First Mover Advantage

The term “First Mover Advantage” was first popularized in 1988 paper by David Montgomery and Marvin Lieberman.

The concept is simple – firms that are the first to enter new (“Blue Ocean”) markets have an advantage over later entrants because they can capture market share more freely without rivals competing for the same customers. If First Movers can achieve Customer Lock-In quickly then it will be much more difficult for competitors to enter the market.

Unfortunately, simply being the First Mover is far from a guaranteed formula for success.

In a 1993 paper authors Peter N. Golder and Gerard J. Tellis analyzed 500 new products across 50 categories and discovered that almost half (47%) of the First Movers failed but only 8% of the Fast Followers failed.

Posted in: Glossary