2011

XLRI Jamshedpur Inderjit Singh Rahul Rai Sahil Ahuja Souvik Halder B10081 B10102 B10105 B10112

[ Effect of environmental attitude & health concerns on the attitude towards organic food products manifested by willingness to buy & pay more for organic products]
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Abstract
Purpose The purpose of this research paper is to determine the effect of environmental attitude and health concerns on the attitude towards organic food products manifested by willingness to buy and pay more for organic products. Design/methodology/approach An online survey in English as well as Hindi was floated to around 250 respondents in India out of which a total of 165 responses were collected and analyzed. The respondents were surveyed on their Environmental Attitude, Health and Safety Concerns, Attitude towards Organic Product, Willingness to Buy Organic Products and Willingness to pay for Organic Products using existing available scales to measure each of these constructs. Findings Linear regression analysis of collected data proved that Attitude towards Organic Products has a partial mediating effect between Willingness to buy organic Products and Environmental Attitude. Attitude towards Organic Products has a partial mediating effect between Willingness to buy organic Products and Health & Safety Concerns. Research limitations/implications The sample space of respondents was limited largely to adults between ages 20-35 with majority of them being students of BM, a two year MBA flagship program offered by XLRI, India. Research may have ignored other possible factors like consumer skepticism, psychographic variables. Due to geographic and sample size limitation of the present study it is suggested to include diversified geographic groups and in large scale in the future. Practical implications The conclusions drawn in this research paper can help F&B industry in developing newer food products in meeting expectations of consumers. It will also provide recommendations for marketers and government on how to develop new strategies for organic food consumers and the future consumption pattern among new consumers. Originality/value Organic food product industry is an industry of increasing relevance, besides there is no such study done on the basis of the Indian consumer market in recent times. The market size of organic food products is increasing and was US $ 72 billion in 2010. No relevant study keeping willingness to buy & willingness to pay together has been done in emerging economies. Also, the effect of gender and occupation on willingness to pay has not been done in the Indian context. Keywords Organic Products, India, Environmental Attitude, Health and Safety Concern, Attitude towards Organic Product, Willingness to Buy, Willingness to Pay Paper type Research paper

Introduction
The preference pattern of consumers of the modern period has been on a change path for the last decade or so. The main driving force for such a sea change has been the increased levels of consciousness about the methods of production of food, their ecological impact vis--vis their environmental friendliness, health and safety concerns of the individual and the nutritional value of the food. Issues such as environmental friendliness, quality of food and their methods of production along with their quality and nutritional value affect the consumers attitude towards organic food products (Laroche et al., 2001 quoted in Tsakiridou et al., 2007). Even though the demand for organic food products are pretty nascent in India, the popularity of the same in Europe has been strong from the mid-1980s (Greenan et al., 1997) while the consumers in USA have been conscious of such factors since 1960s (Klonsky and Tourte, 1998). The decade of environment (Pujari and Wright, 1996) has been favoured by not only increased awareness about the impact of food on health safety but is also trade-driven as much as consumer-driven (Browne et al., 2000). Among others, one of the practices involving health conscious habit and quality consistent behaviour is the purchase of organic food products (Krystallis and Chryssohoidis, 2005). One of the most convincing materials of evidence regarding the increasing awareness and demand for organic food is the increasing number of consumers who are ready to pay a premium for the consumption of organic food products ( Laroche et al., 2001). The end ideology for the proliferation of organic food product is to contribute towards better food marketing practices for organic producers. The question relevant for interested policy makers is to unearth what factors influence those who buy organic food and what constraints hinder consumption of those who do not buy organic food. Also studies need to be done for a proper profiling of the organic food consumers.

The increasing importance to people of what they eat is reflected in the present abundance of studies measuring consumer preferences of environmentally friendly products such as organic foods. At present there exists an unprecedented level of international media attention on environmental issues in response to the scientific communities agreement that increasing world temperatures are occurring in response to human impact on global habitats as evident from the recently concluded Copenhagen Summit. However, careful study needs to be conducted in order to discover the underlying attributes governing the customer preference for organic food. There has been contrasting reports regarding the fact that while many people are self-proclaimed environment conservation experts and are aware of environmental issues, they have a pronounced dissonance towards the purchase of green products (DSouza, Taghian and Lamb, 2006; Lockie et al., 2002; Paladino, 2005). The figures suggest that people are not purchasing organic foods in sufficient quantities.

