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Word Count: 570
What price and Why To assess what price Oxyglobin should be set at we must analyze the 4 Cs Firstly in evaluating the company we determine that the cost of production is 15 Million per year independent of volume plus 150 per unit variable cost The current capacity for Oxyglobin is 300000 units In exhibits 4 and 5 we determine their break-even cost Next we must determine who the customer is and what their potential is To do this we begin by looking at the number of veterinary practices in the US Exhibit 1 shows the average monthly case load of the 15000 US veterinary practices In looking at these averages we can determine the absolute number of practices and doctors for each class of practice Taking the average number of animals dogs cats and other each class of practice treats each month and multiplying that by the absolute number of practices in each class yields the absolute number of animals each practice treats per month and subsequently the annual potential Targeting veterinarians in the emergency care segment is the most efficient and effective approach The potential of this segment is 6930000 animals per year Of this nearly 7 Million animals in need of blood approximately 7 of the need blood come from blood banks and the remaining 93 from a very inefficient and costly donor animal This 93 6444900 represent the potential market for Oxyglobin and is clearly far above the 300000 unit annual capacity for Oxyglobin Conservatively if we assume 30 of these animals are in critical need of blood then we get 2079000 animals Of this population we know that 60 of Veterinarians and 65 of pet owners are willing to pay the 200 400 vets cost doubled to pet owner price Again being conservative if only 25 are actually willing to pay those prices we still have a demand of 519750 again far exceeding our capacity Exhibits 2
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