Great Business Ideas: Complementary partnering

Great Small Business Ideas to Start: Complementary partnering

If your product can be partnered with another, the popularity of the other product may directly affect your sales.

The idea

A “complementary good” is a product that is often consumed alongside another product. For example, beer is a complementary good to a soccer match, while a travel pillow is a complementary good for a long plane journey. When the popularity of one product increases, the sales of its complementary good also increases. By producing goods that complement other products that are already (or about to be) popular, you can ensure a steady stream of demand for your product.

Some products enjoy perfect complementary status—they have to be consumed together, such as a lamp and a lightbulb. However, do not assume that a product is perfectly complementary, as customers may not be completely locked in to the product. For example, although motorists may seem obliged to purchase petrol to run their cars, they can switch to electric cars.

While for some industries producing complementary goods is an optional way to increase revenue, in others it is a compulsory step to avoid becoming obsolete. Producers of video games have to ensure their games are compatible with the latest consoles, while technology firms have to ensure their software programs are compatible with the latest computers and operating systems.

Advertising strategy can be geared toward the complementary status of a product—for example, beer companies sponsor soccer matches. This was taken to a new level in the 2006 World Cup, when FIFA officials demanded that Netherlands supporters remove trousers bearing the logo of Dutch beer “Bavaria,” as it was a rival company to Budweiser, which was a major sponsor. While this attracted criticism for being “ambush marketing” and was probably an overly aggressive strategy, it demonstrated a corporation firmly holding onto its status as the leading complementary good supplier.

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In practice

  • Be aware of possible future trends in a market. If you can anticipate a product becoming popular, you can develop a complementary product and gain first-mover advantage.
  • Consider timing the release of a new product or marketing campaign to coincide with an increase in the popularity of a complementary product.
  • It is dangerous merely to enjoy the success of a complementary product and stop behaving competitively. If you stop delivering high standards and reasonable prices, customers will often develop ingenious ways to fi nd an alternative.
  • Try not to produce a complementary good for a product that already has a surplus of complementary products; the competition makes it difficult to gain a foothold. For example, pretzels go with beer, but so do many other products. You won’t necessarily sell more pretzels if more beer is sold.
  • Your product does not have to simply complement another consumer good; it can complement a social event, seasonal weather, or other factors.