In actual combat, product operators often face problems such as high unit price and low frequency; old basic products that have been in operation for many years and need to find new growth points; and original product lines that are complicated, fat, and bloated. , there is room to re-disassemble the sales operation. The author first introduces the definition of complementary products, and then hopes to give some inspiration to product operators through 7 complementary product cases. Definition of complementary products Complementary products are goods that are consumed together in a certain proportion. For example, glasses and spectacle lenses, substitutes and complements are a pair of relative concepts. So how do substitutes and complements affect each other's price and demand? Let's look at the following two demand curves: Assume that the price and demand of Xiaomi mobile phones are as D1 As shown, if the price of Huawei mobile phones drops significantly, many users will think that since they are all domestic mobile phones, using Huawei mobile phones instead of Xiaomi mobile phones can significantly reduce the purchase expenses. Why not? So even if the price of Xiaomi phones remains unchanged, demand will fall accordingly. This causes the curve D1 to move parallel to D2. Assume that the price and demand for air purifier filters are as shown in D1. If retailers reduce prices to promote air purifier hosts, some users who did not originally plan to buy air purifier hosts will buy air purifiers with the mentality of picking up a bargain. Purifier host, so users who buy the air purifier host will most likely also buy some air purifier filters. Therefore, even if the air purifier filter element does not change, the price reduction of the air purifier host still increases the sales of air purifier filter elements, causing the demand curve to move parallel from D1 to D2. In product strategy, the so-called complementary product effect refers to the product operation strategy in order to improve users' perception of basic products with a primary status. Unexpected effects can often be achieved by improving complementary products with an auxiliary status. Then product operators must understand the correspondence between basic products and complementary products. Carefully identify complementary products that are significantly related to the base product. The essence of the product strategy relationship between basic products and complementary products depends to a large extent on user perceptions and consumer cognition. Generally speaking, basic products and complementary products are related to each other. Often, one prosperes and both prosper, and one suffers both losses. They influence each other and jointly determine the market image of this product portfolio and the overall perception of users. The complementary goods effect will also change with changes in market demand, and different synergistic effects will occur in different industrial cycles and different industrial structures. For details, see the following successful cases of the complementary goods effect. Case 1: Separation strategy of razors and blades More than 100 years ago, King Gillette, the founder of Gillette, discovered that if a set of products consisting of a razor holder and multiple blades was sold in the traditional way, the overall price would often be too high. Customers are overwhelmed, resulting in poor sales. So Kim Gillette thought of ways to sell this set of products separately. And the price of the beautiful and durable Gillette knife holder is very low. And the price of 55 cents is far lower than the $2.50 cost of the Gillette knife holder, but the investment in purchasing the knife holder for the first time is relatively low. Then users will become more and more generally accepted. Therefore, the number of users of Gillette razors has increased significantly, and we can all immediately respond to users who use Gillette razors, who must continue to replace Gillette razors. Then Geely can increase the price of Gillette blades and sell blades that cost only 1 cent to 5 cents. Then the continued revenue from the blades not only makes up for the initial loss in sales of the tool holders, but also significantly increases overall profits. In fact, what is more important is that this pricing strategy of splitting the product matrix has helped Gillette monopolize the razor market for a long time. After Gillette razors, this pricing model of Gillette razors was later learned and applied by many companies. We found that we could split this product portfolio into a base product and a complementary product. Moreover, this complementary product is expressed as consumables and subsequent continuous services. Whether it is printers and ink cartridges, optical cameras and film, game consoles and corresponding game software, elevators and elevator maintenance services, software and software upgrade services, water purifiers and water treatment services, etc. Many products have relied on this pricing model to achieve success. This pricing model, also collectively referred to as the razor and blade strategy by the market, sells basic products at cost prices, or even at prices far below cost, with the purpose of prompting users to purchase more complementary products with higher profits in the future.
