Overhype: First mover advantage

“Could you please Xerox this page?”

“Please switch on All-Out”

“Wash it with Surf”

“Stick it with Fevicol”

Many of the first mover brands have become so successful that we associate the product category need with them. Sadly this brand recall often does not translate into product sales and consumers are agnostic about which brand of Photocopying, liquid mosquito repellant, detergent powder, adhesive they use.

Couchsurfing has been in existence for a decade helping travelers to find economical safe accommodation. However it needed a late incumbent like AirBnB to come up with a commercially viable business plan that took care of the issues like billing, security, advertising & taxes.

Most first movers are unsure about how their product is going to be used and spend a lot of time & energy in promoting the technology. The pioneers are sometimes focused on so many use-cases and markets that their vision is clouded. The incumbent free rides on the market research and buyer education and is better poised to make a focused brand targeting the most compelling

The first mover often is saddled with high failure rate due to pricing, communication/promotions, operational jitters, poor commercialization or plain vanilla economic viability. Sometimes they don’t have enough resources to operate long enough to see success. Other times they are not able to scale up fast enough to fully capitalize on the demand. The incumbent not only faces lesser risks of product acceptance, but knows better what will work and where to invest to get quick returns.

It is easy to get an entrepreneur excited by giving him a story about being pioneers and giving them a unique proposition that is 5-10 years ahead of its time. However most people don’t realize that “Success is not achieved through cutting edge technology but by solving real life problems”. Rarely is the market two small for 2 players to thrive and second mover is not a bad strategy for an agile firm.

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Packaged beverages in India

Indians are remarkably different when it comes to beverage consuming behavior:
1. Temperature: India has unique demand for room temperature beverages. Even the colas and sodas which are traditionally served chilled are often consumed as room temperature. Most retailers will stock three varieties of water/beverage room temperature, slightly cold, and near freezing temperature. However I have rarely seen retailers outside India serving drinks at room temperature (it’s either cold or hot).
2. Time: Most people can spend 30-60 minute with a beverage (alcoholic or otherwise) but Indian tendency of gulping rather than sipping? It is not uncommon to gulp down 2 glasses of water at one go, and the treatment of beverages is often not so different. Even as a child you are encouraged the drink the entire glass of milk (your first beverage) in one go.
3. Packaged hot beverage: Milk, tea, coffee tastes best when served hot, but most retailers are not equipped for that. So you are left with 2 choices either shell out a 100/- for a cup of coffee at CCD (or any other exotic high end tea/coffee parlor) or shell 5-10 bucks for a cheap (probably unhygienic) at a roadside hawker. The vending machine tastes like power as they don’t use fresh milk or coffee. Why is there not a market for something in the middle? A simple electrical warmer could heat up the can/bottle before it is consumed.
4. Lack of indigenous taste: traditional Indian drinks like coconut water, sugarcane, neebu pani are hard to find and the packaged beverage is laced with so much sugar that it cannot be healthy.

Power of Branding: Price tag as a product feature

The price you pay sometimes is the biggest feature of the product or service. There are so many instances where higher the price translates into higher customer satisfaction.
A INR 1,00,000/- watch has the same accuracy & features as a 200/- watch. A 1,000/- mobile phone often has the better cell tower reception & battery life than a 30,000/- smart phone. A foreign vacation is no better than a domestic travel/road drive. Same is true with bags, shoes, cars and so many products… yet we buy them.
Neo-rich do an ostentatious display of wealth through solid gold jewelry & flashy/gaudy accessories. ‘Khandani Raseesh” (who inherited wealth) might not be flashing their price tags, but they let their brand, logos and club membership to speak for them.
Human beings have a herd mentality and always want to be part of that inner-circle. They would go to any lengths to showcase that they belong to that most coveted exclusive club. In today’s capitalistic society that is often determined by the price tag. More the price of the product, the more exclusive it becomes. Sometimes the price-tag & exclusivity supersedes everything else. I guess no wonder any company (including the pharmaceuticals) have a higher branding budget than R&D.
You might like my older post here.