Objective of the study

The purpose of the study is to determine the the relation between factors such as environmental awareness and health concerns with the attitude and purchase intention of organic products. A proper profiling of organic food consumers has also been done. These consumers are among those who have made their purchases besides buying organic food, those that have never considered organic food and those that are staunch evangelists to the cause of organic food.

Literature Review
Organic Food Products
Organic food is produced with use of renewable resources and also conservation of soil and water are taken into consideration to enhance environmental quality for future generations. Organic meat, eggs and dairy products are got from animals that are given no antibiotics or growth hormones. Organic products are produced without using pesticides, fertilizers, and without bioengineering and ionising radiation (USDA National Organic Program, 2005).

Environmental Attitude
Schlegelmilch et al. (1996) indicate that the increase in environmental consciousness of consumers has had a telling influence on consumer purchasing patterns whereby the popularity of organic products are expanding at a fast pace. The market for organic foods has grown exponentially since the 1980s. From a UK market that was worth 8 million in 1985 it had increased tenfold in four years to 80 million. In India too, the increase in the market for organic food has been substantial. The size of organic agricultural land has reached 1.03 million hectares in India in 2007, of which 455,568 hectares are fully under organic plantation while the rest is under partial deployment (Menon, 2009). One of the overwhelming factors helping the expansion of environmental friendly food products is the approaches of sustainable agriculture and modern techniques such as inter-cropping, double digging, etc. That environmentally conscious people will have a positive attitude towards organic food products is evident from: Almost all synthetic products are inhibited in organic farming Crop rotation and soil conservation is made mandatory ( Le GUillou and Scharpe, 2001)

Health and Safety Concern

Most of the consumer research signals health as important variable towards willingness t buy organic product( Padel and foster,2005;Zakowska,2007).Better health conditions is the primary reason for people wanting to intake organic products. Preventing Chronic Disease is another concern for the consumer .Avoiding the consumption of chemical residues is another motive for the consumer. Consumers also take natural and uncontaminated production methods into consideration as we can see from example of UK Consumer, eating fruits and vegetables without peeling off the skin (Zanoli, 2004).Health is an important factor for elder people to have organic products (Wier and Calverley, 2002) A 2003 UK Study states food safety as a reason to buy organic food products. Eastern European survey has found food safety as most important factor to decide on organic products whereas in Western Europe, Ethnic Values are important in determining organic products (Padel and Foster, 2005). Several studies indicate that health and safety concerns as a major motivation for buying organic food (Institute of Grocery Distribution in OCarrol 2001; Tregear, Dent and McGregor 1994). In Food You Can Trust 2000 Survey by Mintel (Jones 2000), Health was the main reason for buyers choosing organic food with 67% believing that organic food was a healthier option.

Willingness to pay more for Organic Products

Consumers demand for organic food products can be judged by their willingness to pay a premium over and above the fair price of the commodity ((Rao and Burgen, 1992; cited in Vlosky et al., 1999). Most consumers make organic food purchase decision under incomplete and imperfect information scenarios. Thus, they cannot clearly appreciate the advantages of organic from conventionally grown alternatives. Thus there is a chance that this might negatively influence the development of organic food demand. In order to rid our study of this fallacy, willingness to buy can also be used as an indicator to gauge the consumer demand for organic food products. There is a huge amount of international literature citing the consumers willingness to pay a premium for organic food products and health/safety concerns (Henson, 1996; Fu et al., 1999; Skuras and Vakrou, 1999; Govindasamy and Italia, 1999; Gil et al., 2000; Corsi and Novelli, 2002, 2003; Angulo et al., 2003; Baltzer, 2003; Canavari et al., 2003; Smed and Jensen, 2003 cited in Krystallis and Chryssohoidis,2005 ). Henson (1996) claims that willingness to pay can be used as a metric to gauge the importance consumers attach to higher quality and safer food products. The same author also states that, among the factors that affect willingness to pay are: Personal experience of hazardous food consumption Consequences of hazardous food consumption

Ease of prevention of the spread of the consequence of the hazardous food consumption Personal attributes( Socio-demographic)

