International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 6510(Online), Volume 3, Issue 2, May-August (2012)

INTERNATIONAL JOURNAL OF MANAGEMENT (IJM)

ISSN 0976 6367(Print) ISSN 0976 6375(Online) Volume 3, Issue 2, May- August (2012), pp. 401-410 IAEME: www.iaeme.com/ijm.html Journal Impact Factor (2012): 3.5420 (Calculated by GISI) www.jifactor.com

IJM
IAEME

A STRUCTURAL ANALYSIS OF PURCHASE INTENTION OF ORGANIC CONSUMERS

SAKTHIRAMA.V, Research Scholar, Department of Agricultural and Rural Management, Tamil Nadu Agricultural University, Coimbatore 641 003 E-mail: sakthirama@gmail.com Dr. R.VENKATRAM, Ph.D., Professor and Head, Department of Agricultural and Rural Management, Tamil Nadu Agricultural University, Coimbatore 641 003 E-mail: management@tnau.ac.in ABSTRACT The aim of this study is to measure attitude, familiarity and purchase behavior of consumers towards organic food in an urban city of India. Nowadays the consumer behavior is changing towards purchase of many environmental friendly and organic products, due to awareness of environmental degradation and the related issues. In India, emergence of organic shops was supported the same. However, the studies related to consumer buying behavior towards organic food were very few. Hence this study was conducted with the specific objectives of measuring the attitude, knowledge and familiarity and purchase intention with the structural model. The study was conducted in Coimbatore City. The sample size consisted of 200 consumers selected randomly. These sample respondents were those consumers who purchased organic products from the four selected organic stores. These stores were selected based on sales volume. The findings and their implications discussed in this study are been subject to empirical testing through analysis of data collected from 60 consumer respondents in three retail outlets located in Coimbatore city in India. Keywords: organic products, consumer attitude, knowledge and familiarity, purchase intention.

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International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 6510(Online), Volume 3, Issue 2, May-August (2012)

INTRODUCTION The demand for organically produced food is increasing in many developing countries (De Haen, 1999). While research on consumer perceptions, beliefs, attitudes and purchasing practices of organically produced food has been done in many countries (Williams and Hammitt, 2000; Jolly et al, 1989; Huang, 1996 in USA, Wright, 1997 in U.K, Hack, 1993 in Netherland, Von Alvensleben, 1998 in Germany and Saunders, 1999 in New Zealand), very few limited research has been done in India. In order to promote organically produced products, a cohesive marketing strategy is needed which depends on a better and fuller understanding of food consumers (Hutchins and Greenhalgh, 1997). In India retail companies with their outlets are responding to the consumer demand for organically produced food and most major retail stores carry at least a limited selection of these products. Such habit preference arouse mainly from the changes in lifestyle of consumers who perceive some lacunae in the newer methods of food production and their safety for consumption. Over the last decade, there has been a remarkable increase in demand for organic-produced food or products. Organic food is often seen and marketed as healthconscious food, which contains fewer contaminants, more nutrients and most importantly having a positive effect on the environment. A C Nielsens (Nielsen, 2006) study indicates that Indians are amongst the top 10 global buyers of foods with health supplements. Also the study indicates Indians are keen to purchase organic food for their children but it suffers from poor availability and premium price perception. Due to high logistic cost and low volume operation, organic foods are still costly (Chakrabarti, 2007). Organic food market in India is still at a nascent stage with inadequate retail presence and little certified branded produce. But the organic market slowly emerging and attracting the high end consumers. Only a minimum number of retail chains are involved in marketing organic food in Indian major cities. REVIEW OF LITERATURE AND HYPOTHESES From the related research to consumer attitudes to organic foods indicated that consumers have only positive attitude as they believed positively about the consumption of organic foods. Schiffersten and Oude Ophuis (1998) and Von Alvensleben (1998) inferred from a study that the organic consumers believed organic fruits and vegetables were healthy, environmentally friendly, and more tasty and nutritious than conventionally grown foods and have only positive attitude. Meanwhile the organic consumption is related to decreasing

