Companies who have an established relationship with customers also possess a distinct advantage if there are switching costs involved. If there is a cost involved in moving from one provider to another, the customer will generally stay with the original company unless the future savings of moving outweigh these switching costs. An organization whose name is synonymous with the industry often possesses a reputation advantage over rivals. Customers will be more likely to identify with a specific brand or product. An excellent example of this phenomenon is Kleenex is the tissue industry.
Reputation can also have an effect on how competitors perceive and react to a market leader.
Reputation can be either an asset or liability. Organizations in this position of power must be constantly cognizant of how their actions will effect their corporate reputation. As alluded to earlier, market leaders are generally first movers. The experience gained by being the first to introduce a product or service is generally invaluable. First movers are the first to build a relationship with the customer of these products and develop name recognition with the product or service.