Organic food

Chapter 1

Introduction

1.1 Introduction

Today, with the advancement of science and technology, humans have more exposure to information technology, knowledge and education than ever before. As a result, people become more aware and sensitive to the environment and their surroundings. A quality and healthy lifestyle have becomes a kind of necessity to the modern generation. Among others, "Organic Food" is recognized to be one of the contributors to a healthy lifestyle. Almost every day, you can read or see "Organic" topic everywhere around you. From newspaper, magazine, billboard advertisement, internet and etc, "Organic" has slowly becomes a trend to the modern society.


However, a few issues have been identified in the Organic Industry in Malaysia. These factors have a strong role in influencing the purchasing and consuming of Organic Food in Malaysia. Therefore, it is important to identified and understand every factor of influence that affect the purchasing and consuming of organic food in Malaysia as all this factors will affect the entire industry from farmer, retailer, produces and even the consumers.


1.2 Background of Study


1.2.1 What is organic food

Based on United State, European, and international definitions, organic food is define as without using any material substance in the food itself, but instead by the "holistic" methods used on organic farms. According to Gracia and Magistris (2007), the intention of organic production is to eliminate chemical used on the food production in order to promote healthier and safety food. Moreover, organic food also means that it is not cultivated using chemical-derived pesticides fertilizers and herbicides. As an alternative, the process of planting and farming the organic food are by using holistic methods such as compost, crop rotation, and biological agents over a natural period of time. According to National Organic Standard Board of the U.S Department of Agriculture (USDA) in year 2000, they established a national standard for the term 'organic'. Organic food, it is defined by "how it cannot be made rather by how it can be made", which "must be produced without the used of sewer-sludge fertilizers, most synthetic fertilizers, and pesticides, genetic engineering(biotechnology), growth hormones, irradiations and antibiotics" (TheStar, 2005). From the individual's point of view, organic means it is grown in a natural environment without any chemical, antibiotics, genetic engineering, and any synthetic products or in simple way, organic mean natural or go back to the traditional way of modes of agricultural.


As an overview, the developments of organic food always work in cooperation with nature environment. Normally people's definition of organic food maybe was just vegetables and fruits, but actually plenty of foods category like meats, eggs, livestock, dairy products and many more are also conclude as organic food. This issues supported by the research conducted by Padel and Foster (2005) where respondents only associate organic term with vegetable and fruit. Generally, organic food includes plenty of categories which include vegetables, fruits, bread, meat, eggs, coffee, juice, rice, tea, potatoes and etc. Other than that, organic food like egg, meat must be free of all kinds of antibiotics or growth naturally in a clean environment.


To sum up, organic food is more environmental friendly since it does not create any pollution and waste to the earth. Besides, they give a tremendous opportunity to human being which led to healthy lifestyle and provide a better environment. Organic consumers carry a meaning of who are not only prefer an improved and healthier lifestyle but also environmental exportation and responsible to take care of the nature (Midmore et al, 2005). In addition, it also brings advantage to whole economy by increase business activities, trade, production and consumption.


1.2.2 The fact of organic

The rise of demanding organic food and healthy lifestyle in both developed and developing country is not just a passing fad. The popularity of consuming organic food is now in an increasing manner in all over the world where it also includes Malaysia. Increased consumers' concern and care regarding food safety and quality as well as health and nutritional aspect of food resulted in increased demand toward organically produced food. Such trend is a kind of reaction to numerous health affair related to processed food (Davies et al, 1995). Refer to the press release post by Nestlé Malaysia in year 2008, it shows that organic growth reached 8.9% including 3.4% of real internal growth. In Europe, organic growth of Nestlé's total Food and Beverages business is about 5.4% and the growth rate is presented around 9.5% in United State and Asia, Oceania and Africa is at the rate of 14.2%. Functional food such as health supplements and organic food was projected reach RM234bil (US$65bil) in 2003 at global market place. It is estimated reach RM601bil (US$167bil) in 2010 by has the growth rate of 14% annually.


According Federal Agricultural Marketing Authority (FAMA), in the year of 2001 the sale for organic food has achieved USD 8 billion world wide. The sale value of organic food is estimated to have growth rate at 20-30% by year 2005. The organization stated that if compared with others agricultural products, organic food has high potential for commercialization in Malaysia. Demand for healthy, environmental friendly processed food, minimally chemical used fresh food, organic food and natural food are caused by increasing of consumer awareness in nutrition value and health conscious (Malaysia Industrial Development Authority, MIDA, 2009). Malaysian start to increase their demand since they believe that consuming organic food is one of the best ways that led to a healthy lifestyle and they view this as a worthy "investment" for their heath. The concern of consumers toward food safety, quality and the environment give an opportunity to the organic industry and become more valuable for producers and retailers. As a part from that, it also activates the organic agriculture sector in Malaysia.


The rises of consumers' awareness of healthy lifestyle along with environment free of pollution have created a wonderful opportunity and market for organic food. However, it is hard for producer or businessman to manage the right products at a right time, right price and still right place with attractive promotion since the changes of consumer behaviour was so unstable due to various kind of reason, so it is very complicate to fix or to define how the consumer behave. Consumer behaviour carries the meaning of activities people undertake when obtaining, consuming and disposing of products and services (Kozak, and Decrop, 2009). As a result, study and understanding the consumer behaviour and willingness of consumers to pay for organic food is a vital knowledge for marketers, producers and businessman. There is a behavioural model proposed by Von Alvesleben (1997) address that product information, product perception and attitudes are the main factors that drive consumer behaviour. When we believe that an object or brand possess favorable attributes or have good feeling then we will have good attitudes toward it. As we all know, when consumer attitudes are more desirable, the intention to purchase is stronger. In this research, it is more focus on consumer preferences and their willingness to pay when they wish to obtain organic food. The result can help marketers and policy makers develop strategies to reach customers more effectively and efficiently.


1.2.3 Natural Food vs Organic food

Most of the people are often confuse about the different between organic food and natural food. Moreover, people though organic food and natural food own the same attribute and tend to treat or mean both the same. In fact, there are certain features that distinguish organic food and natural food.


Obviously, the main factor difference the two is organic food must be certified by United Stated Agricultural Department (USDA) and organic food possessed higher quality. We can notice that organic food have labelled "organic" and this label represent the products are considered as organic by USDA and get the stamp of approval from designed organization. Products which stamp by USDA or labelled with "organic" must contain at least 95percent organic. Organic food can either labelled by foreign certification which is USDA or certify by local organization which is Malaysia Organic Scheme (SOM). Products that labelled with SOM carry a meaning which is the process of production inspected by department's Crop Quality Control Division. The standard where SOM follow is Sirim MS 1529:2001 standards. The guideline applied to control whole process of organic food which includes "production, processing, labelling and marketing of plant-based organically produced food" and lastly, series number will be provided in order to ease the identification process (SOM). Previously, certification only offer for limited organic food such as vegetables, fruit and etc. In general, Malaysia organic aquaculture products were under the governance of Thailand's Organic Aquaculture Farms and Products Certification Centre (OAPC). In order to enhance aquaculture industry in Malaysia, fisheries department provide organic scheme for organic aquaculture production. Additional, this action can minimize the cost of apply organic aquaculture certification from other country.


Moreover, organic food always free of chemical fertilizers, pesticides, bioengineering or irradiation during produce, manufacture and handle (Annadana,2009). Besides, livestock must be free of growth hormones and antibiotics. On the others hand, there is not any specify standard for natural food and it is grown with pesticides, herbicides and chemical fertilizers. Basically, natural food have minimal processing and do not contain refined sugar or artificial ingredients and without altering the raw product (Hermitt, 2006).


1.2.4 Consumer vs Customer

Generally, most of the people have categorized both consumer and customer in the same category where it carry the meaning of purchase any products from sellers. Conversely, both of the words carry different meaning. According to Kotler and Armstrong (2006), consumer is the person who purchases any products for personal use or they call end user. Basically, consumer is the individual who had previously purchased or current users for particular product. On the other hand, the word "customer" carries different meaning in different perspective. In business market, customer is the individual or organization who purchase the product but not for own consumption. The products will become their inventory for further production or resell to end user (Kotler and Armstrong, 2006). Customer can either is a current user or only a potential customer for the product (Wikipedia).

1.2.5 Organic industry in Malaysia

Since 1990s organic market has grown in a favorable beat. Thus, sale of organic food and products are forecasted to be between USD 20 and USD 30 billion yearly. USA is the biggest organic market follow by Germany and United Kingdom. In certain country such as Denmark, Sweden, Austria and Switzerland have 4% share of organic food which exceed in the total food sales. On the other hand, organic market in developing countries is small but considers growing especially in upper income developing countries. Figure 1.3 shows the coverage of organic farm in different country in year 2005.


Malaysia is located in Southeast Asia and consists of two mainlands which is Peninsular (west) Malaysia and East Malaysia with an area of 329,750 km2. The agricultural sector in Malaysia is about 10.24% (738,677 / 75,657) of GDP in year 2008 (Department of Statistics Malaysia). Organic farming in Malaysia was started by Center for Environment, Technology and Development, Malaysia (CETDEM). During year 1986 CETDEM started their organic farm in Sungai Buloh with only one hectare plot. According to Department of Agriculture (DoA), there is 131 hectares of organic farm in Malaysia during year 2001 and approximates organic farming increase to more than 1000 hectares in year 2005. In year 2008, there are about 1000 hectares of registered and 2800 hectares of unregistered organic farm.


Table 1.1: Organic production area

Year

2001

2002

2004

2006

Total area (ha)

131

581

1178

2367

Source: Organic Alliance Malaysia, 2007


Organic farming and production had started up during year 1990. Due to increase in favorability and demand toward organic products this niche market is growing continuously. Consequently, there is increase in the number of organic organization which include government department and non government organization (Table 1.2).


Table 1.2: Organic organization in Malaysia

Organization

Contribution

Address

Moody International Certification (M) S/B

Manage certification issues.

6-L 12-01, Level 12,

Tower 2 Menara PGRM,

No 6&8, Jalan Pudu Ulu,

56100 Cheras, Selangor.

Malaysian Agrifood Corporation Bhd

Provide services to organic and non organic farmers in organizing, production, transportation and others.

Block 2A, Level 25,

Suite 25-1, Plaza Sentral,

Jalan Stesen 5, Sentral,

50470 Kuala Lumpur.

CETDEM

Non profit organization.

Helps and support organic products

17, Jalan SS 2/53,

47300 Petaling Jaya,

Selangor.

Department of Agricultural Malaysia

Assist in issue certification for vegetables, fruits, herbs and mushroom only.

7th Floor, Block 4G2, Presint 4,

52632 Putrajaya,

Selangor.

Organic Alliance Malaysia

Link many newspaper and information about organic products.

No 7, Nunn, Pulau Tikus,

10350 Penang

Malaysia Organic Scheme (SOM)

Organization that has the right to provide certificate for organic farming and production.

