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Webinar: It Is Good To Be First To Market - True or False
- 1. James Graham It is Good to be First to Market; True or False?
- 2. Speaker Introduction 2 12 years management in multinational companies Consulting since 1993 Global Experience Change Specialist 12 years senior management in multinational companies Consulting since 1993 Global Experience Specialises in Strategy Formulation and Execution
- 3. Agenda 1 • Background and context – what is ‘First Mover Advantage?’ 2 • Case study – when first mover advantage was successful 3 • Case study – when first mover advantage was a failure 4 • Case study conclusions 5 • A framework to assess what position to take 6 • Q&A 3
- 4. Definition of First Mover Advantage “Competitive advantage arising from being the first player to enter a new market or industry” Quick Poll – “Do you think that being first to market is always an advantage” 4
- 5. Blue Oceans A Blue Ocean is a market without viable competition First mover advantage might create a Blue Ocean (e.g. Coca Cola® had 13 years without major competition) Blue Oceans can quickly become highly competitive Red Oceans, if the original firm cannot build barriers to new entrants 5
- 6. Case Study #1 – Coca Cola® Beverage Invented in 1886, by John S Pemberton Pepsi Cola® launched 12 years later Coca Cola® was selling over 3.5 million litres when Pepsi Cola® entered the market Coca Cola® brand valued at $79m in 2014 6
- 7. Cola Market Shares (USA) http://www.businessinsider.com/soda-wars-coca-cola-pepsi-history-infographic-2011-11?op=1&IR=T 42% 31% 27% Market Share Coca Cola® Pepsi Cola® Others 7
- 8. Why Did Coca Cola® Succeed? Product remains unchanged (New Coke® introduced and withdrawn) Pepsi Cola® beats Coca Cola® in a blind tests, due to sweeter recipe 13 years lead established brand built loyal customer base Brand perception is a differentiator – Pepsi Cola® has never beaten Coca Cola® to be #1 8
- 9. Case Study #2 – Sony DataDiscman® eBooks had been around for over a decade, but relied on desktop equipment DataDiscman® launched in1992, beating the Kindle® by 15 years It was well ahead of its time Used optical media and a grayscale screen Lead to Sony Librie® , launched 2004, first e-ink reader 9
- 10. Why Did Sony Fail? Sony focused on creating great technology The company used proprietary DRM This limited the number of titles available Users wanted to access a wide range of titles Sony never provided enough titles Amazon understood this and launched the Kindle® with a huge range of titles 10
- 11. Technology Velocity Market Velocity The Five Forces & Two Velocities Industry Competitors Potential Entrants Buyers Substitute Products Suppliers Adapted from Porter, M, 1985, Competitive Advantage: Creating & Sustaining Superior Performance , New York, Macmillan 11
- 12. Red Ocean Blue Ocean Entry and Exit Timing is Crucial Time Key Breakeven Revenues Make Profit & Withdraw Loss Making 12
- 13. Building Barriers Achieving (and maintaining) a technical edge Dominating scarce assets Building a loyal customer base 13
- 14. Examples of Building Barriers Volvo cars – safety advances De Beers – diamonds (sells ~ one third of all diamonds) Loyal customer base – Apple® 14
- 15. Four Routes to Competitive Advantage Route I •Understand the Key Success factors •Focus on differentiating functional capability Route III •Introduce aggressive new initiatives •Analyse and challenge existing assumptions to modify strategy Route II •Aim for relative superiority •Exploit competitor weakness Route IV •Exploit strategic degrees of freedom •Focus on maximising user benefit, by innovating in markets where no competition exists Adapted from Ohmae, K, Mind of the Strategist (The Art of Japanese Business), 1982, Maidenhead, McGraw Hill 15
- 16. High Serious Entry into Market Opportunistic position to test growth prospects; withdraw if indications of sustainable growth are lacking Selective Growth Select areas where strength can be maintained and concentrate investment in those areas All-out Struggle Concentrate entire effort on maintaining strength; if necessary, maintain profit structure by investment Medium Limited Expansion or Withdrawal Look for ways of achieving expansion without high risk; is unsuccessful, withdraw before too deeply involved Selective Expansion Concentrate investments and expand only in areas where profitability is good and risk is relatively low Maintenance of Superiority Build up ability to counter competition, avoiding large scale investment; emphasis profitability by raising productivity Low Loss Minimizing Prevent losses before they occur, by avoiding investment and lowering fixed costs; when loss is unavoidable, withdraw Overall Harvesting Promote switch from fixed to variable costs; emphasise profitability through Value Analysis and Value Engineering of variable costs Limited Harvesting Reduce degree of risk to a minimum, in several segments emphasis profit by protecting profitability even if loss of market position is involved Low Medium High Adapted from Ohmae, K, 1982, Mind of the Strategist (The Art of Japanese Business),, Maidenhead, McGraw Hill Corporate Strengths MarketAttractiveness Specimen Strategies 16
- 17. First Mover Advantage Assessment Likely If the product/service is stable and does not change quickly If the market requirement develops steadily If a sustainable blue ocean is probable If you can build and maintain a strong brand differentiation If you have the resources to develop your product Unlikely If the product/service is vulnerable to disruptive competition If the market develops rapidly If the blue ocean will quickly turn red If you lack the financial strength to build and defend the brand 17
- 18. Conclusions First mover advantage is not guaranteed • Being first to market may need a lot of financial strength • Sometimes the second or third to market wins • It is easy to create the market for others Understanding customer needs is paramount • Customers know what they want • Sometimes they don’t want the best technology, just the best product • The brand is crucial 18
- 20. Future Events with James Graham Dates Seminar Location 31 Jan-4 Feb 2016 Certificate in Data Analysis Skills Dubai 24-27 April 2016 Certificate in Strategic Thinking and Planning Dubai 24-27 July 2016 Analysing and Documenting Policies And Procedures Dubai 20