ORGANIC FOOD INDUSTRY

MARKETING RESEARCH PROJECT

GROUP 5

ACKNOWLEDGEMENTSWe have taken a lot of efforts in this project. However, it would not have been possible without the kind support and help of many individuals and for it we would like to extend our sincere thanks to all of them.

We are highly indebted to our teachers for their guidance and constant supervision as well as for providing the necessary information and their support for the completion of project.

We would like to express our gratitude towards our facilitators Ms. Anjali Malik and Ms.Yogita Singh for their kind cooperation and encouragement which helped us in completing the project.

Our thank and appreciations also go to my colleagues in developing the project and people who have willingly helped us out with their abilities.

Submitted By:

GROUP 4

Table of Contents1

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LIST OF TABLES

LIST OF GRAPHS

LIST OF APPENDICES

Section 1: INTRODUCTION

Background for the studyOrganic farming works in harmony with nature rather than against it. This involves using techniques to achieve good crop yields without harming the natural environment or the people who live and work in it. Organic farming does not mean going ‘back’ to traditional methods. Many of the farming methods used in the past are still useful today. Organic farming takes the best of these and combines them with modern scientific knowledge. Organic farmers do not leave their farms to be taken over by nature; they use all the knowledge, techniques and materials available to work with nature. In this way the farmer creates a healthy balance between nature and farming, where crops and animals can grow and thrive. To be a successful organic farmer, the farmer must not see every insect as a pest, every plant out of place as a weed and the solution to every problem in an artificial chemical spray. The aim is not to eradicate all pests and weeds, but to keep them down to an acceptable level and make the most of the benefits that they may provide.

Why farm organically?Organic farming provides long-term benefits to people and the environment.

Organic farming aims to:

• increase long-term soil fertility.

• control pests and diseases without harming the environment.

• ensure that water stays clean and safe.

• use resources which the farmer already has, so the farmer needs less

Money to buy farm inputs.

• produce nutritious food, feed for animals and high quality crops to sell at a

Good price.

Why consume organic food?To start with, they exclude all the foreign materials added to traditional foods which tend to be toxic. If one practices eating organically produced foods, one is guaranteed of a better and healthier diet to sustain the human body.

Consumption also reduces the risk at which one can get cancer which is very important.

These foods are 90% safer in the sense that human waste or animal excretions are not being incorporated in the production. In traditional foods, it is believed that the water supplies have a percentage of human waste and animal excretions present.

Organic foods support the environmentally friendly cause in that it doesn’t allow the secretion of harmful materials into the atmosphere and ultimately the environment. Pesticides and herbicides used in traditionally produced foods are harmful to the environment especially to aquatic organisms. Therefore organic foods encourage the cause to make the environment a safer place to live in and help in improving the environment.

These foods don’t result in the emission of greenhouse gases which affect and unstabilize the atmospheric conditions.

Players in the marketHassini Impex Pvt.LtdMorarka Organic Food Pvt.LtdSwastha groupTaj agro internationalJhaveri organic farmsHigh tech natural products(India) .Ltd

FeaturesGlobalization of organic food and its culture are the core factors for future

popularization.

Main motivation for these organic foods is fast growing health markets.

Retail outlet culture is now growing rapidly in India.

Shelf life of these foods is at least 2-3 months.

Quality, Taste and Flavor of these foods remains as good as conventional

food.

Objectives of the Study To study the market penetration of Organic food.

To study the consumer perception of Organic foods.

To identify the buying pattern of Organic food.

Research Problem

This Study deals with the organic food industry in India. The study also aims at understanding

the factors influencing the popularity of organic food in India. The factors under consideration

are health awareness, high prices, weak marketing, high cost of production and small scale

farming.

Scope of the Study

The project is a study of what are the factors that is affecting consumer buying behaviour of

Organic food in India. The study is undertaken to understand all the negative and positive

perceptions about the organic food.

In the study we have highlighted the following points:

Percentage of people aware about organic food & have purchased it.

What people like in the organic food market as compared to natural food.

How often the respondents consume organic food?

Which products people prefer more in organic food categories?

Point’s people gave to prefer organic food as an option when needed.

EXECUTIVE SUMMARY

Ever since the concept of organic food got famous in the country, India has emerged as one of the largest markets in the world for organic food.

The organic foods or products are healthy, contain no chemicals or preservatives, are totally natural and are much better than any form of non-organic foods. Organic food is a product which is made without the help of any kind of pesticides, herbicides or insecticides.