Headquarters, Department of Agriculture,

Tingkat 14, Menara Pelita

Jalan Tun Abdul Raman Yaakob, 93050 Kuching,

Sarawak.

Source: Better Diet Islam, 2009


Malaysian organic scheme (SOM) is the organization that has the right to give certification to organic farmers. Today, there are 28 Malaysian Organic Scheme (SOM) Certificate Holders in nationwide with a total area of 1244 hectares (Table 1.3).


Table 1.3: Malaysian Organic Scheme (SOM) Certificate Holders

No

Producer

Area

(hectare)

Address

1

Kahang Organic Rice Eco Farm

105

Km 42, Jlan Kluang-Mersing, Kg Sri Lukut, Kahang,86700 Kluang, Johor

2

DQ Farm Products Sdn Bhd

20

Lot 1677 , CT 813, Mukim Bentong,

Daerah Bentong, Pahang

3

Ishak bin Din

2.4

Lot 4173, Kampung Sungai Dara, Behrang,

35950 Tg. Malim, Perak

4

Ponak Plantation Sdn Bhd

600

Lot 2210, Kg Tohor, Mukim Kenaboi, Jelebu, N. Sembilan

5

Titi Eco Farm Resort Sdn Bhd

11.2

Lot 1706, 1708, 1203, 1349,1916, Sungai Rotan, Mukim Glami Lemi, Daerah Jelebu,

71650 Negeri Sembilan

6

Target Challengers

Sdn Bhd

202.34

Kampung Belangkap, Mukim Rompin,

Rompin, Pahang Darul Makmur

7

Zenxin Agri-Organic

Food Sdn Bhd

5.98

Lot 1055-1059, Mukim Renggam,

Johor

8

DD Pitaya Marketing &

Distributors Sdn Bhd

2.02

Kampung Lending, Air Mawang,

73100 Johol, Negeri Sembilan

9

Norizan bt Othman

0.8

Lot 1777, Bt 11, Kg Paya Siput,

28500 Lanchang, Pahang

10

Nasuha Enterprise Sdn Bhd

10.2

Batu 12, Jalan Muar Pagoh,

84500 Muar, Johor

11

Golden Meridian

Sdn Bhd

12.8

Off Jalan Hamzah, Mukim Rasa,

Hulu Selangor,Selangor

12

Hatiku Agrikultur

1.0

Lot 110, Mukim Of Ringlet, Ringlet 39200 Cameron Highlands, Pahang

13

C & C Mushroom

Cultivation Farm

Sdn Bhd

2.6

Lot 6, Kawasan Perindustrian

Gerisek, 84700 Muar, Johor

14

Syarikat Gamatani

Trading Sdn Bhd

76

P. T 3256 HS (D), 461 Mukim Relai, Daerah Gua Musang, Kelantan

15

DXN Pharmaceutical

Sdn Bhd

1.6

PT 1307 Mukim Malau,

Kubang Pasu, Kedah

16

EM Bioorganic

Sdn Bhd

40

Lot No 21, Projek Modern Farm lanchang, Temerloh, Pahang

17

Kenko Real Organic

Sdn Bhd

40

Lot No 20, Projek Modern Farm Lanchang, Mukim Semantan, Temerloh,Pahang

18

Gk Organic Farm

6.07

Lot 1819, 1812 & 1813, Kpg Sungai Buah, 43800 Dengkil, Sepang, Selangor

19

Zenxin Agri Organic

Sdn Bhd

40.48

Projek Pertanian Moden,

Institut Haiwan Kluang, Johor

20

Tengku Zanariah bt

Tengku Mohd Salleh

0.8

Lot Pt 501, Kuala Lurah

Janda Baik, Bentong, Pahang

21

N&N farm Sdn Bhd

0.8

Lot 5525, 412, 7144 Jalan Kampung

Batu Gong 17 ½ mile Kuching-Serian

Road, Kuching

22

Tan Ah Fatt

1.62

Lot 904, Jalan Chengal

Lempong, Kg. Sungai Karang,

26100 Sg. Karang, Pahang

23

Nilai Selesa Enterprise

20

Sebahagian Kompatmen 13 & 15, Hutan Simpan, Kuala Langat Selatan,

Tanjung Sepat, Selangor

24

Permatang Cabaran

Sdn Bhd

20

Sebahagian Kompatmen 13 & 15, Hutan Simpan, Kuala Langat Selatan,

Tanjung Sepat, Selangor

25

Yu Hao Enterprise

0.6

Lot F252, Sungai Mensun, Brinchang,

Cameron Highlands,Pahang

26

Agripearl Sdn Bhd

8.9

Lot 676 & 678 Kg.Sungai Dua, 72000

Kuala Pilah, Negeri Sembilan

27

Jin Teik Health Food Sdn Bhd

3.83

Mukim Husba, 06200

Kubang Pasu, Kedah

28

Noble Ag Plantation

6.485

Lot 4385 & 4387, Jln Teluk Intan, 35500

Bidor, Perak

Source: Department of Agriculture Malaysia, 2009


Due to increasing in organic farming and production, the number of organic retail outlets is also in the increasing manner. As a result, there are many organic companies have started their business such as Justlife, BMS, Country farm, ZenXin, Woots and etc. Organic food was previously consumed by cancer patients or patients who had serious health problem. Today, organic food becomes a choice for every family or even each and everyone. As we know, Justlife is a famous retailer of organic food and organic products. Justlife has only owned half of a whole retail shop at SS2, Subang Selangor with limited organic products and food. Recently, they are success and owning eight retail shops in Malaysia. Accordingly, we can observe that consumer demand of organic food and products is rising in recent year.


Since the demand of organic food and products are increasing, government has putting effort in order to encourage producers to involve themselves in organic farming. Besides, government mentioned in Ninth Malaysia Plan (2006-2010), they estimating the value for organic farms industry will be worth RM800 million after five year and plan to have 20,000 hectares of organic farm in year 2010 (Economic Planning Unit). During year 2001, Organic Alliance Malaysia (OAM) was found and this organization act as a private sector association to form national network. Government has tried to match the demand by increase the number of producer and organic farmer. However, we still supported by imports and the amount of foods that we imported from other country is about RM10.9bil or 8.7% of total import. Therefore, a study on consumer behaviour is crucial in order to forecast the demand and prepare for supply.


According to local report, a supplier Kerby Ho of KK Hoganik told that demand for organic fruits and vegetables were increase at about 8%-10% every month (NST, 2008). Informed by organic-certified wholesaler Radiant Code's manager- Loke Siew Fong in local report, the sale is experiencing double digit growth. She added that consumers are having higher awareness on health issues nowadays and search for organic food rather than conventional foods (NST, 2008). As a result, research on consumer behaviour can tell supplier with fact reason why they demand for organic food and better understanding the trend of organic market.


Moreover, the needs of communicate for both organic concept and build market confidence are vital in Malaysia market. Most of the citizen were still choosing conventional foods as usual and refuse to purchase organic food due to their own personal reason such as inconvenience, price, knowledge and others. Consequently, marketers have to know the concern of customers or citizen in order to better target the market and segments.


In short, organic market is in an encouraging rate and it is a potential market for marketers, farmers, suppliers, wholesalers and retailers to aim. The reason why and how the demand increase is important for them to study in order to server the organic fans at the right time and right place with sufficient supplies.


1.3 Research Problem

Consume organic food has become an important subject for today in changing social graphic and emerging trend. Government had been aware of the importance of organic sector since early of 1990s. The Organic Trade Association forecasts sales of organic food will be increase by 18% annually through 2010. Organic products become part of the picture for everyone at the present time and customer base of organic sector expected to rise and retailers continue to provide wider variety of organic food. Commission's communication <<European Action Plan for Organic Food and Farming>> were presented in December 2002 that they are planning to increase their efficiency, transparency and consumer confidences in order to develop the market for organic food (Gracia and de Magistris, 2007).


Refer to a report found in OAM in November 2008, Katherine diMatteo, president of the International Federation of Organic Agriculture; consumers seek organic produce as a way of environmental degradation, or as the best way to eat healthy foods. Besides, government and others view that purchasing organic is a good way for developing fair trade due to most of the organic farmers are small-scale producers. The trend of eating and purchasing organic has boosted up the organic sector in constructive rate. Transaction and trade of business have increase indirectly and these also bring a healthy rate for Malaysia economy. Consumers also willing to pay for organic food during economy down turn in June 2008. Economy down turn do not brought a strong impact to this industry and the sale of organic food still in a healthy and encouraging rate. As a result, we confidents there are something behind the consumers to motivate and move them to purchase organic food.


At one time, people always believe that consumer's choice was unstructured and natural but at this moment, people know that human behaviour is manipulated, push or even forced by reason. For instance, health conscious is affecting consumers where they will hunt for organic food in order to replace conventional foods. Nevertheless, this is only one of the hypotheses or assumption that we can made, we cannot prove that this is the accurate explanation for the question: "Why the demand of purchasing organic food is increased from year to year?" Additionally, there are many factors that keep moving people from conventional foods to organic food. Hence, study on the factor that affect consumer's willingness in purchasing organic food is an essential issue to further understand consumer's mind and support organic.


Furthermore, dynamic issues and factors which influence consumers are changeable among individual and purchase decision of organic food will depend on many variables such as consumers' attitudes toward environmental protection and healthiness (Gracia and de Magistris, 2007). Human behaviour and customers' choice is not impulsive, unconscious, inborn and natural. Conversely, consumers' behaviour is always motivated by the environment, enthusiasm, sensation and emotion (Ajzen and Fishbein, 1980). Consumer willingness to pay for organic food may influence by numerous factors. Human beings easily get influenced by the environment and objects surrounding them. We have no capability to freeze their consumption and purchase behaviour. The only way that we can do is to study deeply on what are the main aspects they are focusing and what are the essential factors that manipulate their purchasing. More to the point, people perception and motivation in purchase organic food are vary from country to country. There is different demand in different county with different culture.


In order to have a good explanation to answer the entire question and have a bottomless understanding of customers' willingness to pay during obtain organic food, we come out with the problem statement: What are the main aspects that manipulate consumers' willingness to pay for organic food. Policy maker seek consumer oriental analysis in organic sector since the information is crucial for them (Gracia and de Magistris, 2007). The study not only can improve the understanding of consumer behaviour and factors that affect customers but it is also a necessary research to help marketers to market the products, help government to better know the needs of citizen, help retailers or wholesalers to do some related activities to encourage consumers in order to choose organic food and help producer to estimate the production in future.


