“Late mover” is a term used to describe a business that takes a wait-and-see approach to entering a new market or getting on board with a new business concept. While businesses that act first -- before the competition -- can have a number of advantages associated with being the first to enter a market, they also bear a heavy risk burden. Late movers, on the other hand, can realize advantages that come with holding back initially and observing the playing field.
Late movers have the opportunity to see how well a new idea, concept or approach is received by the general consumer public before getting involved. This helps mitigate a number of risks and limits the amount of research and development invested in gauging public perception. In other words, late movers can learn from the mistakes of early movers when it comes to testing market waters.
Tweaks and Improvements
A late-moving business has an opportunity to watch early movers’ trials and make adjustments before jumping into the fray. This not only reduces the potential for losing investment dollars, but it also positions a late-moving business to quickly introduce its own “new and improved version” of an early moving product. This approach can make a late-moving business appear more innovative or cutting edge, even though it doesn’t hold pioneer status.
Limited Financial Risk
The first businesses into a marketplace often have the most at risk in the event a product or service flops. A late-moving company has the advantage of watching how things like product features, price points and functionality are received, and it can tailor its own approach accordingly. This means less time and money put into initial product development, creating prototypes, conducting market studies and identifying a product audience.
Once a product or concept is in the market and being favorably received by the public, secondary and late movers can take advantage of the excitement already generated and use that buzz momentum to establish and market their own companies and product versions. Less effort is spent raising awareness or introducing a new product line consumers are already familiar with. More effort can be put into differentiating a late mover’s product from the competition.
Downsides to Late Moving
Late movers can potentially be seen as “knocking off” or “ripping off” consumers with an imitation product, which can harm their reputation. Care must be taken to ensure no intellectual property rights are violated by moving into a market established by another company. Late movers can also have a potentially tough time gaining a market share of an established product or service.
- XiXinXing/iStock/Getty Images