MAJOR FINDINGS

1.MARKETS

If we analyze the markets of the organic food then initially total market for organic food in India was valued at USD 129.3 million in the year 2008.Since organic food offer more health benefits than the conventional food, Government of India is leading from the front to ensure multi fold growth in organic market. Exports of organic food market are expected to grow further in the near future.

2.CERTIFICATIONS REGULATIONS

Certification of the organic food products is the major concern for the producers to prove the authencity for their product and generate consumer confidence. Government has shown positive signs by improving the status of the certification agencies. The process of the certification is well defined, although it is costly for small farmers.

3.DRIVERS & CHALLENGES

DRIVERS CHALLENGES1. Huge export markets.2. Organized retail enhancing

distribution system.

1. High prices of organic food.2. Lack of integrated supply chain and difficulties for farmers.

3. Government benefits 3. Certification barriers.4. Increasing health consciousness

among consumers.

4.COMPETITION

The market is highly competitive with large number of producers and promoters. India enjoys comparative advantage of being an agricultural country at a predominant stage with larger quantities of production. Major share of the market is occupied by promoters who are involved in the distribution of these products to the end consumers through various retail outlets.

CONCLUSIONS

In a country like India where labor -intensive farming is more suitable organic farming would be a better option. Organic crops need less water content and most of the agriculture irrigation requirements is still dependent on monsoon so organic farming suits more. As the high price of the organic food is due to the gap in demand and supply if supply will increase price will automatically come down and within the competing levels with non-organic food items.

And last but not the least the quality of food would be way much better than then non organic food.

RECOMMENDATIONS

PROBLEM DEFINITION

BACKGROUND

Organic food is not so much popular in India. Organic food involves high cost of production and generally the price of organic food is 25% higher than the original because they are produced on small scale.

Consumer survey indicates that the public is concerned about the safety of the produce that they purchase in stores due to possible pesticides contamination. Consumer often prefer to purchase tastier varieties grown locally under organic conditions in proper handling of organic food after harvest may result in product contamination and in food borne illnesses.

Organic food is not easily available in the market because of small scale production. The demand assessment of organic food is difficult to

determine because of its weak marketing.

STATEMENT OF THE PROBLEM

The main problem associated with organic food is its popularity among the Indian consumers.

APPROACH TO THE PROBLEM

The main approach in solving problems of organic food was through consumer survey and analysis of the results arising out of that survey.

The main reasons for lack of popularity of organic foods among Indian consumers were less promotions and high prices. To analyze the current status of the organic food of India a set of questionnaires was formed by us regarding the organic food information and we did a survey. After that we analyzed each and every input of the customers on the SPSS (Statistical Package for Social Sciences) software and found various variations like Variance, Co variance, Correlation and Regression etc.

After the analysis we were able to generate the customer satisfaction level, the awareness among customers regarding organic food.

RESEARCH DESIGN

Research Design Formulation

A research design is a framework or blueprint for conducting the marketing research project. It details the procedures necessary for obtaining the information needed to structure or solve marketing research problem.

We did the blend of exploratory and descriptive research work to carry out the organic food project work.

The primary objective of the exploratory research work is to provide insights into and an understanding of the problem confronting the researcher. Here we had to first find out the major problem associated with the organic food i.e low popularity and then we had to gain additional knowledge about all these products.

During the exploratory research many issues were in our mind regarding organic food like:

Why it is highly priced? Why it is not promoted widely? Why it is more preferred in areas where people are

Data collection Methodology

The sources of data used in this project report are both primary and

secondary data.

Primary data

Primary data consists of original information gathered for specific purposes at hand. These are gathered for a specific purpose or for a specific research project. Primary data was collected online as well as manually. A survey questionnaire was made, prints out were taken and then it was circulated to the sample and the result was compiled. We did

a survey amongst the 30 customers. The main areas of survey were Spencer’s Hypermarket and students. We were able to collect lot of details from them as to which types of food they prefer whether conventional food or the organic food and what health benefits they feel after consuming it.

Secondary data

Secondary data consists of information that already exist and that

were being collected in the past for some other purposes. Secondary

data used in this study were collected from external sources like books,

blogs, wiki etc. Some websites which were really helpful are

www.google.com, www.organicfood.com.