1.4 Research Objective

The main purpose of this research is to recognize some of the essential variables that motivate or stimulate citizen in Malaysia in purchasing organic food. Organic market is a potential and profitable market for marketers to have a deep study on it since the demand of organic food is keep increasing nowadays. Besides, organic industry did contribute to Malaysia economy and citizen's health, as well as the environment. In my opinion, customers' belief, feeling, attitudes, motivation and demand trend would bring a deep impact on food industry and this will bring challenges for marketer to design marketing strategy. The following objectives are built to achieve goals of this study.


i. To study the determinants that motive consumers' willingness to pay for organic food.

After identify all the factors, we can better target and server our customers when they doing their purchase. When retailers know all the factors and possess this advantage, they can come out with following step such as education fair, seminar or others kind of exhibition to influence or encourage customers in order to purchase organic food. Moreover, eating organic food can save and secure the earth. Consume organic food not only healthier but also more environmental friendly if compare with conventional foods. By educating others customers about the benefit of consuming organic food, sales of organic food will definitely continue to double up in the future. By the way, this also can help marketers to better market the products and also target potential customers easily. Lastly, this as well will contribute to economic growth and better environment for next generation.


ii. To better understanding consumer buying decision and contribute precise data to policy makers.

There is a problem that release by NST on November 2008 which is the number of organic supporter is increasing however; there are too few farmers to serve the large pool of consumers. As a result, we can overcome the problem of supply and demand after knowing the reason why customers purchase organic food or not. Moreover, most of the researchers showed consumers are willing to pay for high quality food. If this research can prove that there is a significant result between quality and willingness to pay. Related organization can immediately take action in order to strengthen organic production governance.


iii. To study the impact on organic food industry due to the issue of health conscious.

Recently, health conscious became a latest issue among citizen in Malaysia. Most of them are practicing healthier lifestyle and willing to spend and search for supplements and healthier foods. They try to avoid themselves in consuming oily, high sugar level and high cholesterol foods. They seek for more healthy activities such as yoga, dancing and search for natural or original products in their daily life. Throughout this study, we can collect precise and significant result to see whether health conscious can increase the number of organic food fans. Furthermore, government can use the result of this research to allocate more funds and capitals to develop small farmers and help them to shift from convention production to organic production.


iv. To study the relationship between consumer behaviour and organic food purchases.

Many studies pointed that consumer behaviour toward organic food is crucial for decision makers. Obviously, we can understand that the popularity of organic food is in an encouraging rate. However, most of the people are still choosing convention foods as their first choice. This is due to the availability of convention foods is higher than organic food. Although organic food is a potential market, yet customers still cannot get organic food in most of the hypermarket or night market. As we know, most of the consumers in Malaysia will go to night market to purchase their daily or even weekly foods since they can get all kinds of vegetable, fish or meat at lower price at night market. Even there is high demand of organic food; however it is inconvenience for consumers to purchase organic food. Although customer have positive attitudes and high intention to purchase organic food but there are some external factors that will influence customers' purchase decision. Accordingly, research on consumer behaviour can help marketer to study the consumers' preferences and do a more appropriate and suitable plan to serve the customers.


v. To analyze the willingness to pay for organic food.

Consumer always wiling to pay a premium price to obtain any thing or object that they are perceive as a valuable and high quality product. As we all known, organic food is priced higher as compare with convention food. As we all known, consumer has different consumption pattern, attitude and response towards organic food. There is a number of customers are not willing to pay for the premium. Beside that, most of the customers prefer to purchase and consume conventional food instead of organic food. However, some of the consumers are still willing to pay for organic food and they believe this is a "profitable" investment for them. Consequently, segment of organic consumer is getting bigger and bigger. Therefore, it is essential for this study to analyse consumer purchase decision and offer contribution to the decision makers, society, famers and also nation economy.


1.5 Significant of Study

Although the concept of "green" living and consume organic food are becoming one of the favorable issue in this moment that always be discussed and concerned by most of the population today. However, the amount of people who purchase organic food is considered low. According to Fotopoulos and Krystallis (2003), customers are aware of the benefit brought by organic food but there is only small proportion of them willing to pay for it. Additionally, distance brought a significant issue to potential customers (Padel and Foster, 2005) since coverage of organic food shop is low and cause customers who have the intention to purchase organic food face difficulty when they wanted to buy.


Additionally, there are a number of research focus on organic industry had been conducted by researchers from others country (for instance, Gracia and de Magistris, 2007; Fillion and Arazi; 2002). However, there is only few researchers are focusing on the organic industry in Malaysia. As a result, this study can helps in better understanding about organic agriculture in Malaysia and contribute to organic industry in Malaysia.


As a result, this study aims to analyse in depth the factors that influence consumers' feeling and motivate customers to pay for organic food. Apart from that, this study is crucial to show the brief picture to all related parties who involved in organic food industry such as farmers, department of agriculture, wholesalers, retailers and others. This study also plays as an important role and sources for education sector, marketers and small-medium entrepreneur (SME) to understand more about consumer behaviour and factors that influence consumers' willingness to pay for organic food. By the end of the day, the result can help them to do their marketing plan more smoothly, effectively and successfully.


According to a report posted by Food, Nutrition & Science in May 2009, stated that Organic Trade Association (OTA) published the sales of organic have hit $22million. As a result, knowledge and pool of database are crucial for policy makers in order to implementing their marketing plan. Once wealth of data and evidence presented in the industry, all the parties can significantly gain from the benefit. This study can indirectly support small farmers to have more confidents in produce more and more organics foods. Increase in number of production not only can fulfill the demand of Malaysian and self sufficient but also have the opportunity to export the quality foods to others country. Besides, it give a more visual result to government in order to increase their expenditure in helping small farmers to involve in organic farming. Furthermore, objective of some of the related agency such as CETDEM, FiBL, DOA and OAM can become more achievable. After knowing consumer behaviour in depth, retailer shops such as Justlife and Country farm can have more confidents on their effort and increase the coverage of their business in order to reach more potential and profitable customers.


In addition, this study will help us in understanding consumer mind and know the reason behind every purchase of organic food. We can know the aspects that always push and move consumers to purchase organic food instead of conventional foods. On the other hand, we also can see the barriers that influence consumer refuse to purchase organic food and stay with convention foods which offer a lower price and have a high coverage. This also can assist us to understand the barriers faced by most of the population from their point of view. The barriers can be narrow down when we know the root cause of the barriers. Marketer can use the valuable information to run their marketing mix (4P-people, promotion, place, product) and promotion mix (advertising, personal selling, direct marketing, sponsorship, promotion, public relation). Other than that, consumer organic food is one of the ways to save and secure the earth. This can give a hand to the group who are environmental friendly and always love and care the earth. "Green life" with organic food can provide a bright future for the entire citizen to own a healthier life style and also a superior environment. Moreover, we can keep a more natural and fantastic earth for our next generation. By exposing more people to organic product, we are able to educate them the importance of growing this industry in Malaysia. As the demands increase, it will benefit all level of people as it will boosts our economy to a higher level. It will provide more jobs opportunity, more researches and bring more involvement in this sector. Eventually, it reflects directly on Malaysia GDP, attracts foreign investment and technology transfer.


1.6 Scope of Study

The main focus of this study is to identify how organic consumers behave and their willingness to pay for organic food. This research will be targeted on consumers instead of customers since consumers are the group of people who already takes their action in organic consumption. The information provided by them is more precise and accurate if compared to each other. According to information, organic include organic food and organic products. However, the popularity and acceptability of organic products in Malaysia still consider low. Consequently, this research will focus on organic food such as can food, fresh vegetable, fruit and others.


As we all known, consumers' willingness to pay is an issue that difficult for marketer to predict. People always change according to the environment, people, object and others surrounding them. However, people who possess the same characteristics or in the same categorize will always have the same respond to particular matter. Consequently, we will come out some possible hypotheses and do a research on it to help related parties in the industry to make their decision. Beside that, we will study consumers' willingness to pay for organic food since organics foods industry still in a growth stage in product life cycle (PLC). We believe that the outcome of this research will be very useful and valuable for marketers and retailers. In addition, questionnaire will be distributed in Selangor. This is caused by most of the organic retail outlets are located in mentioned area and this will ease the researcher to collect pool of data. Most of the information collected will be vital for us to study the relationship between consumers' willingness to pay and organic food. The variable such as health conscious, income, knowledge, quality and others will be investigate in order to obtain the result.


1.7 Limitation

There is limitation that will be faced at the moment of conducting this research. The number of organic shop needs to be taken into account since organic shop only located at town area. Beside that, some of the respondents may only purchase particular range of organic food and this will create response bias. More than that, there are parts of customers will refuse to do the survey or providing inaccurate answer. Last but not least, limited resources and time also one of the limitation that faced in this studies.


1.8 Chapter Outline

The primary objective of this research is to study the relationship between consumer behaviour and intention to purchase organic food or in a simply ways, the study is to know the factors that affect consumers purchase organic food. Initially, a general introduction about organic food was given in current chapter and it provided the introduction, background of study, research problem, research objective, significant of study and scope of study.


A comprehensive literature review is made in Chapter 2 to study and review the previous works and research about consumers' willingness to pay for organic food. The variables had previously identified by others researches can give a rough idea to conduct this study. By referring the previous works, it helps us to recognize the dependent and independent variables associated in purchasing of organic food. Theoretical assumption and empirical result can be produce in studying the implication between the variables.


Chapter 3 presents the research framework of independent and dependent variable. The graphical appearance can help readers have a clear picture of the relationship between dependent variable and independent variables. Theoretical assumption and empirical result can be produce in studying the implication between the variables. Moreover, few hypotheses will be made in this chapter. Besides, the sources of data and research procedures will be explained in chapter 3.


The development of the questionnaire will be distributed to respondents or chosen population. The questionnaire will be given to the citizen in Selangor to fill by consumers who had and have purchase organic food. Research framework will be drawn to clarify the process among the variables relationship. After the data collected, the results will be analyzed and process by using SPSS (The Statistical Packages for Social Science) software. The study and discussion of the result collected will be presented in chapter 4.


The recommendation and conclusion of the research will be suggested in the last chapter. Short coming and limitation of the research will be identified and suggestion will be given to solve any problem that will be face by future study in the parallel area. To sum up, a conclusion will be making based on the result and study.

Chapter 2


Literature Review


2.1 Introduction

In the context of a research paper or thesis, literature review is a critical synthesis of previous research. This chapter will be focusing on reviewing the previous research or studies from different sources which had been analyzed by others marketer or researcher. Literature concerns research on several variables obtained from past research discussing on consumers' willingness to pay for organic food. In addition, information about consumers' motivation, intention, behaviour and perception towards organic food will be present here. We can evaluate the information which is related to particular topic and its help in proposed studies. Furthermore, the chapter presents theoretical frameworks that built the conceptual foundation for the study and guide the research design and methodology.


