First Mover and Market Follower
Question B
2.1 Introduction to First Mover and Market Follower
When it comes to having a competitive advantage, a firm would be looking at generating higher sales or market share over its competitors. Competitive advantage can be achieved by many ways in terms of low cost, providing niche products or services. Another type of competitive advantage is the first mover. The first mover is termed as a firm being the first to move into a particular market with this services or product. There are significant advantage and risks involved in being the first mover. Market followers are essentially firms which enter into a known market which has been well established. The firms would start off with a smaller market share but are able to benefit from the marketing efforts which are already in place by the leading firms.
2.2 Advantages and Disadvantages of First Mover
Advantages
The advantages are that the first mover would be able to capture a greater market share if the product or service is received well by the consumers. It would be able to yield high profit margin as it would be the one to determine the cost price of the product or service. It would have a upper hand in term of technological leadership as it would be able to enhance its research and development function earlier than the late entrants. The firm would have the advantage to set the market entry barriers if it is able to successfully monopolise the market with its brand.
Disadvantages
However, there are certain amounts of risks involved in being the first mover. The study of the untested market would need to be comprehensive before embarking on the business as a failure would totally destroy the market or serve as a lesson learnt for the second mover and the followers thereafter. The first mover would need to constantly adapt to customer change in needs or else the competitors would move in the develop something better for the customers which in turn would deplete the market share.
2.3 Advantages
2.1 Introduction to First Mover and Market Follower
When it comes to having a competitive advantage, a firm would be looking at generating higher sales or market share over its competitors. Competitive advantage can be achieved by many ways in terms of low cost, providing niche products or services. Another type of competitive advantage is the first mover. The first mover is termed as a firm being the first to move into a particular market with this services or product. There are significant advantage and risks involved in being the first mover. Market followers are essentially firms which enter into a known market which has been well established. The firms would start off with a smaller market share but are able to benefit from the marketing efforts which are already in place by the leading firms.
2.2 Advantages and Disadvantages of First Mover
Advantages
The advantages are that the first mover would be able to capture a greater market share if the product or service is received well by the consumers. It would be able to yield high profit margin as it would be the one to determine the cost price of the product or service. It would have a upper hand in term of technological leadership as it would be able to enhance its research and development function earlier than the late entrants. The firm would have the advantage to set the market entry barriers if it is able to successfully monopolise the market with its brand.
Disadvantages
However, there are certain amounts of risks involved in being the first mover. The study of the untested market would need to be comprehensive before embarking on the business as a failure would totally destroy the market or serve as a lesson learnt for the second mover and the followers thereafter. The first mover would need to constantly adapt to customer change in needs or else the competitors would move in the develop something better for the customers which in turn would deplete the market share.
2.3 Advantages