MICRO ECONOMIC ANALYSIS ON KOHINOOR CONDOMS A Term Paper submitted in Partial Fulfillment of the Requirements for the Credits in Micro Economics

by Abhilasha Bhatt (M02/12) Subha Mookherjee (M40/12) Varun Yadav (M46/12) Veluguri VKVSC Kumar (M47/12) Kaustav Saha(F03/12)

Under the guidance of Dr. Amarendu Nandy

to the DEPARTMENT OF ECONOMICS INDIAN INSTITUTE OF MANAGEMENT RANCHI RANCHI – 834008, JHARKAND

Acknowledgement
This work has been carried out during 2011-2012 at the Economics Department of Indian Institute of Management, Ranchi, Jharkhand, India.

We wish to express our gratitude to Dr. Amarendu Nandy for making it possible for us to analyze the micro economic factors relevant in a condom industry, for his help and advice during this work, and for his contribution and support. We would also like to thank all the people and medical store owners who volunteered for the survey.

Preface

For the last few decades, the number of sexually transmitted diseases has increased- the most dangerous of them being AIDS. It is important to be aware of the ways of combating such problems. One of the ways to prevent the spread of STDs is by the use of condoms. The project aims to study the microeconomic environment around Kohinoor (Condom). The analysis covers economic and non-economic factors influencing demand, product differentiation, effect of policies and consumer preferences for the product. We have rolled out online surveys and conducted field surveys for data collection and documented the quantitative aspect of the project by studying market segmentation, elasticity, price competition, bottom line and pricing practices.

Table of Contents
About the Company ......................................................................................................... 5 The Condom Industry ....................................................................................................... 6
The Condom Market................................................................................................................. 6

Phases in the Industry ...................................................................................................... 7
Rural India (1998)1.................................................................................................................... 7 New Variants (Year 2002)2 ........................................................................................................ 7 Focus on Youth Condom Segment (Year 2009)3 ......................................................................... 7 Price of Latex and its effect on Condom manufacturing and Kohinoor (Year 2010)4 .................... 7 TTK-LIG and the potential online (2011 and 2012)5 .................................................................... 8 Current Thrust.......................................................................................................................... 8

Major Competitors ........................................................................................................... 9
Kama Sutra .............................................................................................................................. 9 Moods ..................................................................................................................................... 9 Manforce ................................................................................................................................. 9 Durex ..................................................................................................................................... 10

Government policies ...................................................................................................... 11 Economies of Scale and Economies of Scope ................................................................... 12 Online Survey Findings ................................................................................................... 13
Sample Characteristics ........................................................................................................... 13 Consumer Preferences ........................................................................................................... 15 Brand Loyalty ......................................................................................................................... 16 Product Differentiation .......................................................................................................... 17 Distribution Channel .............................................................................................................. 17 Substitutes ............................................................................................................................. 18 Factors Influencing Demand ................................................................................................... 18 1. Health and Social Factors ................................................................................................ 19 2. Non-Economic Factors..................................................................................................... 24 Study Pertaining to Kohinoor .................................................................................................. 25 Understanding Elasticity ......................................................................................................... 27 Limitations of the Study ......................................................................................................... 28

Field Survey at Chemist Shops ........................................................................................ 29
Scope of the Survey ................................................................................................................ 29 Methodology ......................................................................................................................... 29 Findings from the Survey ........................................................................................................ 29 Limitations of the Survey ........................................................................................................ 32

Conclusion...................................................................................................................... 33 Refrences ....................................................................................................................... 34

Micro-economic analysis on Kohinoor Condom 5

About the Company
TTK-LIG (renamed TTK Biomed Ltd) is the leading condom manufacturing company in India and producer of the Kohinoor brand of condoms. The company exports more than 600 million pieces annually. It exports to some 40 countries. The preparation for the export market included upgradation both of equipment and of the product focusing on consistent quality. This covered the commissioning of the second phase of Pallavaram plant (trebling the capacity to 600 million pieces a year) and the setting up of a new plant at Virdhunagar in Tamil Nadu with a capacity of 24 million pieces a year.

