The Advantages of Late Movers

• Businesses can take many courses in competitive action. PM Images/Photodisc/Getty Images

  In the business world, companies can take three different approaches to competitive action. First, they can initiate the competition through innovations in products or marketing. These companies are called "first movers." Second movers are those companies that respond immediately to this competition, and late movers respond after the second movers. It is often thought that first movers have the best advantage, while late movers are the most disadvantaged. However, late movers do have some advantages.

Free Ride

• Late movers have the opportunity to take a "free ride" on the first mover investments. They can piggyback on the products already engineered by the first movers, and they can imitate strategies that the first movers have pioneered.

Market Certainty

• By the time the late mover enters the fray, the technological and market uncertainty has been resolved. Consumers are familiar with the product, and marketing and development teams have solid, tested data to determine the demand and response of the market.

Low Risk

• The first mover often has difficulty knowing how to predict and adapt to market changes. Late movers have the advantage of seeing what methods work in response to market changes, and they do not have to deal with the possibility of making a wrong move. They do not have to put up risky investment capital to test and market a brand-new product.