American Intercontinental University
Unit 3 Individual Project
MGT680 – Strategic Management
Project Type – Unit 3 Individual project
This paper will introduce the theories of the first mover and last mover movement in marketing. It will outline the advantages and disadvantages of each theory and examples of each and how it affects the use of the theory. It progresses with giving four examples of companies that that been successful and failed using the theories. It will conclude with an unbiased recommendation of which theory is more beneficial and effective to use.
Advantages and Disadvantages of the First Mover Theory
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The debate continues as to exactly how advantageous is being first on the market. As the internet star- up wave went around may high tech companies took the opportunity to be first movers, selling almost everything from groceries, pet food and even pharmaceuticals online. The main concern was just being first at the cost of providing underdeveloped or inferior products and even operating at a loss (Ya-De Wong, 2003). As a pioneer, being first allows them to move ahead in developing new technology and to stay ahead by staying the leader which inevitably makes it harder for the competition to catch up. Pioneers also get the advantage of choosing prime geographical locations to position their manufacturing plants or distribution centers in areas that provide access to transportation, labor and raw materials (Ya-De Wong, 2003).
In today/s market it is assumed that companies that lead the way will automatically have the advantage but unfortunately that may not be the case. Pioneers often suffer the overwhelmingly high costs which eventually affect sales and profits (Boulding & Christen, 2001). There is a higher cost that is attributed to research and marketing, especially within the electronic industry and even still, there are many areas that are unknown which make the first movers the testers. This may lead to many unknown factors in the market especially how external factors, like regulations, consumer trends and environmental factors may affect the sustainability of the products. Research has also shown that the return on investment over the long run is considerably lower for first movers rather than late movers. It was also shown that the profit margin were higher in the initial years as they maintained profits but as years progressed they lost their brand and marketing advantages as competitors entered the market (Boulding & Christen, 2001).
Many companies fail to realize that nothing is ever right the first time around and for a new product or service to become profitable it would demand the customer’s feedback to truly have the best understanding of what the market demands. Also being the first on the market means that the customers would have to be educated about the product or service and this takes time, effort and money. Eventually, depleting cash flow and time management reality would make it virtually impossible to stay a pioneer and be the first all the time (Bainbridge, 2013).
Advantages and Disadvantages of the Last Mover Theory
While being a first mover has its advantages of being a pioneer on the market with innovation, it is also and maybe more so advantageous to be a follower or an imitator. After a company has introduced a product or service on to the market it is much easier for a last mover to refine this product or service to meet the actual needs of the consumer by getting real feedback from users (Dahl, 2011). The process of benchmarking the last mover progress is easier because...