Skuras and Vakrou (1999) cite a number of willingness to pay measurement techniques in which the result obtained show that the proportion of respondents willing to pay more for organic food is a direct indicator of consumers willingness to pay. Mostly consumers were ready to pay a premium of 60 to 70 percent. However, the premium values varied greatly depending on the type of food under study (e.g. according to Gil et al., 2000, organic vegetables and fruits could demand a higher premium than meat products) and also on the basis of production of that particular organic product (e.g. different cultivation methods, etc.). Govindasamy and Italia (1999) argue that, among the factors that were found to affect willingness to pay, socio-demographic factors such as gender, age, income levels and educational qualification, were the most important qualifiers among the most important. Zanoli (1998) also mentions that surveys generally underplay the real amount of premiums consumers might be ready to pay because of the respondents free-riding behaviour. Actually consumers more often pay up to 300 percent premiums for organic purchases. Also in general, as demand for organic products move into a higher phase, there is a change in the importance of non- buying factors from price of the product to availability of the same is observed (Roddy et al., 1996 cited in Krystallis et al., 2005).

Willingness to buy Organic Products

There is increased willingness among consumers to buy Organic products which are generated from an increased information and awareness about the environmental friendliness of their methods of production (Krystallis and Chryssohoidis,2005). The willingness to buy of organic products is further manifested by the increasing demand of organic food in the Indian consumer market. The popularity of organic food
products in Europe has been strong from the mid-1980s (Greenan et al., 1997) while the consumers in USA have been conscious of such factors since 1960s (Klonsky and Tourte, 1998). Thus this era of increased willingness to buy Organic Products among consumers, specially those housed in the Asia-Pacific region has been heralded as the decade of environment (Pujari and Wright, 1996).

Attitude towards Organic Food Products

Consumers' attitude regarding organic food originates from experiences that in turn, are linked to a complex set of ideals, motivations and experiences. Beliefs and perceptions are highly subjective notions (Fishbein and Ajzein, 1975), because they reflect opinions about the objective state of the world.

Thus when consumers are asked about their preference between organic and conventionally produced food, such respondents actually compare their attitudes toward the methods of procuring the goods, and/or the necessary product attributes under consideration, before making their decision. A highly relevant field of study has been the effect of environmental awareness on the attitude towards organic products. One such study found that attitudes correlated significantly with buying intentions (Sparks and Shepherd 1992). It is also seen in studies that attitudes usually play a major role in shaping behaviour. Most of these studies concluded that consumers purchase organic foods because of a perception that such products are safer, healthier, and more environmental friendly than conventionally produced alternatives. Some studies reported health and food safety as the number one quality attribute considered by organic product buyers. Concern for the environment was less important compared to food safety and health concerns, suggesting that such consumers might rank private or personal benefits higher than the social benefits of organic agriculture.

The Research Model and Hypotheses

Environmental Attitude and attitude towards organic food products
The influence of several intrinsic and extrinsic factors on the consumer preference for organic food has been examined in relevant literature. Some of the factors investigated for their influence have been health, environmental protection, concern for the chemical residues in conventional food products, pesticides, nutritional concerns, as well as improved taste and flavor in organic products (Squires et al. ,2001 quoted in Tsakiridou et al.,2007). Environment refers to all the tangible and intangible characteristics of a consumers world which is moderated by his relationships with other stakeholders and his knowledge about his surroundings (Peter and Olson, 2005 quoted in Tsakiridou et al,2007).Concerns regarding the environment and the impact that traditional food has on the environment during its process of manufacture has been gaining ground as an influence among people. Organic food comes with the promise of environmental friendliness. In particular people with environmental concerns turn out to be more inclined towards having a receptive attitude towards organic food products (Zanoli and Naspetti,2007). Concerns regarding the impact of environment of manufacturing and the method of production , environment and health protection issues, (Greenan et al, 1997 quoted in Krystallis and Chryssohoidis, 2007) seem to influence peoples decision to buy organic food. It has been seen that people high on environmental self-efficacy have a positive attitude towards organic food and its consumption. Hence we hypothesize that: H1: Environmental attitude and consciousness has a positive influence on the consumers attitude towards organic food.

