Market Shaping
Market shaping constitutes the interventions to influence a market’s dynamics for a social or developmental purpose, or another policy objective.
Like markets for health commodities, or maybe even more so, markets for assistive products are complex and can function ineffectively and/or inefficiently.
Shortcomings, such as limited, fragmented, and uncertain demand, few quality suppliers, delays in regulatory approval, and low awareness of available technologies among potential consumers, often lead to low supply, low private investment, limited competition, and high prices, and thus perpetuate low demand. Market shaping looks to break those vicious cycles.
The global health community has deployed market shaping approaches across essential health commodities over the past decade, successfully increasing availability and affordability. For example, prices that donors and developing countries pay for key childhood vaccines, antiretrovirals for HIV, and malaria bed nets, have dropped by at least a half, enabling rapid scale-up in access.
In general, market shaping interventions use 3 levers to reduce market shortcomings:
Reduce transaction costs
Increase market information
Balance supplier and buyer risks
Examples of market shaping interventions include pooled procurement, de-risking market demand through volume guarantees, bringing lower cost and high-quality manufacturers into global markets, developing demand forecasts and market intelligence reports, standardising specifications across markets, establishing differential pricing agreements, and improving service delivery and supply chains.
Successful interventions are tailored to specific markets after robust analysis of barriers and they generally coordinate action on both supply and demand side.
Banner photo: DeafKidz International