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To Measure The Consumer Demand For Organic Food Products Marketing Essay

Concept of organic has been started as challenging agriculture changes with focus on improve the fertility of soil, beneficial to medium sized business as well protection of environment. “Organic production is based on a system of farming that maintains and replenishes soil fertility without the use of toxic and persistent use of pesticides and fertilizers. The use of genetic engineering, sewage sludge, and irradiation also are prohibited in organic production and processing” (Organic Trade Association, 2006).

Initially organic products were limited to the niche market and available on selected store only but later it was available to other general supermarket stores. Later on most of supermarket has introduced the organic product with their own label and increase their produce categories (Fotopoulos and Krystallis, 2002).

Demand by consumer for organic product is main factor which increase the sale of such products. In US, organic food product demand was double in the period of 1996 to 2006 and it is believed that there is prediction to double the demand again in the coming years (Market Research, 2006). It is mentioned that about 73% of population in US have purchased the organic products at least once and thus there was increased the consumers of organic food buyers. Another observation indicated that nearly 23% consumers have habit to purchase organic foods regularly (Hartman Group, 2006).

There are many organic food products available in market supplied by number of suppliers from different location and different country. Each country has its own regulation and policy in trading the organic products. Main focus of regulation is related to organic cultivation, product labelling, design of policy that help to promote etc (FAO, 2005).

There are several organic products available in the market globally. The products decided in to various groups for example animal products includes dairy products, honey, egg, fish, meat etc. Vegetable products includes starchy vegetable, green leafy vegetables, legumes, fresh fruit and vegetables, cocoa, tea, nuts, oils etc and processed food stuffs covers oil of vegetables, sugar, sugar items, beverages and other food products as well as other food products covers cotton, feedstuff and some other non-food products (Jolly and Norris, 1991).

It is not necessary that all the products available in the organic markets are certified as organic products. There are main two reasons why the consumers wish to buy the product from the organic market without organic certificate. One reason, there is trust between suppliers and consumers that their provide products is 100% organic without the certificates and second is the cost of certification is high so it increase the cost of final products. Thus there is mutual understanding between them (Venter, 2005).

It is observed that the business of organic products continuously growing in the market and consumers profile is increase a diversified in term of sociocultural, demographics and psychographic etc. So it play a crucial role in identifying particular group of customer and develop a marketing strategy by focusing that that group of customers. As the organic business continues to grow, and the organic consumer body continues to expand, its consumer profile is likely going to become increasingly diverse in terms of demographics, sociographics, and psychographics. So it is important to study the factors that influence consumption of organic, perception and buying behaviour of consumers.

2. Rationale:

The history of organic food started from the European countries around 1840’s and then started in US, Japan, Australia as well as other developing countries. The basic of organic movement is start and promote the naturally produced foods (Haab and Connell, 2002).

The market of organic food industry is nearly about US $23 billion. It is believed that the largest markets covers North America and Europe. The demand of consumer is growing continuously as well as awareness about the food safety, nutritional value, natural food products, reduced use of artificial colour and flavours etc. It was noticed that maximum growth of organic food market is predicted in the European and developing countries. Many countries has market potential less but they produce organic products and export in t he developing countries (Willer and Yussefi, 2004). As the income of people increased and become stable in countries such as Latin America, Africa and Asia as well as increase education has created the greater demand of functional food (Kotschi, et al., 2003).

In European countries, the grocery retailers are purchaser of organic food directly from the producers. It was noticed the around 70% of the consumer in UK purchase the organic food products from the grocery retailers. Health and natural food stores are main source for purchase of organic food item in Germany France and Italy (International Trade Centre, 1999).

Mawson (2007) stated that consumers prefer an organic food because of its taste and they wish to contribute in saving the environment. There is potential growth for organic food products in the many European countries. The UK is third largest market in the Europe and nearly 70%of the organic products imports from outside. UK is not fulfilling the requirement of organic food demand and import from developing countries.

As seen the market of the organic food is continuously increased and consumers are become more alert about the health and safety. Organic food is one of the choice among the health conscious people and they wish buy a such products. So it is important to study the consumers perceptions and attitude towards the organic food as well as their willingness to pay higher for such products. Output of the present research will help to markers to design new marketing strategies in the competitive market of functional foods.

3. Research Questions:

The first step for good planning of any research is creates an effective and answerable research questions. A Research Question considered as the statement that recognise the observable fact to be studied. In the research planning, to formulate a good research questions is very important as it give an idea what the research for, what is going to finding, what benefited by doing this research etc. It is advisable to give sufficient time in the development of research question. Once author is able to formulate the good questions, then it is very easy for rest the part of the research (Sounders et al, 2006).

