1. First movers are the first entrants to sell in a new product or service category (“pioneers”)

Early followers are early to market but not first.

Late entrants do not enter the market until the product begins to penetrate the mass market or later.

2. first mover advantage:

Brand loyalty and technological leadership

Preemption of scarce assets

Exploiting buyer switching costs

Reaping increasing returns advantages.

first mover disadvantage:

High research and development expenses

Undeveloped supply and distribution channels

Immature enabling technologies and complements

Uncertainty of customer requirements

3. Strategies to Improve Timing Options:

To have more choices in its timing of entry, a firm needs to be able to develop the innovation early or quickly.

A firm with fast-cycle development processes can be both an early entrant, and can quickly refine its innovation in response to customer feedback.

In essence, a firm with very fast-cycle development processes can reap both first- and second-mover advantages.

4. Factors Influencing Optimal Timing of Entry

1.How certain are customer preferences?

•If customer needs are well understood, it is more feasible to enter the market earlier.

2. How much improvement does the innovation provide over previous solutions?

•An innovation that offers a dramatic improvement over previous generations will accrue more rapid customer acceptance.

3. Does the innovation require enabling technologies, and are these technologies sufficiently mature?

•If the innovation requires enabling technologies (such as long-lasting batteries for cell phones), the maturity of these technologies will influence optimal timing of entry.

4. Do complementary goods influence the value of the innovation, and are they sufficiently available?

•Not all innovations require complementary goods, but for those that do (e.g., games for video consoles), availability of complements will influence customer acceptance.

5. How high is the threat of competitive entry?

•If there are significant entry barriers, the may be less need to rush to market to build increasing returns ahead of others.

6. Are there increasing returns to adoption?

•If so, allowing competitors to get a head start can be very risky.

7. Can the firm withstand early losses?

•The first mover bears the bulk of R&D expenses and may endure a significant period without revenues; the earlier a firm enters, the more capital resources it may need.

8. Does the firm have resources to accelerate market acceptance?

•Firms with significant capital resources can invest in aggressive marketing and supplier and distributor development, increasing the rate of early adoption.

9. Is the firm’s reputation likely to reduce the uncertainty of customers, suppliers, and distributors?

•Innovations from well-respected firms may be adopted more rapidly, enabling earlier successful entry.