Applied Research Technologies, Inc. (ART) is facing a strategic decision in its Water Filtration Unit. The long-standing project, currently named RIMOS, has faced two market introduction failures. Despite these setbacks, the technology continues to show promise and our analysis of the available data suggests successful market introduction of the product for residential irrigation is encouraging.
A SWOT and balanced scorecard analyses of marketing, finance and strategic human resource management were conducted in order to identify and decide upon potential courses of action. The following is a summary of our analysis for each respective area:
Our analysis indicates a potential market population of 18.2 million homes, which requires a 0.03% market penetration in year one to meet our projected sales (3 out of 10,000 target homes). The target market segment will be single-family detached homes in regions of the U.S. facing moderate to severe year-round drought conditions. The $9 billion water treatment equipment market includes home filtration units and other products not consistent with RIMOS’ service. Therefore, additional market research will need to be conducted to identify highly concentrated areas where need for RIMOS is greatest. While a break-even analysis was considered, questions about increased proportion of fixed costs and reduction of unit variable cost over time through the learning curve effect make an accurate estimate difficult. Despite these concerns, our analysis shows the Southwestern United States has excellent potential to provide a pilot market for RIMOS. These consumers have landscaping requiring lawn irrigation, limited and increasingly expensive water utilities, and a demonstrated need for the RIMOS product. The availability of established HVAC distribution channels significantly lowers the time and cost associated with market barriers to entry. First mover advantage will also help RIMOS to...