Introduction to Biomarkets Flashcards
What are the components of the “big picture” of Biomarkets(course)?
1) Market Structure & Strategy
- Market fundamentals
- The external environment
- Firm capabilities
- Firm Boundaries
2) Engaging with markets
- The Marketing Mix
- Life-cycle management
- Measuring succes
3) Specific Topics
- Regulation for Bio-pharmaceuticals
- Industrial Biotechnology markets
What is the definition of markets
A collection of buyers and sellers who transact over a particular product or product class
What different types of markets exist?
Product markets
Labor markets
Markets for information
What is indirect information flow?
Seller observes changes in buyer’s behavior.
Seller may observe “something is going wrong” –> adjusts as a result
What is direct information flow?
The buyer tells the seller directly what they want/need
What factors make up the market structure?
- Number of firms in the markets
- Ease to enter of leave the market
- Ability to set prices
- Ability of product differentiation
What characterizes competitive markets?
- Firms product homogenous products
- Market entry and exit is easy (many sellers and buyers)
- Firms are price-takers: firm cannot influence price (if price increase, market share decrease)
- No notable profits (no long term profits) –> if a firm start to make profit, there is a market entry opportunity for other firms to enther
- Full information and no transaction costs
–> companies in general do not like these markets
What characterizes a monopolistic market?
- Only one producer of good (no close substitutes)
- Market entry is difficult –> monopolist holds prohibitive patetns
- Monopolistic firms are price-setters
- Substantial profits (price is set above marginal costs)
- Lower demand than in competitive market
What characterizes oligopolistic markets?
- Product differentiation is possible
- Small group of firms in the market
- Substantial entry barriers (e.g.very capital required such as aircraft)
- Firms can set prices and affect rival’s actions; incentive to coordinate (allthough they are not allowed to do this, some do indirectly)
- Price level is high and firms can generate profits
What characterizes monopolistic competition?
- Products are differentiated (meaning quality of marketing plays a role)
- Typically many firms lower market power
- Free market entry
- Firms set the prices (in similar fasion as a monopolist)
- Spare capacity
- Price level is high - but limited long-run profits (since free entry)
What is the definition of marketing?
Science and art of explorting, creating and delivering value to satisfy the needs of a target market at a profit.
What does marketing attempt to do?
Identify unfulfilled needs and desires.
Defines measures
Quantifies the size of the identified market and profit potential
Pinpoints which segments the company is capable of serving best
Designs and promotes appropriate products and services
Does pharma companies spend more money on R&D or Marketing?
Marketing. Due to the importance for sales.
What is the Bull-Whip effect?
Demand fluctuates as we move up the supply chain.
The effect is related to information flows: unclarity regarding the relevance of fluctuation leads to bigger changes further up in the supply chain.
Example: The distributor sees the increase and expands its purchase order with the manufacturer to anticipate increased requests from other retailers as well. The manufacturer increases its manufacturing run in anticipation of greater product requests in the future.
What does geographic buyer concentration refer to?
Differentiated marketing strategy based on geography