The present investigate will plan the answer of following questions:

What is level of consumer awareness and perception towards organic foods products

What factors affects the buying behaviour of consumers for organic foods

Do consumer wish to pay higher for organic food products

What is level of consumer demand for organic food products

4. Objectives of the study:

Organic food product market is continuously increasing in trends and there are several regulatory bodies monitoring the organic food market. As the organic food with high prices and associated with environmental issues, it is necessary to study the consumer’s perceptions towards the organic food products.

The present study is planned with aim to covers the following objectives:

To analyse the awareness and perception towards organic foods products among the consumers

To study the factors affecting the buying behaviour of consumers for organic foods

To studies willingness of consumer to pay higher for organic food products

To measure the consumer demand for organic food products

5. Previous Research:

Previous research conducted in the area of organic food and other related field are mentioned here.

Magistris and Azucena (2008) conducted a study to investigate the consumers’ decision-making process for organically produced foods products. To get information from the respondents, a structural equation modelling approach has been used. Results indicated that consumer’ attitudes towards organic food was most important towards the health attribute and the environment factors. This is affect on the consumers’ decision-making process buying the organic foods. It was noted that more the information about the organic food market lead to consumer have more knowledge because of higher knowledge about the food products positively influences consumers’ attitudes towards organic food products. It was also found out that consumers who try to follow a healthy diet and balanced life are more likely to have more positive attitudes towards organic food products. From the finding they have concluded that motivation play an important role in the influences of consumer to buy organic food.

Li et al. (2003) studied on the socioeconomic factors and purchase of genetically modified rice. They showed that education, income and number of children in the household were not statistically significant in influencing the probability of willingness to pay for genetically modified rice. Finding revealed that 38 percent consumers were willing to pay for genetically modified rice whereas 16.3 percent were willing to pay for genetically modified soybean. The willingness to pay for genetically modified was increase as the knowledge increase about the genetically modified foods.

Chiang (2004) used a contingent valuation method to determine willingness to pay for genetically modified soybean oil, tofu and salmon. He used a survey method for this research. Findings revealed that 21.9 percent of consumers were willing to pay a price premium for non-genetically modified soybean oil, 37.42 percent for non-genetically modified tofu and 10.8.4 percent for non-genetically modified fed salmon.

Mc Cluskey et al. (2003) also used the contingent valuation method to gather information on consumer acceptance of genetically modified apples. The purpose of the research was to help develop marketing strategy for genetically modified apples in Chile. Results showed that respondents were asked to state their willingness to pay for second generation genetically modified apples. Various discount prices were given to respondents ranging from five to 90 percent and similarly five premium prices range from five to 50 percent. Majority of the past studies focused on the organic food have positive health benefits and that factors influences of the purchase fo the food products. One more attribute is that the organic food is free from pesticides.

Glaser and Thompson’s (1998) conducted study on buying process of organic and conventional food products. They found that consumers are confused and unable to find out different between organic and conventional vegetables. The minor difference in label on packaging is main reason for confusion. They didn’t cover the effect of income distribution and demographic factors on the purchase behaviour towards the organic vegetables.

Mier et al. (2000) studied on the consumer’s willingness for various organic products. They used the contingent valuation method to determine willingness to pay for organic milk, rye bread, potatoes, and cereal. Similar model used by Wang and Sun (2003) to determine demand for organic milk and apples while Du Toit and Crafford’s (2003) used the Engel-Blackwell-Miniard model of consumer behaviour to determine beliefs and purchasing of organic foods.

6. Methodological approach:

There is three purpose of academic study and there are exploratory, descriptive or explanatory. Exploratory studies are related to practical and clarify the understanding of the problem. Saunders et al (2006) explain that exploratory studies of method which help to find out : what is happening, to seek new insights, to ask questions and to asses phenomena in a new light”.

Descriptive studies are related when you wish to portray phenomenon such as events, situation or procedure. Again the descriptive research is also suitable when the problem is clearly defined and the intention is not to conduct the research in the relation to causes and symptoms (Eriksson and Weidershim, 2001).

Explanatory studies are useful when you are going to conduct research on well established formal relationship between variables. In this methods, emphasis more focused on the examination of situation or a problems in order to explain the relationship between the variable (Suanders et al, 2006).

This is the theory how to research does the make and how to work on it. According to Merriam in 1994 he proposed methodology as “the plan of collecting, organising and integrating collected data so that an end result can be reached”. In this part of the research, author would throw some light on strategy of research, other research methods and how collected evidence was and analysed the data (Strauss and Corbin, 1990).

There are mainly two types of research methodology qualitative and quantitative method. The research will be qualitative and quantitative in nature because its objectives are to discover the ideas and insights and what employee think about. This also helpful in understand and analyse various factors which may motivate people to behave in a particular manner and also come to know about their likes and dislikes (Kothari, 2009).