Environmental Attitude and attitude towards organic food products The influence of several intrinsic and extrinsic factors on the consumer preference for organic food has been examined in relevant literature. Some of the factors investigated for their influence have been health, environmental protection, concern for the chemical residues in conventional food products, pesticides, nutritional concerns, as well as improved taste and flavor in organic products (Squires et al. ,2001 quoted in Tsakiridou et al. ,2007). Environment refers to all the tangible and intangible characteristics of a consumers world which is moderated by his relationships with other stakeholders and his knowledge about his surroundings (Peter and Olson, 2005 quoted in Tsakiridou et al. ,2007).Concerns regarding the environment and the impact that traditional food has on the environment during its process of manufacture has been gaining ground as an influence among people. Organic food comes with the promise of environmental friendliness. In particular people with environmental concerns turn out to be more inclined towards having a receptive attitude towards organic food products (Zanoli and Naspetti,2007). Concerns regarding the impact of environment of manufacturing and the method of production , environment and health protection issues, (Greenan et al, 1997 quoted in Krystallis and Chryssohoidis, 2007) seem to influence peoples decision to buy organic food. It has been seen that people high on environmental self-efficacy have a positive attitude towards organic food and its consumption. Hence we hypothesize that: H1: Environmental attitude and consciousness has a positive influence on the consumers attitude towards organic food.

Health concerns & consciousness and attitude towards organic food products A considerable amount of review literature is available for studying the impact of health consciousness and how it impacts the attitude towards organic food products. Most of the consumers have health concerns and pay a lot of attention to health issues . Therefore they seek information about nutritional value of food and also demand food products that are high in nutritional content and free from chemical contents (Tsakiridou et al. , 2007). All consumers consider wellbeing and pleasure as most important values and they associate organic food products with health at different levels of abstraction and consider it nutritious and good for health. ( Zanoli and Naspetti,2007). Organic food is considered to be a common solution to problems related to health safety and concerns (Thompson et al, 1998 quoted in Cicia and Guidice,2002) which instils a positive attitude towards consuming organic products to remain healthy and fit which is ever so important in todays fast competitive world. This fast life pace and heavy media exposure has led to change in lifestyle to a more healthy lifestyle wherein consumers become more and more aware of need to eat healthy food and lead a healthy life ( First and Brozinia, 2009). Consumers consider health as their prime consumption motive and due to the health benefits of organic food products, the attitude towards organic food products is highly positive. Health consciousness is the main determinant in enhancing the positive attitude towards organic foods( Chen, 2009). Concern about health is considered to be egoistic

so it is the main motive behind buying organic food product which promotes positive attitude towards organic food( Magnusson et al, 2002).The growing interest and positive attitude towards ethical production (organic food production) is consumer driven because it addresses the health issues which is one of the most important issue for most consumers.(Czinkota and Ronkainen , 1995). Beliefs about health benefits of organic food products over conventional food products have the strongest influence on the attitude towards buying organic food products. (Thogerson, 2006 as quoted in Beimans, 2011). Hence we hypothesize that:

H2: Health consciousness and concerns positively impact the attitude towards organic food products Attitude towards organic food products and willingness to pay There are evidences supporting the fact that people having positive attitude towards organic food products are willing to pay a higher amount than non organic food products. People who have developed a positive attitude owing to the health benefits, environment friendliness are willing to pay a higher price premium for organic food products (Weir et al, 2008). Consumers are willing to pay a higher price for organic food but the margins are product dependent. (Urena et al, 2008 as quoted in Beimans, 2011). The consumers on average are willing to pay higher amount for all organic foods, However within organic food products there is difference in the margin they are willing to pay depending on the category and type of organic food. The factors that play an important role in defining wiliingness to pay more for organic food products are quality, security and trust which shows the attitude of a consumer towards organic food products (Krystallis and Chryssohoidis, 2005 as quoted in Chakrabarti, 2010) . The most important thing is that if people can see the differences between the organic and non organic food products, they are able to convince themselves for paying more and are willing to do so because of their positive attitude which was built because of the significant differences they themselves observed (Padel and Foster, 2005). Most of the organic food products are certified and these certifications converges towards perceptions of a high quality food which creates a positive attitude towards these products and customers are willing to pay more for these food products. (Chryssohoidis et a, 2007). Laroche et al (2001) indicates that the knowledge and attitude towards organic food products decide thr WTP(willingness to pay) for organic food products. A person without any knowledge or having neutral or negative attitude towards organic food would never even try organic food, leave aside paying premium on it. Hence we hypothesize that H3: People having positive attitude towards organic food are willing to pay more for consuming organic food

Attitude towards organic food and Willingness to buy organic food A number of studies have been done in order to study the consumer behaviour regarding organic foods throughout the world (Zanoli and Naspetti, 2001;Magnusson et al., 2001; Jones and Clarke-Hill, 2001; Wier and Calverley, 2002 ).