In this study, I will focus on the independent variables that affect consumers' willingness to pay for organic food. Previous researchers point out that those variables such as gender, income, distance, place and etc, will manipulate the willingness of consumer to purchase organic food. This chapter will start with the definition of some of the important term and focus on few variables which are: health conscious, level of product knowledge, price, quality of food, consumer behaviour, environmental attitudes, animal welfare and social-demographic. In this chapter, core study will be reviewing previous researchers' outcome which related to mentioned variable and analyze the acceptability of organic food in consumers' mind. This chapter is crucial to support my further analysis and research. Table 2.1 shows the studies related to organic food which had conducted by other reviewers.


Table 2.1: Previous studies of organic food

Authors

Research Title

Variables

Zeng and WeiXia, 2007

Consumer's attitudes and willingness to pay for Green food in Beijing

  • Food quality
  • Knowledge
  • Labelling
  • Attitudes
  • Social economic

Botonaki, Polymeros, Tsakiridou and Mattas, 2006

The role of food quality and certification on consumers' food choices

  • Health Conscious
  • Price
  • Environmental attitudes
  • Convenience
  • Quality
  • Certification
  • Attitudes

Aryal, Pashupati, Pandit and Sharma, 2009

Consumers' willingness to pay for organic products: A case from Kathmandu Valley

  • Health conscious
  • Knowledge
  • Quality
  • Intention
  • Price
  • Certification

Harper and Makatouni

Consumer perception of organic food production and farm animal welfare

  • Health conscious
  • Quality
  • Animal welfare
  • Attitudes and belief

Urena, Bernabeu and Olmeda, 2008

Women, men and organic food: differences in their attitudes and willingness to pay. A Spanish case study.

  • Knowledge
  • Social economic
  • Consumer attitude
  • Health issues
  • Environmentalism
  • Price

Davies, Titterington and Cochrane, 1995

Who buy organic food?

  • Health
  • Environmental
  • Availability
  • Price
  • Quality

Krystallis and Chryssohoidis, 2005

Consumers' willingness to pay for organic food. Factors that affect it and variation per organic product type

  • Product category
  • Quality
  • Certification
  • Price
  • Trust
  • Social demographic

2.2 Definition of term


2.2.1 Willingness to pay and price for organic food

There are a plenty of studies conducted by past researchers focusing on consumer behaviour, attitudes, motivation, perception toward organic food in many Europe countries, US and other countries. Consumer willingness to pay and purchase organic food may reflected by many motivators such as healthiness, environmentalism, perception, awareness and etc (see, for example, Davies, Titterington and Cochrane, 1995; Schifferstein and Oude Ophuis, 1997; Harper and Makatouni, 2002; Cicia, Giudice and Scarpa, 2002; Dimara, Petrou and Skuras, 2003; Zeng and WeiXia, 2005; Krystallis and Chryssohoidis, 2005; Midmore et al, 2005; Urena et al, 2007; Chen, 2009; Aryal et al, 2009; Millock, Hansen, Wier and Andersen, 2002; Batte, Hooker, Haab and Beaverson, 2007). Those studies point out the empirical result detail the finding of factors that influence willingness to pay for organic food. Refer to the above researcher, health and environmental issues, as well as food safety and quality are the most important buying motives. Therefore this research will investigate the relevant determinant that reflecting the willingness to pay of the consumers and their purchase behaviour. As Thompson (1998) observe, "accounting for where foods are purchased is likely to be important in understanding where potential growth in organic food might occur" (p. 1117). According to Rodriguez, Lacaze and Lupin (2007), willingness to pay is "sum of money representing the difference between consumers' surplus before and after adding or improve a food product attributes" (p. 189) Willingness to pay is a ratio of variable of interest and price is a monetary variable which press the value of the variable of interest for different attributes level (Hensher, Rose and Greene, 2005)


2.2.1.1 Price

When topic related to willingness to pay, the crucial element included will be price. From the economic aspect, money is the medium of exchange, unit of account and store of value. Price is an exchange ratio which price provides consumers information about the money that they should scarify in order to obtain an object. On the other hand, for a marketer, pricing is one of the essential elements in marketing mix which is an important strategy to attract consumers. According to Fotopoulos and Krystallis et al (2003), consumers are willing to pay premium price when they purchase organic food. Consumer always perceived price as a parameter and guarantee for food quality (Cicia, Giudice and Riccardo, 2002; Pellegrini and Farinello, 2009). As we all know, organic food always have premium price if compare with conventional food. According to Vlosky, Ozanna and Fontenot (1999) the price above the "fair" price is justified by the "true" value of the product


2.2.2 Health conscious

Organic food consumption is strongly motivated by health conscious and ethical driven could be one of the determinants as well (Harper and Makatouni, 2002). Chen (2009) point out that organic farming system is free of synthetic fertilizers, pesticides, and chemicals and with this system, the food produced contain higher nutrients and safety to consume since they reduce the possibility to get food poisoning. Consequence, consumers perceived organic food is healthier and safety than conventional food (Cicia, Giudice and Scarpa, 2002).Harper and Makatouni (2002) explained that when household got the health conscious, they will concern about food defect and nutrients composition. For instance, additives, amount of fat, refined sugar and etc. According to Midmore et al (2005), health conscious can be divide into two categories; first issues is concern about the product characteristic (freshness, no contaminate, naturalness, production system); second issues is aware by themselves due to others or their own health problem (sickness, special need people) where organic food is needed to control or maintain.


2.2.3 Level of product knowledge

According to Beatty and Smith (1987), product knowledge is defined as consumers' perception toward particular product, as well as previous using experience. Moreover, this knowledge also based on memories or known knowledge (Bruck, 1985). Lin and Zhen (2005) defined product knowledge as consumers' awareness, confident and understanding about the products. Study by Mithcell and Dacin clarify that when customers deeply understand the characteristic of the product such as brand available, impact of performance and etc, they can be categorized as customers who own high level and broader of product knowledge. Product knowledge is an important tool to differentiate the feature and quality of organic food and conventional food (Gracia and de Magistris, 2007). Concept of product knowledge relating to the understanding of organic production, recognize organic labelling, organic farming standard, perception of organic food characteristic in term of quality and safety.


2.2.4 Quality of food

Worldwide health problem and genetic engineering bring uncomfortable to consumers and this rise the demanding of higher quality, healthier and safety food (Verdurme and Viaene, 2003). In this competitive business era, quality of food or product becomes an instrument to measure the food product attractiveness (Ilbery and Kneafsey, 1999). Monroe and Krishnam (1985) point out that quality of product defined as its capability to satisfy consumers. Product itself must carry reliable performance, freshness and others attributes (Rosen, 1984). According to Pellegrini and Farinello (2009) offer insight that quality of organic food always act coherent with the concern toward environment, food safety, healthy and natural. Based on the research conducted by Bell and Valentie (1997), methods of production and country of origin of the food produced contribute an important sign to consumer for quality evaluation. Moreover, consumers always perceive organic food got a higher quality due to the use of safety processing techniques (Midmore et al, 2005). Ophuis and Trijp (2005) stated that quality consist of intrinsic cues and extrinsic cues (Table 2.2).


Table 2.2: Quality cues: Intrinsic and Extrinsic

Quality cues

Intrinsic cues

Extrinsic cues

Description

Physical of the product. Will only change if the product itself had changed.

Not physically part of the product but associate with the product.

Example

Colour, aroma, taste

Price, brand name, country of origin, process of production, safety

Sources: Ophuis and Trijip, 2005


According to Midmore et la (2005), he stated extrinsic cues can further divide into two categories which is direct and indirect experiences quality attributes (Table 2.3).


Table 2.3: Extrinsic cues: direct and indirect experiences quality attributes

Extrinsic cues

Direct experiences quality attributes

Indirect experiences quality attributes

Example

Taste, appearances, freshness

Healthiness,  naturalness, ethical aspect

Source: Midmore et al, 2005


2.2.5 Labelling and Certification

According to Zeng and WeiXia (2005), the meaning of green food certification is "a system to confirm the conformity of certain products to a set of standards" (p. 1). The information carries by organic certification include quality of the product and also safety of organic food (Midmore et al, 2005). According to the Malaysian Organic Scheme (SOM), certification must be based on a set of organic standard which concerns about "production, wrapping, transportation and direct sale of the cultivated organic crop". According to USDA standard, "100percent organic food" or USDA label will be found on the product when it is totally organic (Abdelaziz, 2009). Author pointed that "organic" label will be available on the organic products when it is not less than 95percent organic, organic product which contain 70percent organic ingredient cannot labelled with organic seal but only can mentioned as "made with organic ingredient".


2.2.6 Consumers' behaviour

Theory of Reasoned Action (TRA) is the common behavioural model used by most of the research in order to analysis consumers' behaviour and consumer attitudes (wikipedia). The founder for this theory is Fishbein and Ajzen in year 1975. Ajzen and Fishbein (1980) pointed "attitudes could explain human actions". The theory explains that consumers' behaviour always determinant by their intention. Combination of both attitude and subjective norm will be an important element which performing consumers intention.


Consumers are more willing to pay when they possess desirable attitudes towards organic food (Fotopoulos and Krystallis, 2003). According to Von Alvesleben (1997), product information, perception and attitudes will constrain consumers' behaviour. Additionally, health information, safety, enjoyment and etc, as well as product perception will shape consumers' attitudes toward organic food. An attitude is depending on their belief and we can see the outcome from consumer behaviour (Chen, 2007). Furthermore, consumers' attention is the most proper predictor to determine how they behave (Gracia, A. and de Magistris, T., 2007). According to the author, consumers' attitudes, subjective norm (beliefs) and perceived behavioural control will give impact on consumers' intention. Subject norm will be affected by the opinion of the person who is important for the consumers (Moven, 1993). Perceived behaviour control may impact on consumers' intention. Chen (2007) defines perceived behaviour control as "consumers' perception of personal control over what to buy and eat" (p. 1011).


2.2.7 Environmental attitudes

The growing of concern about ethical production in consumer mind had stated in the studies by Browne et al in year 2000. According to Schifferstein and Ophuis (1997), environmental friendliness among public had boost the development of organic agriculture. Chen (2009) informs that issues regarding environmentalism give an impact on business. In 1998 United Nation and Agriculture Organization state that organic farming system creates a favourable impact on environment. The reason behind is organic farming may rise the level of soil fertility and reduce water "contamination'' Chen (2009). According to Silverstone (1993), environmental consciousness means growing of consumers' awareness toward planet resources. Moreover, the emerged of "green consumer" always putting effort to transform the business environment into an environmental friendly business era. Green consumer is people "who like to spend their money on products they seem as healthy and ecologically benign" (Porritt and Winner, 1988). Other than that, environmental attitudes possess the meaning that consumers prefer to purchase products which are environmental friendly and safety for the society (Harpet and Makatouni, 2002). According to Midmore et al (2005), environmental attitudes emphasize on care for nature and prohibit from pollution act.


