The adage “the early bird gets the worm” plays true when it comes to first-mover advantage. A first-mover is a company that first breaks into a new market. Being the first company to provide a product or service can have long lasting benefits and competitive advantages for your startup. As a first-mover, you have the opportunity to gain huge profit margins and a monopoly-like status in the market due to lack of competition.
It does not automatically become an advantage without effort. You need to strategically capitalize on your position as the first business to offer a product or service so you can reap its benefits and reduce opportunities for second mover advantages. The guide below provides excellent marketing strategies startups can use to get the most out of occupying the first market segment in their niche.
1. Set up Barriers to Entry
Barriers to entry are obstacles that make it hard to enter a market. As a first-mover startup, you have the opportunity to manipulate market entry so as to make it hard for followers to enter the same business. You could acquire rights like patents, which gives you the legal entitlement to stop other companies from producing a similar product for a given period of time, thereby restricting entry into your market.
Barricading around your niche gives you the chance to establish yourself as the owner of the product, and when followers come in, you will already have the market monopoly and loyalty of your customers.
Another barrier to entry you could set up is exclusive agreements with suppliers where they will provide the raw material only for your company for a certain period of time while being your lifetime supplier or other related arrangements. Difficulty in acquiring raw materials for production will delay follower entrance into your market and give you time to solidify your company’s position.
2. Take Advantage of Your Control of Resources
Being the first to enter a market, you have the ability to control resources necessary for the business. For example, if you are starting a new type of restaurant, you have the opportunity to pick the best location where customers can have easy access. Because the idea is exclusive to your company, you might also want to invest in manufacturing your own supplies or raw materials needed for your products. Then, you’ll have the ability to control prices and availability should other businesses decide to start a similar business and need the same materials.
3. Capitalize Momentum
When launching a new product in a new market where consumers are always looking for the “latest” products, it is easy to gain buzz and hype. Since you’ve just released your product, make sure everyone hears about it. Allot money into marketing so you can attract your target consumers, and it’s also imperative to tailor your advertisement according to their interests and demographics for a more personal touch.
You should use both traditional and online advertising. There are lot of ways potential customers can notice your brand and products. Invest in powerful public relations, social media marketing, or you could even do demos or send out your products to society influencers for reviews. Once people get to know how useful your goods or services are, they are bound to talk more about it and word-of-mouth advertising can help your business to grow more.
4. Contracts and Memberships
Depending on your products or services, you can also set up contracts and membership opportunities for customers to enjoy benefits and rewards. These perks not only keep the market bound to your product for a time because of the contract, it also gives them a sense of loyalty and appreciation because of the rewards and discounts they enjoy as subscribers.
Once you win your customers’ loyalty and become their preferred brand, especially because of the good customer service they receive, it becomes difficult for followers to challenge you and take your share of the market.
5. Set Mechanism for Bulk Buying
When launching your product, offer packages that allow customers to buy your product in bulk. This will encourage dependency and acquaintance with the product after a long time of use; and since consumers are more likely to go for brands they are well acquainted with, they are likely to purchase your product again when they need to restock.
6. Maintain Your Position at the Top
Once you have established yourself as the original and premium provider of a particular product or service, put efforts into staying at the top. Keep innovating and inventing new and improved versions of your product or service as people will see you care for them by being up-to-date.
Continuously marketing your business and its innovations can help engraving your brand into the minds of people. Also, taking advantage of your customers’ loyalty and acquaintance to the brand will turn your business into a household name. Furthermore, develop a reward system for longtime customers so they will stay and convert other customers to buy from you.
There are risks in being a first-mover company, but always remember that it has a high earning potential when you know how to take advantage of the opportunities it presents. A lot of first-mover companies—like Coca-Cola, which was the first to introduce cola flavored soft drink; and, EBay, the first to implement an active online consumer auction process—have obviously made huge successes in maximizing the first-mover advantage, and they are still at the top of their niche now.
Imitating the same efforts and making the most out of the advantages outlined above could lead your business experiencing the same success, too.