Given the limited information in this case, which product would you recommend that Apex commercialize? Why?
Apex, a chemical manufacturer, has the option of commercializing one of its compounds due to resource scarcity. Apex needs to examine both choices and take into consideration the analysis of market size and trend, value proposition, market knowledge and share, and forecasted revenue for each of the compound before it decides which compound to commercialize.
The first is Compound A-115, a new electrolysis agent. The electrolysis agent market is stable at $10 million a year with Hamfield occupying 95% of the market and customers are currently satisfied with Hamfield. Since Apex is not known in the electrolysis market and has no presence there, it will be hard for Apex to compete and gain shares from Hamfield. If Apex decides to enter the electrolysis agent market it will at most capture the 5% share (potential of $0.5 million) and Apex will have to create a market for it. Apex will also need to produce a more superior product to that of Hamfield in order to gain market share. But it’s not always about providing a better product. Even if Apex captures 100% of the market, which is not likely, it will have $10 million in annual revenue and not much more since it’s a stable market and customers are not insisting on it like the betas. In addition, Apex will need to put in additional marketing efforts to promote this new product since it’s a new market for Apex. Apex would already be at a disadvantage if they were to enter this market since Apex has to deal with a strong competitor with little revenue margin and considerable initial investment to launch this compound.
There are two products used in the plastic oxidizer market: beta-prednigones and stigones. This market share is $40 million with betas accounting for 60% and stigones accounting for 40% total market share. Apex has the best stigones and dominates that...
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