Most of the studies mention about how the attitude towards organic food is governed by having consciousness about the environment (Tsakiridou et al. ,2007) and health concerns (First and Brozinia, 2009). The willingness to pay among the people however do not always translate into purchase because of the moderator of income levels (Reicks et al, 1997). However this intention is magnified if there is presence of children in the household (Thompson and Kidwell,1997).Disposable income however seems to affect only the quantity of organic food purchased and not the general purchase intention of organic food.Despite high organic price premiums, higher household incomes do not necessarily indicate a higher likelihood of organic purchases (Krystallis and Chryssohoidis,2005) . Overall, although there is ambiguous evidence, those who are more likely to buy organic are females with children, in younger age groups, of higher education and income levels (Govindasamy and Italia, 1999). Most of the consumer surveys done have painted a very robust picture about organic food consumption. Demand for organic food seems to be on the rise and this trend was corroborated during the 1990s when organic food consumption took off in EU. However, with respect to India the market for organic food remains nascent and as yet pretty much untapped. There seems to be an actual disconnect between the willingness to buy organic food as captured by theses surveys ( Padel and Foster,2005 ; Makatouni et al,2005) and the actual purchase intention. So to verify this in the context of the Indian markets and the Indian consumer mindscape we hypothesize: H4: A positive attitude towards organic products results in a willingness to buy organic products.

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Environmental attitude and Willingness to buy Organic Products.

A number of studies have been done in order to study the health & safety concerns and willingness to buy organic food products. (Siti Nor Bayaah Ahmad et al 2010).Studies by also leads to the conclusion that health & natural content was a factor in buying decision(Chinnici et al., 2002; Pearson, 2002). A study conducted in Northern Ireland published in British food journal in1997 reveals three main reasons for organic food purchase namely health, environment and taste respectively. Public concern about food safety, explains the increase in interest in organic products. The results indicate that there has been a significant change in the consumers main reasons for purchasing organic foods, with concern for the environment overtaking the health aspect as the major reason for purchase, as environmental issues came to prominence. (Anne Davies, Albert J. Titterington and Clive Cochrane 1997) H5: There is a positive co-relation between health & safety concerns and willingness to buy organic food products

Health and safety concerns and Willingness to buy Organic Products

A Recent study shows a positive co-relation between perception of environmental friendliness and willingness to buy organic food products (Siti Nor Bayaah Ahmad et al 2010). Although younger consumers have a higher willingness to buy due to their greater environmental concerns,but due to affordability issues ,middle-aged people have replaced them as the prime consumer. (Fotopoulos and Krystallis, 2002, Baker et al., 2002, Solomon et al.,1999) According to the willingness to buy environmentally friendly products, consumers (EFPs) were classified into dark, light and armchair greens( Wales, Mintel). Apart from teenagers, who have limited purchasing power, Mintel concludes that the consumers most committed to the environment tend to be female, aged between 35 and 44. Analysis of environmental consumerism in the United States, reveals the environmentallyconscious consumer is educated, affluent and mainstream (Ottman) . A study conducted in Northern Ireland published in British food journal in1997 shows that those who purport environmental concern and those who take positive action by purchasing organic food may not be the same(Anne Davies, Albert J. Titterington and Clive Cochrane 1997). H6: There is a positive co-relation between environmental attitude and willingness to buy organic food products.

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Thus, our final research model is:

Business Objective
To provide recommendations for marketers and government on how to develop new strategies for organic food consumers and the future consumption pattern among new consumers.

Need for the study

Organic food product industry is an industry of increasing relevance, Besides there is no such study done on the basis of the Indian consumer market in recent times. The market size of organic food products is increasing and was US $ 72 billion in 2010. No relevant study keeping willingness to buy & willingness to pay together has been done in emerging economies. Effect of gender and occupation on willingness to pay has not been done in the Indian context.

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Methodology
Data collection method : SURVEY BY QUESTIONNAIRE Sampling Technique: CONVENIENCE SAMPLING
Subjects & Procedure We contacted a total of 250 conveniently chosen people for our survey. The sample had been served with a questionnaire and some of them were contacted though e-mail. The respondents were mainly chosen during their visit to local super markets, retail stores, etc. We had translated the questionnaire into Hindi for the benefit of the people who had problems with answering in English. The Hindi questionnaire had been back-translated into English to check for consistency of the two questionnaires. Out of the 250 respondents approached a total of 165 responded favorably to our survey. Response Rate: 66.00% Measures

Following were variables/constructs in our model a) ENVIRONMENTAL ATTITUDE Environment attitude was measured using 7 item 7 point Likert scale with scale varying from strongly disagree to strongly agree. The source of items to be used in questionnaire inorder to test this variable was International Journal of Business & Marketing, Vol 5 No 2, Feb 2010 These were the following items to test Environment attitude The current development path is destroying the environment I prefer consuming recycled products. I dispose my garbage in different containers.