Sample design

The sampling technique used for survey was a non-probabilistic convenience sampling. The

sample size was chosen keeping in mind the target market for organic food segment,

Hostel/paying guest, gym instructors, Individuals working hard to lose weights and bachelors

between the age group of 18-40.

Tools & Techniques

Data was collected with the help of questionnaire. The questionnaire is of structured non-

disguised type. The questions were of mixed type.

Sample Size

The total no of respondents were 30 of the total 40 approached. The age group in which the

sample lied is 20-40.The occupation of this sample size was a healthy mix of self employed

individuals,working people and students. The respondents included 17 people from Hostel\

Paying guest which form a large chunk of the target market for organic foods.

Questtionare development and pretesting1. What grade, you would like to give if you have to compare Indian organic food sector with international

markets? ( A – excellent to D – Poor)

-^-------------------^------------------^---------------^

A B C D

EXCELLENT GOOD FAIR POOR

2. How often do you consume organic food in a week?

A.ONCE A WEEK …………..

B.TWICE A WEEK ……………

C.THREE DAYS IN A WEEK …………..

D.MORE THAN 3 DAYS …………….

3.Which product you prefer most in organic foods? Is it basic grains only or vegetables as well as honey?

PRODUCT PREFERENCE1.BASIC GRAINS2.VEGETABLES3.HONEY4.OTHERS

4.Is there any kind of fear while consuming the organic foods? If Yes what?

A. YES ………. B.NO ………..

REASONS:-…………………………………………………………………………………………….

…………………………………………………………………………………………….

5.Do the prices of these organic foods suit you or you want some amendments?

A.SUITS ME ……. B. NEED IMPROVEMENT …….

6.In today’s era where we are getting hybrid vegetables, what are your views regarding them?

………………………………………………………………………………………….

…………………………………………………………………………………………..

7.What health benefits you felt after you first consumed the organic food?

1. HYGEINE ……………………..

2.NUTRITION VALUE …………………….

3.IMMUNE SYSTEM …………………….

4.DIGESTIVE SYSTEM ……………………

5.NERVOUS SYSTEM …………………….

8.What factors contributes to organic food?

1. INGREDIENTS ……………..2. QUALITY ……………….3. QUANTITY ………………

4. CONSUMER PREFERENCES ……………..

NAME: ………………………………………………….

Data analysisOnce the data was collected, analysis of the information was done. The collected data was entered in SPSS. SPSS consists of both data view and variable view. Various variables were taken with regard to organic food like age , gender , preference among organic food , consumption of organic food in a week etc. various tests were conducted like chi-square test , regression test & co-relation. The scaling techniques taken to analyse the result are nominal and scaling techniques.

To analyse the result, firstly chi- square test was conducted using nominal scale and hypothesis test .

For this the two variables taken were age and gender of consumers:

Ho : There is no relationship between age & gender of consumers.

Hi : There is relationship between age & gender of consumers.

Using chi- square test on nominal scale, the value came out to be 6.728 at 9 degree of freedom. The optimal significance level to be taken is 0.05. Hence taking 0.05 significance level at 9 degree of freedom, the table value comes out to be 16.919. Since table value is greater is than actual value so we will reject the null hypothesis that says that there is no relationship between age & gender. So we will accept the alternate hypothesis that there is relationship of age & gender.

AGE * GENDER Crosstabulation

Count

GENDER

TotalMALE FEMALE

AGE 20-25 8 3 11

26-30 12 1 13

31-35 3 1 4

ABOVE 40 0 2 2

Total 23 7 30

Now we will take another set of variables to judge the relationship. The variables taken are gender & consumption of organic food. Using hypothesis analysis :-

Ho : There is no relationship between gender & consumption.

Hi : There is a relationship between gender & consumption.

The value came out to be 1.207 at 3 degree of freedom. But the value at 0.05 at 3 degree of freedom is 7.815. Since table value is again greater than actual value, hence we will reject the null hypothesis & will accept the alternate hypothesis which means that there is a relationship between gender & consumption.

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Pearson Chi-Square 8.451a 3 .038

Likelihood Ratio 8.156 3 .043

Linear-by-Linear Association 2.938 1 .087

N of Valid Cases 30

a. 6 cells (75.0%) have expected count less than 5. The minimum

expected count is .47.

Now secondly t- test using scaling technique will be used to check hypothesis test. The next variables which we took into consideration was liking of organic food & grading done as per in comparison with international market. Using hypothesis analysis:-

Ho: There is no association of liking of organic food with grading.

