According to Wikipedia, “in marketing strategy, first-mover advantage is the advantage gained by being the initial significant occupant of a market segment”. The first entrant often gains a competitive advantage and can be rewarded with exceptional profit margins and a monopoly-like status.
However, not all first-movers are rewarded if the first-mover does not capitalize on its advantage.
For example, consider Tesla. The company was definitely a first-mover with the development, manufacture and marketing of a really cool, fully electric vehicle (EV), the Model S. Now Tesla is in the throws of attempting to capitalize on its success with the model S by seeking to bring to market a much more affordable, but still exciting new vehicle, the Model 3. At this writing, the jury is still out on the Model 3, and others, with far greater resources and manufacturing experience, are actively seeking to bring a wide range of EVs to market.
This is an important concept for investors that resonates far beyond Tesla. In the modern world, you have to be very nimble to stay ahead of prospective competitors.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA