PHN Technical Note 86-6

CONTRACEPTIVE SOCIAL MARKETING

by

Lauren A. Chester

February 1986

Population, Health and Nutrition DepartmentWorld Bank

The World Bank does not accept responsibility for the views expressed

herein which are those of the author(s) and should not be attributed to

the World Bank or to its affiliated organizations. The findings,

interpretations, and conclusions are the results of research supported

by the Bank; they do not necessarily represent official policy of the

Bank. The designations employed, the presentation of material, and any

maps. used in this document are solely for the convenience of the reader

and do not imply the expression of any opinion whatsover on the part of

the World Bank or its affiliates concerning the legal status of any

country, territory, city area, or of its authorities, or concerning the

delimitations of its boundaries, or national affiliation.

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PHN Technical Note 36-6

CONTRACEPTIVE SOCIAL MARKETING

ABS T R A CT

This paper presents the results of a survey of the literature oncontraceptive social marketing. Contraceptive social marketing is definedas the sale of contraceptives at subsidized prices through commercialnetworks. The main objective of this approach to contraceptivedistribution is to improve access to family planning products, usingmarketing strategies, at affordable prices to segments of the population

not adequately served by either the commercial sector or government

programs. Contraceptive social marketing projects, unlike free clinicprograms, raise revenue. They utilize the existing commercial distributionnetworks to sell their products. Margins and assorted bonus schemes are

allocated to the members of the distribution chain to encourage

participation and program growth. Contraceptive social marketing strivesto supplement and complement other family planning programs by reaching adifferent target group and providing an alternative source of contraceptive

supplies. There is, however, an inherent tension between the social goalsof sales maximization and program self-sufficiency--these goals need to beprioritized to minimize conflict. Contraceptive social marketing projectscan be only as extensive as the existing commercial network; a weak

infrastructure hampers program growth.

The first national contraceptive social marketing program began

in India in 1967. Today there are 13 ongoing contraceptive socialmarketing projects; the majority are supported by the U.S. Agency forInternational Development. All of these projects sell more than one

method of contraception except India, which sells only condoms (althoughoral contraceptives are being added to its product line). The points-of-purchase for socially marketed contraceptive products include supermarkets,tea stalls, vending machines and pharmacies. In several countriesprescription requirements limit purchase of oral contraceptives topharmacies. Product prices are generally low although a significant rangeexists: one condom costs less than US$.01 in Bangladesh, $.25 in Barbadosand Honduras. The proportion of all contraceptors served by thecontraceptive social marketing project is minimal in Mexico (1.1%) andThailand (3.4%), but significant in Bangladesh (40.5%), Colombia (31.2%)and Egypt (30.0%). The fact that three programs serve at least 30% of allcurrent family planning users and two serve more than 20% suggests thatprograms are acting, to some extent, as an important supply source and areexpanding the availability of contraceptives.

Prepared by: Lauren A. ChesterPopulation, Health & Nutrition Department

February 1986

CONTRACEPTIVE SOCIAL MARKETING

Table of Contents

Page No.

I. Introduction . . . . . . * * n . . . . . . . . . . . . . . 1

II. Pros and Cons of CS Approach . . . . . . . . . . . . . . 2

Advantages. . . . . . . . . . . . . . . . . . . . . . 2Disadvantages . . . . . . . . . . . . . . . . . . . . 2

III. Strategies Used to Achieve CSM Objectives . . . . . . . . 3

Management. * * * * * * . * * . . . . . . . . . . . 3Products. . . . . . . . . . . . . . . . . . . . . . . 4Target Population . . . . * * p * . t . . . . . . 5Brand Name and Packaging. . . . . . . . . . . . . . . 6Distribution Systems. . . . . . . . . . . . . . . . . 6Points of Purchase . . . . . . . . . . . . . . . . . 7Promotion and Advertising . . . . . . . . . . . . . . 7

IV. Evolution of CSM Projects . . . . . . . . . . . . . . . . 9

A. History. . . . . . . . . . . . . . . . . . . . . 9B. Ongoing Projects . . . . . . . . . . . . . . . . . . . 11

India . . . . . . . . . . . . . . . . . . . . . . . 14Sri Lanka . . . . . . . . . . . . . . . . . . . . . 16Bangladesh. . . . . . . . . . . . . . . . . . . . . 17Jamaica . . . . . . . . . . . . . . . . . . . . . . 20Egypt . . . . . . . . . . . . . . . . . . . . . . . 21Caribbean Region. . . . . . . . . . . . . . . . . . 22El Salvador . . . . . . . . . . . . . . . . . . . . 23Nepal . . . . . . . . . . . . . . . . . . . . . . 24Honduras. . . . . . . . . . . . . . . . . . . . . . 24

V. Pricing . . . . . . . . . . . . . . . . . . . . . . . . . 25

A. Pricing Objectives . . . . . . . . . . . . . . . . . . 25B. Determining Appropriate Prices . . . . . . . . . . . . 26C. Current Product Prices and Consumer Outlays for

Protection by CSM Products. . . . . . . . . . . . . 29D. Margins. . . . . . . . . . . . . . . . . . . . . . . 31E. Cost-Effectiveness of CSM Projects . . . . . . . . . . 37F. Mechanisms for Increasing Project Revenue. . . . . . . 41G. Expanded Product Line. . . . . . . . . . . . . . . . . 44H. Substitution . . . . . . . . . . . . . . . . . . . . . 46

VI. CSM Project Evaluation . . . . . . . . . . . . . . . . . . 47

A. Existing Evaluation. . . . . . . . . . . . . . . . . . 47B. Evaluation Findings. . . . . . . . . . . . . . . . . . 48

Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . 51

CONTRACEPTIVE SOCIAL MARKETING

I. Introduction

Marketing can be defined as a managerial process seeking to

achieve a market response via carefully formulated actions with attention

to target markets a distinguishing feature (Greenberg, Novelli and Curtin,

1983). Social marketing involves coordinating the "4P's": product, price,

place (distribution) and promotion to "maximally motivate and facilitate

desired forms of behavior" (Fox and Kotler, 1980). Marketing techniques

are applied to develop and promote a specific goal using commercial

channels of distribution.

The main objective for contraceptive social marketing (CSM) is to

provide family planning products, using marketing strategies, at affordable

(subsidized) prices to segments of the population not adequately served by

either the commercial sector or government programs, in order to improve

access and thus individual welfare. CSM is based on the premises that 1) a

substantial number of people exist in any society that will, if

sufficiently informed, make a rational decision to allot a portion of their

resources to contraceptive purchases; and 2) consumers want alternatives to

government supply sources which are typically family planning or health

clinics.

Selling contraceptives constitutes only part of the marketing

process; marketing tools must also be utilized. Strategies used to achieve

CSM goals are discussed in Sections III and V. The history of CSM projects

and a synopsis of ongoing projects is given in Section IV, and Section VI

looks at project evaluations. A brief description of the advantages and

disadvantages to the CSM approach follows below.

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II. Pros and Cons of CSH Approach

Advantages. CSM projects, as opposed to free clinic programs,

raise revenue. Theoretically, they can be mounted quickly with little

capital expenditure by making use of the established commercial network

(assuming potential problems such as delays in product price approval can

be averted). The number of retail outlets exceeds the actual or potential

number of clinics thereby increasing the potential reach of distribution to

those far from government service points. By utilizing the established

network of distributors and its corresponding administrative bureaucracy,

costs can be kept below those of dispensing the same contraceptives in

clinical programs. Margins alloted to the various members of the

distribution chain and assorted bonus schemes offered to participants can

encourage program growth (see p. 34 for more on bonus schemes). As

commercial entities, CSM projects can detect and respond more quickly to

changing market conditions than government bureaucracies which tend to

operate more slowly and cautiously. CSM serves to supplement and

complement other family planning programs by: 1) reaching a different

target group; 2) providing an alternative to clients who cannot afford

commercially distributed products but are reluctant to use free services

(often seen as inferior--see Price Sensitivity, p. 41; Ylanan and Verzosa,

1979); and 3) increasing product awareness by promotion and advertising.

Disadvantages. There is an inherent tension in CSM between the

social goals of sales maximization and self-sufficiency--these goals need

to be prioritized to minimize conflict. CSM projects can be only as

extensive as the existing commercial network; a weak infrastructure will

hamper program reach. Bureaucratic procedures such as

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registration requirements for pharmaceutical products and the price

approval process can impede project implementation. The CSM product line

can get lost if: there is not sufficient interest in the product and its

promotion along the distribution chain; potential profit is too low because

of small profit margins allowed (coupled with low-priced products); and/or

incentive schemes, meant to supplement profit margins, are insufficient to

motivate distributors. Additionally, it is difficult to assess whether

consumers receive proper instruction on product use from retailers who may

not be highly motivated; for these reasons a number of CSM projects have

opted not to rely solely on the commercial system but to add a back-up

system of promoters (e.g., in-house sales force) to their projects (see

Distribution Systems, p. 6). Retailers tend to respond to rather than

create demand. It also is possible that CSM projects are not reaching new

users but, rather, established users who are substituting CSM project-

supplied products for those obtained from a former supply source.

III. Strategies Used to Achieve CSM Objectives

There are eight key elements to CSM programs (Altman and Piotrow,

1980). These shall each be described briefly in the following except for

pricing which is discussed in Section V.

Management. There are three prevailing management models among

ongoing CSM projects, distinguished by the degree of government

involvement. The first is direct government management, where projects are

implemented directly by the government ministry responsible. The next

involves project management by semi-autonomous agencies which may exercise

management authority or take an advisory role. Projects are subject to an

agreement with the government, specifying project accountability and

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operating conditions. U.S. contractors, local institutions or both are

usually responsible for project operation. The third model is private

organization management. While government is not directly involved, the

projects must comply with general government regulations. Private

organizations operating CSM projects include: independent, non-profit

organizations, including FPAs; and for-profit organizations. One CSM

project (the Caribbean) is now managed by a commercial distributor.

Products. Condoms, oral contraceptives (OCs) and foaming tablets

are the most frequently offered products in CSM projects. All projects

except India market more than one type contraceptive method (see Table 1).