TTK-LIG is a 50:50 joint venture between TT Krishnamachari & Co and Seton Seholl International of the UK (formerly Rubber Co). TTK has taken ISO 9002 certification to reinforce its position from both production and customer angles. It has also upgraded its technology with the help of its collaborators. Following its collaboration with Seton Seholl, the largest manufacturers of the famous Durex condoms, it launched the brand in India.

The company has also re-launched the Kohinoor Xtra Dot, Xtra Ribs and the Xtra condoms. The new product Kohinoor Xtra Dot, Xtra is coated with a specially formulated lubricant containing the active ingredient benzocaine and is expected to increase the company’s market share in the branded condom segment.

At present the company has a market share of 42% in the branded condom market. The company exported 1.5 billion condoms in 2007 to over 40 countries including the US, France, Germany, Australia, Spain Mexico, South Africa, Brazil and the UK. It has also supplied over our billion condoms to the Family Welfare Programme.

Micro-economic analysis on Kohinoor Condom 6

The Condom Industry

The Condom Market
The current market of rubber contraceptive is valued over Rs 6 billion in 2011-2012. This growth accounts to 2% increase from the previous year, which when considered with the GDP seems out of sync. A study by leading firm has estimated that there is a total of 10% growth in 2011-2012 from 2006-07. In northern and western parts of India the growth was higher than the other parts of the country. Hindustan Latex was established as a part of the effort towards family planning by Government of India in 1966. Additional manufacturing facilities were set up in different parts of the country to increase the initial capacity 144 million pieces per year. In 2007-08 the production was estimated at 1047 million pieces. Through the manufacturing of condoms, the company emerged as an integrated manufacturer of family planning and also started to make devices such as female contraceptives (Saheli), IUCD (Copper T) and female oral

contraceptives (Mala D/N). The company has a technological tie-up with a UK-based company. The use of condoms, conceived primarily as a tool for family planning to curtail population growth, has attained a primacy in arresting the spreading of the dreaded disease, AIDS. Indians use some 2300 million condoms annually while the domestic production was of the order of 3600 million pieces in 2006-07. The balance of about 1400 billion is exported.

Micro-economic analysis on Kohinoor Condom 7

Phases in the Industry

Rural India (1998)1
Government supplies of Nirodh cater to the lowest segment of the market and brands like Kohinoor cater to the upper-end.

New Variants (Year 2002)2
TTK-LIG spent Rs 1 crore for the launch of the new variants of its condom brand `Kohinoor - Kohinoor Xtra Time'. The company also re-launched the Kohinoor Xtra Dot, Xtra Ribs and the Xtra thin condoms.

Focus on Youth Condom Segment (Year 2009)3
TTK LIG Ltd returned to the youth condom segment with a new product, Durex Jeans, a few years after it withdrew its first youth-focussed brand Fiesta from the market. Some years back, TTK launched Fiesta condoms targeting the newlyweds, while its other brands, including Kohinoor, targeted older couples. The company then launched a variant to the super premium sheath Durex and give brand support through advertisements. TTK LIG hoped that the lower price would help Durex Jeans penetrate into the market at a greater pace. TTK launched several new variants to the Durex and Kohinoor brands like Durex Apple and Kohinoor Jasmine.

Price of Latex and its effect on Condom manufacturing and Kohinoor (Year 2010)4
Latex accounts for about 22% of the material costs in condom manufacturing. The price of latex went up to Rs135 per kg from Rs46 per kg due to torrential rains in south-east Asia, where most rubber is farmed. Condom manufacturers had to face an unprecedented rise in the price of latex. With latex prices ballooning nearly 200% year-on-year, condom manufacturers announced price hikes across product lines and it had a deflationary effect on condom sales.

Micro-economic analysis on Kohinoor Condom 8 As latex prices increased dramatically in the course of the year, many small-scale manufacturers went out of business. Half-a-dozen units in the small-scale sector had to down the shutters, unable to contain the rising costs. Despite the rise in latex prices, companies like TTK LIG did not raise price in the recent past. The company has a requirement of 250 tonnes of latex per month.

