Conventional wisdom says that you need to be first to win. But does being first to market guarantee your product will be a winner?
(article continues below)
Not always. In fact, sometimes being a first mover can be a major disadvantage.
Timing is everything in small business. Blazing a trail by releasing a product before anyone else seems like a logical way to secure your dominance in the marketplace.
Sometimes it does, but sometimes waiting for someone else to break new ground is a surer way to achieve long-term success. The key to finding the right time for the release of your product is knowing upfront the potential advantages and disadvantages associated with being the first to market.
Advantages of Being First to Market
- Consumer Impact - First movers enjoy the ability to make a significant impact in the minds of consumers, setting a standard for others to follow. Product characteristics, service delivery methods, price points, and other factors combine to create a level of expectation that you can progressively be refined to strengthen your brand.
- Name Recognition - If you are the first to bring a product to market, you will experience exclusive name recognition during the initial stages of the product's life. As long as you are able to maintain a strong market presence, your name will continue to be identified with the product even after others have entered the market.
- Lack of Competition - This may seem obvious, but being a first mover grants you exclusive market rights - at least for a while. By leveraging your temporary position as the sole provider, you can make significant gains in the short term and plot a strategy to remain competitive when the market gets crowded.
Disadvantages of Being First to Market
- Market Ignorance - When you create a new product, you are (in effect) creating a new market. As a first mover, the new market will look to your company to shoulder the burden of introducing the product to consumers and educating them about its use. This translates into time, effort, and resources that later competitors don't have to worry about.
- Product Development - First movers also bear the cost of developing a product to the point of marketability. For some products, research and development costs aren't a major factor. But for more complex products, it's definitely something you need to factor into your decision. Ultimately, you might be better off letting someone else work out the kinks so you can focus on creating a lasting market presence.
- Cheap Knockoffs - If your product is a success, someone is inevitably going to try to steal market share by offering a cheaper alternative. Unless you can clearly articulate the value of your product compared to a cheap knockoff, you may find yourself priced out by someone who hasn't invested anything in the product's design or development.