2.2.8 Animal welfare

In addition, previous research show that high percentage of consumers are interested about the topic related to animal welfare and they tend to pay more for livestock which achieve animal welfare standards such as organic meat (Bennett, 1996). Definition of animal welfare in consumers' mind is "natural rearing and humane slaughter" (Harper and Henson, 1999). Therefore, Harper and Makatouni (2002) declared that organic animal production, process of feeding and medicines used are the issues concerned by consumers. In that study, it stated that consumers will be motivated if they are informed about "the way that the animals were treated and places where they were kept". Apart from that, we can clarify the reason of why organic market is favourable and always growing in a desirable rate.


2.2.9 Social-demographic

Social demographic is mention about the relationship between cultural factors and social factors and how both of these influence the characteristic of population (Sharma, 1989). The variable will be focus on certain attribute, which included age, gender, income, size of family and educational level of the responders. Consumers' characteristic or demographic information always play as an important foundation to let policy makers access their consumers and better understanding consumers buying behaviour. Demographic information always provides a great opportunity for decision makers to grab more market share and better targeted on potential customers.


2.3 Research variables


2.3.1 Willingness to pay

The number of consumers who are willing to pay a premium price for the organic food is in an increasing rate, the whole market for organic was growing as well (Aryal et al, 2009). As a result, the study indicated that willingness of people to pay premium price is crucial to identify. Therefore, price to pay and how willing to pay have a direct association. Additionally, ethically based driven and customers based driven are the main motives that manipulate the willingness to pay of consumers. The reasons behind of organic consumers include food quality, health issues, environmentalism and life quality (Pellegrini and Farinello, 2009).


Additionally, knowledge, intention and attitudes are three important aspects in order to influence peoples' willingness (XiaWei and Zeng, 2005; Aryal, 2009).Purchase decision will influence by customer internal factors and their own characteristics (XiaWei and Zeng, 2005). The authors also found age and perception toward organic food show significant result in affect customers' willingness to pay. Public intention towards healthy lifestyle and environmental issues are low while the media institution and medical expert constantly emphasize on fitness, wellbeing and etc (Pellegrini and Farinello, 2009). However, he stated that only organic consumers have a propensity in environmental protection and concern about health issues. A study compared between consumers' willingness to pay for organic food and conventional food conducted by Pellegrini and Farinello (2009) showed that consumers are willing to pay higher price for organic produced food.


2.3.1.1 Price

As we all know, price of organic food always higher than conventional food (Figure2.2).


According to the law of demand, the relationship between willingness to pay and price is contrast, yet the in the consumers' point of view, price depend on the type of product (Aryal et al, 2009). He showed that consumer are perceive that the price of organic food is reasonable if compare with conventional food.


Premium price for organic food is not a barrier for consumer to consume and choose organic food since they view it as a long term investment for their health (Sandalidou, Baourkis, and Siskos, 2002). Krystallis and Chryssohoidis (2005) indicated that there is less price sensitive in organic food sector. This issue also supported by Urena et al (2007) that consumer willing to pay for organic food because they perceive organic food is healthier and bring less environment damage. Consumer willing to pay for organic food when it's price is 10% more than conventional food, yet frequent consumers are willing to pay for a 15% increment if compare with conventional product (Urena, 2007). Batte et al (2007) observed that factors that influence consumers' willingness to pay is different with the factors which influence the amount that consumers willing to pay. Cicia et al (2002) found consumer view price as a parameter for quality, hence when the price of organic food parallel with conventional food, consumers will associate with low quality product.


On the others hand, Davies et al (1995) found one of the reasons why consumer did not buy organic is caused by price. In the studies conducted by Wong (2007) declared premium price of organic cotton caused consumer did not buy it. According to local report (TheStar) in February 2005, price becomes a main barrier to purchase organic food for Malaysian. There is a research examined on the willingness of consumer to pay for environmentally certified wood products by Mohamed and Ibrahim (2007) in Malaysia. It shows that only 32% of respondents are willing to pay for the premium price and they are willing to pay around 14.4% of increase. A study showed there are about 64 (81%) respondents out of 79 respondents was agreed that price is an important indicator for them to make decision. Furthermore, Padel and Foster (2005) pointed that price for organic food does not act as a barrier for consumers when purchasing organic food, yet price is an aspect which consumer take into account during their decision making process and price is the element that make the process more complicated. The authors concluded value and reason of high price can encourage consumers to pay for organic food. High proportions of the respondents are not willing to pay premium price for organic food although organic food is healthier and does contribute to their own health (Piyasiri and Ariyawardana, 2002).


2.3.2 Health Conscious

Previously, some of the studies are concerning on sensory attributes (for example, Fillion and Arazi, 2002). However, consumers start to consume organic food due to non sensory attributes such as environment protection and production system. Although there is not any scientific data show that organic food is much healthier, however consumer perceive organic food contain higher level of nutrition and more safety to consume due to its production system. In particular, some of the studies have been found to be significant in explained organic consumers concerning about health issues (Schifferstien and Oude Ophuis, 1998; Magnusson, Arvola, Hursti, Aberg and Sjoden, 2001; Magnusson, Arvola, Hursti, Aberg and Sjoden, 2003; Krystallis and Chryssohoidis, 2005; Mondelars, Verbeke, Huylenbroeck, 2009). Many studies indicated that health conscious is the predominant concern among organic consumers (For example, Padel and Foster, 2005). Health conscious is a critical matter in order to have an effect on consumers' attitudes (Von Alvesleben, 1997; Plyasiri and Ariyawardana, 2002; Aryal et al, 2009; Harper and Makatouni, 2002; Urena et al, 2007).


Research done by Schifferstien and Oude Ophuis (1998) specifically concerns health related determinants such as nutrition, knowledge, health problem and etc. Furthermore, Magnusson et al (2003) mentioned consumer view "organically produced" is an essential matter when they have a higher health consciousness. He states, consumers' health awareness play an important role in order to forecast "consumers' attitudes", "purchase intention" and "purchase frequency". Chen (2009) also declared that health conscious will create positive attitudes of consumers toward organic food. Besides that, there are three main determinants that influence consumers purchase decision is health conscious, second factor is environment issues and taste is the last motivators (Davies et al, 1995). Perception towards organic food is one of the main reasons that caused consumers choose organic food (Padel and Foster, 2005). Chen (2007) pointed out that rise in consumer interest toward organic consumption is caused by they perceive organic food is healthier and more environmental friendly. However, health conscious is predominant for them and environmental concern is placed behind.


When consumers are become health conscious and notice that the risk of consume conventional food is increasing, therefore they try to discover an alternative in order to substitute it with safety and higher quality food (Magnusson et al, 2001). Result showed by the authors concluded that health and food safety are the vital motivator and consumers are willing to pay premium price for organic food since they view food intake is essential to maintain their health. More to the point, studies conducted by Botonaki et al (2006) also found out the health conscious is the crucial factor that motives organic consumers. Padel and Foster (2005) added organic consumers choose organic food is strongly motivated by health conscious and another important result showed consumer choose organic food is mainly caused by personal health instead of family health.


2.3.3 Level of product knowledge

Empirical studies explained that knowledge can affect the willingness of consumers to purchase organic food (Giannakas, 2006; Gracia and de Magistris, 2007; Aryal et al, 2009; Wong, 2007; Napolitano et al, 2009). Although most of the research showed price will be the predominant factors that discourage consumers to purchase organic food; yet research conducted by Padel and Foster (2005) found out convenience issues and availability of the information about organic food play an pivotal role as well. When consumers equipped themselves with more knowledge, they are more willing to pay premium price for it and favourable feelings will be created as well (Botonaki, 2006; Stobbelaar et al, 2007). Giannakas (2002) also pointed out that consumers' knowledge and ability to differentiate the attributes for both organic and conventional food will influence their purchase decision. However, product knowledge will be determinate by education level, healthy lifestyle and information available in the market (Gracia and de Magistris, 2007).


Moreover, Aryal et al (2009) also pointed out that information available can affect consumer decision and knowledge. Limited information provided in the market becomes a barrier for consumer to choose organic food (Makatouni, 2002). Wong (2007) examined knowledge regarding organic food or organic farming such as environmental protection, knowledge about labelling and certification is significant to transform a conventional user to become an organic user. A studies focus on effect of information had observed by Napolitano (2009), he declared that information regarding organic production system is significant in affecting consumer beef liking. Apart from that, consumers' willingness to pay is heavily rely on the what kind of information have been learned.


Most of the research above mentioned the type of knowledge learned by consumers and the impact on knowledge gained. The research examined by Piyasiri and Ariyawardana (2002) found that there is three method to inform consumers about organic food which is publication, mass media and personal communication. He states there have 91.1% respondents who aware about organic food and 50% of them know organic through publication. Almost all of the respondents suggested that they are willing to purchase organic food if they are aware of organic food. In the research of XiaWei and Zeng (2005) indicated that television is the main sources of consumers to obtain the information about organic food. Moreover, media such as publication and broadcast act as an essential sources for consumers to know more about organic (McEachern and McClean, 2002). In contrast, customers pointed that information learned through public institution is not trustworthy. Aryal et al (2009) offer precious insight that few elements (advertisement, quality packaging and labelling) are important sources for consumers to gain product knowledge. Furthermore, Pellegrini and Farinello (2009) found consumer claim that they tend to trust the information received from peers, labels and place of selling.


2.3.4 Quality of organic food

There are a number of studies have been conducted to examine the quality and safety impact on consumers' willingness to pay for organic food (Lucas et al, 2008; XiaWei and Zeng, 2005; Fillion and Arazi, 2002; Midmore et al, 2005; Padilla, Villalobos, Spiller and Henry, 2006; Botonaki, 2006; Mondelaers et al, 2009). Positive perception toward quality of organic food will affect consumers' intention and their willingness to purchase organic food (Verhoef, 2005). Physical quality of the product becomes an important barrier for consumers (Padel and Foster, 2005). As a result, quality and safety of organic food is a crucial variable that affect consumers' willingness to pay. Attributes of organic food found to be significant determinants to increase consumers' willingness to pay (Botonaki, 2006). Quality of organic food and purchase decision has related association in consumer mind during consideration process (Pellegrini and Farinello, 2009). Morris and Young (2000) stated that one of the strategies to develop in food industry is emphasize on quality. Subsequently, consumers' awareness towards green food is contributed in build country economic (XiaWei and Zeng, 2005).


Krystallis and Chryssohoidis (2005) offer valuable insight regarding criteria that perceived as an important attributes for consumers which include price, taste, certification, nutritional, raw material and country of origin. This mentioned features also supported by Pellegrini and Farinello (2009) in their research. Empirical studies detail finding of consumers believe organic food contribute better satisfaction in term of sensory (Williams, Pennington, Bridges, O., Bridges, J.W., 2000; Midmore et al, 2005). Padel and Foster (2005) indicated that some customers choose organic food was due to its better taste. They even recommend retailer to do sampling for organic food and use good taste to influence customers purchase decision. From adolescents' point of view, taste is the core quality aspect for organic food and appearances go after it (Stobbelaar et al, 2007). In contrary, Midmore et al (2005) argue that consumer can only evaluate accordingly when both of the sensory and visual attribute emerge since quality also influenced by physical appearance. Sensory claim had been concerned by Fillion and Arazi (2002), they pointed that organic food not necessary got a better taste than conventional food and it depend on the food type. As the same way, Davies et al (1995) pointed that consumers do not agree organic food are taste better than non-organic food Additionally, research conducted by Midsome et al (2005) reported that consumers are not choosing organic wholemeal product especially wholemeal pasta since they are not satisfied with the taste.