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International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 6510(Online), Volume 3, Issue 2, May-August (2012)

confidence in the quality of conventional foods and to an increasing concern for health (Von Alvensleben and Altmann, 1987). Ajzen (2001) indicated that the more favorable the attitude with respect to a behavior, the stronger is the individuals intention to perform the behavior under consideration and showed that when behaviors pose no serious problems of control, they can be predicted from intentions with considerable accuracy. Chen (2007) studied consumer attitudes and purchase intentions in relation to organic foods in Taiwan and moderating effects of food-related personality traits and proved that attitude positively affect the purchase intention. Choo et al. (2004) studied purchasing behavior of new food product among innovator groups in India. They have found that consumers attitudes will positively affect Indian consumers intention to buy new processed foods. Besides, in India the experts also rated the attitude of the consumer is one of the importances of the factors in the organic consumers purchase process Chakrabarti (2010). Hence the hypothesis is as follows. H1: Attitude will positively affect consumers intention to buy organic food products Chryssochoidis (2000) indicated that consumers have a lack of knowledge on organic food and those who do not buy it, will not, unless they are educated about its real benefits. This highlights the need to understand the conviction of buyers about the utility of organic food. Hill and Lynchehaun (2002) highlighted that knowledge and education appeared to be central to the effective marketing of organic milk and argue that only when organic milk is perceived to be relevant and appealing, the sales began to increase.Saba and Messina (2003) studied the attitudes towards organic foods and risk/benefit perception associated with pesticides. The subjects of the sample tended to hold positive attitudes towards eating fruits and vegetables produced through organic agriculture. Same way many studies support that information about the merits of particular food or food production methods may result in the development of positive consumer attitudes and increase the likelihood of consumers accepting these foods (Berg, 2004; McEachern and Willock, 2004; Siegrist, 2000; Siegrist, Stampfli, Kastenholz, and Keller, 2008). Based on the above reviews consumers knowledge and familiarity about the organic food are important aspect to form their attitude. Meanwhile it has to be expected same positive effect on purchase intention. Hence the hypotheses are as follows. H2: Knowledge and familiarity about organic food will positively affect consumers attitude to buy organico food products
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International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 6510(Online), Volume 3, Issue 2, May-August (2012)

H3: Knowledge and familiarity about organic food will positively affect consumers intention to buy organic food products Accordingly, a study focusing on purchase intention of organic food buyers in India may provide insights for the entirely nascent but emerging category and its stakeholders. The aim of this study is to measure attitude and knowledge and familiarity with purchase intention. Thus, it is proposed to comprehensively test all the hypotheses and the following conceptual model is proposed as follows. Figure 1 Conceptual model Attitude towards organic foods

H1

Purchase Intention H3

Knowledge and Familiarity

H2

METHODS AND MEASUREMENTS To measure the attitudes towards organic foods 13 statements were selected and shortlisted based on the judges opinion. Besides, 6 statements for knowledge and familiarity, and one statement for purchase intention were used. These constructs were measured with the five-point Likerts continuum of Strongly agree, Agree, Neutral Disagree and Strongly disagree as response categories and measurement procedures followed for were also assessed through enquiry (Choo et al., 2004). Before commencement of the actual survey, the Interview schedule was pre-tested and based on the response; required modifications were done before the Interview schedule was actually administered to consumers. Sampling and data collection Next to Chennai, Coimbatore city is one of the major cities in Tamil Nadu. Coimbatore is considered to be a tier II city with diversified cultures, wide socio-economic classes and highly sophisticated lifestyles. Coimbatore consumers are already aware and interested in organic
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International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 6510(Online), Volume 3, Issue 2, May-August (2012)

products as environment friendly product and green product.The supply of organic food is also steadily increasing (Banumathi, 2011). Besides, during the past two years many new organic retail shops have been opened in Coimbatore. Out of the eight specialty organic retail outlets, based on the sale volume, four organic retail outlets were selected for this study. Consumer survey was conducted in these selected outlets. In each selected store, 50 consumers were contacted at random and the total sample size was 200. FINDINGS AND DISCUSSION The details about general characteristics of sample respondents are shown in Table 1. It could be seen from the table that majority of the respondents (53.33 per cent) were female buyers of organic foods. Among the respondents, 69 per cent of customers had graduate level education and about 35 per cent respondents were had their own business followed by the private employees (32.4 per cent). About 41.40 per cent of the family households belonged to Strivers category with yearly family income ranging between ` 5,00,000 and ` 10,00,000, followed by 36.54 per cent of the families (Seekers) with an earning capacity of ` 2,00,000 to `5, 00,000. Table 2 Factor loadings of attitude and familiarity Socio economic characteristics Gender Educational levels Occupational status Male female Up to Schooling Graduate Government Jobs Private Business Home maker 90, 000 to 2, 00, 000 2,00, 001 to 5, 00, 000 5,00, 001 to 10, 00, 000 More than 10,00,000 Per cent 46.7 53.3 21.9 69.1 23.4 32.4 35.2 7.0 1.50 36.54 41.40 20.56

Income (annual family) ( `)

Consumer Attitude towards organic products The attitude towards the organic food was measured with 13 items and the knowledge and familiarity of organic food were measured with 6 items. Factor loading of the used items were depicted as follows in the Table 2. The reliability of the items checked with Cronbach alpha value for the attitude scale and familiarity, 0.910 and 0.802 respectively. The values were higher than the 0.7. So the reliability of the scales was good.

