Question

1: Network Effects pertain to a specific form of First Mover Advantages such as capturing customers, acquiring desirable locations, obtain patents among others.

Group of answer choices

True

False

2: Mapping the Consumption Chain is focused on the travel times of the upstream raw material.

Group of answer choices

True

False

Answer 1

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Abstract

In marketing strategy, first-mover advantage is the advantage gained by the initial significant occupant of a market segment. First-mover advantage may be gained by technological leadership, or early purchase of resource.

1) Technological leadership

Technological pioneers can protect their R&D through patents. However, in most industries, patents confer only weak protection, are easy to invent around, or have transitory value given the pace of technological change.

With their short life-cycles, patent-races can actually prove to be the downfall of a slower moving first-mover firm.

2) Preemption of scarce assets

First-movers can establish positions in geographic or product space such that latecomers find it unprofitable to occupy the interstices.

Entry is repelled through the threat of price warfare, which is more intense when firms are positioned more closely. Incumbent commitment is provided through sunk investment cost.

When economies of scale are large, first-mover advantages are typically enhanced. The enlarged capacity of the incumbent serves as a commitment to maintain greater output following entry, with the threat of price cuts against late entrants.

For Example,

1. Procter & Gamble is an example where a company's technology leadership helped propel their product (disposable diapers) into the US market.
2. They used a learning-based preemption to help invest in low-priced European synthetic fiber, which helped keep costs down, and allowed for selling the diapers profitably at a cheaper price.

Therefor option 1. is correct - " True " which explain the above concepts that is related to characteristics of "Network Effects pertain to a specific form of First Mover Advantages such as capturing customers, acquiring desirable locations, obtain patents among others"

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