A research had conducted in China declared that few determinants caused consumers' concern about green foods which are food safety, nutrition and etc (XiaWei and Zeng, 2005). Authors added the issues of food safety have provided a great opportunity to boost economy. In advance, Makatouni (2002) stated that product attributes (food safety, taste) important in shaping consumer preference toward organic food. Nevertheless, Mondelaers et al (2009) argue that process of production and extrinsic attributes are more important than intrinsic attributes. This point also supported by other research which declared that important criterion for organic food that make consumers' view organic food have higher quality are production of organic food, included environmental friendly, concern for animal welfare, non chemical used and etc (Midmore et al, 2005). The result show by Aryal et al (2009) pointed that food safety is more important than the price they paid. In another word, consumers are willing to pay premium if they confident that the food they consume is safe.


2.3.5 Certification and labelling

Certification and quality assurance of organic food are becoming more important in the international level. In advance, labelling act as an important source for consumer to recognize which organic products have been go through a comprehensive control system (McCluskey, 2000). Moreover, labelling and certification act as a trust builder between end users and producers (Padel and Foster, 2005). Producers view it as a marketing strategy to differentiate themselves from competitors, protect themselves and add value for them (Botonak et al, 2006). Around 65% respondents believe that certified organic food and the certification must at least from any local institutes to make sure the organic food meet quality requirement (Piyasiri and Ariyawardana, 2002). Organic certification add value to both organic consumers and non buyers by provide additional information when in their purchasing stage (Makatouni, 2002).


Consumers will receive more knowledge and information from labelling provided on the good (XiaWei and Zeng, 2005). As the same way, Caswell and Mojduszka (1998) also pointed out that labelling and certification assist in providing more information to consumers. Consumer will not trust and purchase any organic products which have no certification or labelling (Padilla, 2006; Aryal et al, 2009) but consumers in UK are better in recognizing the word "organic" instead of any certification or particular label (MINTEL, 2000). In accordance, consumers' perceived quality of organic food should not only depend on its taste or visual characteristic, but must included certification or organic labelling as well (Midmore, 2005). As stated by the author, certification is crucial in order to make consumers feel confidence towards organic food. Additionally, certification can make consumers' buying process straightforward since it helps consumers easy to identify and recognize organic food (Padel and Foster, 2005).


Certified quality label become a necessary element in most of the society especially in developed country since it is important to satisfy consumers physiological needs (Sijtsema et al, 2002). In the research of Millock et al (2002) stated that consumers in Denmark are confidence toward control system of organic food and most of them can recognize and trust the labelling. However, Grankvist and Biel (2001) argue that organic labelling will not drive consumer to obtain organic product. In Malaysia, organic certification for local aquaculture industry has been introduced by Fisheries Department Malaysia in year 2009. According to the director of Fisheries Department Malaysia-Datuk Junaidi Che Ayub, he said that certification of organic products act as a reliable medium for consumers to ensure that particular products had governed by organic standard (Bernama, 2009).


According to Chen (2007), higher food involvement of consumer (recognizes labelling and certificate) will authorise their attitudes and intention to obtain organic food. On the other words, if previous food involvement had brought unfavorable experiences to consumers; they will have negative attitudes toward organic food. Therefore, institute that responsible for provide certificate and label must ensure that quality of producers or farmers must meet certain standard and qualification.


2.3.6 Consumers' behaviour

Several studies have been undertaken to examine issue in the wider context of comprehensive in the area of consumers' behaviour and consumers' attitudes toward organic food (Gracia, A. and de Magistris, T., 2007; Grankvist and Biel, 2001; Zanoli and Nasppetti, 2002; Chen, 2007; Harper and Makatouni, 2002; Padel and Foster, 2005 ). Consumers' behaviour is indirectly informed that they are willing to pay for organic food and view this as a long term investment for their heath (Pellegrini, Farinello, 2009). Consumer purchase behaviour is "affected by their perceptions, beliefs, attitudes, and the ability to pay premium for organic products" (Harper and Makatouni, 2002, p.297). They also pointed positive attitude towards organic food, and the more likely for consumers to pay for it. Chen (2007) used OLS linear regression models to identify consumes' intention is affected by attitudes, subject norms, perceived behavioural control and perceived difficulty. Furthermore, Pellegrini and Farinello (2009) declared that there is a relationship between consumption attitudes and organic food preferences. Consequently, understanding of consumers' attitudes provides vital information for decision maker to plan for their marketing strategy (Aryal et al, 2009).


According to Grankvist and Biel (2001), the image and belief toward organic food is usually positive. When consumers perceived that organic food is much healthier and natural, positive attitudes will be construct toward organic food and tend to purchase organic food as well (Gracia and de Magistris, 2007; Chen, 2007). Ajzen (1991) pointed when positive attitudes created toward organic food, positive attitudes also will be created toward organic food purchases. In accordance, consumers who are concern about the environment issues believe that purchase organic food can prevent environment damage and pollution. As a result, they are more willing to pay for organic food when favourable belief and attitudes has been created (Gracia and de Magistirs, 2007). Botonaki et al (2006) found attitude is important factor that cause consumers to choose organic and willing to pay high price for it.


Aryal et al (2009) examine that product knowledge give an important impact towards consumers' attitudes. Moreover, Grankvist and Biel (2001) pointed out that the relationship between environmentalism and consumer attitudes have strong correlation. For instance, consumer who concern about recycle activities may also purchase organic food. Health conscious also play as a vital role to shape consumer attitudes and behaviour (Magnusson et al, 2003). Subject norm explained that consumer will behave according to the person who is important for them. Therefore, the particular people who are important for them have favourable though toward organic food; they are more willing to pay for organic food (Chen, 2007). Laroche et al (2000) examined that both internal (experience, attitude) and external (quality, convenience) variable are crucial in shaping consumers' purchase behaviour. For example, consumer will consider organic food due to their positive attitudes but they may not purchase it caused by inconvenience or others external factors.


In particular situation, perceived behavioural control may get influence due to the limited capabilities of consumer. For example, when consumers have limited knowledge about organic food, it will affect their perceived behaviour control and intention to purchase (Chen, 2007). According to Ajzen (1999), when consumers have higher perceived behaviour control, they will have higher intention to carry out the behaviour.


2.3.7 Environmental attitudes

Past researchers showed that consumers' environmental attitudes and awareness of animal welfare bought a significant result in explaining consumers' organic purchases (Schifferstein and Oude Ophuis, 1998; Vlosky et al, 1999; Harper and Makatouni, 2002; Magnusson et al, 2003; Midmore et al, 2005; Mondelaers, et al, 2009; Chen, 2009). All mentioned studies noticed that, environmental issues become one of the most important motives to push consumer to purchase organic food. Higher degree of consumers concern about the environmentally production, positive attitudes will be created (Chen, 2009).


Davies et al (1995) indicated in their research, environmental concern has raised the interest of organic food. There are more than 70% of respondents perceived that purchase organic food is one of the ways to save the environment (Pellegrini and Farinello, 2009). People are more preferable to support environmental friendly products and prohibit any action which cause pollution or environment damage (Padel and Foster, 2005; Lucas et al, 2008). In contrast, the research examined by XiaWei and Zeng (2005) declared consumers are preferred in recycling or environment protection activities instead of pay for green food.

In particular, there is argument showed those organic consumers are more concerns about health issues than environmental friendliness (Schifferstien and Oude Ophuis, 1998; Chen, 2007; Piyasiri and Ariyawrdana, 2002). As the same way, Magnusson et al (2003) found that health awareness is more motives than environmentalism. Conversely, Midmore et al (2005) indicated that throughout the Danish survey they found the most vital determinants are animal welfare and environmental concern, health issues is placed behind them.


2.3.8 Animal welfare

Today, consumers not only care about the environment surrounding them, they also do concern about animal welfare as well. Most of the research mentioned both environmentalism and animal concern became an important indicators for consumers' willingness to pay for organic food (Harper and Makatouni, 2002; Magnusson et al, 2003; Midmore et al, 2005; Mondelaers, et al, 2009). One of the ethical issues which drive consumer purchase organic food is animal concern. Harper and Makatouni (2002) stated that one of the parameters for food safety is depend on the standards of animal welfare. Another motives besides health conscious, well being and taste of organic food, concern about animal welfare also one of the important criterion for consumers to consume organic food (Padel and Foster, 2005). According to the result found by Stobbelaar et al (2007), consumers were more care about animal welfare if it is compare with environmental issues. Authors examined that animal protection is an important factors for girl to pay for organic food. Additionally, majority perceived animal welfare is most important motives for them to pay for organic food, yet health issues are place behind (Midmore et al, 2005). Napolitano (2009) indicated that animal concern and production process of beef will be the determinant of consumer favourability.


2.3.9 Social-demographic

Different types of consumer have different perception toward organic food (Aryal et al, 2009). Moreover, social demographic plays an important role in establish consumer purchase decision development (Padel and Foster, 2005). Econometric modelling had been used by Midmore et al (2005) in order to analyze purchase data of Danish; the studies examined disposable income, location, age and educational level are significant factors in organic consumption. In contrast, Wang (2007) examined psychographics characteristic and social-demographic in influence consumer organic consumption. He states that gender is the most effective factor in showing the differences .The age differences do not show any significant relationship and most of the organic consumers are from higher social class, well educated and wealthy (Padel and Foster, 2005). On the contrary, Botonaki et al (2006) indicated that consumers' willingness to pay do not effected by social demographic; married is the only significant factor which show positive relationship. This also supported by Krystallis and Chyssohoidis (2005) pointed social demographic do not affect consumers' willingness to pay.


2.3.9.1 Gender

Urena et al (2007) declared that women will control more on their food consumption and more willing to try on food without any artificial. He also added women are more concern about labelling. However, he stated that men are more willing to pay a higher premium price if compared. In advance, he showed that the product knowledge perceived by women is better than men. Moreover, a study focus on adolescents' attitude conducted by Stobbelaar et al (2007) also found that price is less important for girl when boy was compared. Authors pointed girls are more willing to pay for organic food rather than boys. In accordance, the studies conducted by Davies et al (1995) also supported that women are more willing to purchase organic food than men; yet there is not much different for willingness to pay more if compared between women and men. Furthermore, girls believe that organic food have higher quality than boys do (Stobbelaar et al, 2007). After compared, women are more prefer in organic food purchase and consumption (Pellegrini and Farinello, 2009).