Hi : There is association of liking of organic food with grading.

Looking at the value which came out to be at significance level of 0.000, we will reject the null hypothesis because this value is less than 0.05. This means that there is association of liking of organic food with comparison of Indian market with international market.

The second set of variables taken are liking of organic food & factors affecting the demand for organic food.

Ho: There is no association of liking of organic food with factors

Affecting demand of organic food.

Hi: There is association of liking of organic food with factors affecting

Demand of organic food.

The value , after solving this comes out to be 0.086 which is more than 0.05. So we will accept that there is no association of liking of organic food with factors affecting demand of organic food.

After this we move on to co-relation. Co- relation is the statistical measurement of the relationship between two variables. Now we will take another two set of variables as liking of organic food & grading of Indian organic food with international organic market. On this we came to know that both set of variables are less positively co –related. The value comes out to be 0.290 which is less than 0.5

LIKE OF

ORGANIC

FOOD

GRADING OF

ORGANIC

FOOD

LIKE OF ORGANIC FOOD Pearson Correlation 1 .290

Sig. (2-tailed) .120

N 30 30

GRADING OF ORGANIC

FOOD

Pearson Correlation .290 1

Sig. (2-tailed) .120

N 30 30

Considering other set of variables called grading of organic food & factors affecting demand of the same. The value comes out to be 0.201 which again is less positively co – related.

LIKE OF

ORGANIC

FOOD

FACTORS OF

ORGANIC

FOOD

LIKE OF ORGANIC FOOD Pearson Correlation 1 .089

Sig. (2-tailed) .639

N 30 30

FACTORS OF ORGANIC

FOOD

Pearson Correlation .089 1

Sig. (2-tailed) .639

N 30 30

Regression is a technique used to discover a mathematical relationship between two variables, dependent & independent , using individual data.

Solving the regression equation using variables like of organic food & grading of organic food, we get:-

Y= a + bx

Where Y is dependant variable

A is constant variable

X is independent variable

b is beta

Taking these values as a basis for analysis , the new equation will be formed as follow :-

Like of organic food = 2.240 + 0.290

The significance level is 0.120 which is more than 0.05 so we will accept that there is no association between like of organic food & grading of organic food.

ANOVAb

Model Sum of Squares df Mean Square F Sig.

1 Regression 1.908 1 1.908 2.570 .120a

Residual 20.792 28 .743

Total 22.700 29

a. Predictors: (Constant), GRADING OF ORGANIC FOOD

b. Dependent Variable: LIKE OF ORGANIC FOOD

Now taking another set of variables namely , factors of demand of organic food & grading, we will get the following regression equation:-

Grading of organic food = 6.454 + 0.201

Significance level is 0.287 which is more than 0.05 ,hence we will accept that there is no association of grading of organic food with factors of demand of organic food.

ANOVAb

Model Sum of Squares df Mean Square F Sig.

1 Regression .866 1 .866 1.177 .287a

Residual 20.601 28 .736

Total 21.467 29

a. Predictors: (Constant), FACTORS OF ORGANIC FOOD

b. Dependent Variable: GRADING OF ORGANIC FOOD

SCALING TECHNIQUES

In our project , in order to find out the data and to analyze the same , non- comparative scale was used. Non- comparative scale includes continuous rating and itemized rating scale. However the main scale used in our project is linkert scale. This scale is the most widely used rating scale that requires that requires a respondent to indicate degree of agreement or disagreement.

LIMITATIONS OF THE RESEARCH

Due to resource constraint, we could gather only this much of information. We could have gathered more information by increasing our sample. We were not able to target a larger sample size of 100.

CONCLUSION

1) In a country like India where labor -intensive farming is more suitable organic farming would be a better option.

2) Organic crops need less water content and most of the agriculture irrigation requirements is still dependent on monsoon so organic farming suits more.

3) As the high price of the organic food is due to the gap in demand and supply if supply will increase price will automatically come down and within the competing levels with non-organic food items.

4) And last but not the least the quality of food would be way much better than then non organic food.

REFERENCES

1. www.google.com 2. http://www.faqs.org/nutrition/Ome-Pop/Organic-Foods.html 3. http://ressources.ciheam.org/om/pdf/c61/00800166.pdf 4. http://en.wikipedia.org/wiki/Organic_food 5. http://ofai.org/

6. http://www.satavic.org/

7.8. Organic Control Italy,2000 Organic food production in Italy – past and

future.9.