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
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.