2.3.9.2 Income

Income is one of the indicators in determinants consumers' willingness to pay (Piyasiri and Ariyawardana, 2002).According to Gracia and de Magistris (2007), consumers will have a higher preferable in purchasing organic food whenever they have a higher income. Consumers in China are aware of food safety problem; they tend to pay for organic food when their net income is higher (XiaWei and Zeng, 2007). Davies et al (1995) found that when the income is higher, consumers tend to increase the number of organic food purchased.


2.3.9.3 Educational Level

Additionally, Lucas et al (2008) declared that, people will have higher organic knowledge when they have higher education level. Environmental education and year of education are having an effect on consumers' willingness to pay for organic food (Piyasiri and Ariyawardana, 2002). Authors found related institute are encouraged to organize program regarding education in order to enhance the awareness of consumers. Stobbelaar et al (2007) stated that adolescents who are higher educational level have favourable attitudes toward organic food in term of price, taste, animal protection, and environmentalism. Additionally, authors examined taste is the core attribute for adolescents and health conscious in the contrary. Generally, organic purchasers are either advances diploma holder or degree holder (Pellegrini and Farinello, 2009).


2.3.9.4 Age

XiaWei and Zeng (2005) examined segment of people who are from the age of 20-30 years old is more willing to pay for organic food, yet group with middle age (40-50) is the contrary. Studies reported by Magnusson et al (2003) pointed that younger group is more willing to pay. Moreover, Padel and Foster (2005) stated that majority of organic consumers include young working women and middle age women. Empirical studies explained there is not any significant association between age and willing to pay (Thompson and Kidwell, 1998; Davies et al, 1995).


2.3.9.5 Size of family

There is not any different between household with and without children, however, household with children are planned to pay more for organic food (Davies et al, 1995). The studies also added household with children will show significant result if disposal income also bring into consideration. Then, household with children and higher disposal income will be more interested in organic consumption. Laroche, Bergeron, and Barbaro-Forleo (2001) have been found significant in examine females with child have higher willingness to pay for organic food.


Somehow there is different factors can relate to household with children and without children to purchase organic food. Research conducted by Padel and Foster (2005) offer value insight that determinants for household with children purchase organic food is health driven. On the other hand, authors found household without children tend to connect eating organic food with happier and healthier lifestyle, include environmental protection as well.


2.4 Relationship between dependent variable and independent variable

After review the studies conducted by previous researchers, some of the researchers had argued there is not any significant result show between few independent variables and willingness to pay for organic food. However, most of them had pointed independent variable (health conscious, level of product knowledge, quality of organic food, certification and labelling, consumers' behaviour, environmental attitudes, animal welfare and social demographic) have positive relationship with consumers' willingness to pay. Table 2.4 shows the example of few past studies where the researchers stated there is significant result between variables.


Table 2.4: Previous studies of independent variables

Independent Variables

Authors

Research Title

Result

Health Conscious

Gracia and de Magistris, 2007

Organic food product purchase behaviour: a pilot study for urban consumers in the South of Italy.

There is positive correlation between health conscious and organic purchase.

Schifferstein and Oude Ophuis, 1998

Health-related determinants of organic food consumption in the Netherlands.

There is significant result between health and organic consumption.

Botonaki et al, 2006

The role of food quality and certification on consumers' food choices

There is significant result between willingness to pay and health issues

Aryal et al,

2009

Consumers' willingness to pay for organic products: A case from Kathmandu Valley.

There is positive relationship between health awareness and willingness to pay

Harper and Makatouni, 2002

Consumer perception of organic food production animal welfare.

A greater health conscious of consumers, the more likely for them to pay a premium

H1: There is a significant relationship between consumers' health conscious and their willingness to pay for organic food.

Level of product knowledge

Botonaki et al, 2006

The role of food quality and certification on consumers' food choices.

Consumers who have information are willing to pay premium price.

Aryal et al,

2009

Consumers' willingness to pay for organic products: A case from Kathmandu Valley.

There is significant result for knowledge and willingness to pay.

Stobbelaar et al, 2007

Adolescents' attitudes towards organic food: a survey of 15-16 year old school children

Positive result showed between knowledge and organic purchase.

H2: There is a significant relationship between levels of product knowledge regarding organic food that affect consumers' willingness to pay.

Quality of organic food

Gracia and de Magistris, 2007

Organic food product purchase behaviour: a pilot study for urban consumers in the South of Italy.

There is significant result for quality and organic consumption.

Aryal et al,

2009

Consumers' willingness to pay for organic products: A case from Kathmandu Valley.

Consumers reject organic food which has poor apparel.

Davies et al, 1995

Who buy organic food?

Quality show positive relationship on organic consumption.

Krystallis and Chryssohoidis, 2005

Consumers' willingness to pay for organic food. Factors that affect it and variation per organic product type

There is significant relationship between quality and willingness to pay.

H3: There is a significant relationship between quality of organic food and consumers' willingness to pay for organic food.

Certification and Labelling

Zeng and WeiXia, 2007

Consumer's attitudes and willingness to pay for Green food in Beijing

There is positive relationship between labelling and willingness to pay.

Botonaki et al, 2006

The role of food quality and certification on consumers' food choices

There is significant result showed between certification and organic consumption.

Aryal et al,

2009

Consumers' willingness to pay for organic products: A case from Kathmandu Valley.

Certification has positive relationship with consumers' willingness to pay.

Krystallis and Chryssohoidis, 2005

Consumers' willingness to pay for organic food. Factors that affect it and variation per organic product type

There has positive relationship between certification and organic purchase.

H4: There is a significant relationship between organic labeling and certification that would contribute to consumers' willingness to pay for organic food.

Consumers' behaviour

Botonaki et al, 2006

The role of food quality and certification on consumers' food choices

There is positive relationship between willingness to pay and attitudes.

Aryal et al,

2009

Consumers' willingness to pay for organic products: A case from Kathmandu Valley.

When consumers have positive attitudes towards organic food then they are willing to pay a premium.

Harper and Makatouni, 2002

Consumer perception of organic food production animal welfare.

There is positive relationship between attitudes and willingness to pay.

Pellegrini and Farinello

Organic consumers and new lifestyles. An Italian country survey on consumption patterns

Consumer behaviour has positive relationship on organic purchase.

H5: There is a significant relationship between consumers' behavior that would affect consumers' willingness to pay for organic food.

Environmental attitudes

Gracia and de Magistris, 2007

Organic food product purchase behaviour: a pilot study for urban consumers in the South of Italy.

Concerning about environmental protections, consumers are more willing to pay for organic food.

Harper and Makatouni, 2002

Consumer perception of organic food production animal welfare.

Environmental attitude has positive effect on organic purchase. 

Davies et al, 1995

Who buy organic food?

A greater environmental concern, the more likely consumer pay for organic.

Magnusson et al, 2003

Choice of organic food is related to perceived consequences for human health and to environmentally friendly behaviour.

There is significant result show between environmentalism and organic consumption.

H6: There is a significant relationship between consumers' environmental attitudes and their willingness to pay.

Animal welfare

Harper and Makatouni, 2002

Consumer perception of organic food production animal welfare.

There is significant result showed between animal welfare and willingness to pay

Padel and Foster, 2005

Exploring the gap between attitudes and Behaviour: understanding why consumers buy or do not buy organic food

There is positive relationship between animal issue and organic consumption.

Stobbelaar et al, 2007

Adolescents' attitudes towards organic food: a survey of 15-16 year old school children

Animal welfare has positive relationship on organic purchase.

H7: There is a significant relationship between consumers concern about animal welfare and their willingness to pay.

Social demographic

Padel and Foster, 2005

Exploring the gap between attitudes and Behaviour: understanding why consumers buy or do not buy organic food

There is significant result between social demographic and organic food consumption.

· Gender

Davies et al, 1995

Who buy organic food?

Women are more willing to pay for organic food.

· Income

Gracia and de Magistris, 2007

Organic food product purchase behaviour: a pilot study for urban consumers in the South of Italy.

When there is higher income they are more willing to purchase organic food.

· Educational level

Midmore et al, 2005

Consumer attitudes to quality and safety of organic and low input foods: A Review.

Educational level has positive relationship on organic purchase.

· Age

Zeng and WeiXia, 2007

Consumer's attitudes and willingness to pay for Green food in Beijing.

There is positive relationship between age and organic consumption.

· Size of family

Padel and Foster, 2005

Exploring the gap between attitudes and behaviour: understanding why consumers buy or do not buy organic food

Size of family has positive relationship on organic purchase.

H8: There is a significant relationship between social demographic and their willingness to pay.

H8a: There is a significant relationship between gender and consumers' willingness to pay.

H8b: There is a significant relationship between income and consumers' willingness to pay.

H8c: There is a significant relationship between consumer educational level and their willingness to pay.

H8d: There is a significant relationship between age and consumers' willingness to pay.

H8e: There is a significant relationship between size of family and willingness to pay.

Chapter 3


Research Methodology


3.1 Introduction

Previous chapter discussed the review conducted by other researchers. In this chapter, this study will describe the processes and methods used to conduct this research. It will be looking into the research framework, sampling procedures, hypotheses, sources of research data as well as statistical tests. The process of the research begins with the development of the research framework.


The research process continues with hypothesis development which is a suggested explanation of a phenomenon. The hypothesis might forecast the outcome of the observation of a phenomenon in nature. Continuously, the research procedures basically state the procedures that have been gone through to collect the data until the conclusion of the research. Sources of research data and sampling also will be discussed.


The development of research instrument respondents is where the primary sources are section into few sections. Respondents are asked to rate the questionnaire on a five-point scale, ranging from 1(strongly disagree) to 5(strongly agree). Secondly, the secondary data are archived from the related journals and article which are chosen specifically. These journals and articles are strongly related to support our research topic. Data Analysis and Measurement are then done to test the quality of data, testing the hypotheses developed for the research and make the conclusion for the research.


3.1 Research Design

Basically, research design is a framework or roadmap for conducting marketing research project. It shows the necessary step and produces to obtain the information needed in order to solve the research problem. A good research design ensures that the information collected will be relevant a useful. It also helps in ensure the effectiveness and efficiency of the research being conducted. In this part, we will be discussing the definition for both dependent and independent variables. Besides that, illusion of conceptual framework will be show.


3.1.1 Definition of variables


Table 3.1: Variables Definition

Variables

Definition

Source

Dependent

Willingness to pay

willingness to pay is “sum of money representing the difference between consumers' surplus before and after adding or improve a food product attributes”

Rodriguez et al, 2007

Independent

Health conscious

When people concern about product characteristic and aware by themselves due to others or their own health problem.

Midmore et al, 2005

Level of product knowledge

Consumers' awareness, confident and understanding about the products.