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International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 6510(Online), Volume 3, Issue 2, May-August (2012)

Table 2 Factor loadings of attitude and familiarity Factor Cronbachs loadings alpha

S.No

Statements Attitude

1. 2. 3. 4. 5. 6. 7 8 9 10 11 12 13

To eat organic fruits and Vegetables is .(foolish/wise) To eat organic fruits and vegetables is.(bad/ good) By eating organic fruits and vegetables I get a healthy food By eating organic fruits and vegetables I get a food that is environmental friendly By eating organic fruits and vegetables I get a better taste By eating organic fruits and vegetables I get a food that is more nutritious To eat organic fruits and vegetables means to pay more To eat organic fruits and vegetables means to have difficulties in finding them on the market Organically grown foods contain less pesticide residues Organically grown foods contain no artificial colourants, flavourants and preservatives Organically grown foods have more flavour Organically grown foods must be certified Organic certification ensure the trust worthiness of organic vendors Knowledge and Familiarity of organic foods

0.913 0.932 0.908 0.915 0.867 0.658 0.904 0.933 0.842 0.908 0.834 0.952 0.872

0.910

1. I frequently buy organic foods 2. I like to visit the organic stores to know about the products 3. I often tell my friends about organic products 4. I used possible ways to know about my interested organic product or services

0.917 0.983 0.842 0.802 0.700 0.608 0.983

5. I like to know and read about organic production 6. I like to see the promotions of organic products ads, vedio

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International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 6510(Online), Volume 3, Issue 2, May-August (2012)

Figure 2 Structural model Attitude towards organic foods

0.871

Purchase Intention 0.772

Knowledge and Familiarity

0.642

Chi square ( 2) = 1.80 [1df] CFI = 0.984 AGFI = 0.937 RMSEA = 0.028 Based on the result of structure equation model (Fig 2), the model was fit with the Chi-square ( 2 ) of the model is 1.80, at significant at one per cent level. The Adjusted Goodness-of-Fit Index (AGFI), a measure of the relative amount of variance and covariance of sample and is jointly explained by hypothesized model and the index. The index ranges from zero to 1.00 and values closer to 1.00 is indicative of good fit (Joreskog and Sorbom, 1993). The Comparative Fit Index (CFI) value ranges from zero to 1.00. The CFI value of greater than 0.90 considered a well-fitted model . In this study, AGFI (0.937) and CFI (0.984) indicated that the model fitted the data well in the sense that the hypothesized model adequately described the sample data. The Root Mean Square Error of Approximation (RMSEA) was first proposed by Steiger and Lind in 1980, was only recently been recognized as one of the most informative criteria in covariance structure modeling. RMSEA value less than 0.05 indicated a good fit and values as high as 0.08 represented reasonable errors of approximation in the population (Browne & Cudeck, 1993). In this study the RMSEA value for the model was 0.028 and it was indicative of good fit between the hypothesized model and the observed data. Attitude towards organic food affect the purchase with the path coefficient of 0.871 and knowledge and familiarity affect the purchase with the path coefficient of 0.642. Besides, knowledge and

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International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 6510(Online), Volume 3, Issue 2, May-August (2012)

familiarity affect the attitude with the path coefficient of 0.772. Hence the conceptual model and hypotheses were proved. Table 3 Summary of Hypothesis and Results of Testing Hypothesis Number H1 Hypothesis Attitude will positively affect consumers intention to buy organic food products Knowledge and familiarity about organic food will positively H2 affect consumers attitude to buy organico food products Knowledge and familiarity about organic food will positively affect consumers intention to buy organic food products Yes Supported Yes

H3

Yes

CONCLUSION From the foregoing discussion the attitude and purchase intention of consumers towards organic food in an urban city of India. The purchase intention was influenced by attitude and knowledge and familiarity of consumers. Meanwhile knowledge and familiarity of consumers affect the attitude of the consumer. Besides, the findings of the study indicate that knowledge and familiarity should be considered by organic food producers and marketers as a key factor influencing organic food consumption. Information and promotion campaigns could focus on promoting organic foods, so the consumers are provided with elements and experiences that stimulate their knowledge and familiarity. Same way the retailers of organic products often invest a relatively high share in communication related to organic food products. Such communication efforts can be effective for conveying factual information to build knowledge among consumers. Furthermore the retailers could providing a visible place to organic products in shop may increase consumers familiarity. Additionally the organic food producers as well as retailers are recommended to inform people about the beneficial aspects of organic foods in addition with organic farming practices. Such emotional appeal like enjoyment and pleasure could reinforce positive attitudes towards organic foods. Hence improving the knowledge of consumer with positive consideration will lead to create positive attitude. This will lead to positive purchase intention.

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