Stretching Out?
N Nagaraj
Condom. The word, depending on one's outlook, provokes different reactions: Some people think it's a contraceptive and an aid to family planning; others think it's an insurance against sexually transmitted disease and AIDS; and most don't want to talk about it. The government, however, is interested from the point of view of controlling the population explosion and in recent times, to prevent AIDS.
And also interested are a few companies, one of which is TTK-LIG. On July 2, 1997, TTK-LIG launched Durex (DUrability, Reliability, EXcellence) condoms in India. And all equations in the market and in the customer's mind are bound to change. Durex is made by LIG plc, internationally recognised as the global leader in the development of latex thin film barrier technologies. Durex will be available in two variations: Super Thin and Spermicidal. Durex is the only major brand to offer a spermicidal condom.
The London International Group (LIG) has associated with TTK from as early as 1952, when TTK's was an indenting agency which imported and marketed LIG's condoms. In 1963, the London Rubber Company (India), now TTK-LIG Limited, set up a condom manufacturing facility at Pallavaram, a Chennai suburb. TTK-LIG was soon involved in the government's family planning efforts manufacturing condoms for the Nirodh programme. The company now has one more manufacturing unit at Virudhunagar and a total installed capacity 765 million pieces a year. The company also has its own brands Kohinoor and its variants for different types of condoms.
The commercial segment of the condoms market in India is around 360 million pieces a year. The market for branded condoms is 240 million pieces a year. TTK-LIG's market share -- for Kohinoor and its variants and Fiesta -- is 40 per cent in the total market and 60 per cent in the branded market. In volume terms, the closest competitor is J K Chemicals' Kama Sutra which has a market share of around 12 per cent in the branded segment. The other major player in the branded condoms business in India is Hindustan Latex Limited with its Moods condoms.
Clive R. Kitchener, Group Director of Strategy, LIG plc classifies the market for condoms into four segments: One, the popular segment, in which TTK-LIG has its Kohinoor brand and its variants; two, the premium segment, in which TTK-LIG now has its Durex brand; three, the social marketing segment which is subsidised by the government where TTK-LIG is testing the concept of its Champ brand; and four, the government Nirodh segment. Kitchener adds: ``We want to participate and lead in all the segments''.
Considering LIG's international record, Kitchener's statement is no idle boast. As far as the premium segment is concerned, Durex is sold in 140 countries; market leader in 41 countries; and No. 2 in 20 countries. The company has no worldwide competitor -- all its rivals are regional brands. The company also leads the worldwide contract market and has clients such as the UNFPA, USAID, Zimbabwe, Brazil and the EU programme in Bangladesh. In marketshare terms, the company has 22 per cent of the worldwide commercial segment and 31 per cent of the worldwide contract business. LIG's record for innovation is impressive too.
The company has several firsts to its credit: The first shaped (or contoured) condom; the first spermicidal condom; and the first polyurathene condom. Research showed that people wanted more sensitive condoms and LIG decided to find a new material and developed `Duron', which has a material strength twice that of latex. Kitchener says that the production process for polyurathene condoms are different and the material is very difficult to produce. He adds: ``polyurathene condoms are very thin and very strong and cost much, much more''. LIG has around 70 persons and spent around 6.8 million pounds last year on its r&d. Kitchener insists that the timing of the launch is perfect: India is an open country now that is growing; and, India has a growing and increasingly wealthy middle class. ``People are becoming more and more sophisticated and discerning in their choice of consumer goods. I believe it holds true for condoms too'', says Kitchener. He adds: ``Research indicates that the sophisticated and discerning are missing something (in their sexual lives)... and that is Durex''.
The company researched the Indian market by surveying several hundred couples in major Indian cities for usage of contraceptives, awareness of imported brands and quality. International brands were associated with better quality and there was also a need for ``thinner products that are very strong''. The survey showed that variants like textured condoms and variations in colour and flavours are very small segments. Research also shows that a vast majority of consumers use condoms for family planning. Only a few people use condoms to gaurd against sexually transmitted disease (STD). Kitchener believes that this pattern will change over time as awareness of STD and AIDS increase.
In line with the findings, the company has launched its super thin and spermicidal condoms in India. The packaging for Durex in India was designed in the UK. The company experimented with different designs and finally selected three. The final design was arrived at after extensive research. The cartons are printed in Europe to achieve a true international look. The condoms will be priced roughly twice as much as any popular brand in the market today. The closest as can be to a premium condom is Kama Sutra but Kitchener is confident that the price differential and the image differential will set Durex apart in a class of its own. Kitchener adds: ``They will sell very well because people are willing to pay for the best''.
What will Durex do to TTK-LIG's existing Kohinoor range? Kitchener feels that the positioning of the two brands are completely at variance. Kohinoor is positioned (and perceived) as the condom for the married couple and the underlying projection is for family planning. With sexual attitudes and tastes changing in India in tune with international trends, Durex will be positioned as a lifestyle product that is all about pleasure and fun. However, the underlying projection will again be family planning.
What about the health peg? Kitchener says: ``You can't position a condom for STD alone. That is a negative proposition''. And Kitchener adds that governments all around the world have been guilty of this mistake. TTK-LIG is planning to put in a little bit of excitement -- ``sensual and international'' -- in the ads for Durex. He says that McCann-Erickson will do ``local ads stressing global Durex''. TTK-LIG will also organise roadshows, programmes, quizzes, public service announcements, and include leaflets in the packs to increase awareness. MTV viewers in India would already be familiar with Durex. Durex sponsors programmes including MTV's Most Wanted and also has spot ads in MTV.
LIG is the only company to have a deal with MTV worldwide which means that Durex is visible in MTV Europe, US MTV, Latino MTV, and MTV Asia. Kitchener says that the world deal has ensured that Indians have had ``a year of pre-exposure to Durex''. He adds that MTV is a good vehicle to reach young adults and he believes that ``young adults all over the world have a common currency''. Kitchener also adds that in many countries around the world, people do not properly understand the importance of education and awareness relating to sex, family planning and STD. He says that more and more governments are realising that it is easier and more effective to teach people when they are young. Kitchener believes that LIG's choice of MTV will stimulate debate among youth and help in increasing awareness.
LIG conducts a survey worldwide and brings out a Durex Global Survey Report. TTK-LIG plans to conduct similar research in India and bring out a Users and Attitude Survey. Kitchener says that going purely by per capita consumption, India has huge potential. Per capita consumption of condoms in Europe is 4 to 6 per month and that is not weighted for age/sexual activity. Kitchener says that the per capita consumption is much lower in India, and that coupled with the fact that India has a much higher proportion of young people, makes it an attractive proposition. As far as openness is concerned, Europe ranks first -- Europeans are more open to discussion on usage and attitude; India is perceived as quite conservative; and most surprisingly, the US has problems in educating youngsters about safe sex.
Kitchener on LIG: ``Three years ago, LIG almost went bust because of diversifications. We had a photo processing division in Europe, a Fine China business `Royal Worcester Spode' and small single country health and beauty products. We have now exit a number of businesses and concentrating on thin film barrier technology''. The determination to stick to the core business shows: LIG acquired a US company `Aladan' (which makes examination gloves and condoms) last year and shut down its own plant in the US as it was considered a drain on resources. LIG's turnover for the year ended March 31, 1997 was 339 million pounds (up 5.3 per cent); the contribution of thin film barrier technologies was 241 million pounds (up 10.6 per cent); and, pre- tax profit was 35.6 million pounds up 39.5 per cent. LIG plc now has gloves (medical, household and industrial) and condoms as core business and also has a small range of health and beauty products.