TTK-LIG and the potential online (2011 and 2012)5
Sales through the online store for Durex, marketed by TTK-LIG, have touched Rs 3.5 lakh from Rs 15,000-20,000. According to TTK- Embarrassment, lack of privacy and not enough space to stock the entire range in retail outlets, affect the shopping experience and retailers take advantage of these factors to push brands that give them higher margins, adding that the online store gets around all these problems. TTK-LIG has seen a spike in sales since July-August a year ago, a result it attributes to its sustained marketing activity online (including social networks) as well as on its packs.

Current Thrust

Kohinoor Silk Latex Free condoms Starts at Rs. 35

The company is promoting Kohinoor Silk as the only condom available in the market today that is a non-latex condom. It is made from technologically advanced Polyisoperene material. Polyisoprene is a substitute to natural latex.

Micro-economic analysis on Kohinoor Condom 9

Major Competitors

Kama Sutra
Kamasutra Condoms are manufactured and marketed by JK Ansell Ltd, a 50:50 joint venture between the Ansell International and the Raymond Group (India), is one of the world largest producers of latex products. KamaSutra launched in 1991 is a leading condom brand in India; and now it is exported to over 60 countries. Around 250 million pieces of condoms are manufactured by JKAL every year. JKAL also manufactures Gammex and contraceptives, medigrip non-sterile and sterile, Nutex gloves and Sensi-Touc. 250 mn pieces per annum are manufactured at the plant Aurangabad in Western India manufactures.

Moods
Hindustan Latex, one of the world's largest manufacturers of condoms, markets the popular Moods Condom in India. It is the leading enterprise in this market under the ministry of health and family welfare, government of India. It produces annually 800 million condoms. HLL is setup in the natural rubber rich state of Kerala for the production of male contraceptive sheaths for the National Family Welfare Program. The company has entered into the collaboration with the Female Health Company (FHC) of the US for manufacturing female condom in India and has launched a new product in the segment of female condoms , Velvet.

Manforce
Mankind Pharma is the 8th largest pharma company in the country. Established in 1995 with today its worth is Rs 2000 crore. The company also has a strong product portfolio in the consumer brand and has accounted a growth 16-18% annually, against the industry average of 13-14%. Mankind stands at the third position in the male condom market and second in the pills market.

Micro-economic analysis on Kohinoor Condom 10

Durex
Durex enjoys approximately a 25% share of the world’s branded condom market (close to 4 bn pieces), and is world’s top brand. It is positioned at the premium segment of the market. The product was made available in two variants, Durex Superthin and Durex Extra Safe.

Micro-economic analysis on Kohinoor Condom 11

Government policies

In the past two decades Government of India formulated various policies which increased the sales of condoms exponentially. These policies can be classified as those related to the control of STDs like HIV/AIDS and those related to the control of population growth. In order to control the spread of AIDS, Government of India has established National AIDS Control Organization (NACO) in 1992. This organization was established to formulate various policies and programs for the control of AIDS. The National AIDS Control Programme was launched in 1992. In its first phase (1992-99) it concentrated on slowing down the spread of HIV. It also created awareness and addressed the safety norms in blood banks and sexual health clinics. It developed skills in clinical management, health education and counselling. Availability of good quality condoms through social marketing has made a significant increase in its use. The second phase (1999-2004) is fully sponsored by central government and was implemented in all the states and union territories of India. Here the focus has been shifted from creating awareness to changing behaviour through interventions. The main concentration was on groups with high risk. Various media channels such as TV, radio, etc., were used. It also started various state level AIDS control societies and improved the drug and equipment procurement practices. It strengthened India’s capacity to respond to HIV/AIDS on a long term basis. Currently NACP was in its third phase. Both prevention and treatment have been given high importance in this phase. The county is committed to achieve millennium development goals in reducing HIV mortality in the near future. Population control has been one of the main areas of emphasis for the planning commission. The first five year plan emphasized the reduction in fertility and gave it the top slot in the family planning programme. The second five year plan also gave importance to population control. This is when government started to educate the people on contraceptives. Substantial budgets have been allocated for population control. In all the plans, various types of birth control methods such as sterilization, IUCD, use of contraceptives have been advocated.