Condoms are supplied in all projects. Their advantages are many and

commonly known; particularly important for CSM is that they are usually

free of legal and medical restrictions, and thus can be sold in a variety

of outlets. OCs are sold by all projects except India (a USAID-supported

CSM project to sell OCs is planned--see p. 16 for details). The main

disadvantage to social marketing of OCs is prescription requirements: 4 of

the 12 projects shown in Table 1 which sell OCs have this requirement,

thereby limiting sales to pharmacies. In two others, prescriptions are not

necessary but sale of OCs is restricted to pharmacies. Pharmacies

constitute a small proportion of commercial outlets and are typically

concentrated in urban areas; accessibility to OCs in rural areas can

therefore be limited. Seven of the projects sell spermicides, but only one

(Mexico) markets injectables. Two projects sell IUDs but only the Egyptian

project sells them at subsidized prices (Mexico sells IUDs at commercial

prices). Egypt has had considerable success at marketing IUDs: IUDs sold

through pharmacies and physicians now account for nearly two-thirds of all

couple years of protection (CYP) provided by the CSM organization, and

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provide coverage to 19 percent of all contraceptors (Social Marketing Forum

(SMF), Spring 1985).1/

Products are donated by USAID and/or IPPF to all but 2 projects.

In Colombia, although some commodities are still received from IPPF,

PROFAMILTA (an FPA) purchases most of the products it sells. In Mexico,

PROFA.M (a private, non-profit organization) purchases packaged commodities

from Mexican manufacturers, as required by law, but hopes to develop its

own production capability for spermicides and condoms. The Indian

government buys condoms directly from Indian manufacturers and gives them

to the CSM project.

Target Population. The target population will be defined by the

objectives of the program. Ideally it will be those not currently using FP

with enough disposable income to buy contraceptives but unable to afford

the full price of commercially marketed products.

Determining the characteristics of the target population through

marketing research can play an important role in designing the CSM project

so that it effectively reaches its target population. It therefore should

be considered an integral part of program design. Investigating willing-

ness to pay and buyer habits and preferences, and testing acceptability of

the product, packaging and promotion techniques contribute to successfully

providing the targeted customers in a non-offensive manner with a product

they can afford. That market research has been used only sporadically and

insufficiently in most ongoing CSM projects is probably due to a lack of

both funds and expertise. An exception to this pattern is Egypt, where

marketing research results are used to guide program operations (see

Egypt, p. 21).

1/ Derived, based on data in Table 2.

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Brand Name and Packaging. Packaging serves the dual purpose of

physically protecting the product and promoting a specific product image;

the latter purpose is usually stressed in CSM projects. Even though

repackaging donated products can be expensive, it has the advantage of

adding distinctive brand names, package design (often needed to

differentiate CSM products from those distributed free in government-run

clinics) and local instruction materials, all of which can be chosen on the

basis of consumer research. Research findings suggest that brand names may

be important to the promotion of a product: condoms tend to be popular

when their names depict manliness and strength (e.g., Panther or Raja

(king)), whereas OCs are favored when their names imply femininity and

affection (Sherris, Ravenholt and Blackburn, 1985).

Distribution Systems. In countries with developed commercial

distribution networks CSM products tend to move from distributors to

wholesalers and stockists to retailers. In countries with less developed

commercial infrastructure the CSM distribution system may be comprised only

of a few salesmen delivering to retailers. Exclusive reliance on

commercial distributors has proven successful in only a few projects (e.g.,

India and Jamaica) because few CSM countries have a developed distribution

network. Problems experienced, such as unwillingness of the distributor to

take on sometimes controversial products with uncertain profit potential,

and little active promoting and selling of CSM products, have prompted the

use of additional distribution systems to supplement, or replace,

commercial distribution. Government and quasi-government distributors

have often been used. In-house sales forces, made up of CSM project staff,

are being used in a number of projects, most notably, Bangladesh. They are

responsible for the distribution tasks of transporting, promoting and

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selling CSM products to retail outlets. Another system occasionally used

consists of village distributors who sell products either to retailers or

directly to consumers. The last two systems tend to have greater

flexibility and mobility to reach more remote areas not well serviced by

the commercial network.

Points of Purchase. The points of purchase constitute the last

link in the distribution chain. Retail outlets (e.g., food stores,

barbershops, street hawkers, etc.) and medical establishments (where

medical personnel promote and sell CSM products, as in Bangladesh; or where

OC prescriptions are required) are primary purchasing locales. Other

purchase points, tried with varying degrees of success, include vending

machines, which are subject to maintenance problems and vandalism; and mail

orders, which have constituted a small part of CSM projects where they were

tried. Using a mail order system usually involves direct consumer

response, and is feasible only in countries with high levels of literacy

and newspaper coverage combined with reliable mail service. Sri Lanka's

experience with this method was relatively successful and cost-effective:

18 months after the project was started, 2 percent of condoms sold were via

mail order (Binnendijk, 1985; Davies and Louis, 1977). Mobile sales units

are being successfully used in Bangladesh: vans travel throughout rural

areas showing family planning films and selling CSM products. House-to-

house sales have had mixed results and are generally expensive compared to

use of an existing commercial system.

Promotion and Advertising. Promotional messages and materials

are used to call attention to CSM products; to inform potential users of

the product's advantages, price, and availability; and ultimately to

persuade consumers to buy CSM products. Promotion to consumers, retailers,

-8-

distributors and other influential groups is considered an essential

component of CSM projects (Sherris, 1985; Altman and Piotrow, 1980). Two

major constraints exist for social marketing promotion: resistance to

advertising and cost. Promotion is often the largest line item in the

operating budget.

CSM projvcts basically utilize four types of promotion:

mass-media; point-of-purchase (posters, displays); public relations

campaigns (rallies at sports events); and the interpersonal approach

(education activities of village promoters). Most programs use print and

broadcast media, and all use some type of point-of-purchase promotions,

e.g., pop-up counter top OC dispensers in Jamaica. Many countries do not

allow public advertising of prescription drugs (see Table 1); in such

countries, or in isolated areas with few or no TVs or radios, other

techniques are used. For example, in Nepal decorated jeeps travel

throughout remote areas broadcasting family planning messages on

loudspeakers and the drivers sell the products.

Advertising messages should be tested to establish that they are

acceptable to their intended audience and accomplish their motivational

goal. The effectivc ness of different family planning themes was pre-tested

in Bangladesh: the most effective messages were those stressing family

economics (food and shelter) and children's (sons') future; least effective

were ads stressing benefits for the wife (Harvey, 1984a). In Ghana, where

the advertisement for the CSM condom was not adequately pretested, the

reaction to mass media promotion of the product was negative and eventually

contributed to the termination of the project.

Even though advertising has been an integral part of CSM

campaigns, ti- effect of advcrzising cn -ales volume has not been

-9-

adequately studied. Available information indicates that it does indeed

lead to increased sales (and conversely to a sales decrease when

advertising is discontinued): evidence from Bangladesh and India in the

mid 1970s showed that advertising restrictions and cuts in the promotional

budget corresponded to decreased sales (Altman and Piotrow, 1980); in

Honduras, sales of OCs doubled in the two months following a five week

advertising campaign, dropped sharply in the months after advertising was

stopped, and rose again when advertising was resumed (Levy, 1984). Such

evidence, while interesting, is much too fragmented, too correlational and

covers periods too short to allow firm conclusions to be drawn.

IV. Evolution of CSM Projects

A. History

The first national CSM program began in India in 1967 and was

designed and supported by the Ford Foundation. Rural Kenya was the site of

the first private CSM project, where Population Services International

(PSI) established a two-year experimental program in 1972 with funds

provided by USAID. In 1973, CSM projects began in Colombia and in Sri

Lanka.

IPPF has been active in initiating and supporting projects in

Colombia, Sri Lanka and Thailand. But by far the greatest amount of

support for CSM projects has come from USAID. Programs funded by USAID

generally begin with full financial support under the management of U.S.

contractors. Technical assistance and assistance for operational expenses

tend to be reduced as programs mature and become more cost-effective.

Commodity support typically continues indefinitely. USAID has supported

the start of 18 full-scale projects since 1974: of these 10 are ongoing

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(although Mexico is no longer funded by USAID), 5 are in preparation and 3

have been terminated or suspended. Termination of projects, begun in the

1970s in Tunisia and Ghana, resulted from lack of host government

commitment, government restrictions and from institutional problems. In

Ghana, political sensitivity to mass media advertising of CSM products (see

p. 8), which was not adequately assessed, contributed to the project's

demise. Difficulties with hiring and retaining program managers also

contributed to project failure. More recently, USAID withdrew support from

the Ecuador CSM project, in which no sales transactions had occurred over

the 2-1/2 year project life. Failure to obtain product price approval,

government objections to sale of donated commodities, and changes in

government all contributed to the suspension of this project.

A CSM project launched in Mexico in 1977 with the support of

USAID, proceeded well until 1980, when a change of government led to vastly

diminished support of family planning. New officials rescinded the

project's sales permits for all contraceptives except condoms. They

restricted contraceptive advertising and denied requests for price

increases. Project performance declined markedly, lead,ng to withdrawal of

USAID support. This project has continued without USAID support, although

coverage has fallen markedly, from about 5 percent of the target population

in 1980 to less than 1 percent in 1984. The project has also been selling

a mix of non-contraceptive products (e.g., Bic pens, Q-tips, key-chains,

etc.) in efforts to achieve self-sufficiency and fill the gap created by

lost USAID support (see Section V.H. for more information on product mix).

- 11 -

B. Ongoing Projects

There are currently 13 CSM projects considered to be ongoing,

including one project that has only recently begun sales (Guatemala).

Eight are supported directly by USAID, two by IPPF, those in India and

Thailand by their governments, 2 / and that in Mexico with no outside

funding. The major features of and promotional strategies used by these

projects are given in Table 1.

While the literature does attempt to define CSM, it provides no

clear-cut delineations as to what features constitute a true CSM project.

There is disagreement as to whether the projects in Colombia and Thailand

qualify as true CSM endeavors because their operations are not geared

toward obtaining the typical CSM objective. Instead, they strive to

maximize commercial objectives rather than to provide affordably priced

products to the underserved population; they do not restrict their target

population to low income groups; and they rely heavily on door-to-door

sales in rural areas, not the usual sales method used in CSM projects.

They also employ few of the marketing techniques that are characteristic of

CSM projects (e.g., both do little or no advertising, a major component of

the CSM approach).

Both of these projects use village level workers to promote and

distribute products: these workers operate door-to-door and sell directly

to the consumer. This practice is more typical of a community distribution

program than a CSM program. The goal of Colombia's project is to meet

contraceptive demand as well as subsidize other programs operated by

2/ Thailand also receives some support from USAID and IPPF.

