Business Rivalry: Why Second-Mover Strategy Is Better Than First-Mover

Business Rivalry

Who was the first person to land on the moon? You would certainly know his name, Neil Armstrong. Well, who was the second? Very few people would know that it was Buzz Aldrin. It is because the first one always creates a very dominant and towering impact that overshadows others. However, who faced more risk, more danger, and higher chances of fatality? It is always the first one, therefore, Neil Armstrong.

Business follows a very similar philosophy. The first mover might get some advantages but are always on the verge of dangerous risk and unknown pitfalls. In comparison, second movers can save them from those dangers by observing the first one. The first-mover acts as the laboratory experiment to understand market dynamics. The second mover does not need to perform any such experiments and can make better decisions without risking much.

There are numerous functional fields where new business players are entering every day. Some take the risk and enter into untapped territories of the business world. Sometimes it turns out to be a successful initiative and sometimes a disaster. Second movers can, therefore, observe prior attempts and carefully make their decisions. To further clarify, this article talks about four reasons why a second-mover strategy is better than a first-mover.


1.    Improved product/Service Offering

Developing the right market offering is the most crucial element of creating a solid business plan. And this is something that requires the collective efforts of expert marketers. Today, first-mover industry leaders mostly hire competent marketers and business professionals with a keen understanding of market dynamics. They look for business grads with online business masters programs credentials to develop exceptional market offerings alongside captivating marketing plans. The knowledge attained through online programs instills essential skills to develop strategies and tactics for creating a unique market value proposition.

However, it is not always that simple. Complex market dynamics sometimes ruin even the most well-planned value propositions. The target audience rejects your products/services, compelling you to go back to the blackboard and design a new market offering.

Surviving in the market becomes highly challenging, requiring costly and time-consuming strategies. Usually, first movers face these challenges. Second movers have a considerable advantage of observing them and incorporating improvements in their products/services before formally launching in the market. Google isn’t the pioneer of search engines but a clear industry leader. It had the second-mover advantage. It observed other search engines like Infoseek and Yahoo and developed an improved market offering that people accepted readily.

2.    Fewer Efforts on Customer Awareness

A customer will not develop trust and reliability in a product/service until they are aware of it. Therefore, companies spend millions of dollars each year just spreading awareness about their market offering. According to Statista, the global advertising expenditure will reach a whopping $650 billion by the end of this year. Second-mover companies can save themselves from such humongous marketing expenditure. They already get an audience who is informed and aware of a product/service category. The first mover has performed all those marketing efforts, and now they need to build upon it.

The second mover waits along the line, entering the market with something better, and capitalizes on existing customer awareness. IBM extensively invested in markets to educate people about the possibilities of the personal computer. They carried out comprehensive marketing campaigns and spent millions in spreading consumer awareness. Apple came out, capitalized on this consumer awareness, and portrayed its products as a viable substitute for IBM’s. They didn’t need to undertake the same marketing efforts to educate the consumer. Instead, they focused those efforts on positioning their market offering against IBM.

3.    Less Investment in Research and Development

Technology rules the business world. Every company is moving toward digitization and adopting technology in different business functions. According to Forbes, 70% of global companies have already undergone a digital transformation or are in the process. However, heavy research and development is a necessary prerequisite of any technological implementation or new technology development. First movers perform all these extensive research and development activities. According to Globe Newswire, the global R&D expenditure stood at a staggering $815 billion in 2020.

The second mover merely needs to sit on the sideline and wait for the right opportunity. They can save themselves from these hefty R&D expenditures. They need to wait till technology development reaches its optimization stage and gain acceptability in the market. Then it’s just about upgrading it or even creating something better. Careem and Airlift follow almost identical technological platforms like Uber. They didn’t need to develop the infrastructure from scratch because they had the second mover advantage. Similarly, Amazon and Alibaba are not the pioneer of online selling but have gained dominant market positions because they developed on existing infrastructure.

4.    Capitalizing on untapped market opportunities

First movers get so encapsulated with the mainstream market offerings that they tend to miss out on other easy and prolific opportunities. The second mover can observe them and identify those gaps. They can develop their market in those little areas that are easy and lack competition from big fish of the industry. It is only possible because they are moving second and have the window to observe and select.

Southwest Airlines entered the airline industry pretty late. However, they smartly identified an area in the market where no other market players were active. They focused their operational efficiency on short-haul flights. Now they are the second-largest airline company globally as per the number of passenger travels. They got to develop this competitive edge because of the second-mover advantage.

Final Thoughts

Business is all about being smart and cashing in on market opportunities. You won’t always have the financial muscle to initiate innovation. However, you can still benefit from it by appropriately devising your second-mover strategy. You need to observe the evolving market dynamics and make well-calibrated decisions. Then, you can enjoy every opportunity in the market without realizing the high costs. However, staying within the ethical boundary is crucial for long-term business success.

Arnold Bloom

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