Micro-economic analysis on Kohinoor Condom 12

Economies of Scale and Economies of Scope

The main raw material used in the manufacture of condoms is rubber latex. Condom industry is capital intensive. The cost of the raw materials used is relatively low compared to the cost of the machinery employed in the manufacturing of condoms. The fixed cost is very high compared to the variable cost. Also the manufacturing and packing plants are fully automatic. The variable cost involved is only 15-20% of the total cost of manufacturing. Condom industries can produce condoms in a large number to take advantage of this low variable cost to reduce its overall average cost. Due to various government policies such as free condom distribution and social condom marketing and also due to the increased awareness among the people the demand for condoms has increased tremendously over the past few years. All these helped the Indian condom industry to achieve a large degree of Economies of scale. Female condoms also require the same manufacturing process. The raw materials employed are also almost the same. There is a large chance of Economies of Scope in the condom industry. Companies can make use of this to produce both male and female condoms. But there are certain obstacles for this as the sales of female condoms are far less than the sales of male condoms. The reasons for this poor sales are that inserting a female condom is a skill that has to be learned and female condoms are significantly more expensive than male condoms( almost 2 to 3 times higher ). The reason for this higher cost of female condoms is that there are very less government interventions and subsidies in the case of female condoms as compared to male condoms. If proper government steps were taken to reduce the price of female condoms and create awareness among the public, there will be a lot of scope for condom industries to produce both types of condoms.

Micro-economic analysis on Kohinoor Condom 13

Online Survey Findings

To understand consumer preferences about condoms, an online web based survey was floated. The questionnaire was designed to understand the consumer demographics, preferences about brands, differentiation in condoms, substitutes to condoms, factors influencing demands, understanding distribution channel and understanding elasticity in the condom market.

Sample Characteristics

The sample consisted of 62 respondents including both regular users and prospective users. It was assumed that both would respond rationally. While regular users were requested to report based on their actual experiences, prospective users were urged to respond according to their true perceptions. Based on regular versus prospective users of condom, 32% of the survey respondents were regular users and 68% of the respondents were prospective buyers.

User Type Regular User Prospective User Total

Response 20 42 62

% 32% 68% 100%

Figure 1: Regular Users vs Prospective Users

As per gender and age characteristics are concerned, 89% of the respondents were males and majority of the respondents were of the age group 18-25 and 25-35 years, which accounted for 52% and 44% of the responses respectively.

Micro-economic analysis on Kohinoor Condom 14

Gender Male Female Total

Response 55 7 62

% 89% 11% 100%

Figure 2: Gender distribution

Age Group 18-25 years 25-35 years 35-45 years 45-55 years above 55 years Total

Response 32 27 1 1 1 62

% 52% 44% 2% 2% 2% 100%

Figure 3: Age group distribution

Income wise distribution indicated that most of the respondents were of the income group Rs 25000-Rs 50000 followed by groups in less than Rs 10000 and Rs 10000 - Rs 20000 bracket.

Monthly Income less than Rs 10000 Rs 10000 - Rs 25000 Rs 25000 - Rs 50000 Rs 50000 - Rs 100000 above Rs 100000 Total

Response 12 11 26 8 5 62

% 19% 18% 42% 13% 8% 100%

Figure 4: Income group

Thus, we could infer that the sample consisted mainly of young males with low to moderately high income level.

Micro-economic analysis on Kohinoor Condom 15 The willingness to pay data is commensurate with the above findings as maximum respondents are willing to pay a higher price for a packet of condom, often the premium ones. This also infers that the consumers are more quality conscious than price conscious.
Answer below Rs 15 Rs 15 - Rs 25 Rs 25 - Rs 35 Rs 35 - Rs 45 Rs 45 - Rs 55 above Rs 55 Total Response 4 12 11 8 10 17 62 % 6% 19% 18% 13% 16% 27% 100%

Figure 5: Willingness to Pay for a Pack of 3 Condoms

Consumer Preferences
Based on the responses to the survey, it is found that the Durex brand has the maximum preference in the sample. Almost 40% respondents chose Durex whereas only 15% chose Kohinoor as their 1st preference.
30 25 25 20 15 10 5 0 Kohinoor Kamasutra Moods Manforce Durex Other 9 5 6 5 12

