COMPLEMENTS
When studying industry analysis in Chapter 3, we identified the availability of complements as an important force determining the profit potential of an industry. Complements add value to a product or service when they are consumed in tandem. Finding complements, therefore, is an important task for managers in their quest to enhance the value of their offerings. The introduction of AT&T U-verse is a recent example of managers leveraging complements to increase the perceived value of a service offering.' AT&T's U-verse service bundles high-speed Internet access, phone, and TV services. Service bundles can be further enhanced by DVR capabilities that allow users to pause live TV, to record up to four live TV shows at once, and to access video on demand. A DVR by itself is not very valuable, but included as a "free" add-on to subscribers, it turns into a complement that significantly enhances the perceived value of the service bundle. Leveraging complementary products allowed AT&T to break into the highly competitive television services market, significantly enhancing the value of its service offerings. By choosing the differentiation strategy as the strategic position for a product, managers focus their attention on adding value to the product through its unique features that respond to customer preferences, customer service during and after the sale, or an effective marketing campaign that communicates the value of the product's features to the target market. Although this positioning involves increased costs (for example, higher-quality inputs or innovative research and development activities), customers will be willing to pay a premium price for the product or service that satisfies their needs and preferences. In the next section, we will discuss how managers formulate a cost-leadership strategy.