Introduction Flashcards
(36 cards)
What is the definition of a market?
- A collection of buyers and sellers who transact over a particular product or product class
- Various markets: Product markets, labor markets, markets for information
A market exchange what?
1) Communication (Industry to buyers)
2) Goods/services (Industry to market/B2C)
3) Money (Sales and buys)
4) Information (Buyers to industry)
What defines the market equilibrium in a microeconomic perspective?
P = Price, Q = Quantity, D = Demand, S = Supply
The supply vs. demand curve.
- Increase in price leads to less quantity sold because of a fall in demand.
- Supply quantity increases with price.
The intersection between these two curves is the market equilibrium.
Where can you find the excess demand or supply on a market equilibrium graph?
Above the demand line, to the left of the supply line: Excess supply. (Sellers market)
Under the demand line, to the right of the supply line: Excess demand. (Buyers market)
- Meaning if the price is not at the intersection there might excess supply or demand
What defines different market structures?
1) number of firms in the market
2) the ease to enter or leave the market
3) the ability to set prices
4) the ability of product differentiation
(think porters here)
Mention the different theoretical/ideal markets
1) Competitive markets
2) Monopolistic markets
3) Oligopolistic markets
4) Monopolistic competition
Describe competitive markets
1) Firms produce identical (homogenous) products
2) Market entry and exit is easy: many sellers (and buyers)
3) Firms are price-takers: firm cannot influence price.
a. If you divert from this your sales will decrease and you’ll move to the mean again.
4) No notable profits (no long-term profits)
5) Full information and no transaction costs
Describe Monopolistic markets
1) Only one producer of a good (no close substitutes)
2) Market entry is difficult (e.g. monopolist holds prohibitive patents)
3) Monopolistic firms are price-setters
4) Substantial profits (price is set above marginal costs)
5) Lower demand than in competitive market
Changing prices has direct impact on the demand area under the curve.
Describe oligopolistic markets
1) Product differentiation is possible
2) Small group of firms in the market (aircraft producers, video game market); e.g. based on limited licenses
3) Substantial entry barriers
4) Firms can set prices and affect rival’s actions; incentives to collude (coordinate)
5) Price level is high, and firms can generate profits
Describe Monopolistic competition
1) Products are differentiated (e.g. quality, marketing play a role)
2) Typically many firms, low market power
3) Free market entry
4) Firms set the prices (in similar fashion than a monopolist)
5) Spare capacity
6) Price level is high but limited long-run profits (since free entry)
Which different points does marketing touch upon?
1) Value creates at a profit: Exploring, creating, and delivering value to satisfy the needs of a target market at a profit
2) Identifies unmet needs.
3) Market sizes: defines, measures, and quantifies the size of the identified market and the profit potential
4) Segments and promotes: Identifies segments the company can serve best and designs and promotes the appropriate products and services
What is SG&A? And can work as a proxy for?
Sales, general, and administrative expenses.
- Proxy for marketing expenses.
Do pharma companies spend more money on Marketing (SG&A) or R&D?
More on marketing….
What is the bullwhip effect?
That the amount of fluctuation becomes larger the further down a supply chain you go. (From the direction of consumers to fabrication).
What are the characteristics of a B2B market?
1) Few, large buyers that account for large sales volume
2) Close supplier-customer relationships: proposals, contracts, routines
3) Professional purchasers
4) Multiple buying influences
5) Multiple sales calls
6) Low price-demand elasticity
7) Derived demand: monitoring of end user markets important
8) High demand volatility (fluctuation), “bullwhip” effect
9) Geographic buyer concentration
10) Direct purchasing (no intermediaries)
What are the characteristics of a B2C market?
1) Products more important than relationships
2) Emotional considerations affect buying process more strongly
3) Brands and status very important
4) Less sophisticated buyers
5) Single step (impulse purchase) processes, depending on product
6) Intermediaries frequently with important role in selling process
Do you go through the same phases when buying something from new vs. rebuy vs. modified rebuy?
No! You skip certain buyphases with straight rebuys and some with customized rebuys.
Technology push vs. market pull is?
Technology push: Creating a technology and pushing it into market. Market pull is consumers showing an unmet need and a product developed based on this.
What is the 5-stage model of the consumer buying process?
1) Problem recognition
2) Information search
3) Evaluation of alternatives
4) Purchase decisions
5) Post purchase behavior
What are some market considerations early-on in pharma product development?
1) Market size of the disease
2) Unmet needs and market potential
3) Product vision and strategy
4) Identifying market segments
5) Minimum clinical and pharma-economic outcome levels.
What does the Drug Approval Process look like?
1) Pre-clinical research (Discovery + Animal testing)
2) Clinical Studies (Phase 1: Pharmacodynamics -> Phase 2: Efficacy, Safety and Dosage -> Phase 3: Larger numbers)
3) Completion and submission of NDA (FDA review)
4) FDA Review (Outcomes: Approval, Denial, Approvable with further studies needed.
5) Post-Market Surveillance (Continued observation to monitor side effects and new uses.
And NDA in a drug context is?
New Drug Application
What are Innovator drugs?
- First-in-class drug
- Unique mechanism of action
Innovator vs. me-too
What are me-too drugs?
- Same / similar mechanism of action
- Typically with improved efficacy, more convenient dosage forms, etc.
Innovator vs. me-too
