Microsoft Acquisition of Yammer

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There is an increasing need to boost market penetration of the product early on in its life cycle due to ever changing technologies and shorter life span of the product. There are various techniques which help achieve this task –first mover , Pre-announcement, constant innovation etc. By reaching the market first a firm enjoys distinct advantages like the second mover doing only 71 % as well in market share in fmcg goods and 76% as well in industrial products. These advantages stem from the fact that the customer loyalty for the brand is already built , trial rate for the second mover is decreased if needs of the customer are fulfilled. The market leader makes use of the insights of the lead users and has its supply chain set up in place. They also have the freedom to choose the most profitable user segment. Some disadvantages of being a market leader are the risk of failure, high R&D costs, high marketing costs, risk of technology change and risk of suboptimal product features. The take-ff for certain technologies is also very slow. But in effect the advantages far outweigh the disadvantages but the pros and cons to enter first must be evaluated by the companies. An example of a first mover whose advantage has still not been diluted is Cisco Systems. After being in the industry for more than 25 years it continues to be the market leader in its core competencies of routing and switching. The fact that Cisco continues to charge premium for its products and is also the market leader speaks volumes about the penetration it has achieved in the market ad the unwillingness of the customers to switch.
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