Late Mover Essay ⋆ Business Essay Examples ⋆ EssayEmpire

Also called a late follower or a later market entrant, a late mover is a firm that enters a market sometime after both the market pioneer(s) and after early follower firms. While there are no set guidelines in terms of the passage of chronological time that clearly differentiate late movers from early movers, it is generally acknowledged that late-mover firms enter markets characterized by significant numbers of existing competitors and, as such, the markets are often relatively mature in terms of growth rate. Kodak, for example, was labeled a very late mover in the inkjet printer market when the company decided to enter this market with its own brand of inkjet printer many years after numerous other firms had established strong footholds in the market. Similarly, the CocaCola Company, with its Dasani brand of bottled water, entered the bottled water market quite late in terms of its earlier high growth but nevertheless has found such a timing strategy to be profitable for the firm and a valuable complement to the firm’s portfolio of beverage products.

Given that market timing is an important element in firms’ marketing strategies—since firms seek to make the most of their limited resources in relation to perceived market opportunities—late movers must often be concerned with being “too late” to market, which can reduce the opportunity available to the firm, as opposed to being “too early” to market, which can waste a firm’s resources. The firm that either implicitly or explicitly pursues this particular type of market-follower strategy (where the other type of follower strategy is to be an early follower—entering the market soon after the market pioneer or pioneers) ultimately seeks opportunities to pursue and exploit some form of follower advantage. Specifically, this is typically where the firm’s entry strategy enables it to obtain greater economic or behavioral benefits in comparison to those achievable by pioneering firms and earlier follower firms, such as lower-cost product development (as a result of evaluations of the pioneer’s new product) or more-effective product positioning (as a result of learning from the pioneer’s marketing mistakes).

At the same time, however, late movers must be sensitive to order-of-entry effects, where there are effects on marketing performance that are directly attributable to the sequence of entry of a firm into a market relative to that of competitors. For example, research on frequently purchased consumer goods has found that, as a firm’s order-of-entry increases (e.g., the later it enters in relation to competitors), market share, probability of consumer trial, and probability of repeat purchase by the consumer are all observed to decrease.

Given the pros and cons of late following, it is not surprising then that research on follower firms indicates there are both late-mover success stories and stories of failure. Where late movers have been successful, characteristics of the market have often included that the market demand “explodes” around the same time as the late mover enters the market— suggesting that earlier firms, including the pioneers, were ultimately too early to market and/or that there is a technological change or development in the market that enables the late mover to capitalize on the change and introduce an innovative product rather than a me-too or imitation product.

On the other hand, where late movers have failed, there may have been any number of circumstances faced by such firms, such as being up against strong incumbents who, individually or collectively, have depleted the potential market to a point where it is not economically viable for a new entrant to enter. Alternatively, there may be psychological factors at work, such as where the market pioneer has become synonymous with the product category. Still other reasons include that one or more incumbent firms may have found ways to lock in existing customers to such an extent as to make the economic switching costs sufficiently high that they discourage customers from considering switching to the product of a new entrant.

The implication of such findings for late movers is that there are a great many risks associated with later market entry. There may or may not be profitable opportunities to enter a market depending on the characteristics of the market and the firms seeking to exploit them and, as such, it is critical that firms considering such a timing strategy evaluate the circumstances on an ongoing basis. For firms already in the market, there are also implications; such firms should be vigilant for openings in the market that may be profitably exploited by late movers who, by choice or circumstance, ultimately enter markets when such entries may be least expected.

Bibliography:

Scott G. Dacko, The Advanced Dictionary of Marketing: Putting Theory to Use (Oxford University Press, 2008);
Zachary Finney, Jason B. Lueg, and Noel D. Campbell, “Market Pioneers, Late Movers, and the Resource-based View (RBV): A Conceptual Model,” Journal of Business Research (v.61/9, 2008);
Gurumurthy Kalyanaram and Glen L. Urban, “Dynamic Effects of the Order of Entry on Market Share, Trial Penetration and Repeat Purchases for Frequently Purchased Consumer Goods,” Marketing Science (v.11, 1992);
Steven P. Schnaars, Managing Imitation Strategies: How Later Entrants Seize Markets From Pioneers (Free Press, 1994);
Venkatesh Shankar, Gregory S. Carpenter, and Lakshman Krishnamurthi, “Late Mover Advantage: How Innovative Late Entrants Outsell Pioneers,” Journal of Marketing Research (v.25, 1998).

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