Topic: Strategy

First-to-market Advantage: Innovation Leadeship

Posted by Anonymous on 500 Points
I welcome your thoughts and additional aspects of consideration on the topic of being first-to-market.

These are the initial questions that came to mind:

(A) What percentage of a product portfolio is pursued as first-to-market in best-practice companies that solidly own the leadership position in innovation?

(B) What typically comes to a company that pushes itself to produce first-to-market products & services?

(C) Are there general rules of percentage gain for:
- earned market share %?
- price tolerance/margin gains?
- brand equity gains?

(D) What are advantages and disadvantages of being consistently first-to-market?

Brief Background:

We're in the thick of strategic planning and at the point of defining our market position goals.

To date the company has not been marketing focused so while there have been many first-to-market products and services, they've not been specifically identified as such.

Looking for guidelines to take into the next planning session to give the group an idea of what first-to-market means in terms of performance impacts - good and bad.

I could go into all the detail of how we're planning to move from where we are to where we're going but it's a bit much for the Forum space - I'll certainly not whinge at any pointers that come out in your responses - always a good cross-reference to make sure we've covered our bases.

As always - appreciate your professional insights and knowledge sharing.

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  • Posted by koen.h.pauwels on Accepted
    Great questions, Nancy! Let me summarize what is publicly (i.e. academically) known about first-to-market (aka pioneering) advantage (your questions B-D):
    1) earlier (<80s) studies found very strong and consistent pioneering advantages, but this was mostly due to 'survivor bias' (i.e. they considered pioneers that stayed in the market for years, not the ones that failed early on – do you remember the PDAs before Palm Pilot?)
    2) later studies found that pioneers often do not have an absolute advantage, but do obtain much better effectiveness of their marketing efforts due to higher awareness and the fact that consumer ideas (preferences, attribute importance weights) about the category have formed around the pioneering product - so followers have to offer better scores on these attributes and overcome customer switching costs
    3) evidently, being first to market also entails important risks, including less accurate consumer information than that available to followers

    The benefits of pioneering advantage are discussed in

    A good article on benefits of the alternative strategy of entering in the growth stage:

    Hope this helps, and am looking forward to other expert's reflections on the good, the bad and the ugly of aiming for first-to-market
  • Posted on Author
    Thanks for your response.

    In terms of averages or anticipated activity, do you know of any general rules regarding gains that can be expected in price/margin or market share?

    Any chance you can apply the links again - they came up with error messages.

    Appreciate your help.
  • Posted by CarolBlaha on Accepted
    This is a great article I often reference regarding "colonizers vs consolidators".

    Sell Well and Prosper tm
  • Posted on Author
    Awesome - there's some great stuff there for me to use to get this group of non-Marketers into the groovy world of owning a position and understanding the inherent ups & downs of those positions. Thanks!
  • Posted on Author
    Thanks for your response.

    I googled Hendry Theory and found mostly abstracts and a few reference articles, none of which provided a fuller picture of the information above.

    It would be a great help if you would you be so kind as to provide more detail about the numbers you have provided above.

    Thanks in advance.
  • Posted by mgoodman on Accepted
    Just a gut reaction, not a result of any real research:

    The first-to-market advantage is a mixed bag, more related to how novel the product/service is, how big the consumer/customer need, and how effectively the product is marketed. Any real research on this will likely be a useless average or anecdotal.

    I would suspect that the way a first-to-market product is positioned at introduction is the most important single variable most of the time.

    If it's positioned as the "first-ever electric widget" then it will be seen that way and the "second-ever electric widget" will be all but invisible -- unless that second-in product is positioned as the "first-ever-electric-widget with frabbles on it."

    If the "first-ever" product is simply introduced into the market without a "first-ever" positioning, then the first-to-market advantage is largely irrelevant, and a better second-to-market can easily gain market leadership.