Once basic products drive complementary products, that is to say, a single razor drives blades, profits will roll in. Blades can become the company's main source of profit. The key is that the blades must not only be repeatedly consumed, but also because of the patent. Problems are difficult to replace with products from other companies. Case 2: Green Mountain Coffee Company, a coffee company that sells capsules, is a company that carries forward the razor and blade strategy. Green Mountain Coffee Company was founded in the United States in 1981. Listed on NASDAQ in 1993. If Starbucks sells feelings. Green Mountain sells cups. The founder of Green Mountain Coffee has this famous saying: Why brew a pot of coffee at a time? I only drink one drink at a time. This idea led them to invent an important product: the K-cup capsule that brews just one cup of coffee at a time. The so-called K cup is also called coffee capsule. It is a unique patent of Green Mountain Coffee. A container that looks like a paper cup and has a smaller paper cup-like permeation device inside, which is a unique design that can only permeate liquids. It can greatly preserve the aroma of coffee and is popular among people. To match this K-cup capsule, Green Mountain Coffee Company has developed a special Krieger coffee machine. Put the k-cup capsule in this coffee machine and a cup of fragrant coffee will appear in front of you in one minute. And there’s no need to grind coffee beans, weigh them, or clean them. There is no residue at the bottom of the cup and you can brew just one cup every time. The Krieger coffee machine produced by Green Mountain sells for about one hundred US dollars each, which is a cost price and even a slight loss. But once consumers spend $100 to buy a Krieger coffee machine, they will keep buying the matching K-cup coffee capsules. Green Mountain Coffee Company has applied for multiple patents related to K-cup capsules and Open to all beverage vendors. Other coffee, tea, hot cocoa and other beverage vendors are allowed. Such a K-cup capsule is produced and used in Green Mountain’s Krieger coffee machine. These companies only need to pay Green Mountain a royalty of 6 cents per cup. In fact, even the famous Starbucks has launched such a Starbucks coffee capsule. After consumers purchased Green Mountain’s coffee machine at a low price, Not only do you want to buy its original K-cup coffee capsules, but you also buy K-cup capsules in the form of tea, hot cocoa, etc. from other beverage companies, and even K-cup capsules from Starbucks. The efficiency gains brought about by this complementary product operation approach are: nearly 3 million K-cup capsules are consumed every day in American homes and offices. Green Mountain Coffee has further developed its razor and blade product strategy. In fact, it uses a so-called razor that is compatible with more types of so-called blades. It uses its specially manufactured Krieger coffee machine to be compatible with different types of K-cup capsules from different beverage manufacturers, thus occupying more market space, and then charges other producers of K-cup capsules through patent authorization. This is what is called Product strategy to make money while lying down. Case 3: Reverse innovation using complementary goods strategy: Apple’s iPod and iTunes Apple’s iPod and iTunes are business cases that take the complementary goods effect to its extreme. Apple launched the iPod in 2001, and almost every product manager remembers Steve Jobs' famous advertising slogan at this famous launch: "Put 1,000 songs in your pocket!". I still remember it as a cool thing. In fact, the early MP3 Walkman players could only store one hour of music, while the first iPod could store 1,000 songs. But what really pushed the iPod to its peak was the complementary product behind it, that is, iTunes, although in terms of hardware, most competitors can compete with Ipod products through hard work, but when Apple's iTunes goes online. Other competitors find themselves at a huge disadvantage. Apple has the iTunes desktop software that synchronizes iPods and computers, as well as the iTunes store, especially this iTunes store, where genuine music can be downloaded cheaply. It was the first legal website to pay per song and download it. Users only need to pay 99 cents per song. These songs come from the 5 major record labels and thousands of independent artists. Each song is charged 99 cents, with 70 cents going to the record company that owns the copyright to the song, and 20 cents going to the credit card issuer who processes the payment. Although Apple is responsible for the operation and maintenance of the payment website and other indirect costs. But it only leaves about 9 cents per song. Although it was not possible to directly make money from iTunes, iTunes quickly became an extremely effective complement to support the basic product of iPod.