Unless we do something, environmental damage will be irreversible. I practice environmental conservation tasks. I bring my shopping bag when I go shopping. I prefer to buy environmentally friendly labeled products.

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b) HEALTH & SAFETY CONCERNS Health & Safety concerns was measured using 6 item 7 point Likert scale with scale varying from strongly disagree to strongly agree. The source of items to be used in questionnaire inorder to test this variable was Asian Journal of Food & AgroIndustry These were the following items to test health & safety concerns I'm really worried about food safety because of my concerns with animal diseases such as bird flu, influenza H1N1 I think it is important to know well how to eat healthily I think that I take health into account a lot in my life I always avoid eating foods with additives and preservatives. I am concerned about my drinking water. I always pay attention to a balanced diet.

C)

ATTITUDE TOWARDS ORGANIC PRODUCTS Attitude towards organic products was measured using 9 item 7 point Likert scale with scale varying from strongly disagree to strongly agree. The source of items to be used in questionnaire inorder to test this variable was International Journal of Marketing Studies. These were the following items to test health & safety concerns Organic products are healthier (health benefit) Organic products have superior quality (quality) Organic products are a fraud (fraud) Organic products are tastier (tasty) Organic products have more freshness Organic products are worse than the conventional ones (worse) Organic products are more expensive (expensive) Organic products are more attractive (attractive) Organic products have not harmful effects (no harmful effects)

c) WILLINGNESS TO BUY Willingness to Buy was measured using 4 item 7 point Likert scale with scale varying from strongly disagree to strongly agree. The source of items to be used in

questionnaire inorder to test this variable was International Journal of Business & Marketing, Vol 5 No 2 , Feb 2010. These were the following items to test willingness to buy I would still buy OP if it costs more that conventional ones. I would buy OP because it is worth buying. I would buy OP because buying it helps preserve the environment. I would buy OP because it is higher quality than conventional products.

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d) WILLINGNESS TO PAY Willingness to Pay was measured using 1 item Multiple choice question. The source of item to be used in questionnaire inorder to test this variable was International Journal of Business & Marketing, Vol 5 No 2, Feb 2010). This was the item to test willingness to pay How much more would you be willing to pay for organic products? The options for this were Same Price, 10% more, 20% more, 30% more, 40% more, Price doesnt matter

Analysis To find out the relationship between the variables, we used the four step Barron & Kenny Test which uses linear regression to determine the mediation effect in the influence of the dependent variable by the independent variable. We have used Environmental Attitude and Health and safety concerns as independent variable and Attitude towards Organic Products as the mediator in their relationship with Willingness to Pay and Willingness to Buy Organic Products which act as dependent variables. The data obtained from the survey was analysed using Chronbach alpha and regression correlation analysis to examine possible results that helps in understanding of respondents. All statistical analyses were using SPSS package version 17.0

DEMOGRAPHIC ANALYSIS
165 respondents participated in the survey. Majority were males (68%) and their ages ranged between 16 to 35 years and above with majority in the range of 16-25 (56%). Majority of the respondents were students (67%) but majority of them non buyers. The table demonstrates the summary of sample demographics

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Table: Demographic profile of Respondents (n=165)

ITEMS Gender Male Female Age 16-25 years 26-35 years 35 and above Category Buyer Non buyer Income levels <20000 20000-35000 35000-50000 >50000 Educational Qualifications Senior Secondary Level Under Graduate Post graduate Profession 16 51 98 10 31 59 12 26 44 83 7 16 27 50 111 54 67 33 92 47 26 56 28 16 113 52 68 32 NUMBER PERCENTAGE

Housewife Professionals Students

12 43 110

7 26 67

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RELIABITY ANALALYSIS, MEAN, SD

VARIABLE No of CRONBACH items ALPHA 7 6 0.829 0.811 0.866* MEAN SD Environmental Attitude Health & Safety Concerns Attitude products towards 31.3212 31.9152 34.1576 4.95835 5.29658 5.60265

organic 7*

Willingness to Buy Willingness to Pay

4 1**

0.897 -

19.8667 2.2485

3.76041 0.89991

* Originally 9 item scale, 2 items deleted as individual Cronbach alpha < 0 (but positive) ** 1 item scale only

