An innovative late mover can create a sustainable advantage by enjoying a higher market potential and a higher repeat purchase rate than either the pioneer or noninnovative late movers, growing faster than the pioneer, slowing the pioneer's diffusion, and reducing the pioneer's marketing spending effectiveness. Innovative late movers are advantaged asymmetrically in that their diffusion can hurt the sales of other brands, but their sales are not affected by competitors' diffusion.
Lilien and Yoon (1990) find that success is lower for first and second entrants; higher for third and fourth; and again lower for fifth, sixth, and subsequent entrants in selected French markets for industrial goods.
Late movers can outsell pioneers in at least two ways. First, a late mover can beat a pioneer at the pioneer's own game. The pioneer plays a central role in defining the category concept (e.g., Kleenex) and buyer preferences for the category (Carpenter and Nakamoto 1989). These preferences are the foundation for competition between the pioneer and later entrants in a category (e.g., Carpenter and Nakamoto 1996). By understanding these preferences, a late mover can identify a superior but overlooked product position, undercut the pioneer on prices, or out-advertise or outdistribute the pioneer, thereby beating the pioneer at its own game.
Second, a late mover can overtake a pioneer through innovation. Innovation in either product or strategy can reshape the category and the competitive game between the pioneer and late entrants, enabling a late mover to overtake the pioneer (Berndt et al. 1995; Carpenter et al. 1997; Carpenter and Sawhney 1996; Yip 1982).
The role of innovation is particularly vivid in evolving or so-called "high-technology" markets (Carpenter and Sawhney 1996; Golder and Tellis 1993). Innovation plays a role in so-called "low-technology" markets as well.
Studies show that pioneers enjoy substantial advantages relative to late movers and that late movers