Response

Figure 6: Brands of First Preference

Micro-economic analysis on Kohinoor Condom 16 As a second preference too, Kohinoor lagged behind with only 13% popularity while Kamasutra leaded the pack with 26% preference.
18 16 14 12 10 8 6 4 2 0 Kohinoor Kamasutra Moods Manforce Response Durex Other 8

16 14 12

7 5

Figure 7: Brands of Second Preference

Brand Loyalty
The reason why consumers prefer a particular brand was studied in a question regarding reason to stick to brand of choice. The findings suggest that most influencing reason is quality of the product, followed by ease of availability. Price is generally not a major influencing factor.
Average Value 5.92 3.79 2.92 5.39 5.06 5.21

Figure 8: Reasons behind Preferences

Micro-economic analysis on Kohinoor Condom 17

Product Differentiation
Condoms are available in different variants, namely flavoured, dotted, extra thin, etc. The survey findings suggest that dotted variants have a clear leadership in the product differentiation criteria.

Figure 9: Condom Varieties

Distribution Channel
To understand the distribution pattern of condoms, a question was put up enquiring the means of availing condoms. The results show that by large, the most popular medium is direct buying from chemist shops. Alternative means like online purchase or condom vending machines are not much popular yet. One respondent even mentioned purchase from pan shop.

Other Free sample from Clinics Subsidized distribution by NGOs Condom Vending Machines Online Purchase Chemist Shop 0 10 20 30 40 50 Response

Figure 10: Distribution Channel

Micro-economic analysis on Kohinoor Condom 18

Substitutes
The major substitute for condom stands to be contraceptive pills. However, the female condoms also have some popularity though its yet to be significant.

16%

18% Femidom (Women Condom)

6% 5%

Contraceptive Pills Copper T Vasectomy/Tubectomy Other 55%

Figure 11: Substitutes

Factors Influencing Demand
To understand the factors that affect the demand for condoms significantly, 2 set of questions were included in the questionnaire, one to enquire about the health and social factors and the other to understand any non-economic factor that might be influencing demand. A simple linear regression analysis is done to find out if there is any linear relationship between the factors and demand. Also, a multiple regression approach is undertaken to establish a model of demand versus all the factors together.

Micro-economic analysis on Kohinoor Condom 19

1. Health and Social Factors
FACTOR 1: AVOIDANCE OF AIDS AND OTHER SEXUALLY TRANSMITTED DISEASES

The null hypothesis is taken that there is no linear relationship between Demand for Condoms and Avoidance of AIDS and Other STDs. The alternate hypothesis is taken that there is a linear relationship between Demand for Condoms and Avoidance of AIDS and Other STDs. The regression model can be summarised as follows:
Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 0.398627009 0.158903493 0.144885217 10.50071302 62

Table 1: Regression Statistics for Avoidance of AIDS and Transmitted Diseases ANOVA df Regression Residual Total 1 60 61 SS 1249.90338 MS 1249.90338 F Significance F

11.33545256 0.001331731

6615.898435 110.2649739 7865.801816

Table 2: ANOVA for Avoidance of AIDS and Transmitted Diseases

We see that FSTATISTIC > FCRITICAL. Thus the null hypothesis stands rejected. Hence, we can declare there is significant evidence that a linear relationship does exist between Demand for Condoms and Avoidance of AIDS and other STDs. Also, from R Square value, we can declare that 15.89% variation in Condom Demand can be attributed to Avoidance in AIDS and other STDs. The regression model can be equated as: Demand = 24.77 - 2.24 (Avoidance in AIDS and other STDs)

Micro-economic analysis on Kohinoor Condom 20
FACTOR 2: PREVENTION OF P REGNANCY

The null hypothesis is taken that there is no linear relationship between Demand for Condoms and Prevention of Pregnancy. The alternate hypothesis is taken that there is a linear relationship between Demand for Condoms and Prevention of Pregnancy. The regression model can be summarised as follows:
Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations Table 3: Regression Statistics for Prevention of Pregnancy ANOVA df Regression Residual Total 1 60 61 SS MS F Significance F 0.264366633 0.069889717 0.054387879 11.04239041 62