    Interesting question, and this is just my gut reaction. I'll be interested to see if others see things the same way.
  • Posted on Author
    I like the examples!

    Those points are great conversation starters for us: Do we have a technological advantage that precludes immediate competition? are we merely providing a launch pad for them to leap-frog us? are we ready to clearly mark our territory and defend it consistently?

    Thanks for the brain starter!

  • Posted by mgoodman on Accepted
    FWIW, very often in positioning projects we challenge clients to tell us why their product is the FIRST, BEST or ONLY product that delivers some important benefit for the target audience.

    Sometime that's a real struggle, because they keep saying "We weren't first, we're not technically the best, and we're certainly not the only one out there."

    So then we ask why anyone would prefer their product, and we get a long list of unique product features or other offering elements (e.g., guarantees, delivery advantages, tech support, etc).

    Then we ask them if they're the first ones to offer that kind of tech support (or whatever), and they say they are. When you restate that as a benefit ("... have confidence that the product will work as it should, or the manufacturer will make sure it does"), suddenly you ARE the first, best and only one to deliver THAT benefit.

    It sounds like you need some of that kind of thinking in your organization. Yours is a neat challenge, and you have an opportunity to really make a big difference by leading this horse to water.

    Good luck.
  • Posted by steven.alker on Accepted
    Dear Nancy

    Firstly the Hendry reference – I fail to see the relevance or even the origin of blanalytics references or to what they pertain. Hendry’s original paper on first steppers in a market was an abstruse 1980 work on amongst other things the role of entropy in the marketing process. I’ve obviously missed something here!

    Koen’s second reference is:

    Naa! Sod it, the forum won't let the URL come out unmolested, so just cut and paste the whole of the original reference including the bits that didn’t get hyperlinked. His first reference, from Wiley is available only on subscription or by getting Wiley to send an enabling cookie. The second has some interesting insights into the relative advantages and disadvantages of being a thought leader as well as first into the market with an innovative product.

    Broadly, from where I stand, the advantage of being first is that if you have a fist class idea based on sound market research and some solid basis of intellectual copyright protection, for a period of time, you can capture the available market. But that is only the market you can reach and reach is a real problem for a product or service which the world knows nothing about.

    To alert potential purchasers, you have to expend enormous expenditure and time on promoting something, which until the moment of reading your blurb, no-one would have had even an inkling that they might be interested in it!

    Pre-launch marketing is therefore educational and informational, with a goal of winning over large-scale media interest so that the product is widely reported.

    The second stage is to promote it having set up channels of distribution, educated sales people, re-sellers and general distribution and advertised or promoted the product in a way which brings in sales enquiries, rather than just expressions of “gee-whiz”

    The third stage is to satisfy demand from a basis of never having done this before with this particular product. Doing this without under or oversupply is a difficult balancing act and one where meticulous planning is required rather than some esoteric adherence to some hypothetical model of how a new product might work in the market. Once the enquiries start to come in, depending on the sales channel, volume and value of the product, your challenge will be to accurately forecast the demand and to meet it. This might be based on looking at the forecasts from individuals and channel-organisations or if it is a mass market product, a mixture of these and some metrics from the marketing activities and whatever “big-maths” econometrics might apply.

    The forth stage is to be able to offer the appropriate level of customer service, from getting people up and working with your new product through top satisfying those who have a duff item or have misunderstood what they were buying. Failure to do this properly will wipe out whatever benefits you accrued from the first 3 stages!

    Lastly, unless you are protected by watertight patents and copyright, then the opposition will look at your launch, examine your success, note you failures and promptly produce a me-to product to capture their own share of the new market which you have created. The only way you can defeat this is by being utterly successful in the first stages, build up a brand value, learn from any mistakes and evolve the product such that by the time the me-too items come out, they look like last years good idea.