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Table 1. MAJOR FEATURES OF ONGOING CSM PROJECTS

Project location, Start organizatio- Implermenting Target Products Fints-of-& Product Lauich Dates/ nal Model Agency opulation Sold Distributors Purchase Ponotional Strategies Utilized

AMIA

Irdia Start 1967 Government Department of 1978: 40 millicn Condsan Camercial Pharmacies, Radio, V, press, POp2/ ad village

Launch 1969 Family Wlfare "younger couples" distributors retail outlets uarket displays at trade and cattlefairs. Retailer bonuses, displaycontests and special offers.

Sri Lanka Start 1973 Private FPA Condoas, Cnercial ('s by pes- POP displays. Prountion of basicLaunch 1973 ocs, distributors, criptions only. family planning concepts is

Tablets progran staff Pharmacies, re- permitted but bLand-specifictail shops, mail advertising is not allowed.order sale

Bangladesh Start 1974 Semi- Bangladesh So- All at risk Condas, Program staff, Pharmacies, Radio, print, POP displays, TV.launch 1975 Autonmous cial Marketing oce, stockists shops and sales- Various ton-tralitional mathods-

Progran Tablets an and uedical nobile film units, painted hatpractitioners sails . 28% of budget goes to

prootion.

Nepal Start 1976 Began as Nepal CRS Gomp. All at risk, ondoas, Progran staff Medical stops, Radio, newspapers, film, calendars,launch 1978 Gov 't, independent especially ocs, general retail, painted jeeps with public address

now private nm-profit rural poor Tablets jeep drivers, systems. Brand name promntion nottea stalls allowd on radio. Bonuses ad free

samples are given to retailers.

Thailand Start 1977 IbpaLation & Cnioms, Cnmnity- Pharmacies: ur- Cammuity-based uorloars promnote;launch 1977 Private Development Fertile CCs tesA distri- ban; house-to- advertising by tn-profit organiza-

Associates: couples butors; shape house sales: tion is prohibitel. Little paidindependent, in trban areas rural aivertising is done.norn-profit org.with a for-profit conponent

LAMM AHERIC& AN)

Colabia Start 1973 Private PROFAMILJA At risk couples Condas, PRIXILIA Pharmacies, Little mass media advertising.Launch 1973 (FPA) with access to ocs, staff, con- shops Prorotion to retailers done by

retail cutlets Tablets Mercial community-based instructoras.distributors

Jamaica Start 1974 (bverment Jamaican Natio- Young adults Ccxas, Gamercial Pharmacies, Adverl;ising badget as cat back inLaunch 1975 nal Family OS distributors general retail 1980. In 1983-84 only POP ads nere

Board - MCt used. Broadcast als resuned in 1985.

El Salvador Start 1976 Private FPA At risk, low Condoms, Progran staff, Pharmacies, No aivertising budget since 1983.Lainch 1978 income can ad OCs, commercial vending Pharmacy operations limited due to

vonen Tablets distributors machines political instability.

Mexico Start 1977 Private PROFM, Cordams, Program staff Pharmacies POP displays, radio, TV, news-launch 1979 indepernent ocs, papers. Advertising restrictions

non-profit Inject- on OCs.

organization ables,with for-profit IUD9canrPnent

Bonduras Start 1981 Private FPA tow income, Coniams, mercial Phrmacies, Print, radio, W, POP materials.Lanch 1984 urban and rural Cs, distributor snall shops.

consumers Tablets CEs available(Planned) only in Pharmacy

Caribbean Region Private C33mercial Low ixome arn Condans, Cnmorcial OCs by pres- POP displays, radio, V, retailer(Barbados, St. Lucia istribucor and woaen (Es distributor cription. training seminars. Barbedos: busand St. Vincent) Pharmacies, signs (mass nadia avertising for

Start 1983 supennarkets, prescription products is banned).Laxinch 1984 smell stops BoUS for bulk purchases given to

retailers.

Guatemala Start 1983 Private adependent, First, poor ur- Oxxkas, Clercial OCs by pres- as media broadcast advertisingLaunch 1985 for-profit ban wonen; later OCs, distributor cription. of brand-pecific Cs is banned.

organization rural woaen Tablets Pharmacies,later: snallstores, gasstations

KWITZ EASZ

Egypt Start 1978 Started with Family at thL Married aomen IUD9, Program staff, OCa by pres- Mass nails, POP, displays, retailarlaunch 1979 FPA; now Future (FUF), with ctr or (brios, commercial cription. education naterials. Free sales

quai- indepenient more ildren; Tablets, distributor Pharmaies, to physician. Brand-specificaveromental organization CES general retail, advertising for (es ernd. 45% of

hospitals ad buget 9yes to pranotion todoctors consumars.

1/ Dates of project start and first pc,Aat sale,2/ Pa: thLat-of-purchase.

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PROFAMILIA.3/ In urban areas, PROFAMILIA targets the middle class: it

sells products at high prices to pharmacies, which in turn sell them to

consumers at price levels similar to those for commercially distributed

products. At these price levels the programs cannot adequately serve the

low income population (a typical CSM objective). The urban pharmacy

component, which accounts for two-thirds of total program sales, does cover

nearly 11 percent of all married women of reproductive age (MWRA) and the

total project covers 15 percent of all MWRA and 31 percent of all

contraceptors in Colombia.

The Colombia and Thailand projects do not seek to maximize

distribution but gear marketing efforts toward achieving commercial rather

than demographic objectives. For this reason, as well as those given

above, they will not be discussed extensively in this text.

Not unexpectedly, of the remaining 11 projects, the most

protection measured in terms of couple years of protection (CYP)4 / is

provided in the two countries with the largest populations: the projects

in India and Bangladesh provided 2 million CYP and 1.3 million CYP,

respectively, in 1984 (see Table 2). But, the India program served only

1.4 percent of all married women of reproductive age (MWRA), the Bangladesh

project, 7.7 percent. However, it is estimated that of all contraceptors

in Bangladesh (representing 19 percent of all MWRA), about 40 percent are

served by the CSM program, the highest coverage of users among the

3/ In Colombia's case, some feel that while lack of advertising and high

urban prices remove it from true CSM ranks, the higher urban pricessubsidize the rural program and help it reach the true CSM objective ofserving low income, isolated populations.

4/ For a definition of CYP, see Table 2.

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established CSM projects (compared to e.g., 6 percent in India). 5 / This

project accounted for 50 percent of all CYP provided by the total national

program's distribution of condoms, OCs and spermicides in 1983. Egypt

ranks third in CYP provided by projects shown in Table 2, and 30 percent of

all contraceptors are served by its CSM project. In Nepal, the CSM project

reaches 21 percent of contraceptors and accounts for 50 percent of all

condoms distributed in the country, for all spermicides and for 20 percent

of OCs. Coverage in El Salvador, Sri Lanka and Mexico (p. 10) is low and

in the latter two has declined since 1980 (see forthcoming discussion for

explanation). A further description of ongoing CS projects is given

below. 6 /

India 7/. This project is a Government-sponsorea (MOH) effort in

which the Government buys condoms from Indian manufacturers at very low

prices and gives them to the CSM project. Various distributors arrange for

marketing through existing commercial channels, such as tea companies.

Over 400,000 retail outlets distributed Nirodh condoms in 1983/84.

Promotion has been designed and executed within the government; extensive

advertising and point-of-purchase campaigns have accompanied distribution.

The level of sales has increased from less than 25 million in 1968 to

nearly 200 million in 1983. Coverage is estimated to be about 1.4 percent

of MWRA. Nirodh condoms are sold for $0.01 each (see Table 3 on CSM

product prices).

5/ As a comparison, annual sales of the 10 leading OC brands in the U.S.represents about 11.5 percent of all MWRA. Sherris, Ravenholt andBlackburn, 1985.

6/ No further discussion of Mexico, Colombia or Thailand is given.Because Guatemala has just begun sales, no further descriptionadditional to information in Table 1 is given.

7/ Less information is available for this project because it is not USAIDsupported.

- 15 -

Table 2. (IMWM ( TM ULMSAITSH EM 1RORMSI/

(INERAGE OF (SM PROJECT

Proportion of Proportion of Con-Cyp3/ WRA Served by traceptors Served

Contraceptive Provided CSM Project (%) by C4 Project (%)Project Prevalence Rate2 /Country (latest available) 1984 1980 1984 1984

India 32.0 1,985,000 0.6 1.4 6.0

Bangladesh 25.0 1,343,111 3.1 7.7 40.5

Colombia 55.0 565,584 14.0 15.3 31.2

Egypt 24.0 522,427 0.8 7.2 30.0

Thailand 59.0 158,660 2.0 2.0 3.4

Sri Lanka 55.0 90,832 5.9 4.2 7.6

Mexico 39.0 47,953 1.5 0.4 1.1

Jamaica 51.0 44,325 9.3 12.6 22.9

Nepal 7.0 43,514 0.5 1.5 21.0

El Salvador 34.0 15,740 1.9 2.2 7.0

1/ Because they have only recently begun sales, projects in the Caribbean, Guatemala andHonduras are not included.

2/ Percent of all married wmen of reproductive age, RA (15-49 years, except Jamaica and ElSalvador, 15-44 years) currently using contraception. Data are for latest year available,1978-1984.

3/ A (buple Year of Protection (CYP) is the equivalent of one year of contraceptiveprotection for one couple. It is generally assumed that 13 cycles of OCs or 0.53 IJDsequals one year of protection. Calculating CYP from condom and spermicide use is nredifficult as use depends on coital frequency. For convenience, it is usually assumed that100 condoms or 100 foaming tablets equals one GYP.

Source: World Development Report, 1985 and Sherris, Ravenbolt and Blackburn, 1985.

- 16 -

The Nirodh program has successfully marketed a tremendous number

of condoms during its existence, but sales have lagged in recent years. A

basic problem arose because marketing management had been placed under the

authority of the MOH. Marketing executives have been frustrated by trying

to operate in the commercial world while constrained by government

bureaucracy, budget processes and the involvement of other Ministries,

which have differing and sometimes conflicting priorities and objectives.

When the Marketing Director, placed in the MOH, wanted to hire a

photographer to try out ideas for a new package design, he was unable to,

because all such activity had to be carried out by the Ministry of

Information and Broadcasting, the purveyor of advertising.

There is also some question as to whether the large corporations

(e.g., Union Carbide), which buy condoms from the government and market

them with a margin through their distribution systems, receive adequate

compensation from condom sales. Their activity level has often seemed

dependent on the extent of public relations value they received and/or

government pressure exerted on them to sell condoms (Schellstede, 1985).

