Apex Case Study

Apex Case Study
The development of new products is fundamental to the future success of most firms. New product development is both a strategic means of diversification and maintenance of the company’s share of the market (Annacchino 7). There are factors that might prevent a company from making an educated guess on the new product launch in the market, given competing interests. These factors include competition, risks, and others (Loch and Stylianos 49). Allowing gut feelings in making a decision might put the future of a company at unnecessary risks. Apex is facing a dilemma on the appropriate product to launch given their relative merits and demerits on the market. The problem is compounded by a lack of analytical information that would have otherwise enhanced the decision-making process on the choice of the two products.
However, before one makes a decision on the product that would assist the company is striking it big, it would be important to summarize the important facts that are hand, which would be important in tossing a coin to the right side. The company has an average annual sale of $60 million, and it is expected that the two products would gross the same margin percentage. This implies that the two products are competing on an equal footing, with none having an undue advantage from the outset. Apex is confident of the ability of compound A-115, which faces a stable market of $10 million, and could be a bargain considering its technical superiority compared to the substitute in the market.

The substitute produced by a rival firm has its roots firmly entrenched on to the market, and it would be a real risk staking away Hamfield’s satisfied customers, but compound A-115 must keep alive the hopes of Apex, assuming they are priced evenly. On the other hand, Compound B-27, a beta, might foray into a market that the company already dominates with another product, a stigones, but the market is gradually moving away from stigones to betas. It would worth pointing out that a critical part of the company’s strategy to do well in this market.
The ideal situation that would suit the needs of the customers and that of the company would be two launches the two products in their respective markets.
The customers would be winners in this situation, as they would obtain a product that satisfies their needs and wants, and the company would also emerge as a winner as they would pocket the profits that arise from the sale of the two products. However, scarcity of resources and other market factors has pushed the company to make a decision on the product that would suit their strategy and help in reaping profits. The game theory that relies on the decision tree might be preferable in this situation, as the case has limited analytical information (Kelly 3). In this scenario, it might be valuable relying on payoffs and relative offsets to make a decision. Implying that when a decision must be made when one of the products has a significant advantage over the other.
The decision tree, based on the facts would begin by either a choice on compound A-115 or B-227. Since B-227 is going for a bigger market share of the $40 million, compared to A-115’s only $10 million, then a tentative choice on the former would be appropriate (Appendix). Moreover, the concept of 5C’s in marketing provides more appeal to the management of the company to consider B-227 over A-115, as it factors in completely the company, collaborators, customers, competitors and climate.
Works Cited
Annacchino, Marc. The pursuit of new product development: the business development process. Butterworth-Heinemann, 2011.
Kelly, Anthony. Decision making using game theory: an introduction for managers. Cambridge University Press, 2003.
Loch, Christoph, and Stylianos Kavadias. Handbook of new product development management. Routledge, 2008.
Appendix