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Second Mover Advantage: What Makes Apple So Successful

6/1/2015 Anant Goel

It can be summed up in three simple sentences…

  • Second Mover Significant Advantage

  • Stand Out by keeping it Simple

  • Superb quality in products and services

It is not necessary to be the first to market; you can be the second or even third and stand out from the crowd and be a market leader.

Remember…

MySpace hit the web before Facebook. AOL gave us e-mail before Google or Yahoo. The Walkman preceded the iPod. But who's standing now? In fact, "I don't think I can name a first-mover who is a market leader." Indeed, while some dominant first-movers--such as FedEx, which essentially invented overnight delivery and still rules the roost today--can be found. However, many prominent companies came second or even much later and dominate their markets. Southwest, for instance, wasn't the first airline; Google wasn't the first search engine; and Starbucks wasn't the first coffee shop by a long shot.

Second-mover firms are sometimes called "fast followers".

Obviously, every market is different. Thus, while some markets may highly reward first-movers, others may not. Second-mover advantage can be summarized by the adage: "The second mouse gets the cheese."

Example Second-mover Advantage: Amazon.com

Many people are familiar with the company which is America’s largest online retailer. In 1994, Jeff Bezos founded Amazon as an online bookstore and launched the site in 1995. Unbeknownst to many, is that books.com, was founded in 1991 and launched online in 1992… and it is considered to be the very first online bookstore. However, once Bezos decided to launch the largest online bookstore, he began advertising on over 28,000 other internet sites and has since dominated the business. Amazon experienced what is known as a second-mover advantage as a “fast follower”.

So, even if your start-up [or a new consumer product] wasn't first on the scene, the right messaging and its simplicity can help you dominate your market and become ubiquitous.

Second-Mover Advantage

In industry after industry, entrepreneur after entrepreneur is saying the same thing: Being first can surely be an advantage, but so can being second. Those who follow a market leader can actually be more successful in most cases, says Anne Marie Knott, an associate professor of strategy at Washington University in St. Louis,

Perhaps the biggest plus of being second to market is that entrepreneurs can avoid first-mover mistakes. Anant Goel, CEO at LeRumba.com, likes to quote Franklin D. Roosevelt: "I think we consider too much the good luck of the early bird and not enough the bad luck of the early worm." Goel says, “Letting someone else go first gives the entrepreneur an invaluable opportunity to see where the mines really lie and what the Canary finds in the mine shaft.”

Second Mover Significant Advantage

Another significant advantage to being second is the benefit of piggybacking on the pioneer's development spending. Second-mover advantages can come from leveraging first-mover investments in researching technology, refining products, developing markets, sourcing materials and even lobbying for regulatory changes.

And being second can be especially cost-effective internationally. "There are huge start-up costs for going into a country, understanding that country and getting reliable sources of information.” In some countries, including China, market research is actually illegal. One of the only ways to gather advance information about those kinds of markets is to watch while someone else goes first.

Second Mover Second Chances

Of course, entrepreneurs who follow the market leader do face some significant disadvantages in smaller markets… and not so much in global markets. For example, one disadvantage arises when the first-mover has already locked up critical resources. These resources may include patents, technologies, standards, locations, regulatory relationships and brand loyalties.

Very small markets can also be unfriendly to second movers. When Wal-Mart enters a small town, very little un-served demand may remain for latecomers. High switching costs, found when customers must jump financial or other hurdles before moving to a new supplier, can also factor in. For example, Microsoft's legion of customers face daunting learning curves when considering alternatives such as Apple or Linux. Network effects also block second-movers by making products and services more valuable as more people use them. In that sense, having far more users than other online auctioneers is one factor keeping eBay atop its heap.

"The unfortunate truth of the matter is that sometimes the best product doesn't win." "No matter how much better you create your product, some first-timers have already captured consumers through brand awareness and distribution. And people are sometimes hesitant to change their habits when something is tried and true."

But it's not enough to just be second. Second-movers must take the right steps; a later offering can resemble a first offering, for example, but it still must be different. "You copy with a twist," Goel says. “That may be in packaging, pricing, features or any other component.”

There are fewer and fewer truly original ideas. It's almost a requirement for entrepreneurs to contemplate being second to someone. But that's OK if you can take a practical view and not just be some trend tag-along or copycats… that are just lame. For example, nobody needs two dozen iterations of LED base DLP pico projectors that are dim, need focus, and burn a hole in your shirt pocket.

Really!!! Imagine what's next? Twitter for pets?

But even if your smart business idea is part "me too," it doesn't have to sound like one… well, like one of those. It all comes down to messaging and the simplicity of that message.

You should be able to clearly explain the following about your company [or your product] within 10 seconds…

  • Who you are?
  • What you do?
  • Why you're different?
  • Why should we care?

Don't think that can be done with a concise yet effective message?

Look at these…

Forkly: "Share your tastes and discover new ones. Eat, drink and rate."

Pinterest: "Organize and share all the beautiful things you find on the web."

Those statements don't only hit on need and function; they also create an emotional trigger. They're uniquely designed to hit the triggers of their target demographics (food and drink lovers, fans of visual organization).

As you work on your own messaging, don't settle for second-best or copycat tactics. Ditch the buzz speak and all the tired, overused words that people don't even hear. Instead, look to the messaging of a company like Facebook, a social media network with over 1.44 billion active users: Facebook's mission is to give people the power to share and make the world more open and connected.

Not a single buzzword. Plain English that makes you want to learn more.

No, Facebook is not the first social network or advertising & promotions platform on the planet, but they didn't sell themselves short with words. More important, they chose not to waste anyone's time by making it hard to figure out the gist of what they [Tweeter] do.

So remember two things on your journey when you are a second mover and want to go from no name to ubiquitous: First, it's unlikely that anybody will want to use your product unless they understand what it does--and simple language is the best way to get them there. Second, inject superb quality in your product and launch kick-ass iterations to keep your revenues moving forward, but never imitate. Rather, emulate, taking the best of the past and present to show us a better future… like Apple does.

[Curated content based on excerpts from posts, blogs, media articles, and sponsored research]
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