In 1984, 15 years after product launch, a second condom was added

to the product line: Nirodh Deluxe, a higher quality, lubricated condom

priced at $0.016. In addition, to help alleviate program stresses and to

spur sales the government plans to set up a semi-autonomous, non-profit

Contraceptive Marketing Organization (CMO) to manage a CSM project that

will sell OCs through pharmacies. This project will target literate, urban

couples with some disposable income, and hopes to have 1.6 to 2.0 million

customers by 1988 (representing 20 percent coverage of the targeted group).

Sri Lanka. Designed to operate on a national scale, this project

was implemented in 1973 by PSI. It is now managed by the national FPA;

- 17 -

both commercial distributors and CSM staff distribute condoms. OCs are

distributed by CSM staff only. For Preethi condoms, the first product

sold, sales reached their highest level in 1980. However, because donor

funding was reduced in the early 1980's, the project was forced to begin

selling many products at commercial prices and to drop the most popular,

low-priced Preethi ($0.03) condom in order to raise needed revenue. The

project now promotes a low priced condom ($0.015), 2 moderately priced

condoms ($0.04-0.05) and two brands sold at higher, commercial prices

(about $0.22 per condom), as well as 1 OC and 1 spermicide. It is also

selling consumer goods such as plastic bags in order to raise additional

income. While this move toward self-sufficiency has been successful in

terms of income generation (by 1984 the program made a profit of about

$0.34 per CYP), the emphasis on higher-priced products has meant lower

total sales and lower coverage (in 1984, 4.2 percent of MWRA were covered,

down from 5.9 percent in 1980).

Bangladesh. This CSM project, managed by the Social Marketing

Program (SMP--a semi-autonomous organization) and assisted by PSI, began

sales with Raja condoms and Maya OCs in 1975. In 1979 foaming tablets were

added, followed by a low dose OC in 1980 and Panther condoms in 1983. It

is one of the more successful projects in terms of both coverage and sales

levels. Initially distribution relied on the existing commercial network,

but it was found that products were not reaching rural areas and

distributors seemed unwilling to expand to these areas. SMP therefore

started its own in-house distribution system using its own sales force: a

300-person staff consists of, among others, a national sales manager, who

supervises 8 regional sales managers, and 70 salesmen (Schellstede and

Ciszewski, 1984). Wholesalers, relieved of having to provide salesmen,

- 18 -

participated more willingly. Emphasis on rural outreach has been such that

up to 60 percent of CSM products may now be sold ultimately to the rural

population. SMP salesmen and medical representatives sell products to

tradesmen. Sales have been made to more than 100,000 various

establishments, including "stockists" who sell products to small retailers

and consumers.

This project distributed enough contraceptive products in 1984 to

cover nearly 8 percent of MWRA (up from 3.1 percent in 1980); of the 11

ongoing CSM projects, only Jamaica reaches a greater share of the

population at risk. In 1983, SMP provided 67 percent of national condom

protection, 21 percent of OC protection and 70 percent of spermicide

protection. In FY 1975-76, SMP provided a total of 80,000 CYP, or 8

percent of nationally provided CYP; in the 12-month period ending June

1983, it provided 931,000 CYP, or 50 percent of the national program output

(Davies, 1983).

"Raja" has virtually become the generic name for condoms.

Extensive and intensive promotion, such as use of riverine junks displaying

Raja logo on the sails, is seen as largely responsible for the 690 percent

sales increase in Raja from 1976 to 1982. Sales increases have paralleled

improvements in the SMP's ability to contact, supply and service

increasingly more distribution outlets. Three brands of condoms are now

offered by the project, although sales are dominated by Raja. "Raja"

condoms sell for less than $0.01 each, about one-tenth the commercial

price. Condoms now account for 86 percent of the total CYP provided

annually by the SMP.

There have been some questions raised concerning actual condom

usage: there is a substantial "gap" between usage implied by national

- 19 -

program records (4-5 percent) and usage measured in the Contraceptive

Prevalence Survey (1.8 percent). Non-cqntaceptive use--the "balloon

factor"--and smuggling (7-8 million condoms to Burma and India annually)

can account for only a small portion of the gap (Davies, 1983). A study by

Family Health International (FHI) concludes that underreporting of condom

use by women appears to be the major cause of the gap.

Davies estimates total condom prevalence to be about 5.4-6.2 percent.

"Maya" has become synonymous with oral contraceptive (OC). Early

use of widespread distribution on a non-prescription basis was not

effective--sales plateaued in 1978 and 1979. Market research found that

people were afraid of the pill, and that rural medical practitioners were

using OCs as a convenient explana'ion for various medical complaints of

clients, Because extensive promotion apparently could not overcome

people's negative perception of the pill, mass marketing does not seem to

have been well suited to dealing with concerns surrounding this product.

The problem of mass marketing may have been accentuated in Bangladesh where

most purchases are made by men--their effectiveness at relaying information

received at point-of-purchase to their wives is problematic.8 /

A new distribution strategy was adopted late in 1980 with the

addition of Ovacon, a low-dose pill. Medical representatives, added to the

sales force, now handle OC distribution to pharmacies and medical

personnel; the idea being to use these "detail men" to counter, through

education, the negative image of OCs that practitioners were portraying,

and to motivate them to actively promote and sell OCs. The plan was that

over-the-counter sales would resume only after OCs were carefully

8/ Low price and an "unscientific" name may also have affected salesperformance.

- 20 -

introduced through medical channels. The new strategy appears to be

working. OC sales over the past two years have grown faster than those of

condoms, doubling from 1982 to 1984, and in 1984 exceeded 2 million cycles

for the first time. Ovacon accounted for 40% of 1984 OC sales (Sherris,

Ravenholt and Blackburn, 1985).

Jamaica. Jamaica's Commercial Distribution of Contraceptives

(JCDC) program is a leader among CSM projects, reaching a large proportion

of MWRA (12.6 percent) and covering nearly one-quarter of all

contraceptors. This success has been accomplished despite a number of

management problems and only a modest growth in sales over recent years.

The ability of the Jamaica project to successfully utilize commercial

distributors is probably due to its commercial infrastructure being

stronger than many other project countries.

Under the management of Westinghouse Health Systems (WHS), sales

of Panther condoms and Perle OCs began in 1975. Sales levels in 1976 were

twice those in 1975. The MOR assumed project responsibility in 1977 when

WHS's contract was not renewed. Starting in 1978, USAID supplied only

commodities and technical assistance, discontinuing funds for advertising.

The MOH had difficulty recruiting a good marketing director because they

were paying only on the civil servant pay scale, and project management

ceased to be consumer-oriented. The country's economic problems

contributed to rising JCDC operating costs, and product prices could not

keep pace with inflation. Condom sales continued to rise but at a slower

rate of 9 percent from 1977 to 1980. During the same period pill sales

increased by 19 percent. Inflation and price controls were eating into

distributor margins during this period and the number of retail outlets

selling CSM products declined. After three years of negotiations, the

government fiaslly approved an increase in product prices in 1981.

- 21 -

However, in real terms, the new prices are actually lower than the 1975

prices due to devaluations in the Jamaican dollar: a Panther condom now

costs $0.03, half the 1975 price; one Perle cycle sells for $0.16 compared

to $0.36 in 1975. After 1980 the rate of increase for product sales slowed

further: to 4 percent for condoms, 9 percent for OCs. Part of this

slowdown was to be expected as the absolute quantity of sales increased,

but it is likely that the change to government management (along with the

problems just mentioned) may have contributed to the reduced rate of sales

growth.

Despite the managerial and financial difficulties, however, the

project remains viable. Targeting the teenage market (because of the high

rate of adolescent pregnancy) is one of the new strategies being tried to

restore the JCDC's earlier momentum. Products are sold, in retail outlets

patronized by young people and pharmacists have been instructed not to

impede teenagers from buying contraceptives.

Egypt. When this project began in 1978 it was part of the FPA;

it became institutionalized as a separate, semi-autonomous organization,

Family of the Future (FOF), in 1979. Sales growth has been significant and

product sales are third highest among the 11 ongoing CSM projects. It now

covers about 7.2 percent of married women of childbearing age (up from 0.8

in 1980), and 30 percent of all contraceptors. The project operates under

a product management system in which each product has its own manager,

responsible for setting objectives and developing marketing strategies.

Condoms, foaming tablets and low-dose OCs are sold by this

project through a combination of in-house and commercial distribution. FOF

contraceptives are promoted at popular beaches and through rallies at

sports events; free samples of condoms and tablets are distributed as are

- 22 -

hats and T-shirts bearing product logos. This project in fact spends 37

percent of its budget on promotion. It has conducted extensive market

research which has enabled it to segment its target market according to

education, attitudes, buying habits, etc. Promotional efforts have been

addressed to the identified segments.

The unique feature of the Egyptian project is that it is the only

one to market IUDs at subsidized prices. The Copper T and Copper 7 IUDs

account for 61 percent of the CYP provided by the project. IUDs are sold

almost exclusively to married women with children who typically buy them at

pharmacies and take them to their doctors for insertion. Early attempts to

gain medical staff participation using printed educational material were

far less successful than was the approach of detailing, personal visits by

medical representatives to physicians and pharmacists to introduce, promote

and sell IUDs, and training programs on IUD insertion. While an aggressive

public relations program helps maintain project visibility and legitimacy

among physicians, it also has its price: in the last quarter of 1984,

promotion to doctors consumed over 20% of the CSM program's budget

(Sherris, Ravenholt and Blackburn, 1985).

Caribbean Region. Barbados, St. Lucia and St. Vincent comprise

the first regional CSM project. The reasoning behind trying this multiple

country approach is that "the bigger market allows savings for countries

too small to run cost-efficient projects of their own." The project is

modeled after Jamaica's CSM project and has adopted its advertising

materials and brand name products; the package for the Perle OC has been

redesigned. The Barbados FPA originally managed the project; it is now

operated by a commercial distributor with technical support from the SOMARC

project of the Futures Group.

- 23 -

Condoms are available in pharmacies, mini-markets, and small

shops. There is a prescription requirement in each country and OC sales

are restricted to pharmacies except in St. Vincent where OCs may also be

made available at non-pharmacy outlets.9 / Because Barbados has banned mass

media advertising of prescription products, bus signs, posters and

detailing to pharmacists and doctors are the chief promotional techniques

used. Retailer incentives in the region include giving the retailer two

free cycles of OCs for every 24 bought and one free condom for every ten

purchased. Physician orientation seminars, to provide project information

and product samples, were held when the project started.

