There is a certain mystique to being the first. We remember and honor innovators and first achievers in countless fields—first in flight, first to walk on the moon, etc. Yet being the pioneer of a product category hardly guarantees that a company will enjoy enduring success. One study showed, in fact, that pioneers were more successful than late movers in just 15 of 50 product categories.

Pioneering and late-moving companies both have distinct advantages. Making smart decisions means knowing why many pioneers fail, why many late-movers succeed, and whether your situation favors pioneering or entering the market late. “A lot of times people are looking for simple solutions,” says Gregory Carpenter, a professor of marketing and faculty director for the Kellogg Markets and Customers Initiative at the Kellogg School who, along with Venkatesh Shankar, a professor at Texas A&M University, recently wrote a book chapter about the topic. “What we’ve tried to show is that there are enormous advantages to being first. But in many cases, that doesn’t preclude later firms from being successful. In fact, the same mechanisms that create success for pioneers also create success for later entrants. In some industries, under some circumstances, it’s much better to enter late.”

“In some industries, under some circumstances, it’s much better to enter late.”

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Zantac or Coca-Cola? The ulcer-relief drug Zantac is a classic case study of a successful, late-entering product. Zantac was superior to the pioneer ulcer drug in important ways—it had fewer side effects, for example—when the company Glaxo began selling it in the early 1980s. A few years later, it was the best-selling prescription drug in the world. Other well-known brands have followed a similar path. Boeing did not pioneer modern jet travel, nor Google the Internet search engine. Yet both companies are now industry leaders. On the other hand, consider Coca-Cola. An entire section of the company’s website is devoted to telling the story of Coke’s evolution from drugstore curiosity in the 1880s to one of the most famous brands in the world today. Though many soda companies have emerged since Coke began selling its product, none of them have its story, its mystique, or its success. Coke’s example highlights one of the great advantages of being a pioneer: you can become the psychological standard—the brand that consumers recall first and most frequently. And being the standard by which other brands are judged, pioneers are in a position to shape consumer tastes and preferences. They shape the product ideal and thus can be hard to beat. Pioneers also benefit from people’s basic risk-aversion. Once consumers have come to trust a brand, they prefer it to untried, unknown alternatives—even when the pioneer costs more. Fast Followers and Late Movers So why are late entrants often more successful than their pioneering competitors? One key factor is that creating a product is costly, both in terms of the money invested and the mistakes made on the path to success. While the pioneer pays a steep price in creating the product category, the later entrant can learn from the experience of the pioneer, enjoying lower costs and making fewer mistakes as a result. Such a fast follower strategy is especially appealing to agile firms with deep pockets. “A lot of times pioneers are not very well funded,” says Carpenter. “They create a competitive game, and then they’re unable to dominate it. Their resources are just too limited. So competitors enter quickly and, with more resources, are able to win the game that the pioneer has created.”