What is a pioneering brand? Types of Pioneers? What is Benefits of pioneering?
Brands that were first in the market. Used in reference to the first company to introduce its offering to a given market defined by a particular customer need. The company that first reached a given customer segment with its offering.
4 Types of pioneers:
- Technology - The company that first introduces a new technology to a category.
- Product - The company that is first to commercially introduce an entirely new product.
- Business model - The company that is first to introduce a new business model.
- Market pioneers - The company that first introduces a given offering to a particular target market.
Benefits of pioneering
Offers the incumbent a number of advantages not available to later entrants, including shaping consumer preferences, creating switching costs, gaining access to scarce resources, creating barriers to competitive entry, and taking advantage of the learning curve.
A pioneering company has the unique opportunity to shape customer preferences, creating a close association between its brand and the underlying customer need; they become synonymous with the entire category.
As a pioneer, a company has the opportunity to build loyalty by creating switching costs for tis customers. These switching costs could be functional (loss of the unique features of the pioneer's offering), monetary (the cost of replacing proprietary equipment or a penalty for breaking a contract), or psychological (the cost of learning the functionality of a competitor's offering).
The pioneer can benefit from preempting scare resources such as raw materials, human resources, geographical locations, and collaborator networks. Pioneer might be able to lock out competition by securing exclusive access to strategically important mineral resources. The pioneer might also preempt strategically important geographic locations in both real space and cyberspace; can also preempt the competition by forging collaborator alliances with strategically important partners such as distributors or advertisers.
Pioneer can create tech barriers to prevent competitors from entering the market. Might secure the exclusive rights to a particular invention or design that is essential for developing offerings that will successfully address a specific customer need. Being the pioneer also enables a company to establish proprietary tech standard that ensures the sustainability of its tech advantage in the marketplace.
Pioneer often benefits from learning curve advantages, allowing it to heighten production effectiveness and efficiency as its cumulative output increases over time. Being in business longer than its competitors gives the pioneer a competitive edge in technological know-how, level of workforce experience, and productivity.
Drawbacks of being a pioneer.
Doesn't always benefit the company. Pioneers face a distinct set of disadvantages that might impede rather than facilitate their market success. 3 most common include free riding, incumbent inertia, and market uncertainty.
A later entrant might be able to free ride on the pioneer's resources, including its investments in tech, product design, customer education, regulatory approval, infrastructure development, and human resource development. Alternatively, a follower could reverse-engineer the pioneer's product and improve it, while investing only a fraction of the resources required to develop the original product.
Being a market leader often leads to complacency, thus leaving technological and market opportunities open to competitors. Might also be driven by a reluctance to cannibalize existing product lines by adopting new technology or a new business model. Might also result from a "sunk-cost mentality", whereby managers feel compelled to utilize their large investments in extant technology or markets even when technological advancements and market forces make these investments unfeasible.
Another disadvantage in being a pioneer is the uncertainty associated with the offering. Whereas the pioneer has to deal with the uncertainty surrounding the technology and market demand, a follower can learn from the pioneer's successes and failures and design a superior offering. Because of the uncertainty associated with the introduction of a new offering, companies with strong brands and distribution capabilities often choose to be late-market entrants, which enables them to learn from the pioneer's experience and develop an effective and cost-efficient market-entry strategy. These companies use their brand and channel power to manage the risk associated with new product development and new market entry, allowing them to be successful late entrants into a given market.