A first-mover advantage can be simply defined as a firm’s ability to be better off than its competitors as a result of being first to market in a new product category. First-mover advantage is a superior strategic position enjoyed by the first firm in a new market. It is a monopoly-like advantage that includes both a high market share and pricing power. The effects of a first-mover advantage can be temporary if the position isn’t successfully defended.

The following are first-mover advantages.

Technological Leadership
Developing technology capabilities in an area that is difficult or impossible to match. This may include intellectual property such as patents and trade secrets.

Brand
A company’s service or products that becomes ingrained in the culture of the new market. For example, the first hip hop artists still garner a certain amount of respect and esteem by enthusiasts of the music.

Resources
Securing scarce resources that make it difficult for others to enter your market. This is similar to the advantages of traditional monopolies such as oil and gas whereby it is extremely difficult for a new competitor to enter the market as the land required wasn’t available.

Switching Barriers
The first firm in a new market is sure to capture most of the initial customers. Such customers may be reluctant to switch due to implementation or the costs they may face switching.