Lesson 11: COMPLEMENTORS

Compl e me ntor s

• Complementors are often considered the sixth force of Porter’s industry analysis framework.
• Businesses selling such product or service that complements the products or services of another
business are called as complementors.
• Complementors are businesses whose offerings are compatible/complementary to a co-existing
product/service.
• A simple example would be travel and hotels in the tourism sector. A person who gets on to a
flight would look forward to a hotel once he lands, similarly, a person who buys a laptop would
look forward to installing software to run it. This concept of complimenting is known as the
factor of complementors.

Advantages of Complementors:

• Improve the quality of the product or service, provide additional features and benefits and create
new revenue streams. Increase the demand for the primary product or service by enhancing its
value and providing additional benefits to customers.
• Increase the switching costs for customers, making it more difficult for them to switch to a
competitor's product or service. Complementors can provide cost savings for the industry by
providing efficient and effective support services.
• Help to create new markets and expand the customer base by offering new products or services
that complement the primary offering. Increase the differentiation of a business's product or
service. This can make it more attractive to customers and give it a competitive advantage.
• Complementors can impact a company's competitive advantage in several ways. For example,
companies that have strong complementors can offer a wider range of products or services which
can help to differentiate them from competitors. Additionally, complementors can help to
improve a product quality, functionality, and overall customer experience which can lead to
increased customer loyalty and improved brand reputation.

Disadvantages of Complementors

Complementors create relationships in which it may result in the dark side of complementor relations.
• Adam Brandenburger and Barry Nalebuff highlight double-edged relationships with
complementors, as they can create a tug-of-war over who is going to be the main beneficiary.
• Although complementors share a desire to expand their common market, they can develop
tensions in areas like pricing and control in the market.

Disadvantages of investing in the production of complementary goods:

• High dependency between the products, where there is a decrease in demand for the
complementary product if you increase the price of the main product (Moradi, 2021).
• Differences in characteristics between complimentary items. The fact that these items may be
created by several businesses means that the expected and actual levels of quality may differ
(Yalcin et al. 2010).