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New Product Development

Why it doesn't always pay to be first Add to ...

After earning his MBA in 2008, Vinay Chopra knew he wanted to work for himself. Just three years later, Mr. Chopra’s company, Mobiroo, counts Research In Motion (RIM), Future Shop, Best Buy and other large big box retailers and among its clients. He also has business deals in Europe and the United States, 12 full-time employees and a downtown Toronto headquarters.

How did the 32-year-old do it? Mr. Chopra managed to create a product he believed no one else had. That unique product was able to generate sufficient buzz to garner attention, and sales, from some of Canada’s largest companies.

“The idea germinated from the promotional industry, where my mother has a successful business,” says Mr. Chopra, who received a full-scholarship to complete his MBA at the University of Western Ontario’s Ivey School of Business. “There were few digital goods in the space, but there was an opportunity to push-out these out because of demand.”

Mobiroo is in the business of mobile app gift-cards. Mr. Chopra culls, what he believes, are the best apps for his clients and in turn, the clients can offer the gift cards to their customers. Sold by major handset manufacturers, carriers and retailers, the gift cards effectively act as a conduit between app developers and end users.

Mr. Chopra worked on the concept with his parents – his mom is an entrepreneur and his dad has a finance and engineering background – and hired IT experts, namely 25-year-old Kosh Sarkar from the University of Waterloo, to help him create what he hoped would fill a gap in the marketplace.

After coming up with the idea in December 2008, Mr. Chopra networked and cold “e-mailed” prospective clients until he got what he wanted. “In April 2010, RIM took a good liking to Mobiroo, and said they hadn’t seen anything like it.”

Mr. Chopra’s first campaign with RIM was launched at the end of 2010 when the technology company purchased 60,000 gift cards worth 20 pounds each for the U.K. market. With that deal, Mobiroo’s business entered the black and has since continued to turn profit.

While Mr. Chopra was able to create a unique product and take advantage of being the first-mover in the app gift card space, John Pliniussen, Queen’s University associate professor of sales, eMarketing and Innovation, warns that what Mr. Chopra accomplished isn’t easily replicated. “There are few things consumers need that are new,” says Prof. Pliniussen. Simply developing a unique concept is tough and even if an entrepreneur has created something new that catches everyone’s attention, Prof. Pliniussen warns that consumers still have to feel a need, be it practical, social or emotional, to actually purchase the unique product. Obviously, irrespective of how unique a product is, if consumers aren’t willing to purchase a product, the business is destined to fail.

Simon Parker, director of the Entrepreneurship Cross-Enterprise Centre at the University of Western Ontario’s Ivey School of Business, agrees that it is difficult to come up with a unique product. There are, however, obvious advantages, if you can be the first to market. For instance, the entrepreneur has a head-start in creating market share and has the opportunity to shape the market without interference from competitors.

But being the first-mover doesn’t necessarily lead to success.

“It can flag the existence of an idea to a stronger competitor,” says Prof. Parker. “For example, VisiCalc was the first spreadsheet. But VisiCalc showed Lotus and then Microsoft the opportunity of spreadsheets.”

Prof. Parker believes a first-mover advantage is difficult to establish unless it’s in an industry where size is an advantage, such as Facebook, Skype and Twitter. “Having the first-mover advantage is less important than most entrepreneurs think,” says Prof. Parker.

For entrepreneurs who are able to get into a market first, Prof. Parker suggests they consider how easily imitated the product is and what will forestall competitors. While a narrow range of products can be protected through patents, most cannot. Prof. Parker suggests that entrepreneurs focus on creating quality that is hard to imitate, including a strong brand. Starbucks is a great example, he says. While the retail giant offers things that other coffee purveyors can imitate – like coffee and free WiFi – competition can’t imitate its brand.

“To maintain a first-mover advantage, you have to stay ahead of the competition,” says. Prof. Parker. “That might mean, for example, having more apps for your tablet compared to any other tablet. It’s creating a value that others can’t imitate.”

Mr. Chopra is aware that his first-mover advantage doesn’t necessarily translate to continued success. He has a patent pending for his mobile app gift-cards. But, perhaps, more importantly, Mr. Chopra hopes to keep competitors at bay by having technology that isn’t easy to replicate. He constantly works with developers to ensure his clients get the right apps, the right technology and the right evaluation tools.

“I have gained the trust of my clients,” says Mr. Chopra. “The question I always ask myself is how do I hold onto this?”

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