Assignment task: PharmX, a market research firm located in Cleveland, conducts various market research for pharmaceutical and medical device manufacturers. In one of its research projects, PharmX wanted to apply the Bass Model to predict the diffusion of a new drug that treats Alzheimer's Disease. The drug has not been launched so there is no sales data. To use the Bass model for prediction, PharmX needs to first estimate the Bass model parameters m, p and q.
Answer the following questions:
(1) What are the terms for m, p and q, and what do they measure/represent in the Bass model?
(2) Briefly describe how PharmX should estimate parameters p and q.
(3) Assume that PharmX has estimated m = 20,000,000, p = 0.03, and q = 0.45. Calculate the sales in years 1 to 3. You can round out the decimals. Show your work