Complementary Goods On The Radar?

February 10, 2008


Another old article from July 07 by Nicholas G. Carr in the Strategy+Business magazine…

By all the discussions about nearly zero marginal costs, nearly “public goods” et cetera, there was this suggestion “to sell something else“. So what is this “something else”? The first look should get to all the complementary goods… (Simply put, complements are products that tend to be consumed together . Economically they have an symbiotic relationship. For example if you expand the supply or reduce the price of one product, demand for its complements tends to go up. In this relationship the “strength” of the influence on the other product could be very unequal of course. As you can see in the example cinema and popcorn.)

How do you uncover and evaluate innovation opportunities in complements?
Nicholas recommended in his article some basic questions:

“1. What complements are currently constraining demand in our markets?”

“2. What new product might boost demand for our core offerings?”

“3. Would our customers buy more if they had better information?”

“4. Would we learn valuable lessons by innovating in complements?”

“5. Do we have competitors whose fortunes are tightly tied to the price of complements?”

With this “360 degree approach” the music industry is trying to get in the market of a lot of complementary goods… but did they get far enough yet?
Is the movie/tv industry already thinking about that?


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