Even though the regional structure probably has financial

benefits, it undoubtedly complicates bureaucratic procedures. Some

difficulties have arisen from cultural and language differences, but the

biggest problem has been overcoming the economic disparity between Barbados

and its two less affluent neighbors. A two-tiered pricing strategy was

devised to address this problem: higher prices are charged in Barbados

($1.75 per OC cycle and $0.75 per condom 3 pack) than in St. Lucia and St.

Vincent ($1.26 and $0.42, respectively). These prices are high relative to

other CSM projects but they are 25 to 50 percent lower than prices for

commercially distributed products in these countries.

It is hoped that this project can be expanded; feasibility

studies are underway on Antigua, Dominica and St. Kitts.

El Salvador. This project is managed by the country's FPA. It

continues to operate despite the political instability in the country, much

turnover in project management personnel, and declining sales levels.

9/ In St. Lucia and St. Vincent, the prescription requirement is very"relaxed." Bayley and Washchuck, 1983.

-24-

Condoms, OCs and tablets are sold mostly through pharmacies. Pharmacies

are only open periodically and have put bars on the windows: clients can

no longer go into pharmacies, they must purchase products through the

barred windows (Blackburn, 1985). The project reaches about 2.2 percent of

MWRA.

Nepal. The early years of this project, which began selling

condoms and OCs in 1978, were plagued by cultural, distributional and

promotional impediments; products were promoted but not available in many

areas, creating a bad image for the project. Multiple languages, difficult

terrain and a weak commercial infrastructure hampered sales growth. In

response to the problems, an in-house sales force was established to

distribute products to wholesalers, stockists and retailers. Two

additional steps were taken in 1981 to help alleviate these problems:

jeeps were acquired to ease mobility and promotional problems, and the

government rescinded its ban on contraceptive brand name advertising on

radio. As a result, sales of Dhaal condoms (which sell for $0.01 each)

increased 95 percent in 1982. Foaming tablets were added to the product

line in 1983. The project covers 21 percent of all contraceptors but only

1.5 percent of MWRA.

After 7 years of quasi-governmental management with technical

assistance from WHS, the CSM project was incorporated as an independent,

non-profit organization in 1983; The Nepal Contraceptive Retail Sales

program has recently become a private company. In 1984 the program hired a

woman sales representative for its products, the first Nepalese woman to

sell contraceptives (SMF, Fall 1984).

Honduras. One of the 4 CSM projects managed by an FPA, this

project officially began in 1981 but organizational and legal problems, and

- 25 -

difficulty in getting the OC registered delayed product launch until March

1984. Sales of condoms and OCs were low in the remainder of 1984 (7,900

CYP) and costs were high (the cost per CYP was $42). In general these

results constitute a poor performance for a 4-year old project. However,

because product sales only began in 1984, it is still too early to evaluate

the eventual success of the project.

V. Pricing

CSM projects are meant to complement government-sponsored and

other commercial distribution programs by reaching a target population that

these programs fail to adequately service. From the consumer point-of-view

there is little difference between CSM products and commercially sold

products except the price: both are usually distributed via retail

outlets, but the CSM products are generally priced to increase sales rather

than to maximize profits (Huber, et. al., 1985). Government and donor

subsidies, which cover product and some start-up costs, allow for

contraceptives to be sold at a low price but one sufficient to generate

some revenue for the distributor, retailer and the project itself.

A. Pricing Objectives

The basic goal of the CSM program has a direct bearing on

determination of pricing objectives. The social objective to increase

accessibility to and availability of family planning products to

populations not presently served means that sales maximization and market

penetration are primary goals in setting prices,, with efforts to attain

self-sufficiency a secondary purpose (Ylanan and Verzosa, 1979). USAID no

longer promotes self-sufficiency as a long-term goal; instead it stresses

cost-effectiveness and maximizing cost recovery without reducing

- 26 -

coverage (Ravenholt, 1985).10/ Project experience to date indicates that

most projects are not ready for financial self-sufficiency "unless the

social objective of expanding contraceptive prevalence is to be sacrificed"

(Harvey, 1984b). As has been mentioned, Mexico's CSM project is considered

self-sufficient and Sri Lanka's is making a profit but in both coverage has

been marketedly reduced; Colombia's project raises considerable revenue but

is not targeted toward low-income market segments.

B. Determining Appropriate Prices

Determining prices for contraceptive products is a critical task

in the planning of a CSM project. Product prices can influence the

behavior of all of the links in the distribution chain--consumers',

retailers, etc. The process of price selection requires considerable study

and analysis if the needs and interest of the CSM project and the target

population are to be served. Arriving at the optimum price is complicated

by the difficulty in identifying the actual costs to the user: consumers

face a number of opportunity costs additional to product costs.

Project designers determine the prices to be charged for CSM

products. They must take into account program goals (coverage and cost

recovery); consumer expectations; government pricing laws; distributor,

wholesaler and retailer margins; and prices relative to target market

income and prices of other consumer products. The process of setting

prices entails a number of steps. First is consideration of what have

become the basic "rules of thumb:" the price of a one month supply of the

product should be less than one percent of the monthly income of lower

10/ "Self-sufficiency" generally means project operation continueswithout subsidies. Subsidies usually cover contraceptive commodities,advertising and some start-up costs. Lewis, 1984.

- 27 -

income groups of the target population; CSM product prices should be in the

same ballpark as prices of frequently purchased items (e.g., loaf of bread,

toothpaste, razors, cigarettes)--this allows the monthly purchase of

contraceptives to fit into the buying habits and cash availability of the

target groups; and CSM products should be about half of the price of other

commercially distributed products. In general these "rules" have been used

as guidelines in price setting by the ongoing projects (Ravenholt, 1982).

The Nirodh program in India chose a price low enough for the "user to

perceive the condom as an everyday necessity, like soap, tea and coffee"

(SMF, Summer 1984). In Bangladesh, the cost of one year's supply of

contraceptives equals about one day's wages at the prevailing rate of farm

labor (Schellstede and Ciszewski, 1984). In Honduras the monthly income of

some groups was $50 in 1980; accordingly the recommended price for a one

month's supply of CSM products was $0.50. But the "rules" are not always

followed: in Egypt CSM products are not as cheap as the lowest priced

contraceptives available through commercial channels and in Honduras OCs

are sold for $0.75 per cycle, more than the recommended price (see

Table 4).

Market research to investigate consumer ability and willingness

to pay, and the price sensitivity of the target market (e.g., consumer

perception of the product quality and price link) should be conducted to

help determine appropriate price levels. It is generally stated that if

prices are set too high the product becomes too expensive for the target

group, and if set too low, the product will be perceived as being of poor

quality. Although the evidence is somewhat mixed, available information

suggests that these assumptions are valid. A review of studies of

developing countries presented by Lewis (1984) shows that while there is

- 28 -

little difference in demand for free and moderately priced products, demand

is reduced for higher priced products. In Jamaica and Thailand, Akin and

Schwartz (1985) found that as product prices increase, product use

decreases, although not markedly (see Price Sensitivity, p. 41 for more

information). On the other hand, survey results from Egypt indicate

existence of the consumer perception that "anything free or cheap can

hardly be good" (Howell and Novelli, 1980). In Thailand, OC users

suffering from side effects often switch to higher priced OCs seen as

higher quality and Ath fewer side effects. "Indirect marketing evidence

from India and post-price rise increases in demand in Jamaica and Sri Lanka

suggest that prices can be too low, depressing demand by reducing consumer

confidence in the contraceptive market" (Lewis, 1984).

Use of pre-launch surveys can help identify consumer attitudes

toward price levels. For example, such a study done in Bangladesh

confirmed that proposed OC and condom prices were acceptable to consumers;

in Nepal OC prices were found to be acceptable but survey respondents in

remote area: felt condom prices were too high.

Distributor, wholesaler and retailer margins to be offered for

sale of CSM products must also be considered in determining product prices

(see Margins, p. 31). These margins, designed to cover expenses and

provide profit, are added to the base price of the product. Margins

provided for CSM items are usually comparable to those for other consumer

products, although some programs (e.g., Nepal, Guatemala and Jamaica) offer

higher margins as an incentive to sell CSM products. Any government

pricing laws must also be accounted for in setting prices.

Based on the program objectives, "rules of thumb," market

research, margins to be offered, etc., project management sets a price for

- 29 -

its products. Many. governments must approve initial prices for new

pharmaceutical products. This process has caused serious problems for some

CSM projects. For example, the project in Ecuador, which had planned to

begin sales in the summer of 1984, was suspended in April 1985 because the

government had failed to approve proposed prices for OCs and spermicides.

Government approval is also necessary in some countries to change (usually

increase) product prices. This process runs more smoothly in some

countries (e.g., when import duties were imposed on tablets in Egypt the

project had little trouble getting approval for a price increase) than in

others (e.g., Jamaica--see p. 20).

C. Current Product Prices and Consumer Outlays for Protection

by CSM Products

Table 3 shows an estimate of what consumers pay for monthly and

yearly coverage from CSM contraceptive products based on current product

prices, and how that relates to GNP per capita in the CSM countries.11 In

general, there is consistency across projects with consumers in the poorest

countries paying the lowest prices (Bangladesh, Nepal, India, Sri Lanka).

Consumers typically pay more in the Latin American and Caribbean countries

than in Asia, with the exception of Jamaica, where the price of one cycle

of OCs ($0.16) is notably low given its middle income status (see p. 20 for

pricing problems in Jamaica). Overall prices are lowest in Bangladesh and

highest in the Caribbean project (see p. 23 for discussion of Caribbean

project).

Half of the project countries shown in Table 3 offer multiple

products at different prices. The lowest cost of a month's supply of

11/ See Footnote 1/ Table 3 for explanation of calculations.

