Market Movers Study Notes

Market Movers & Edge Lecture Notes The Business Book Market Movers First-mover advantage can lead to market leadership Amazon and Google as examples of market pioneers Benefits of being first or better in the market First-mover advantage explained by Montgomery and Lieberman Importance of being first or better in a rapidly changing market GAINING AN EDGE First-movers have the potential to become market leaders Risk of failure is high in dynamic markets with technological innovation Later entrants benefit from entering a recognized market Avoiding mistakes and benefiting in rapidly changing markets Key to gaining an edge: be first or be better in the market. First-mover advantage in the dot-com era Businesses rushed into new online markets inspired by Amazon's success. Being first was believed to establish brand dominance and create barriers for competitors. However, many companies failed due to overspending and entering markets with low demand. Advantages of being a first-mover Premium prices, significant market share, and strong brand association. Time to perfect processes, accumulate market knowledge, and secure advantageous resources. Ability to build switching costs into products, making it hard for customers to switch to rivals. Market strategies of Amazon.com Amazon capitalized on the emerging e-commerce market by offering easy online purchasing. Adapted quickly, added features like OneClick ordering, and built efficient distribution systems. Maintained customer trust and loyalty, leading to a significant market share in online retail. First-Mover Failures Examples of first-movers failing to maintain a competitive advantage: Friends Reunited, MySpace, eToys.com, and boo.com. eToys.com declared bankruptcy in 2001 despite being an early online retailer. boo.com had technological superiority but failed due to being ahead of its time. Despite the allure of first-mover advantage, success is not guaranteed in the market. Timing is Everything The success of being a first-mover depends on timing and luck. Market speed and technological innovation play crucial roles in determining the advantage of being a first-mover. A 2012 study showed that 65% of users delete apps within 90 days of installation, indicating the uncertainty of success in the app market. Apple's First-Mover Disadvantage Apple's Lisa, the first computer with a Graphical User Interface (GUI), was a commercial failure. Commodore's fast-follower GUI computer yielded a shareholder return of 80%, surpassing Apple's offering.