Lin and Zhen, 2005

Quality of food

Consist of intrinsic cues (physical of the product) and extrinsic cues (not physically part of the product but associate with the product).

Ophuis and Trijp, 2005

Labelling and certification

“A system to confirm the conformity of certain products to a set of standards”.

Zeng and WeiXia, 2005

Consumers' Behaviour

Intention will affect consumer' Behaviour. Both attitude and subject norm will influenced consumer intention. Lastly, attitude affected by consumer belief and evaluation; subject norm will manipulated by motivation and others opinion.

Ajzen and Fishbein (1980)

Environment attitudes

Concern about nature and prohibit from pollution act.

Midmore et al, 2005

Animal welfare

Process of feeding and medicines used are the issues concerned by consumers.

Harper and Makatouni, 2002

Social demographic

The relationship between cultural factors and social factors which influence population characteristic. The indicators include gender, income, educational level, age and size of family. 

Sharma , 1989


3.1.2 Development of research framework

The research framework shows the relationship of independent variables and dependent variables (Figure 3.1). The independent variables are health conscious, level of product knowledge, quality of food, labelling and certification, consumers' behaviour, environmental attitudes, animal welfare and social demographic.


3.2 Hypothesis development

The theoretical framework illustrates the relationship between variables and the relationship being identified. A hypothesis is a testable statement or can be defined as a logically conjectured relationship between two or more variables expressed in the form of a testable statement (Malhotra, 2009). Hypothesis will be tested in order to find the relationship and solve the problem.

The following is the hypotheses that are formulated to help to test the relationships of the willingness of consumers to pay for organic food. There are eight hypotheses in this research:

  • H1: There is a significant relationship between consumers' health conscious and their willingness to pay for organic food.

  • H2: There is a significant relationship between levels of product knowledge regarding organic food that affect consumers' willingness to pay.

  • H3: There is a significant relationship between quality of organic food and consumers' willingness to pay for organic food.

  • H4: There is a significant relationship between organic labelling and certification that would contribute to consumers' willingness to pay for organic food.

  • H5: There is a significant relationship between consumers' Behaviour that would affect consumers' willingness to pay for organic food.

  • H6: There is a significant relationship between consumers' environmental attitudes and their willingness to pay.

  • H7: There is a significant relationship between consumers concern about animal welfare and their willingness to pay.

  • H8: There is a significant relationship between social demographic and their willingness to pay.

  • H8a: There is a significant relationship between gender and consumers' willingness to pay.

  • H8b: There is a significant relationship between income and consumers' willingness to pay.

  • H8c: There is a significant relationship between consumer educational level and their willingness to pay.

  • H8d: There is a significant relationship between age and consumers' willingness to pay.

  • H8e: There is a significant relationship between size of family and willingness to pay.

3.3 Sources of data

In this study, there are two ways to obtain data which is primary and secondary sources. Generally, primary data is information acquired firsthand by the researcher for the specified purpose of addressing the research problem. The method that has been used to examine is survey based. Primary data will be acquired by distribute the questionnaires to target sample. Few studies conducted by other researcher also used survey based in order to solve their research problem. There are few methods to collect primary data such as survey method, interview method and observation method. Survey method will be used in this research.


The secondary data is data collected by others researchers who also have interest on the particular topic. These data can be collected quickly and inexpensively. Secondary data will be obtained by the literature review of the journals, book, newspaper, magazine and etc. In this research, most of the secondary data are collected through journal and book. The sources of these journals are obtained through Emerald, Sciences direct and database in MMU Library. Furthermore, part of the information collected through government publications, analyses offered by the media, websites and internet.


3.4 Data Collection

The aim of the research is to examine the determinants that affect consumers' willingness to pay for organic food. The primary date will be collected through distribute the questionnaires to target sample. Questionnaire is a common method used by past researchers (for example, Harper and Makatouni, 2002; Zeng and WeiXia, 2005; Krystallis and Chryssohoidis, 2005; Chen, 2009).


Questionnaire form will be distributed to 250 organic consumers in order to obtain demographic profile of consumers and the view of the respondents. In this research, questionnaire will be distributed to the consumers in Klang Valley who had purchase the organic food in organic shops. The main reason of choosing Klang Valley is because the high number of organic shop located at Klang Valley. Moreover, organic consumer will be targeted instead of customers since we can obtain more accurate data and better understand the determinants of green consumers to choose organic food. The purpose of using questionnaire is due to the potential of collect data from large pool of respondents and responses are gathered in standardized way. Moreover, this method is inexpensive and require less effort if compared. Unlike telephone interview which enquire high cost and respondents can simply hanging up the phone. The result obtained from the survey can help in determine customers' willingness to pay for organic food.


3.5 Sampling Technique

In order to collect data and make this research more meaningful to decision maker, the target sample of this research will be existing organic consumers instead of potential customers. The sampling size for this study is 250 consumers who have purchase organic food. This is due to the information provided will be more accurate and precise. There are two type of sampling technique which is non probability sampling and probability sampling.


In this research, non probability sampling will be employed since it is more convenience for research. Researcher will select the element in the sample base on own decision and judgment. The advantage of using non probability sampling is due to it incur less cost, convenience and least time consuming. The important non probability sampling techniques are convenience sampling, judgmental sampling, quota sampling and snowball sampling.


In order to easy manage for the particular characteristic of sample, quota sampling will be used in this study. Quota sampling consists of two stages; first stage is to develop control categories of population elements. For example only organic consumers will be chosen as an element for the sample. After that, select the elements base on own judgment during the second stage. Researcher has to ensure that the elements selected must meet the requirement.


3.6 Questionnaire Design

Questionnaire design is an important part to ensure internally consistent and coherent data for analysis. The questionnaire must be straightforward in order to ensure that the respondents are able to answer and researcher should minimize the boredom and fatigue. The aim of the clear and concise of the questionnaire is to ensure the data collected is the best from respondents.

The main language for the questionnaire is English since the target sample for this study is public from different races. In generally, the questionnaire will be divided into three parts. The first part will be focus on consumers' demographic profile such as age, income, level of education and etc. The objective of second part is to investigate the preference of customers when purchase organic food. The third part focus on the independent variables consist of health conscious, level of product knowledge, quality of product, labelling and certification, consumers' Behaviour, environmental attitudes, animal welfare and social demographic. The question regarding dependent variable will be asked in this part as well. Consumers' willingness to pay will be the dependent variable for this study.


This questionnaire will be distributed at the organic shops located in Klang Valley in order to understand consumers' willingness to pay for organic food. Respondents are asked to rate the questionnaire on a five-point scale, ranging from 1(strongly disagree) to 5(strongly agree). A pilot study will be conducted before the questionnaires distribute to target sample in order to increase the efficiency of the survey and quality of the questionnaire design.


Pilot study can help researcher to make sure the questionaire is well design and avoid any problem or difficulty during respondents answering the question. Feedback or responde get from pilot study is crucial for researcher to correct the error immediately. Furthermore, this action can ensure that the questionnaire has minimum mistake in order to aviod bias during the actual study.


3.7 Measurement

Likert Scale will be used in the questionnaire. Likert scale is a measurement scale which consists of five response categories (1= strongly disagree, 2= disagree, 3= neutral, 4=agree, 5= strongly agree) with the closed questions. Likert scale used in order to indicate respondents satisfaction level. This type of measurement scale brings advantage to both researcher and respondents. It is easy for researcher to administer and respondent can understand it easily (Malhotra, 2009). This is one of the scaling and measurement method commonly used by researcher. For example, "Adolescents' attitudes towards organic food: a survey of 15-16 old school children" by Stobbelaar, (2006), "Consumer consumption and perception of organic products in Croatia" by Radman, (2005).


3.8 Unit of Analysis

This research will focus on consumers rather than retailers or potential customers because organic consumer is the individual who purchase and consume the organic food. The result will represent the truth of why consumers purchase organic food. According to Zeng and WeiXia (2005), consumer purchase Behaviour is vital to be a sign of their willingness to pay and their experiences can influence their willingness to pay in future. On the other hand, the out come and result of the study may not valuable for marketers and it may not reflect precise opinion of the consumers.


3.9 Target Respondent, Sample Size and Study area

A total of 250 set survey forms will be distributed to organic food consumers who have purchase any organic food in organic shops located at Klang Valley, Selangor. The main reason of choosing them is due to they had did their purchase and they give desire respond to the questionnaires. However, potential customers are not being chosen since they may only have the intention to purchase but never take the action. Consequently, their respond towards the questionnaire may not as accurate as existing consumers. The study area of this research is located at Klang Valley, Selangor since the economy status in Selangor is favorable and there are many organic shops opened in that area.


3.10 Data Preparation

Data preparation is crucial in order to ensure the quality of the finding. On the other word, this part is to avoid the mistake, biased finding and others result will affect final result. The initial step of data preparation is questionnaire checking which include the completeness and quality. Question contrast with the sampling techniques should be correct immediately. After problems have been identified, editing of the questionnaires should be taken to make sure the accuracy and quality of result. Some of the questions may illegible, inconsistent and etc. Next, data must be coding and transcribing. Data cleaning incur checking the consistency and treatment of missing responses. This step will be more extensive since it done by computer. Lastly, data analysis strategy will be selected.


3.11 Data Analysis

After a pool of data has been conducted from representative sample of the population, the data will analyze by using SPSS (The Statistical Packages for Social Science) to accomplish the intention of this study and hypothesis also will be tested. In general, there are three type of data analysis strategy, which are univariate analysis, Bivariate analysis and Multivariate analysis.

Univariate analysis applied when researcher analyzes data on a single variable at a time or when there is a single measurement of each element in the sample. However, when there are a number of measurements for each element, variable will be analyzed separately. One of the methods of this Univariate analysis strategy is frequency test. Frequency test is used to obtain a count of the number of responses associated with different values of one variable. On the other word, frequency test is applied when there is only one variable is considered at a time and test all the Likert scale question in order to know the mean and standard deviation. Pie chart and bar chart also will be used to present the result.


In contrary, Bivariate analysis the relationship between a single dependent metric variable and a single independent metric variable. It is a useful and flexible method to analysis the associated relationship. For example, when analyze the relationship between gender and willingness to pay and the relationship between household and willingness to pay. Chi-square and ANOVA (Analysis of Variance) will be use in the research as well. Chi square is a statistic method use to test the statistical significance of the observed association in a cross tabulation. This statistic method helps in ensure the existing of a systematic association between two variables. In SPSS analysis, one way ANOVA will be used in the research in order to test the hypothesis.


On the other hand, Multivariate analysis applied when there are two or more measurements on each element, variable will be analyzed simultaneously. Multiple linear regression use to test the relationship between two or more independent variable and one dependent variable at a same time. Additionally, hypothesis is proven through the correlation and multiple regression analysis. All the methods above use to increase the efficiency and the accuracy of data analysis of this study.