- 30 -

Table 3. MNIT RICES KR SK PlMlUClS, (If RR (1E IDII AND GCE )EAR (F MME FRM CS1 RMESl/AM HRET(ON F GP ( ER CAPTIA SUE W CS24 HRrS

(in U.S.$)

Condoms OCs Spermicides Maximum Pro-GNP Prtion ofper Cost of Cost of Cost of GNP pc spent

Project Country capita Unit Coverage For Unit Price Coverage For Unit Coverage For on CSM pro-ani Year 1983 Price 1,M. 1 Yr. (per cycle) I Mo. 1 Yr. Price 1 Mo. 1 Yr. duct in l yr

Bangladesh (1985) 130 0.008- 0.067 - 0.80 - 0.06 - 0.065 - 0.78 - 0.009- 0.075- 0.90 - 1.50.02 0.167 2.00 0.16 0.173 2.08 0.01 0.083 1.00

Nepal (1985) 160 0.01 0.083 1.00 0.12 - 0.13 - 1.56 - 0.02 0.167 2.11 2.60.32 0.35 4.16

India (1985) 260 0.01 .083 - 1.00 - - - - - - - *0.016 0.133 1.60

Sri Lanka (1985) 330 0.015- 0.125- 1.50 - 0.09 - 0.098 - 1.17 - 0.03 0.25 3.00 6.80.223 1.86 22.30 0.13 0.141 1.69

Honduras (1984) 670 0.25 2.08 25.00 0.75 0.81 9.75 - - - 3.7

Egypt (1985)2/ 700 0.04 0.33 4.00 0.42 0.455 5.46 0.02 0.167 2.00 *

El Salvador (1985) 710 0.017- 0.142 - 1.70 - 0.05 - 0.054 - 0.65 - 0.06 0.50 6.00 5.4.38 3.17 38.00 .51 0.553 6.63

Thailand (1985) 820 0.03 - 0.25 - 3.00 - 0.19 - 0.206 - 2.47 - - - - *0.07 0.583 7.00 0.33 0.358 4.29

St. Vincent and 970 0.14 1.17 14.00 1.26 1.37 16.38 - - - 1.7St. Lucia (1984)

Jamaica (1984) 1,300 0.03 0.25 3.00 0.16 0.17 2.08 - - - *

Colombia (1985) 1,430 0.12 - 1.00 - 12.00 - 0.39 - 0.42 - 5.07 - 0.06- 0.50 - 5.83 - *0.14 1.17 14.00 0.46 0.50 5.98 0.14 1.17 13.56

Barbados (1984) 4,050 0.25 2.08 25.00 1.75 1.90 22.75 - - - *

* less than one percent.

1/ Cne year of coverage is equivalent to use of 100 condoms or foaming tablets and 13 cycles of OCs. COe month ofcoverage is estimated to be the equivalent use of one-twelfth that needed for one year, i.e., 8.33 condoms ortablets, 1.08 cycles of OCs.

2/ Cost for 1 year of coverage is estimated as equivalent of 0.53 IUD: Copper T $0.64; Cbpper 7 $1.75.Cost for 1 month of coverage is estimated as equivalent of one-twelfth of 0.53: Copper T $0.053;

Copper 7 $0.15.

Source: Darived from Sherris, Ravenlolt and Blackburn, 1985.GNP Figures: Wbrld Development Report 1985.

- 31 -

condoms by country ranges from $0.067 in Bangladesh to $2.08 in Barbados

and Honduras. In seven countries, a month's supply costs $0.25 or less.

Six countries offer more than one brand, thus providing a choice of product

and price. The range for one month of protection from the lowest priced

OCs available by country is $0.05-$1.90 (El Salvador and Barbados are the

outliers); all but two fall below $1.00, and most are $0.50 or less. A

number of projects offer different dose levels of OCs with low-dose pills

often priced higher: they are seen as more desirable and of better

quality. In Nepal the low-dose OC was priced higher ($0.32 per cycle) than

the regular dose ($0.12) to "coincide with its high quality, more effective

image" (SMF, Spring 1984). The cost of coverage from spermicides is

generally close to that for condoms. By country, consumers pay more for

condoms on a monthly basis than for OCs in seven of the countries offering

both, less in three and about the same in one (Bangladesh).

Expenditures for a year's supply of CSM products generally

accounts for a small proportion of GNP per capita in project countries:

2.6 percent or less in 9 countries (less than 1 percent in six of those

nine). This supports Lewis' assertion that spending on family planning

does not represent a large proportion of household expenditures even in low

income countries.

CSM product prices are generally much lower than those found in

the private sector (Table 4). The exception to this is found in Egypt

where OCs from the private sector cost only slightly more per cycle ($0.46)

than those from the CSM project ($0.42).

D. Margins

Most CSM programs rely at least partially on the commercial

distribution system to market their products. Profits to distributors,

- 32 -

Table 4. COST TO CONSUMER FOR CSH PRODUCTS AND FORCONTRACEPTIVES FROM THE PRIVATE SECTOR IN SELECTED COUNTRIESI!

(Prices in US$)

Condoms (1) OCs (1 cycle)

CSM Private Sector CSM Private SectorPrice Price Price Price

Bangladesh 0.008-0.02 -- 0.06-0.16 1.28

Egypt 0.04 0.19 0.42 0.46

El Salvador 0.017-0.38 -- 0.05-0.51 3.60

Thailand 0.03-0.07 -- 0.19-0.33 1.25

Jamaica 0.03 -- 0.16 1.74

Colombia 0.12-0.14 0.23 0.39-0.46 0.80

1/ Average cost for the private sector is estimated as midpoint of thereported range. Data for private sector are circa 1980/81. Data forCSM product prices are for 1985 except Jamaica which is 1984.

Source: Lewis, 1984 and Table 3.

- 33 -

wholesalers and retailers who sell CSM products are determined by the level

of markup they are allowed. Margins for CSM products are usually

comparable to those for other commercial products. While there is a

considerable range in the level of margins allowed, distributor margins

typically range from 15 to 20 percent; wholesaler margins: 4 to 8 perdent;

and retailer margins: 15 to 25 percent. In a few countries margins for

pharmaceuticals are dictated by law (e.g., Mexico). Some programs have

offered higher-than-standard margins to increase profit levels and thereby

encourage the participation of the commercial distribution system. In

India, distributors and wholesalers are allowed a 13 percent margin on CSM

condoms compared to 6 percent offered on most other goods; retailers

receive a 20 percent margin, nearly twice that for other goods (see

Table 5). In Nepal, the retailer and wholesaler margins were originally

set higher than the usual margin allowed: 18 to 20 percent rather than 15

percent for retailers and 13 to 17 percent, instead of 8 to 10 percent for

wholesalers. These have since been revised downward: wholesalers selling

Gulaf OCs now get a 12 percent margin, while retailers are allowed a

15 percent margin (Sherris, Ravenholt and Blackburn, 1985).

Despite increased margins, profit levels are often very low, not

because the margin itself is low but because the product prices are so

low. For example, in Jamaica, where Panther condoms sell for $0.03 each,

retailers earn very little ($0.0064 per condom sold) even though the

retailer margin is quite high (27 percent); in contrast, the least

expensive, commercially distributed condom in Jamaica provides seven times

more actual profit on each sale because of its higher price (Sherris,

Ravenholt and Blackburn, 1985). Table 6 provides additional examples of

margins and profits received by the different members of the distribution

- 34 -

chain. In Barbados, where the product price and margins are high, profit

levels are considerably greater.12/

Profits earned from margins on product prices which have not been

changed during a project to keep pace with inflation appear to have

declined. In a study by the International Contraceptive Social Marketing

Project (ICSMP), most of the 10 CSM projects examined showed retailer

profit declined to one-third to one-half its initial value since project

launch (ICSMP, 1983a).

CSM projects have developed a number of tactics to help alleviate

these problems. For distributors and wholesalers profit margins are

typically the incentive for involvement, although occasionally they may be

induced to participate as a public relations gimmick or by strong govern-

ment support (i.e., political appeal to sense of patriotism--India). A

number of projects offer bonuses or discounts additional to margins to

encourage retailer participation. In Egypt pharmacies receive a credit

subsidy: they are allowed relaxed payment terms (30 days) on large orders

of CSM products; free displays are also given on bulk purchases of

condoms. Nepal and the Caribbean projects offer free samples with bulk

purchases: in the latter, retailers receive two free cycles of OCs for

every 24 purchased and one free condom for every 10 bought. Nepal offers

one free bonus condom for each one purchased: the scheme reportedly led to

a 60 percent increase in sales to retailers in 1978. Nepal also offers

free calendars and prescription pads to retailers. Nepal has found these

strategies more effective than high margins for increasing retailer

12/ Product prices in Barbados are the highest among all CSM projectcondom and OC prices.

- 35 -

Table 5. DISTRIBUTOR, WHOLESALER AND RETAILER MARGINSALLOWED IN FOUR CSH PROJECTS

Margins (Percents)

Country Distributor Wholesaler Stockists Retailer

Bangladesh (1983)1/ 4-8 5-7 15-20

Caribbean (1983)2/ 27 50

India (1985)3/ 13 6 20

Nepal (1983)4/Dhaal Condom 17 19Suki Dhaal Condoms 16 19Gulaf OC 13 18Nilicon (low-dose) OC 13 18Kamal tablets 14 20

1/ Davies, 1983.

2/ Bayley and Washchuck, 1983.

3/ Sherris, Ravenholt and Blackburn, 1985.

4/ Margins offered now are somewhat lower and more in keeping with theusual margins offered. Even with these higher margins (shown forillustrative purposes), the profit to wholesalers and retailers forproducts sold is minuscule (Table 6). Nepal CRS, 1984.

-36-

Table 6. WlGD AUlMD A O0dOMOM RICS TD BURCIPAIES IN DSMBUICN CHAIN(Prices in U.S.$)

Price to Price to Price to Price to Price to

Project and Product Distributor Wholesaler Stockist Retailer Consumer

6% 6% 17.5%

anglaesh margin margin margin

Ovacon OC .1212 ).1285 .1362 .16

.0073 .0077 .0238mark-up mark-up mark-up

13 20%

India margin 6% margin margin

Nirodh (ondoms (3) .0209 > .0236 > .0250 > .03

.0027 .0014 mark-up .005mark-tp mark-up

15%Nepal 12% margin margin

Gulaf OC (newmargins) .0932 > .1043 0.12.0111 mark-up .0157

mark-up

19%

17% margin margin

Dhaal Condom (1) .0072 .0084 0.01

.0012 mark-up .0016

50%

Barbados 27% margin margin

Pantber Condoms (3) .3937 > .5000 - 0.75.1063 mark-up .2500

mark-up

50%

27% margin margin

Perle OC .9186 > 1.1667 ; 1.75

.2480 mark-up .5834mark-up

Source: Derived from Tables 3 and 5; Sherris, Raveabolt and Blackburn, 1985

- 37 -

participation. In Jamaica, pharmacists may take a retailer training course

offered as part of the CSM project.

