How To Become A First Mover With IT Services

Jun 21, 2016 posted by Abhishek Vinod Singh under Digital Transformation, Technology

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What do you mean by the term ‘first mover’? A company gains a competitive edge by being the first company to enter a particular market/industry. A first mover has the power to acquire a huge market share, brand recognition, as well as customer loyalty. Moreover, the first-mover company can experiment to develop the perfect product/service.

Technology Leadership

Early entrants have the ability to mold other enterprises to their implementation of technology which is pretty hard for relatively newer industry players. The companies that enter the industry early learn how to reduce production costs after a considerable amount of experience. This effect is termed as ‘learning curve’ effect; in this way the early entrants maintain a cost advantage.

Unless new enterprises learn to offer their products/services at lower rates and that too quickly, it will be difficult for them to sustain their venture. However, research studies have concluded that later entrants are able to learn about the new technologies quickly and give a tough competition to the first-movers. 

Technology benefits a first-mover because the company can apply for patents of their technology and prevent other enterprises copying the success formula. However, patents protect first mover firms only in certain verticals like pharmaceuticals. New entrants can quickly introduce new technological designs to outshine the patents of the first mover firms.

A strong first-mover gains technology leadership when the company establishes its product/service as an industry standard, which other companies will find it difficult to follow and thus will face difficulties in attracting customers to the new business.

Resource control

A first-mover gains control over essential resources that will improve over time and become better than those used by the new entrants. A first-mover will launch its business in the most prominent location and hire the best resources. For instance, Wal-Mart is exploiting this competitive advantage to launch discount stores in small towns.

Additionally, a first mover has an efficient supply of raw materials to manufacture the product or avail a shelf space in a store. Ample opportunities of building a stable resource base favor a first mover. For instance, first mover has an opportunity to increase production or experiment with different product lines, thus warning new entrants about the high levels they must achieve in order to attain profit.

Costs related to buyer switching

If a customer is wants to switch to a new brand, the first company helping that customer stands a competitive edge. Switching costs involve acquainting with the new product along with penalties of breaking long-term contracts.

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First movers have a great opportunity to mold user preferences in the category of consumer products. If your product is one-of-a-kind, has acceptable quality will surely develop customer loyalty. Loyal consumers normally do not spend much time acquiring information of other products and avoid risks of dissatisfaction caused due to the switch.

For example, Coca Cola has dominated the soft drinks market for a long time. Consumers have built a brand preference than the product itself. On the contrary enterprises prefer to buy large quantities and search for low-cost options.


If first mover companies enjoy the long-lasting benefits, as stated above, then why isn’t it a popular business strategy? In many industries, new entrants can overcome these benefits. For instance, a first mover company attracts customers to a new product. New entrants will already be aware about customer preferences and won’t have to invest much in understanding customer needs. Secondly, the new entrants will also avoid mistakes of the first-movers

With the evolving nature of the World Wide Web, IT companies feel susceptible to the success of new entrants. Fast followers adopt the principles of reverse engineering; they are reworking on existing products to develop competing products in a quick and affordable way negating the advantages of a first mover.  

We are still exploring differences across industry verticals and geographic markets. Consumer products offer more advantages to first movers than industrial products however research is continuing on the advantages of first movers in the services sector.

Although, we do not know much about effects of first mover companies in countries except the United States, evidence suggests that even other countries are realizing the advantages of being a first mover.

Another advantage of first-mover companies is that they are able to use other resources to maintain the initial edge. For instance, if your enterprise holds a strong position in marketing and distribution, you are well-versed with the strategies to sustain this lead by introducing a new product to a new target segment. However, you must also be aware about the follower strategies as well.

The uncertainty about advantages of first-mover companies, you must consider following points carefully:

  • Will you invest in looking for opportunities?
  • What is the best approach for the current market scenario?
  • Which of the three benefits will be available to a first mover in the present market?
  • Do you have sufficient resources to sustain the lead
  • How difficult will it be a follower in this market?
  • What will be the advantages of entering this market late – lower cost, better technology or better understanding of customer needs?

You might be attracted by the advantages of becoming a first-mover, however fast followers also have their own share of advantages. You decide which approach will prove to be beneficial for you in the long term. Will your approach have the greatest potential to sustain in the long run with the given resources and nature of the market.

First Mover or Follower – What’s the Right Business Strategy

What does the number 1 mean to you? Everything that matters, right? Even during school and college you must have had the mindset of achieving nothing less than an ‘A’ grade because it will be regarded as failure.

Do you remember who stood second in your class; even your professor won’t remember you if you are an average student. The same philosophy applies to a new entrant or someone who introduces a new product following a competitor. After all, since your student days you have known that it is important to be first and gauge the level of competition.

Not true always. Many success stories in the business world have been created without being the best student of the class. An entrepreneur who fails often ultimately achieves the goal of success.

These organizations have adopted the philosophy of being a fast follower i.e. a company that approaches the competitive market with a strategy as a reaction to the product/service introduced by the competitor and penetrate the market due to strong demand.

A fast follower can quickly adjust their products/services considering the feedback from the market about the offering proposed by the first-mover.

It is true that being second may be disadvantageous for your company however its advantages outweigh the weaknesses. Fast followers adopt innovation to develop appropriate customer solutions; these companies are more responsive to consumer needs and develop a financially sound product/service to sustain in the long term.

Advantages of fast follower

  • Flexibility to adjust and develop a perfect customer solution
  • Consumers already know about the advantages and features of the product/service
  • You can learn from the first company’s mistakes
  • Reduce financial risks and chances for failure
  • Opportunity to differentiate your value proposition from the market leader


  • The first company will enjoy greater visibility
  • Lower brand association
  • Initial market demand and customer response may mislead the fast follower
  • Difficult to attract attention of venture capitalists
  • Lengthier sales process to outweigh the performance of market leader.

How to become a good fast follower?

It is not just adopting a financially sound strategy; you also have to create the appropriate corporate culture. A top-down approach helps in maintaining urgency continuously, driving employees towards innovation, and move quickly to grab any opportunity that comes at your front.

Being an underdog you will always be excited to challenge the market leader and will feel proud when you overcome the challenge which once looked like an unachievable feat.

Personality, risk orientation, sense of adventure, persistence, and sticking to the goal in every situation are some of the characteristics that will integrate into the working culture of a fast follower company.

Implications Fast Follower Companies Face

The essence of business growth and success lies in its marketing strategy. Be careful and take intelligent risks. Assess the market leader’s product entry and create a differentiated product. Waiting too long is not a solution; you might miss the bus altogether as the market will be attracted towards the first mover.

Follow the market trend, build a long-term relationship with customers and try to understand their needs. Efficient methods of market research will help you assess the present market conditions, customer reactions, which in turn will help you devise an appropriate marketing strategy for your new product/service.

Do not present your offering as a ‘me too’ product/service. A wrong approach is to reduce costs and sell your offering at lower prices. Always remember customer is king. Maintain a customer-oriented approach and you will always emerge a winner in the long run.

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