems.

4. Pricing is off.

5. Weak internals like team, system and leadership.

6. Poor execution of marketing plan.