Retailers (and others along the distribution chain) are supposed

to charge the official price approved by the government for CSM products.

There appears to be little mechanism for enforcing those prices on the part

of the project and little disincentive to inhibit retailers from increasing

prices (unofficially) and correspondingly, their profits. Studies have

found a wide range of prices charged for CSM products within countries,

indicating that retailers (and others) are manipulating prices.

E. Cost-Effectiveness of CSH Projects

The objectives of individual CSM projects and priorities accorded

them in the different countries will affect costs: those with primarily a

social objective--rural outreach and a low income target nopulation (e.g.,

Bangladesh)--will likely have higher project costs (and charge lower

prices) than a project which emphasizes income generation and

urban-oriented markets (e.g., Sri Lanka, Mexico, Colombia). The cost-

effectiveness of CSM projects is typically measured in terms of annual net

project costs per CYP (see Table 7)13/. Colombia and Sri Lanka are the

only CSM projects making a profit (in Colombia $2.18 per CYP in 1984; in

Sri Lanka $.20 per CYP in 1983, up from a net cost of $0.02 per CYP in

1982). In Sri Lanka, the ability to earn a profit is attributed to the

13/ These figures are based on estimates of CYP and population coverageand should be considered as approximate indicators of program coverageand efficiency.

- 38 -

Table 7. NET OPERATING COST OF CSM PROJECTS PER COUPLEYEAR OF PROTECTION, 19841/

(in U.S.$)

Project Country Net Operating Cost Per CYP

Colombia 2 / ($2.18 profit)

Sri Lanka3 / ($0.20 profit)

Mexico $0.0

Bangladesh $1.75

Thailand $2.80

Nepal $4.67

Egypt $4.98

El Salvador4 / $14.56

Honduras $32.40

1/ Excludes commodities cost and takes account of sales revenue.

2/ Includes cost of purchasing most contraceptives. Covers urban pharmacycomponent and urban and rural shop component.

3/ Figure is for 1983, the first year this project registered a profit.

4/ Figure is for 1983-84.

Source: Colombia, Sri Lanka, Thailand, Nepal: Sherris, Ravenholt andtlackburn, 1985; Mexico, Bangladesh, Egypt, El Salvador, Honduras:derived, Table 8.

- 39 -

addition of products sold at commercial prices in the early 1980's to the

product line. During that period, however, coverage of MWRA dropped by 29

percent (see Table 2). The Mexico project had zero net cost in 1984:

following withdrawal of donor support in 1981, the project began selling

spermicides, IUDs and a number of household items at commercial prices to

raise revenue (see Expanded Product Line, p. 44). Coverage since 1981 has

dropped by 60 percent. The Bangladesh CSM project appears to be

cost-effective given its emphasis on rural outreach and the low price of

its products. Its net cost per CYP ($1.75 in 1984) is less than the cost

for most other agencies providing family planning, including the government

through free programs, which range from $3-18 per CYP. Only the private

voluntary sterilization program approaches the CSM project's low cost per

CYP (SMF, Winter 1984; Davies, 1983).

Cost-effectiveness of these projects is also affected by the

social and economic circumstances existing in the country. For example,

Binnendijk (1985) asserts that "multiple cultures and languages, the

mountainous terrain and weak infrastructural and commercial sector of Nepal

place constraints and costs on the project there not encountered in more

homogenous and developed societies." It is implied that the somewhat

higher costs and low coverage in Nepal are at least partially the result of

these factors, although no specific data are offered to support this view

(the net cost per CYP in Nepal is high but has declined over the

years--discussed below). Sherris, Ravenholt and Blackburn (1985) attribute

at least part of the high net cost per CYP in El Salvador ($14.56) to the

social unrest there which has disrupted sales.

Among the many factors that influence cost-effectiveness, prices

charged, size of project and length of program operation are considered

V -40-

very important, with the latter the most significant. Altman and Piotrow

(1980) state that new programs tend to have high costs (e.g., start--up

costs for market research, packaging, promotion and distribution), while

revenues from sales are low. As programs become established costs level

off while revenue increases from growth in sales. They cite the

significant decreases in net costs per CYP from project inception to 1979

in India ($2.51 to $1.67 in 8 years) and Sri Lanka ($9.83 to $3.79 in 4

years) as evidence. In Bangladesh, the net cost per CYP was $2.86 in 1976,

the first full year of operation when about 10 million condoms and 500,000

cycles of OCs were sold; in 1984 the cost was $1.75 with sales of about 130

million condoms and 2 million OC cycles (and coverage of 40 percent of all

contraceptors). In Nepal, net total cost (including commodities cost) per

CYP went from $49 in 1978 to $19 in 1981 and $8.30 in 1984. During that

period condom sales went from less than 100,000 to 3.4 million and OC sales

from 10,000 cycles to about 110,000 cycles. On the other hand in the young

Honduras project, where sales only began in 1984, the net project cost was

much higher at $32.40.

Large programs tend to be more cost-effective than small ones.

As sales volume increases the program can achieve economies of scale

thereby improving its cost-effectiveness. Fixed costs, e.g., for

contractors, become smaller as a proportion of total expenditures. In

Bangladesh where net operating costs were over $3 million in 1984, the

sales volume was the equivalent of nearly 1.4 million CYPs, yielding a net

cost of $1.75 per CYP. Projects launched in small countries will never be

able to reach a comparable sales volume. For example, in the Caribbean,

where only about 100,000 women of reproductive age live, the budget was

$172,000 in 1983-84 and the cost was over $140 per CYP (without sales

-41-

revenue). At least part of the cause for the high cost per CYP in El

Salvador is attributed to the project size (project sales were the

equivalent of 15,000 CYP from April 1984 to March 1985).

A more in-depth look at project costs and revenue generated

through sales is given in Table 8. Egypt is the most expensive project in

terms of total costs, and generates the most revenue followed by

Bangladesh. Sri Lanka's project is earning a profit of $0.34 per CYP and

Mexico's project has zero net costs. Of the remaining five projects shown,

three generate enough revenue to cover about one-quarter of their costs.

The level of cost recovery is lowest in Nepal at 16%.

F. Mechanisms for Increasing Project Revenue

The intention of CSM projects is to set a low price so that high

sales volume will eventually be generated thereby providing a satisfactory

return to retailers. But retailer profits have generally been low and

where subsidies have been withdrawn (e.g., Mexico, and partially in Jamaica

and Sri Lanka) projects have had to come up with additional ways to raise

revenue. Two such mechanisms have been raising product prices and

expanding the project product line.

Price Sensitivity. How sensitive are consumers to changes in

price? A study by Lewis (1984) on price elasticities found that small

price increases resulted in only temporary decreases in sales followed by a

return to original sales levels. The effect of the price increase in

Jamaica on sales volume was similar to that experienced in other countries

(e.g., Sri Lanka) where prices were raised: demand declined immediately

following the price hike, then gradually moved back to (and in Jamaica's

case, surpassed) original levels. In Egypt, price increases for IUDs (from

-42-

Table 8. 1TAL W1B= GDST AND REVEM E, PRJECT COTS IM R CYPAlM IEVUZ (F COET RHCOMY, IR SELiWMD GM IBMCJS, 1984

(in U.S.$)

Total Net 1t Pro- Revenue Total Pro- CostProject Country Project Total Project Total ject Cost Generated ject Cost Recovery

Cost'/ Revenue Cost CYP Per CYP Per CYP Per CYP (%)

Bangladesh 3,129,727 694,294 2,435,433 1,392,000 1.75 0.50 2.25 22.2

Sri Lanka 129,747 160,393 +30,646 90,832 +0.34 +1.76 -1.43 12.3

Egypt 2! 3,631,756 1,029,255 2,602,501 522,427 4.98 1.97 6.95 28.3

Honduras 333,000 77,025 255,975 7,900 32.40 9.75 42.15 23.1(budget)

El Salvador3/ 276,452 46,452 230,000 15,800 14.56 2.94 17.50 16.8

Nepal 4/ 242,610 39,400 203,210 43,500 4.67 0.91 5.58 16.3

Mexico 1,300,000 1,300,000 0 67,000 0.0 19.40 19.40 100.0

1/ What is included in project costs is not clearly defined. Refers to operating costs and is exclusiveof contraceptive comodities unless otherwise noted. Bangladesh, Sri Lanka and Egypt include costfor staffing, promotion, administration research; Egypt and Bangladesh include costs for technicalassistance; Sri Lanka and Bangadesh include costs for sales and packaging.

2/ Data are for 1984-85.

3/ Data are for 1983.

4/ Estimates.

Source: Bangladesh, Sri Lanka and Egypt: Sherris, Ravenbolt and Blackburn, 1985.Mexico and Bonduras: derived from SWF, Spring 1985.El Salvador: derived fran SMF, Spring 1985 and Binnendijk, 1985.Npal: derived from Sherris, Ravenholt and Blackburn, 1985, and Nepal ContraceptiveRetail Sales Cbmpany 1983.

- 43

$2.14 to $2.85) and tablets (from $0.022 to $0.036 each) did not affect

sales. In Thailand, doubling the price of injectables (from $0.75 to

$1.50) at public clinics had no effect on current users or new acceptor

levels. However, it appears that a major price increase can reduce demand

significantly in some countries. A doubling of product prices in 1983 in

El Salvador is blamed, in part, for a 50 percent drop in sales.1 4 / In

India, a doubling of the price of Nirodh condoms in 1974 coincided with a

drop in sales (a simultaneous reduction in the promotional budget may also

have contributed).

A study by Akin and Schwartz (1985) on Jamaica and Thailand found

that "as price [for a method] increases consumers become less likely to use

the method, but the magnitude of this price effect is not large".... For

those choosing priced products (instead of free ones), rising prices appear

to have only a small deterent effect on use of each priced method. Data

suggest that if prices were raised 50 percent, usage xould change by less

than 5 percent, and that less than 3 percent would switch to natural

methods, the remainder moving to a less expensive "modern" method.

The results for these two countries suggest that prices do not

significantly affect the decision as to whether to use free contraceptives

or priced products. Oth.. ctudies indicate that where free and modestly

priced contraceptives a l'fered through similar, known outlets (e.g., in

Colombia, Korea and rgp) there is little difference in demand for free

and low priced products. In an experiment in Taiwan, consumers were

presented with a choice of OCs at 3 price levels. The response to the

14/ One must also qonsider how much other factors--political instability--contributed to this drop. SMF, Spring 1984.

