Economics has proven over the years to implement a variety of techniques that assess the value of non-market and the size of potential customers targeted as a market for goods and services. These goods and services are not traded nor priced in the market for they are only in the development or discovery stages. This concept helps the economist to assess the nature and how the perception of the people the products are being targeted at would react and know the potential market size. There are many methods and concepts of implementing these ideologies of marketing and non-market evaluation of goods and services.
This economics paper is based on the discovery made by one of the scientists whom I have been working with, so as to ascertain that the drug which they have discovered will penetrate in the market and how it will be priced depending on the size of the potential market. For the people who are obese for it’s an obese drug product developed at the department of Megapharma, Inc. This paper main thesis is how the size of potential market of obese people as the target will be estimated and how the manufacturers will be able to determine the marketing price for the drugs?
Size of potential market and target estimation
Because economics offers many different concepts and methods of deployment or market evaluation for new developments it is therefore important to evaluate different concepts which control it. First concept we are going to address is scarcity; the scarcity of implementation of a drug that will fully combat the epidemic of obesity. In United State and Canada this has been a big blow and the most affected are young children, teens and adults. This is the group of people who form the market target of medical products. So if the specialization concept is applied in this market segment then the result would be advantageous for the new drug because of the high cases of obesity in these regions.
Another concept that we shall deploy to help understand the size of market for this drug will be conflict analysis; this approach which I have recommended for the market classification for the new drug. This approach provides a broader and relevant knowledge of the market situation at the moment; it also helps to the notification of requirements regarding needs, conflict dynamics and power. If our research market meets all these needs then we will be able to understand the concerns of the market about obesity as an epidemic, this mutual understanding will foster the need for why to have a new effective drug that will complement the already existing ones.
According to Chin & Lee, (2008) the size of the market of this drug is high depending on the rate as assessed by the World Health Organization body states that obesity in most developed countries is claiming more lives than the dreaded HIV.
Market prices for the new drugs estimation
To ascertain the price suitable for this new development then we have to consider the impact that obesity has on the market which it’s being targeted to. The nature and urgency that obesity remedies are needed well speaks for itself, in this we are going to induce the economics concept of supply and demand analysis and microeconomics theory; which determines the prices of outputs in highly competitive prices (Ioannides, Et al. 2002).
These two theories claim that demand for a new commodity in the market is the respect by which the manufacturer should be aligned when considering the price for the new development. The quantity of the commodity is the main factor as observed in the demand theory, but if the prices are relatively standard and compliments the already existing ones. So price in this case will be largely influenced by the need for the new effective obese drug with affordable value in the market segment.
References
Chin, Richard and Lee, Bruce. (2008) Principles and Practice of Clinical Trial Medicine. New York, Academic Press.
Demos, L. (2002) Reference-Based Pricing Schemes: Effect on Pharmaceutical Expenditure, Resource Utilization and Health outcomes [Online]. Web.