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    Product Development: First-mover or Late-mover Theory

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    The managers of your company are deciding whether to develop a brand new product not yet seen in the marketplace or a version of a competitor's product that has already been launched into the marketplace.

    Management has called a meeting to discuss which way to go. They want to know if they should follow the "first-mover" or "late-mover" theory. You have been assigned the task to develop a presentation for this meeting that will give evidence that either supports or disagrees with these theories. You may use the Cybrary or other Web resources to find more information on these terms as well as examples to support your position.

    In the speaker's notes of the PowerPoint slides, elaborate on the bullet points you placed in your presentation and provide information to support your claim.

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    Solution Preview

    Please see response attached for better formatting, which is also presented below. I hope this helps and take care.


    First or Late Mover Advantage in e-Business
    Pros and Cons
    Using Real-Life Examples

    n The First Mover Strategy
    n The EC Marketplace
    - Characteristics
    - Importance of the Domain Name
    n First Mover Advantages in EC
    - First Mover Success - Amazon
    - First Mover Failure - Netscape
    n The Late Mover Strategy
    n Late Mover Advantages in EC
    - Late Mover Success - Google
    n Late Mover Disadvantages in EC
    - Late Mover failure - Barnes & Noble
    n Conclusions

    First Mover Advantage

    Does the early bird get the worm?

    Definition: When the firm that enters the market first achieves a sustainable advantage compared to subsequent followers

    Most research has been done with brick and mortar firms.

    Example: The Cola Wars

    Coca-cola: launched in 1886; leading world manufacturer and distributor of non-alcoholic beverages; first to launch international campaign in the 1950s

    Pepsi: launched in 1898; had gone bankrupt in 1923; 1972 - was first Western product available to consumers in Russia where it achieved first-mover advantage and maintains it today over Coke (6:1)

    Worldwide market shares:
    - Coke 43.1% Pepsi 31.7%
    - Product innovation

    Differing Views
    First movers or pioneering firms enjoy higher market share from substantial sales advantages such as economies of scale, being first to secure scarce resources, etc.
    - First movers may achieve advantages by 'setting the standard' by which the offering, and subsequent offerings are judged by consumers
    - The pioneer must continually innovate

    Differing Views
    n BUT...the current business environment is highly competitive, unstable economically, and changing rapidly - studies have demonstrated a negative correlation between order of market entry and market share

    The E-Commerce Marketplace
    n The EC market has altered market dynamics
    n Major sustainable competitive advantages are ...

    Solution Summary

    The solution explains whether to develop a brand new product not yet seen in the marketplace or a version of a competitor's product that has already been launched into the marketplace e.g., "first-mover" or "late-mover" theory.