Unit 3 Individual Project

Unit 3 Individual Project
The development of a new product always raises a number of problems and challenges. In this respect, the most important question any company should answer before launching a new product is whether the company is going to introduce a brand new product or probably the company is going to introduce a version of an existing product. Companies introducing original, innovative products are first-movers, whereas companies introducing products that already exist and that represent a version of a competitive product are late-movers. As the matter of fact both first-movers and late-movers have their own advantages and disadvantages and, today, it is possible to name a lot of examples of successful first-movers and late-movers as well as a number of failures of both first-movers and late-movers. This means that the overall success of the product being introduced depends not on the theory itself, either first-mover or late-mover, but on the development and introduction of the product itself and the position and potential of the company introducing the product.
Advantages and disadvantages of each theory
First of all, it is important to dwell upon the major advantages of first-movers theory. In fact, it is possible to single out the following advantages of first-movers: innovative product, first in the market, monopolistic position, technological advantage over rivals. Innovative products always put companies in an advantageous position because they attract consumers and, if they prove to be able to gain the public approval, products become popular and first-movers succeed. In addition, first-movers hold the first position in the market, i.e. they are leaders in the market and they set the pace of the technology and market development. Moreover, when competitors have not developed alternative or competitive products, first-movers hold the monopolistic position and they can maximize their revenues as long as the demand persists and there are no or few rivals. At the same time, first-timers normally maintain the technological advantage over their rivals because they were first and they can develop the product and introduce innovations faster than rivals, which are late-movers.
On the other hand, first-movers may have substantial disadvantages. It is possible to mention the following disadvantages of first-movers: the lack of confidence from the part of consumers, need substantial resources for promotional campaign, lack of financial resources, possible technical problems. The lack of confidence in the new product from the part of consumers is probably the greatest challenge and major disadvantage of first-movers because the company needs to gain the consumers’ approval of the new product to succeed. At the same time, the development and introduction of the new product needs substantial financial resources because the company needs to spend financial resources on the development and testing of the product and further promotion of the product to attract customers. By the way, the promotional campaign for a brand new product needs substantially larger financial resources compared to late-timers. In such a situation, the risk of the emergence of some technical problems in the brand new product persists that means that the new product may be not reliable and, thus, fail in the market.
As for advantages of late-movers, it is possible to name the following: popular products or technologies, consumer confidence, reliable technologies, demand on products or services. In fact, the product is already popular and consumers are confident in it. Therefore, the company just needs to offer an alternative and conduct an effective promotional campaign. Moreover, technologies used to manufacture the product are reliable and demand is stable.
As for disadvantages of late-movers, it is worth mentioning the following: possible backwardness of technologies compared to first-movers, high competition, small market share, lack of brand’s popularity. Late-movers are always behind first-movers technologically. The competition in the market is already high and the company can count only for a small market share at the beginning. Moreover, the company needs to gain the popularity to attract consumers to the product.


At the same time, there are a lot of examples of successful first-movers: IBM, Microsoft, De Beers, iPod. These companies and products proved to be first-movers and they took the monopolistic position in the market, whereas some of them maintain still the dominant position in the market. On the other hand, there are failed first-movers, such as: Fitch’s shampoo, Chux disposable diapers, Reychler laundry detergent, Bright Star batteries. In actuality, the public can hardly remember these first-movers, which failed and their products proved to be a total failure.
Late-movers can also be successful. In this regard, it is worth mentioning the following successful late-movers: Nintendo, Palm Plot PDA, Amazon.com Charles Stack Online Bookstore, JVC’s VHS. The aforementioned companies introduced products that already existed in the market and they outpaced first-movers, which failed. Among failed late-movers it is possible to single out the following: Atari, Apple’s Newton PDA, Sony’s Betamax. These companies and products failed because they proved to be unable to maintain the competition.


In such a context, it is possible to recommend choosing between first-movers and late-movers depending on the goals and potential of the company. First-movers theory should be applied when the company is confident in the success of the product and when the product can substitute the existing products or create a strong and stable demand. The company may have limited financial resources and take full advantage of its monopolistic position at first. Late-movers theory should be applied when the company is ready for a competitive struggle and can use substantial resources to gain its market share. Therefore, companies relying heavily on innovations can become first-movers and succeed, whereas companies, which have already reached a substantial success, can implement late-movers theory.


Thus, it proves beyond a doubt that both first-movers and late-movers theories have their advantages and disadvantages and they have examples of successes and failures. In such a situation, the company should decide whether it is ready to take a risk and start developing a brand new product to reach a tremendous success and high return on investments or, probably, the company prefers lower return on investments but a stable demand on the product being introduced.


Davila, T. Epstein, M., Shelton, R. (2006). Making innovation work; how to manage it, measure it, and profit from it. Wharton School Publishing, New Jersey.
Schneiderman, R. Technology Lost: Hype and Reality in the Digital Age. New York: Touchstone, 2002.
Tenner, Edward. Why Things Bite Back. New York: Random House, 2005.

Unit 3 Individual Project 8.1 of 10 on the basis of 4322 Review.