Within three days of the launch of the iTunes music download service, computer users downloaded 1 million copies of the iTunes desktop software. And paid to purchase more than 1 million songs. As a consumer, I definitely love the freedom to choose from many songs and download them online in real time. And the price is so low. Get your favorite song for only 99 cents. iTunes has become the world's largest music store. After the launch of iTunes, it had an extremely amazing impact on iPod sales. Before the launch of iTunes, Apple sold an average of 113,000 iPods per quarter. After the launch of iTunes, quarterly sales of iPods skyrocketed to 733,000. Ipod eventually occupied 70% of the US MP3 market, and Apple has since truly embarked on a path of hacker-level explosive growth. In essence, the complementary goods effect created by Jobs is a business model that is inverse to the traditional razor blade strategy, which is to sell cheap blades to drive razor sales. The key is that what is sold here are other people's blades, from the five major record companies. Songs, and users can download a piece of music they like very much after selecting it for only $0.99. What about pulling their own so-called razor? An iPod product costs at least $399, and iPod products at each price point are often $50 to $100 more than its competitors, but its market share is as high as 70%. Case 4: Low-frequency breakthrough complementary product strategy: IKEA furniture and IKEA restaurants IKEA is the world's largest furniture supplier, with 1 billion customers visiting every year. When mentioning IKEA, not only will you think of the simple and natural furniture in the Nordic style, but you will also unconsciously reminded him of the IKEA restaurant and the food specialty store outside his checkout area. Users who have been to IKEA restaurants have impressions. IKEA's beef balls and ice cream are must-haves. Meatballs are a Swedish specialty food, but IKEA has developed vegetable balls, chicken balls and other products for consumers in different regions, so that today's consumers prefer to call it IKEA meatballs instead of Swedish meat. pill. The reason why ice cream becomes a marketing tool for a restaurant. The key is that it is the cheapest ice cream on the market. It only costs one yuan to buy an ice cream on weekdays and only two yuan on weekends. In essence, IKEA is not just opening restaurants without making money. There is a complementary goods effect in a broad sense between IKEA restaurants and IKEA furniture. We all have this understanding. Furniture malls are generally opened in places far away from the city center for a very simple reason: rent is cheap, and IKEA is no exception. For example, in Beicai, Shanghai, due to the low rent, IKEA can have a larger and more comprehensive range of furniture and provide free parking, but it is far away from the city center. The surrounding supporting facilities are definitely not perfect. On the other hand, purchasing furniture is very time-consuming. You may have experienced the feeling of going hungry before buying furniture. The founder of IKEA pointed out when he first started doing business: going hungry will not lead to good business. IKEA restaurants meet the needs of users at this specific time and location. Furthermore, the consumption frequency of furniture is relatively low. How can we attract customers to visit IKEA more frequently? In the minds of users, IKEA restaurants have become a very influential chain of restaurants. In addition, combined with food specialty stores, about one-third of customers come to IKEA specifically to dine and visit IKEA furniture by the way. Careful customers will also find that IKEA's user flow design is very unique. Generally, users will be guided from the parking lot to walk through a section of IKEA's shopping route before arriving at the IKEA restaurant! During this walk, users will unconsciously be attracted by the products along the way, stop to appreciate and choose IKEA furniture, and their shopping desire and willingness to pay will naturally form. IKEA starts from user needs and cleverly links furniture and catering, which seem to have no direct dependence. This product strategy of using the original low-frequency furniture business with high-frequency catering business is the complementary product effect, which is reflected in the IKEA restaurants and food stores not only solve the discomfort of customers buying furniture when they are hungry, but also provide a value-for-money experience in specialty dining, which will continue to attract customers to visit frequently. High-frequency consumption such as catering drives relatively low-frequency furniture consumption. We seem to have found a counterexample of the so-called not doing business properly from IKEA. Sometimes the more distinctive and attractive the side business is, the more successful the main business associated with it will be.