-44-

moderately priced OC ($.13) was identical to that for the free product; the

OC which sold for $0.25 per cycle attracted half as many acceptors.

A study of CSK programs in 11 developing countries by Boone, et

al., (1985) found condom sales more sensitive to price (to which they were

negatively related) and less sensitive to income than were OCs.

Apart from the Taiwan study, there have not been any

experimental studies that have actually evaluated how varying prices affect

buying. Data available seem to indicate that there may be some room for

raising prices in CSM projects without affecting demand. This would

increase revenue, provide additional profits and reduce the level of

subsidy needed. But available information also indicates that too high a

price discourages contraceptive usage or leads to shifts to traditional

methods. What is considered too high a price will vary by socioeconomic

conditions of the target group, the value of children, etc. Additional

research on price elasticities of demand and willingness to pay could help

projects set more appropriate prices and provide guidelines as to what the

upper limit of price increases would be in order not to significantly

affect demand.

G. Expanded Product Line

As an alternative to raising CSM product prices in order to

increase revenue, a number of projects provide a product mix: they have

added higher priced brands to their product line to increase product

revenue. Sri Lanka has introduced a new higher priced condom, Preethi

Gold, and sells Rough Rider and Stimula condoms at commercial prices;

Bangladesh added a higher priced, low-dose OC (Ovacon) in 1983.

-45-

Another mechanism for increasing revenue that is being used by

some projects is the addition of non-contraceptive products to the sales

line. In Bangladesh, delivery kits are sold for $1.00; in Nepal ORS

packages are sold for $0.07 a pack. Colombia's PROFAMILIA project added

many products, including disposable diapers, sanitary napkins, Nandol

(analgesic) and distilled water, but only the last continues to be sold;

selling the water is meeting a need not yet duplicated by competitors.

Price competition from the commercial market, the bulk of the items,

storage problems, etc., led to termination of sales of the other items

(Andreasen, 1985). Mexico's PROFAM project also added a number of products

(as many as 8 in 1983) after USAID funding was withdrawn e.g., Bic pens,

sanitary napkins, CONTAC, a health magazine, and key chains (with embedded

condoms for "emergency use"). Economic crisis in 1983 caused severe cash

flow problems forcing PROFA4 to delay payments to non-contraceptive

suppliers. This, coupled with low sales for some items resulted in

discontinuation of sales of many of these products. In 1985, syringes,

disposable diapers and key chains were being sold. Different products are

sold at different times depending on demand and competition. The sale of

non-contraceptive products has generated substantial revenue for PROFAM.

It appears that projects must resist the temptation to

haphazardly add products to their sales line. Careful study should be

conducted to assess which products should be added, if any, and to assure

that they will meet a need of potential consumers. The question of whether

sales of other products is an appropriate activity of CSM projects should

also be addressed. Allowing the revenues raised from other profitable

lines to be used to subsidize CSM projects is effectively a political

-46-

choice of how to use revenues that could be used for other purposes. The

answer as to whether CSM projects should sell non-contraceptive products

and, if so, what types is not immediately obvious.

H. Substitution

The extent to which CSM projects reach those with unmet demand

for contraception and/or actually increase demand, rather than simply

provide products which are substituted for products available from other

sources or for natural methods, has not been systematically studied. Data

presently available are circumstantial and inconclusive. CSM project

evaluation studies done in Bangladesh, Nepal, Mexico and Kenya concluded

"that sales and distribution of contraceptives from existing sources

continued to grow and that if there was substitution it was probably

marginal" (Binnendijk, 1985). In Bangladesh, public and private sector

family planning program managers were found to be supportive of the CSM

project because they saw their increased sales as resulting from the CSM

project's extensive advertising. In fact the Bangladesh program provides

an example of a case where the CSM project may have helped to increase

overall contraceptive prevalence. Available data show that as CYP provided

by the project increased, the CYP provided by all government programs

(except from IUDs and voluntary sterilization) grew proportionally. This

suggests that the CSM project contributed to meeting unmet demand rather

than simply providing an alternative supply source to existing

contraceptive users. This conclusion is speculative, however, as it is not

known how fast demand would have grown without the project. Conversely,

other CSM project data imply that substitution may be considerable in some

countries: data from Sri Lanka, Thailand and Colombia (described as

-47

"inconclusive") suggest that CSM projects contributed to a reduction in

private sector sales. Survey data for Sri Lanka indicate "that as much as

35 percent of CSM condom sales may have been substitution for other family

planning methods." Colombia's PROFAMILIA project, directed at higher

income groups, probably contributed to a decline in commercially

distributed products (Binnendijk, 1985).

This indirect and circumstantial evidence suggests that in

countries where contraceptive use is low and a large market of couples who

are non-users exists (e.g., Bangladesh, Egypt, Nepal and India), CSM

projects probably provide products without having a large impact on other

supply sources. Therefore, substitution may not be a significant factor in

such countries. It may be an issue for countries with higher contraceptive

prevalence and with more government and commercial supply sources (e.g.,

Jamaica, Sri Lanka and Thailand) and in projects that target higher income

groups. More research is needed to determine to what extent CSM programs

reach new users or provide a substitute for conventional commercial sales

or clinic service.

VI. CSM Project Evaluation

A. Existing Evaluations

CSM projects have not been extensively evaluated. Quantitative

evaluations have not been consistently executed: no set approach to

evaluation exists, and appropriate measures of success (sales, CYP,

demographic impact) have not been determined, making assessment of project

performance and effectiveness difficult and cross-country comparisons crude

estimates at best. Data collection has been poor; few baseline studies

have been done. "There have been too few appropriately controlled

-48-

quasi-experimental designs/surveys to conclude with any certainty the

extent to which CSM projects have impacted overall contraceptive prevalence

rates and fertility levels" (Binnendijk, 1985).

None of the ongoing projects cover more than 15.3 percent of the

married women of reproductive age and six cover fewer than 5 percent. At

what level should CSM projects be considered successful? Many health-

oriented efforts strive for very high coverage levels (e.g., EPI--the

Expanded Program for Immunization); should CSM projects similarly try to

reach the masses or should they be content with 5-15 percent coverage?

What coverage level should a marketing manager (as opposed to a health or

family planning manager) consider satisfactory, given budget constraints,

advertising restrictions, etc.?1 5/ These are some of the questions that

evaluations should address.

There appears to be a trend toward doing qualitative evaluations

(e.g., Davies' of Bangladesh, 1983) rather than quantitative evaluations.

This may be necessary where ongoing projects have limited data available.

New projects should be designed so that data which are necessary for more

quantitative assessments will be collected for the project implementation

period.

B. Evaluation Findings

Given the limitations just mentioned, the literature does cite a

number of constraints to project success and factors necessary for good

project performance. These are discussed below.

15/ Pharmaceutical companies selling OCs in the U.S. consider a new

product successful if sales reach $20 million annually: this

represents about 166,500 CYP, or about 0.5 percent of MWRA in the

U.S. Sales of many consumer packaged products are regarded as

successful if they reach as few as 5% of the target population.Sherris, Ravenholt and Blackburn, 1985.

-49-

CSM projects tend to perform best when not implemented directly

by the government. Projects run by FPAs have more management problems and

are less successful than those managed by independent, non-profit

organizations that can operate with more flexibility (Binnendijk, 1985).

Flexibility to adapt to change and reality, and authority to make changes

are keys to success (Altman and Piotrow, 1980). Discontinuity in

management has caused serious problems in some projects (Ravenholt, 1985).

Government support and assistance with overcoming procedural

constraints, however, is critical to program success. Even where

government is not managing a project it can have significant impact on the

operation of a project: absence of political commitment; customs

regulations; restrictions on advertising and price changes; and

prescription requirements have all been mentioned as constraints to project

performance (Osborn and Reinke, 1981; Perkin, 1977; Boone, Farley and

Samuel, 1985). In addition to government "imposed" constraints, multiple

languages and cultures prevalent in a country can complicate advertising

and communication aspects of a project. Lack of resources--financial,

manpower, etc., can restrict execution of the complete marketing process

(Greenberg, Novelli and Curtin, 1983). Marketing (and management)

expertise needs to be available and/or obtainable (ICSMP, 1983b). General

economic problems (Jamaica) and political stability (or lack thereof--El

Salvador) will influence CSM performance. The strength of the commercial

distribution infrastructure will at least partially determine the coverage

of the CSM project: thus far projects have been most successful in

reaching urban and peri-urban areas because it is there that the delivery

systems are strongest; in general, remote rural areas have not benefitted

- 50 -

substantially from CSR projects (except in Bangladesh) (Ravenholt., 1985;

Sherris, 1985). In general, external involvement of other organizations is

considered almost as problematic as management issues, while marketing

becomes more important during the operational stage (ICSMP, 1983b).

Use of donated products has created some problems for CSM project

managers. For example, USAID commodity procurement procedures have

sometimes negatively affected the performance of CSM projects supported by

USAID (most of those discussed in this paper). The lengthy procurement

process can cause supply shortages: lead time for supply orders is long

(18 months for condoms) because contraceptives are purchased in bulk on a

competitive basis to obtain the lowest price. USAID's practice of awarding

contracts to the lowest bidder has, in the past, resulted in changes in the

product supplies and disruption of CSM sales performance. Early problems,

such as the lack of distinction between package designs for CSM products

and those distributed free in government programs, and the limited types of

products available to CSM projects, were alleviated when USAID developed

different packaging for CSM products and made available a variety of

condoms and different dose level OCs so CSM programs could increase their

product line (Sherris, Ravenholt and Blackburn, 1985).

In general, available evidence indicates that CSM programs can

play an important part in meeting the family planning needs in a country if

they are well managed, have government support, are appropriately

publicized and are adapted to the local culture and environment. The fact

that three programs serve at least 30 percent of all current family

planning users and two serve more than 20 percent indicates that programs

are acting, to varying degrees, as important supply services and expanding

the availability of contraceptives.

- 51 -

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Altman, Diana L. and Phyllis T. Piotrow. "Social Marketing: Does itWork?" Population Reports 8(1), January 1980.

Andreasen, Alan R. "Growth Opportunities for Contraceptive SocialMarketing Programs." Mimeo. February 1985.

Bayley, Ronald and Gail Washchuck. "Caribbean Contraceptive SpcialMarketing Project--Initial Marketing Plan," Mimeo. Pepared forICSMP, 1983.

Binnendijk, A. "AID's Experience with Contraceptive Social Marketing; ASynthesis of Project Evaluation Findings." Draft. Mimeo. January1985.

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