7. Methods:

Universe:

The universe can be infinite or finite. Here the population of a city, the numbers of workers in a factory are the example of finite universe and infinite universe can be stars in the sky. It means total number of items which we cannot count (Kumar, 2005). In this research the universe would be finite as consumers because the research will be carried out by covering the consumers associated with buying food products.

Sample:

According to Heidingsfield and Eby (1962), “Sample is composed of some fraction or part of total number of elements or units of a defined population. Sample is a method of selecting some fraction of population”. It means that here author will collect the data from the consumer of selected location of the London as sample and the size of sample nearly 100 will be used for the present research. In the present research, 100 respondents will sample size for the data collection for present research purposes. Sample size will be selected randomly and convenience base for data collection.

Data Collection Method:

There are several ways used for data collection such as telephonic interview, personal interview, mail, questionnaire, observation etc. From the several methods, questionnaire based data collection method will be used in the present research. Questionnaire will be prepared and pretested to find out any difficulties during the filling up the same. Once pre tested the questionnaire, it is handed over to consumers and requests them to fill it up (Kumar, 2005).

Data Analysis Method:

Here simple data analysis method will be used manual entry in the excelsheet. Data will be put into the software and then on the basis of findings graphs will be prepared. Non Statistical method will be used for data analysis. On the base of the answer, result and discussion will be carried out.

8. Ethical Considerations:

Ethical consideration means protecting dignity and privacy of each individual taking part in the research process. It also includes that researcher must inform the reason behind the research that means why he or she carries the research and also the information gathered by the research must be kept confidential and it is voluntary for the employee to participate in it (Saunders et al, 2006).

For the present research, answer given by respondent will be remaining confidential. Before handed over the questionnaire, the detail of research purpose and aim will be explained to the respondents. The information gathered will be used for the present research purposes. The data collected will not be declared a third party.

9. Validity:

The concept of validity is considered as a wide choice of terms in qualitative research. This concept is not a single, fixed or universal concept, but “rather a contingent construct, inescapably grounded in the processes and intentions of particular research methodologies and projects” (Winter, 2000). Several researcher have made argued that the validity is not applicable to qualitative research, but on the way they are agreed and realized the need for some kind of qualifying check or measure for their research. For example, Coolican (1994) suggest that the validity is affected by the researcher’s perception of validity in the study and his/her choice of paradigm assumption. As a result, many researchers have developed appropriate term to validate their research such as quality, rigor and trustworthiness (Davies & Dodd, 2002).

10. Reliability:

Although the term ‘Reliability’ is a notion used for testing or evaluating quantitative research, the thought is most frequently used in all kinds of research. A good qualitative study can help us “understand a situation that would otherwise be enigmatic or confusing”. This relates to the perception of a good quality research when reliability is a concept to evaluate quality in quantitative study with a “purpose of explaining” while quality concept in qualitative study has the purpose of “generating understanding” (Stenbacka, 2001). The difference in purposes of evaluating the quality of studies in quantitative and quantitative research is one of the reasons that the concept of reliability is irrelevant in qualitative research.

To guarantee reliability in qualitative research, examination of trustworthiness is crucial and important. In contrast, Stenbacka (2001) argues that since reliability subject concerns measurements then it has no significance in qualitative research. Further the issue of reliability is an irrelevant matter in the judgment of quality of qualitative research. Therefore, if it is used then the “consequence is rather that the study is no good”.

11. Time Frame

To design time frame for any research planning is very useful for any researcher. It give the idea and timeline as alert for work pressure and author can finish the task within a given guideline. Time frame also draws the attention if there is delay in any activity. Actual dissertation is started from May 2010 and will be finished by October 2010. Initial author will start to collect the relevant literature and understand the research area very well. Once the subjects are properly narrow down the questionnaire will be prepared and simultaneously start to prepare chapters of dissertation. Finally data will enter and analyzed and report will prepare (Mulenga, 2009). All the main topics linked to the research topic are shown in below given table.

Gantt chart:

Activity

Duration (Months)

Apr

May

Jun

Jul

Aug

Sept

Oct

Nov

Literature Survey

1

Wait for proposal approval and concentration on exams. .

Dissertation topic

1

Research Proposal,

Presentation and Submission

1

Literature Review

3

Interviews

2

Data Analysis

3

Presentation of draft dissertation

½

Correction & final submission

1/2

Completed

In-Progress

Outstanding

12. Bibliograpgy:

Chiang, F. (2004). An analysis of consumer perception and acceptance of genetically modified foods in Taiwan. Paper presented at the 8th ICABR International Biotechnology Conference, Ravello, Italy.