REGRESSION TABLE
DEPENDENT VARIABLE INDEPENDENT VARIABLE Significance R2 CHANGE (STEP 2 TO 3) Attitude towards Environmental Attitude organic products Health & Safety Concerns 0.404 0.000 0.16 3 0.22 0 0.29 7 0.20 8 0.36 4 0.174*

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0.469

0.000

Willingness to Buy

Attitude products

towards

organic 0.545

0.000

Environmental Attitude

0.456

0.000

Environmental Attitude + 0.282 Attitude towards organic products 0.431 Willingness to Buy Attitude products towards organic 0.545

0.000

0.000 0.000 0.29 7 0.38 8 0.47 0 0.152**

Health and Safety Concerns

0.623

0.000

Health and Safety Concerns 0.471 + Attitude towards organic products 0.324 Willingness to Pay Attitude products towards organic 0.247

0.000

0.000 0.001 0.06 1

* Partial mediating effect as significance < 0.05, with value=0.456-0.282=0.174 ** Partial mediating effect as significance < 0.05, with value=0.623-0.471=0.152

We then used Sobels test find out the significance of mediation analysis ( mediator was Attitude towards Organic Products). The result is summarized in a below. P (two-tailed) = 0.000051 for Health & Safety Concerns and Willingness to Buy P (two-tailed) = 0.000028 for Environmental Attitude and Willingness to Buy

Findings and Implications

Attitude towards Organic Products has a partial mediating effect between Willingness to Buy organic Products and Environmental Attitude. Attitude towards Organic Products has a partial mediating effect between Willingness to Buy organic Products and Health & Safety Concerns. Buyers are willing to pay a price premium of 15.4% for organic products where as non-buyers are willing to pay a premium of 11.3%. Gender has no effect on willingness to pay more for organic products with females willing to pay 12.7% premium and males willing to pay 12.4% premium. Students are more willing to pay a premium (17.3%) as compared to professionals (10.4%).

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Conclusion
Consumers decision to buy organic or not involves a set of factors that cannot easily be interpreted. The organic food is considered at the nascent stage in India where not many people are aware about. The need to conduct the study is to have better understanding among Urban Indian Consumer in the age bracket of 20-35.In particular, Environmental Attitude and health and safety concerns are significant drivers of organic food consumption. A policy measure should target the consumers having these two factors on their mind. Knowing perception of organic food product by buyers will help the marketers of organic food to establish a proper communication message. The message would be appealing for consumers who exhibit their interest towards organic food products. Consumer preference for organic food is based on a general perception that organic products have more desirable characteristics than conventionally-ones. Consumer willingness-to-pay for organic versus conventionally foods reflect that individuals make trade-offs between attributes associated with consuming alternative products. Yields from organic farming are generally lower than conventional production, a willingness to pay a price premium for an organic product is important for financial sustainability of the sector. The proportion of respondents willing to pay a price premium decreases as the premium increases (10% to 40%). The report does not provide a clear pattern about the levels of price premiums various groups of consumers are willing to pay, nor about which groups of products attracts higher mark-ups.

Limitations
Research may have ignored other possible factors like consumer scepticism, psychographic variables. The limited size of the sample ( in order to cater for time constraints) may have reduced proper representation of the consumer attitude. Due to geographic and sample size limitation of the present study it is suggested to include diversified geographic groups and in large scale in the future. Further comparisons of different groups of consumers from different culture, nationalities, and ethnicities are deemed to be preferable.

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Yet, despite these limitations, the study was able to establish that the perceived environmental attitude & health and safety concerns has an impact on the consumers willingness to pay more and willingness to buy Organic Food Products.

