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Question:Is the so-called "first-mover advantage" always an advantage?

Answer:Not necessarily. The first mover must educate a market about a product category. Often the second mover waits until the product category is properly educated, then jumps in. If the second mover has enough money -- which, of course it has saved by not educating the market -- it can often take away the market from the first mover. In addition, the first mover may have difficulty getting customers to properly categorize their product. For example, when combination phone/fax/printers came out, they might be categorized by customers as a phone – not a multifunction device. This is because they don’t have an established category for multifunction devices, so they just stick the new product in the phone category – and it thereby competes with phones.


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