Coolican H (1994). Research methods and statistics in psychology (2nd edn.), London, Hodder & Stoughton.

Davies D and Dodd J (2002). Qualitative Research and the Question of Rigor. Qualitative Health Research, Vol. 12, No. 2, 279-289.

Du Toit, L. and Crafford, S. (2003). Beliefs and purchasing practices of Cape Town consumers regarding organically produced food. Journal of Family Ecology and Consumer Sciences, 31:1-11.

Food and Agricultural Organisation (FAO). 2005. Joint FAO / WHO Food Standards Programme Codex Alimentarius Commission, 28th Session Rome, Italy 4-9July. Report on the 16th Session of the FAO / WHO Coordinating Committee.

Fotopoulos, C and Krystallis, A. (2002). Purchasing motives and profile of the Greek organic consumer: a countrywide survey. British Food Journal, 104 (9):730-765.

Glaser, L.K and Thompson ,G.D. (1998). Demand for Organic and Conventional Frozen Vegetables. Selected Paper to be presented at the American Agricultural Economics Association Annual Meeting, August 8-11.

Haab, T.C. and Mc Connell, K.E. 2002. Valuing environmental and natural resources: The econometrics of non-market valuation. New horizons in Environmental Economics. Edward Elgar: Cheltenham, UK.

Hartman Group (2006). Organic2006: Consumer attitudes & behavior – five years later & into the future. Available online at :http://www.hartman-group.com/products /study Organic2006.html. [Accessed on 11th May 2010].

Heidingsfield, M. and Eby, F. (1962). Marketing and Business Research, New York.

International Trade Centre. (1999). Organic Food and Beverages: World Supply and Major European Markets. Geneva: Publisher.

Jolly, D.A. and K. Norris. (1991). Marketing Prospects for Organic and Pesticide-Free Produce. American Journal of Alternative Agriculture, 6(4): 174-179

Kothari, C.(2009),”Research Methodology-Methods and Techniques”, New Age Publications, India.

Kotschi, J., Bayer, W., Becker, T. and Schrimpf, B. (2003). AlterOrganic: local agendas for organic agriculture in rural development. Proceedings of an International workshop at Bonn-Konigswinter, 21-24 October 2002. Marburg.

Kumar,R.(2005). Research Methodology:-a-step-by –step Guide for Beginners, Sage Publications Ltd., London.

Li, Q., Curtis, K.R., McCluskey, J.J and Wahl, T.I. (2003). Consumer attitudes toward genetically modified foods in Beijing, China. AgBioForum, 5(4): 145-152.

Magistris T and Azucena G (2008). The decision to buy organic food products in Southern Italy. British Food Journal, 110:9,929-947.

Mawson, N. (2007). Consumers’ environmental awareness low, retailer survey finds. Business Day. 19 June 2007. Available Online at :http://www.businessday.co.za/articles/companies. aspx?ID=BD4A495996 [Accessed on 12th May, 2010]

McCluskey, J.J, Ouchi, H., Grimsrud, K.M and T.I. Wahl. (2003). Consumer response to genetically modified food products in Japan. Agricultural and Resource Economics Review, 32: 222-231.

Mulenga Z M (2009). Research Methodology. Lecturer note. Cavendish College, London.

Organic Trade Association. (2006). Organic sales continue to grow at a steady pace. Available online at: http://www.organicnewsroom.com/2006/06/organic_sales_ continue_to _grow.html [Accessed on 15th May, 2010].

Saunders M, Lewis P and Thornill A (2006). Research methods for business students. 3rd Edi. Pearson Education, published by Dorling Kindsey Pvt., Ltd, India.

Stenbacka, C. (2001). Qualitative research requires quality concepts of its own. Management Decision, 39(7), 551-555.

Strauss, A. and Corbin, J. (1990). Basics of qualitative research: Grounded theory procedures and techniques. Newbury Park, CA: Sage Publications, Inc.

Venter, A. (2005). Face to face interview on consumer trends in domestic organic industry and history of biodynamic agriculture in South Africa. Personal interview Wendey Angel.

Wang, Q. and Sun, J. (2003). Consumer preference and demand for organic food: Evidence from a Vermont survey. Paper prepared for presentation at the American Agricultural Economics Association Annual Meeting. Montreal, Canada, July 27-30.

Willer, H. and Yussefi, M. (2004). The World of Organic Agriculture. Statistics and Emerging Trends 2004. 6th Revised Ed. International Federation of Organic Agricultural Movements: Bonn, Germany.

Winter, G. (2000). A comparative discussion of the notion of validity in qualitative and quantitative research. The Qualitative Report, 4(3&4).

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