"First to market" is a term used to describe companies that gain early market share for a new product or product category. When a product is introduced, there is usually an absence of well-known competition. Companies that wish to establish themselves as market leaders, gain brand name recognition and maintain long-term market share may pursue this type of strategy. Large, established companies sometimes develop and introduce new products in order to remain competitive and appeal to consumers who value innovation.
Companies that employ a "first to market" strategy may be the first to sell a product or be the first to gain significant market share in the product's category. For example, a global market leader in consumer beverages was the first company to introduce cola-flavored soft drinks. Some companies have become leaders by introducing products before high levels of competitor activity existed in certain product categories, such as snack foods. Even though a company may have not been the first to produce and sell potato chips, its particular brand might have gained the largest early following.
For some companies, a "first to market" advantage is the ability to establish brand name recognition and loyalty. By placing a new product on the market before there are a large number of competitors, companies can maximize the number of potential consumers who try, use, and adopt the product. In some cases, the product category becomes associated with the brand name of the market leader's product. When consumers think of or refer to the product, they call it by the market leader's name regardless of whether they purchase its brand.
Get startedWikibuy compensates us when you install Wikibuy using the links we provided.
The "first to market" strategy can help companies maintain long-term market share. Several developers of new products have long-term market shares that outpace the shares of their competitors. While this is not guaranteed to happen, the bulk of consumers tend to stick with one or two brands that they become familiar with. By being the only available option during the product's introduction stage, consumers are more likely to develop a preference for the brand they have more experience with.
Disadvantages associated with a "first to market" strategy include high development costs and the risk of being imitated by competitors that can deliver more value. In some ways, companies that introduce new products open up opportunities for other organizations to steal market share by producing lower-priced imitations. Market leaders also bear the burden and costs associated with creating awareness about their new products and convincing consumers to try them.