Case 5: Low price for traffic, high price for value-added: Alibaba’s basic services and value-added services all know that in the beginning, everyone can open a store on Taobao without paying fees. However, when Taobao has today’s data volume, not only does it have to charge basic Product technical classification purpose service fee and Taobao has developed more value-added product charging modules, such as: Taobao express, diamond exhibition, banner advertising, Alimama advertising, word-of-mouth and other value-added product modules. So it is no exaggeration to say that Alibaba’s start was also a masterpiece in the application of razors and blades. On the one hand, Alibaba's basic products attract merchants to settle in for free, which has defeated competing products eBay and accumulated its own traffic pool. When the user customers reach a certain volume, they will start to sell a matrix of value-added products. Case 6: Splitting bloated products: Restaurants in the sky We all realize that in the fiercely competitive aviation industry, airline catering services are an auxiliary function and are generally in a weak position in the overall operation of airlines. In the past, We often complain that airline meals are unpalatable and there is no way to explain why they are unpalatable. However, in the past year, we will find that many improvements in airline catering have become a common phenomenon. For example, the veteran of Sichuan Airlines Godmother, brown sugar steamed buns and baked potatoes are very popular. Xiamen Airlines orders meals online. Even in the economy class, there are almost ten kinds of special meals for online selection in advance. Hainan Airlines specially provides yellow chili sauce. Such a The yellow chili sauce fully demonstrates the local characteristics of Hainan Airlines. In the past year, we often saw friends waiting at the airport sending photos of shredded pork noodles with pickled vegetables, spicy pork noodles, and the bowl of noodles from China Eastern Airlines in WeChat Moments. Further analysis of airline catering. In-flight catering After communicating with senior professionals, you will find that flight catering is actually extremely complicated. The complexity of aviation catering is reflected in: first, time constraints, because food is not easy to store and must be fully prepared within 24 hours, which requires an efficient cold chain logistics system; second, food hygiene and safety are even more demanding on airplanes. Strict and even harsh; again, you have to face the uncertainty of demand, because the passengers on each flight are uncertain. After secondary processing and cold chain processing, the taste will inevitably be affected after several times. On the other hand, as living standards improve, users' taste buds become more and more picky. Passengers' demand for aviation catering is changing, and their perception is also changing. Mediocre catering can no longer meet the needs of passengers. In fact, compared with the basic service of flight, whether it is catering or baggage service. In fact, they are all complementary services that are sold in bundles, and this bundled sales can actually be split. That is to say, the complementary service of airline catering can be released, so the next step is to choose between the two. A completely different change. On the one hand, since airline catering is complicated and often complained about, it is like some foreign airlines learning from it, canceling catering services and abandoning bundled sales. The other side is taking. It is to improve the quality of aviation catering and thereby enhance the overall experience of air travel services to strengthen bundled sales. On the other hand, the increasing number of Internet celebrity foods on the plane is also a pressure and crisis that airline catering companies have seen being abandoned. Case 7: Artificial intelligence is born from complementary products. Artificial intelligence has three cores: algorithm + data + computing power. On the one hand, companies and individuals who are good at algorithms are often accomplished in machine vision but not in machine hearing. On the other hand, they are also good at machine hearing. Vertical fields are good at business analysis, and companies and individuals that have countermeasures for their own business weaknesses often do not have the best of both algorithms and data. Thirdly, companies that make computing power chips are superior in the versatility of chips, but in the chip vertical Domain performance has to be lowered. Based on the above characteristics of artificial intelligence products, artificial intelligence products often start from one point. For example, Google started from TPU+TF and later used TF as a free product to build a user pool. Amazon uses MXNET as an open source framework to allow users to join its artificial intelligence camp at the lowest cost, and then sells Echo smart speakers and AWS services. For more details on artificial intelligence scenarios and methods to help products, please refer to the author LineLian’s new book "AI Empowerment: AI Redefines Product Managers" or our classic program http://996.pm/MeANw Thinking and Inspiration to Achieve Product Complementarity To increase efficiency, you can learn from Gillette Company to split high-priced products into one high-priced product and one low-priced product, so that low-priced products drive sales and then high-priced products. You can also learn from the coffee capsule company to use basic products to drive a value-added product. Alibaba is similar to opening stores at low prices or even for free to gather traffic pools.
You can also learn from IKEA and use high-frequency catering to drive low-frequency furniture sales. You can also disassemble and optimize the product modules of airline catering and sell them. It is still very difficult to realize the complementary goods effect of product strategy. Behind the successful application of the complementary goods effect, there is almost an extremely exciting product story.