549.7386601 549.7386601 7316.063156 121.9343859 7865.801816

4.508479343 0.037860648

Table 4: ANOVA for Prevention of Pregnancy

We see that FSTATISTIC > FCRITICAL. Thus the null hypothesis stands rejected. Hence, we can declare there is significant evidence that a linear relationship does exist between Demand for Condoms and Prevention of Pregnancy. Also, from R Square value, we can declare that 6.98% variation in Condom Demand can be attributed to Prevention of Pregnancy. The regression model can be equated as: Demand = 25.59 – 2.15 (Prevention of Pregnancy)

Micro-economic analysis on Kohinoor Condom 21
FACTOR 3: SOCIAL NORMS

The null hypothesis is taken that there is no linear relationship between Demand for Condoms and Social Norms. The alternate hypothesis is taken that there is a linear relationship between Demand for Condoms and Social Norms. The regression model can be summarised as follows:
Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations Table 5: Regression Statistics for Social Norms ANOVA df Regression Residual Total 1 60 61 SS MS F Significance F 0.100953883 0.010191686 -0.006305119 11.39125105 62

80.16578576 80.16578576 7785.63603 7865.801816 129.7606005

0.617797586 0.434960105

Table 6: ANOVA for Social Norms

We see that FSTATISTIC > FCRITICAL. Thus the null hypothesis stands rejected. Hence, we can declare there is significant evidence that a linear relationship does exist between Demand for Condoms and Social Norms. Also, from R Square value, we can declare that 6.98% variation in Condom Demand can be attributed to Social Norms. The regression model can be equated as: Demand = 10.21 + 0.54 (Social Norms)

Micro-economic analysis on Kohinoor Condom 22
FACTOR 4: INFLUENCE OF WELFARE PROGRAMS BY GOVERNMENT

The null hypothesis is taken that there is no linear relationship between Demand for Condoms and Influence of Welfare Programs by Government. The alternate hypothesis is taken that there is a linear relationship between Demand for Condoms and Influence of Welfare Programs by Government. The regression model can be summarised as follows:
Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 0.119230796 0.014215983 -0.002213751 11.36807057 62

Table 7: Regression Statistics for Influence of Welfare Programs ANOVA df Regression Residual Total 1 60 61 SS MS F Significance F

111.8201032 111.8201032 0.865259481 0.355998598 7753.981713 129.2330285 7865.801816

Table 8: ANOVA for Influence of Welfare Programs

We see that FSTATISTIC > FCRITICAL. Thus the null hypothesis stands rejected. Hence, we can declare there is significant evidence that a linear relationship does exist between Demand for Condoms and Influence of Welfare Programs by Government. Also, from R Square value, we can declare that 1.42% variation in Condom Demand can be attributed to Influence of Welfare Programs by Government. The regression model can be equated as: Demand = 9.65 + 0.63 (Influence of Welfare Programs by Government)

Micro-economic analysis on Kohinoor Condom 23
ALL FACTORS COMBINED

The multiple regression model can be summarised as follows:
Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations Table 9: Regression Statistics for All Factors ANOVA df Regression Residual Total Table 10: ANOVA for All Factors 4 57 61 SS MS F Significance F 0.469173941 0.220124187 0.16539606 10.37401324 62

1731.453231 432.8633078 4.022139956 0.006087951 6134.348585 107.6201506 7865.801816

From R Square value, we can declare that 22.01% variation in Condom Demand can be attributed to all the 4 factors combined. The regression model can be equated as: Demand for Condoms = 27.59 – 2.27 (Avoidance in AIDS and other STDs) -1.02 (Prevention of Pregnancy) + 0.35 (Social Norms) + 0.84 (Influence of Welfare Programs by Government)

Micro-economic analysis on Kohinoor Condom 24

2. Non-Economic Factors
A cross-tabulation of the various non-economic factors showed that factors like marriages, Valentine’s Day, holidays and vacations, celebrations, etc have moderate influence on demand for condoms. On a 7 point scale the mean scores for change in demand due to economic factors and no change in demand can be represented as:
Series1 4.75 4.7 4.65 4.6 4.55 4.5 4.45 4.4 4.35 4.3 4.25 4.2 Demand is not Constant

