Porter 6 Forces

Porter’s 6 Forces is a Strategic Tool that helps companies analyze and study Markets so that they can design adequate strategies.

• It is an extension of Porter’s 5 Forces.

 

This model uses the 5 Elements described in Porter’s 5 Forces and adds one more:

• Complementary Products.

 

Porter’s 6 Forces:

• Suppliers.
• Clients.
• Entry Barriers.
• Substitute Products.
• Competitors.
• Complementary Products.

We have a Page dedicated to Porter 5 Forces, with lots of Examples and Tips.

• Here, we’ll Focus on the 6th Force: Complementary Products.

 

We recommend that you consult our page “Porter 5 Forces” if you want to know the 6 Forces in their entirety.

This additional Force refers to the existing complements that surround a certain Product.

 

This new Force is important because in some Markets, companies can make much more profit with Complementary Products than with the main products.

 

You will understand it better with this example:

 

The Fashion Market is the perfect example.

Look at Gucci, for example.

 

How do you think Gucci makes more profit?

• With their $3.000 dresses?
• Or with their “cheaper” complementary products?

 

Gucci has all kinds of products:

• Dresses.
• Bags.
• Key chains.
• Shoes.
• etc.

 

You can be sure that their profit comes from wallets, leather bags…

• From Complementary fashion Products.

That is why this 6th Force is important.

 

In certain Markets, you need to look beyond the Main product.

But… in which Markets?

Complementary Products are very important:

• When the main product has a close relationship with them.
• When they can be easily manufactured by the Company.
• When their added Value is high.

 

When should you not worry about complementary products?

• When any of these conditions are not met.

 

Examples:

• A small burger maker usually doesn’t have a potato, onion, or coleslaw product line.
  • These products are very different from Burgers.
    • And, their added value is reduced.

 

• Toothpaste companies don’t usually manufacture toothbrushes.
  • They are two very different products.
    • And, the margins are on the toothpaste.

 

• Fork and knife makers do not typically make ceramic plates.
  • The manufacturing processes are absolutely different.
    • And the investment required would be huge.

Now that you know why and when, Complementary Products are important…

 

It’s time to see more examples:

We have chosen 4 examples of Markets in which Complementary Products played and continue to play a very important role.

 

Let’s begin:

 

The makeup market is so diverse and dynamic, that it is difficult to distinguish a leading product.

• There are hundreds of Complementary Products that complement each other.
  • Eye-liner and Eyeshadow.
  • Lipstick and Lip contour.
  • etc…

 

In addition, every year, new beauty products appear and all brands follow the trend.

Why?

 

Because:

• Makeup products have large margins.
• The manufacturing processes and ingredients used are very similar.
• Makeup products are “used together”.

In addition, Companies don’t want their clients to look for another brand.

 

This is a fun example of what can happen if a company thinks too much about complementary products.

 

In the beginning of 1990’s there was an open battle between Nintendo and Sega.

The battle was so “fierce” that both companies started to develop innovative new products.

 

While Nintendo hardly developed any major add-ons as they had a more powerful system …

• Nintendo focused on making new and entertaining games.

 

… Sega followed a very different approach:

 

 

They tried to improve the power of their game console by adding new accessories:

• Sega CD.
• New Controls.
• Sega 32X.
• etc.

And these add-ons were not cheap.

 

 

In the end, Sega users were confused.

Would  the new games be developed for:

• The CD System?
• The 32X?
• The normal game console?

… And would Sega add any other accessories to play the new games?

 

These “Complementary Products”:

• Didn’t add any value (value was in the games).
• They were not easy to manufacture.
• The game console, didn’t really needed them.

 

We’re pretty sure you’ve heard of BOSE.

• In case you don’t know, it is one of the best audio equipment companies in the world.

 

They have:

• Headphones.
• Microphones.
• Speakers.
• … They even have “Audio sunglasses” and noise-cancelling earplugs.

 

They started with just speakers, but as soon as they realized how big the “audio equipment” market was getting, they started offering other products.

 

 

All these new “Complementary Products” (at first they were Complementary):

• They had a lot of added value.
• Perfectly complemented their previous products.

 

It’s true that, making a great speaker or headphones is a very different thing.

• That is why BOSE moved “little by little” toward these new products.

However, in essence, the components used and the “science” behind them are very similar.

 

If you don’t know “Le Creuset”, we don’t blame you.

• I personally love to cook, so … I am very familiar with this brand.

 

In case you don’t know it, “Le Creuset” is to Cookware what BOSE is to Audio equipment.

• It is a “premium” cookware brand.

 

They started out as a cast iron pot company and have diversified into other new products over the years.

 

 

Nowadays, they manufacture lots of different kitchen utensils.

• From fondues to pepper pots.

 

All the products they manufacture:

• Have a high added value.
• Complement each other perfectly.
• Are relatively similar to manufacture.

 

If they had not explored new Complementary Products, if they had limited themselves to cast iron pots, they would not be the prestigious brand that it is today.

Porter’s 6 Forces is a tool that expands Porter’s 5 Forces to better analyze markets from a Strategic perspective.

 

It uses the 5 Elements described in Porter’s 5 Forces and adds one more: Complementary Products.

The resulting 6 Forces are:

• Suppliers.
• Clients.
• Entry Barriers.
• Substitute Products.
• Competitors.
• Complementary Products.

 

Complementary Products are very important:

• When the main product has a close relationship with them.
• When they can be easily manufactured by the Company.
• When their added Value is high.