    I speak from a little experience on the latter issue. In the 1980’s an instrumentation company which wasn’t even a competitor (It operated in a field of measurements and applications which we didn’t touch) was staggeringly successful with a thing called a combustion analyser. We looked at what they did and tested the market with a factored American product. Having listened to the success and failure stories of our sales teams, we noted all the failings of the original market entrants and designed something which overcame them. We avoided all their patents by careful adherence to the design and launched our product into a market which was half educated to the concept and slightly fed up with the product failures of the market leader.

    We never said that we were better, or more reliable, just different and let the test of time speak for reliability. Most importantly, we put the product into the hands of 15 UK sales people and 30 international business partners. 2 years later we were world leaders in portable combustion analysis products and the originator of the concept was putting itself up for sale.

    Being first can be a winner, but it is a perilous place to be!

    Steve Alker
    Sales Vision
  • Posted on Author
    Thank you for the information and for relating your experiences. Very helpful -

    The reframing exercise will be an interesting one for this group. We'll see how far we can move along the continuum from completely sales focused to becoming marketing savvy and getting the true value of our products and services.

    Appreciate the insights and your expertise.

  • Posted by steven.alker on Member
    Hi there McDonnellhorses

    My name is Gabby and as I’m a young person with a horse already maybe I can give you some ideas which would appeal to young people. I guess you want to attract people who are really interested in learning to ride and learning how to enjoy it, rather than children who don’t give a monkeys or who might not really care about horses and riding!

    There are two really fun aspects to riding. On is learning not to fall of the horse (!!!) whilst still enjoying yourself and the other consist of things like grooming and looking after ponies. I know a lot of girls who would spend all day looking after horses if they could, but they are not very good at riding.

    Lots of people here have said that it is a safe thing to do. Well, it can be, but if children are going to learn to ride and if they are going to enjoy themselves, there are risks like falling off and ending up in the poo! Riders should wear body protectors and hard hats, but that’s all part of the fun and the image. Sometimes it’s the image which gets children into riding and they learn to enjoy the bumpy, bottom hurting bits later!

    Quite often, children think that riding is as easy as sitting on a horse but I can tell you that it is not. That’s half the fun, the difficulty. To become any good there are lots of things to master, but learning to do them should be fun. When you are five feet off the ground on something weighing a ton and it has no way of stopping apart from you and your reins, it’s quite scary.

    I think that’s the difficult thing to get over. Horse riding isn’t a fairground ride – it’s more exciting than that and once someone has overcome their fears or the idea that they won’t like it, it is really, really fun. One way to get this over in your open day is to have lots and lots of young riders around who are enthusiastic about their riding. Get them to show new kids how to mount, to tell them good things in the saddle and to let the visors try the most exciting things possible without letting anyone get hurt. And have them show visitors how to groom a horse. Most girls and loads of boys secretly wish to get the chance to groom a fine pony.

    Don’t con anyone and that’s children and parents. Horse riding is great, great fun and it is exciting, but its such a lot of fun because there are some risks involved. The newcomers won’t be exposed to many of these, but they shouldn’t be given the idea that horse riding is without its spills and dangers!! Sometimes, controlling the danger and getting on top of fear is one of the biggest thrills.

    I hope you have a good day

    Gabriella Alker (Age 13)

  • Posted by steven.alker on Member
    whoops, wrong answer to wrong question!
  • Posted on Author
    Hi Gabriella,

    Thank you for your response - I see it was meant to go to a different question, but I thoroughly enjoyed reading it.

    It's great to see you have such passion about your interest! Horses are fantastic animals and I think you've captured the essence of the interaction between the rider and the horse: They are big and powerful and it is by grace alone that they allow a rider any sense of control - it's really quite wonderful. And you've captured the real joy - the simple things like grooming a pony (one of my favourites is having them take oats from the palm of your hand - the muzzle is so soft and so gentle).

    Thanks again for your response (P.S. Your Dad got points for your good writing!)

    Wishing you much continued enjoyment of all things equine.

    Happy riding,

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