Demand is always Constant

Figure 12: Comparison of Scores for Changing and Constant Demand

The descriptive statistics for various factors can be compared as below:
Marriages Mean Standard Error Median Mode 5.0161 0.2904 6.0000 7.0000 Valentine’s Day Mean Standard Error Median Mode 4.6452 0.2702 5.0000 7.0000 Holidays and Vacations Mean Standard Error Median Mode 5.32258 0.22970 6.00000 7.00000

Standard Deviation 2.2868 Sample Variance 5.2292

Standard Deviation 2.1279 Sample Variance 4.5278

Standard Deviation 1.80867 Sample Variance 3.27129

Table 11a: Descriptive Statistics for Non-Economic Factors

Micro-economic analysis on Kohinoor Condom 25
Festivals Mean Standard Error Median Mode 4.1129 0.2643 4.0000 7.0000 Celebrations Mean Standard Error Median Mode 4.4677 0.2558 5.0000 5.0000 Demand is always Constant Mean Standard Error Median Mode 4.4032 0.2895 5.0000 7.0000

Standard Deviation 2.0812 Sample Variance 4.3313

Standard Deviation 2.0140 Sample Variance 4.0563

Standard Deviation 2.2793 Sample Variance 5.1954

Table 11b: Descriptive Statistics for Non-Economic Factors
6 5 4 3 2 1 0 Marriages Valentine’s Day Holidays and Vacations Series1 Festivals Celebrations

Figure 13: Comparison of Scores for various Non-Economic Factors Influencing Demand

Thus, it can be inferred that maximum increase in demand for condoms is during holidays and vacations. Marriages also have a profound effect on demand for condoms.

Study Pertaining to Kohinoor
Only 9 respondents chose Kohinoor as their brand of first choice. Out of them, 8 were prospective users and only 1 was a regular user. Gender wise, 8 were male and 1 was female. Most of the respondents belonged to the lower age groups below 35 years. Salary wise, the distribution was more even. Maximum concentration was in the range of Rs 10000 - Rs 25000. In the variant category, again the distribution was almost even with slightly higher preference to Extra Time. In line with the general findings, most respondents preferred buying from Chemist Shops. However, willingness to pay is lower with maximum responses in the group of Rs 15 – Rs 25.

Micro-economic analysis on Kohinoor Condom 26

10 8 6 4 2 0 Kohinoor Rs 35 - Rs 45 Rs 25 - Rs 35 Rs 15 - Rs 25 above Rs 55

Figure 14 (a-f): Consumer Demographics for Kohinoor as First Choice

Micro-economic analysis on Kohinoor Condom 27 Enquiring about the reason behind choosing Kohinoor, we find that Kohinoor is mainly preferred by respondents for its quality and varieties available.

6 5 4 3 Mean 2 1 0 Price Quality of Product Easy Availability Brand Loyalty Varieties Available No Reason, Indifferent to Brands

Figure 15: Reasons for Brand Loyalty towards Kohinoor

Understanding Elasticity
The willingness to change brand under conditions of price change was noted on a 7 point scale to understand the elasticity of a condom brand. The conditions set were as follows: a. Price for a pack of 3 condoms of your preferred brand increases by Rs 10

b. Price for a pack of 3 condoms of your second most preferred brand decreases by Rs 10 c. A new ordinary condom brand is launched that is priced at half the rate of the cheapest condom brand available in market d. A super premium condom brand is launched that is priced at double the rate of the priciest condom brand available in the market Depending on the responses received from respondents whose first preference was Kohinoor, it is inferred that they are most liable to change brand if the price of their second most preferred brand is decreased by Rs 10. The mean values for all the conditions and the overall willingness to change along with their respective percentage effects is represented in the figure below.

Micro-economic analysis on Kohinoor Condom 28
6 5 4 3 2 1 0 Overall Willingness Price increases Price decreases New ordinary Super premium by Rs 10 by Rs 10 condom brand condom brand 80 70 60 50 40 30 20 10 0 Series1 Series2

Figure 16: Understanding Elasticities

Thus, it can be inferred that Kohinoor faces considerable threat from its competitors and its cross price elasticity of demand is quite high.

