Given the limited information in this case, which product would you recommend that Apex commercialize? Why?
I would recommend that Apex commercialize Compound B-227. First, there is a much larger market size and future growth potential with B-227 at $40 Million and climbing vs. A-115 which is at $10 million and relatively flat and stable. This means that even if Apex tried to innovate with A-115 and theoretically captured 100% of the market, which is not likely considering they would be competing with a very well established company, Hamfield, they would only have $10 million to show for it and nothing past that amount since it’s a stable market. If they choose to commercialize with B-227, they would only need to capture 25% of the market in order to reap the same revenue potential, which is a much more realistic and obtainable goal. Aside from dollars and cents, we need to look at what Apex specializes in. The company is not known at all in the electrolysis market and, again, would be competing with one major player who dominates the market share. Not only would Apex need to establish itself in a brand new market, but it would have to do so with a new product that isn’t really desired at this point amongst potential customers. I believe that this would prove to be a waste of time, energy and money for Apex to try and venture into. While Apex believes that customers would gravitate towards A-115 because it is a superior product, we have learned that innovation is not always about providing a better product or service and they should consider that in their decision making process. A-115 should not be viewed as the “silver bullet” which will cause their enterprise to grow – they need consider the entire innovation process in order to achieve enterprise growth. On the other hand, there is a desire in the market for B-227 so it’s already known that if Apex focused its energy in innovating toward that product, there would definitely be a positive...
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