Limitations of the Study
1. The sample was based on 62 responses only, mostly male in the age group of 18-35. 2. Data about willingness to pay for condoms in a month was not available. Hence, it was assumed that respondents are willing to expend 1% of their monthly salary towards condom. The regression models are based on this assumption.

Micro-economic analysis on Kohinoor Condom 29

Field Survey at Chemist Shops

Scope of the Survey

The main objective of this survey was to primarily judge the consumer preference, market scenario, cross price elasticity, pricing strategies with respect to Kohinoor condoms from the seller’s perspective.

Methodology

We went about preparing for the survey by first preparing a questionnaire that was to be asked to the shopkeepers. The questionnaire was constructed purposefully in such a way such that it addressed the various questions mentioned above. Next we identified the following locations based on population density, frequency of chemist shops to conduct our survey: • • • • Booty More Kanke Road Circular Road Kutchery

Findings from the Survey

The survey gave us insights on the following aspects:

i.

The most kept brands as shown below in the figure are Kohinoor and Manforce closely followed by Kamasutra and Moods. Interestingly one of the main competitors of Kohinoor, Durex didn’t have a significant presence (3%).

Micro-economic analysis on Kohinoor Condom 30

Percentage of shops keeping a brand
3% 3% 3% 3% Kohinoor Manforce 24% 16% Durex Kamasutra Masti 8% 21% 16% 3% Moods Deluxe Sunsex Fire

Figure 17

ii.

Condoms contributed only about 5-10% of the annual sales for most of the chemist shops.

iii.

Manforce condom is the most preferred brand with close to 55% of the shops indicating that Manforce generates the maximum sales.

Sales Distribution
9% 9% 9% 9% 9% 55% Deluxe Durex Kamasutra Kohinoor Manforce Masti

Figure 18

iv.

One of the major reasons for Manforce condoms generating higher sales is because the majority of the shopkeepers (70%) suggest customers to go for that particular brand.

Micro-economic analysis on Kohinoor Condom 31

Brand promoted by the seller
10% 10% 10% Kohinoor Manforce Moods Depends on the income of the buyer

70%

Figure 19

v.

The reason behind such promotion is that the margin provided by Manforce is considerably higher than the remaining brands.

Reasons for promoting a brand other than kohinoor
20% Higher Margin Higher Quality 20% 60% Greater Sales

Figure 20

vi.

There are several substitutes available in the market such as I-Pill, Unwanted 72, Mala-D but the usage is limited with sales being limited to only 20-30 strips per month.

Micro-economic analysis on Kohinoor Condom 32 vii. 100% of the respondents said that a price increase has no effect on the demand. Thus we can infer that demand is almost inelastic.

viii.

The survey also indicates that demand doesn’t vary throughout the year with close to 99% of the respondents indicating that.

ix.

The price of condoms remains more or less constant – the last increase (around 2025%) being more than a year back.

Limitations of the Survey
Some of the limitations of the survey are the following:

i.

This survey was limited to Ranchi.

ii.

The number of respondents could have been more.

iii.

The data was taken only from chemist shops. Other avenues could have been explored.

Micro-economic analysis on Kohinoor Condom 33

Conclusion

1. Kohinoor is not a very popular brand amongst educated youths particular from moderate to high income groups compared to brands like Durex and Kamasutra. 2. Most of the sales of Kohinoor are through Chemist shops. It thus needs to give thrust to other delivery channels like online purchase. 3. It can segment into the premium condom market where higher rates could be charged. 4. It faces high cross-price elasticity from its competitors.

Micro-economic analysis on Kohinoor Condom 34

Refrences

1. Expressindia.com 2. Hindu Business Line 3. TwoCircles.net 4. Economic Times 5. The Hindu Business Line 6. The Economic Times 7. www.kohinoorpassion.com/aboutus/ 8. Consumer Products – Condoms.pdf from ISI Emerging Markets Database 9. Indian Contraceptive Market Outlook 2015.pdf by Mindpower Solutions 10. Wikipedia