Directions for Future Study Study of income as a moderating variable in finding out the willingness to pay more by organic food consumers The study can be done by taking the effects of consumer scepticism and other psychographic variables into consideration

References
Siti Nor Bayaah Ahmad and Nurita Juhdi(February 2010), Faculty of Business Administration, Consumers perception and purchase intentions towards organic food products: exploring the attitude among Malaysian consumers. Derk Jan Stobbelaar, Gerda Casimir, Josine Borghuis, Inge Marks, Laurens Meijer and Simone Zebeda(2006), Adolescents attitudes towards organic food: a survey of 15- to 16-year old school children, International Journal of Consumer Studies ISSN 1470-6431 Sylwia Zakowska-Biemans(2011), Polish consumer food choices and beliefs about organic food, British Food Journal Hee Yeon Kim and Jae-Eun Chung(2011), Consumer purchase intention for organic personal care products, Journal of Consumer Marketing Somnath Chakrabarti (2010), British Food Journal Vol. 112 No.8 Dana K1, K Jesy Thomas2, E K Thomas3 and K J Joseph.(2002), Willingness to Pay Premium for Organic Products: A Case Study in Kerala Rachael L. Dettmann & Carolyn Dimitri, Year 2006, Whos Buying Organic Vegetables? Mohd Rizaimy Shaharudin(2007), Purchase Intention of Organic Food in Kedah, Malaysia; A Religious Overview Mohd Rizaimy Shaharudin Pirjo Honkanen, Bas Verplanken and Svein Ottar Olsen(2006), Ethical values and motives driving organic food choice, Journal of Consumer Behaviour Athanasios Krystallis and George Chryssohoidis(2003), Consumers willingness to pay for organic food: Factors that affect and variation per organic product type , Emerald Publishing House Limited Efthimia Tsakiridou,Christina Boutsouki and Yorgos Zotos, Kostantinos Mattas(2007), Journal of consumer behaviour, British Food Journal Lau Kwan Yi (2004), Consumer behaviour towards Organic Food Consumption in Hong Kong: An Empirical Study, British Food Journal Jan Urban, Iva Zvinov, Milan asn(2004), Determinants of organic food consumption: Comparative case study on Czech consumers Robin Roberts, Griffith Business School, Griffith University and Sharyn Rundle-Thiele, University of Southern Queensland (2004), Organic Food: Observations of Chinese purchasing behaviours

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Katrin Millock (CIRED), Lars Grn Hansen, Mette Wier, Laura Mrch Andersen (AKF, Denmark) (2004), Willingness to Pay for Organic Foods:A Comparison between Survey Data and Panel Data from Denmark Opal Suwunnamek, takashi toyoda 2008, Consumer Attitude towards Organic Labeling Schemes in Japan Katie Gifford and John C. Bernard(2006), Influencing consumer purchase likelihood of organic food A.O. Dipeolu, B.B. Philip, I.O.O. Aiyelaagbe, S.O. Akinbode and T.A. Adedokun(2009), Consumer awareness and willingness to pay for organic vegetables in S.W. Nigeria, Research Article, Food and Agro-Industry, ISSN 1906-3040 Jue Chen, Dr. Antonio Lobo(2004), An Exploratory Study Investigating the Dimensions Influencing Consumers Purchase Intentions relating to Organic Food in Urban China Gopal Datt Bhatta, W. Doppler and Krishna Bahadur KC (2009), Consumers willingness and preference towards organic vegetables: A conjoint approach, Conference on International Research on Food Security, Natural Resource Management and Rural Development Sedef Akgngr, Blent Miran, Canan Abay(2007), Consumer Willingness to Pay for Organic Products in Urban Turkey, International Marketing and International Trade of Quality Food Products Pirjo Honkanen, Bas Verplanken and Svein Ottar Olsen (2006), Ethical values and motives driving organic food choice, Journal of Consumer Behaviour J. Consumer Behav. 5: 420430

21

Appendix Contents 1. 2. 3. 4. 5. 6. 7. Hindi questionnaire English Questionnaire Cronbachs Alpha Co-efficients Means & Standard Deviation Regression Analysis Mediation Effect SOBEL Calculator

22

HINDI QUESTIONNAIRE

6 : (7 ) ( 1-7 1 " " 7 " "

, . . .

16 - 25 26-35

36-45 46-55 56-65 66

23

/ /

0 - 5,000 5,000-9,999 10,000-14,999 15,000-19,999 20,000-24,999 25,000-29,999

30,000-34,999 35,000-39,999 40,000-44,999 45,000-49,999 50,000 1 1 1 , 1 1 , 1 1 2 3 4 5 6 7 2 3 4 5 6 7 2 3 4 5 6 7 2 3 4 5 6 7 2 3 4 5 6 7 2 3 4 5 6 7 2 3 4 5 6 7

24

 , H1N1 , 1 2 3 4 5 6 7

25
1 1 1 1 1 1 1 2 3 4 5 6 7 2 3 4 5 6 7 2 3 4 5 6 7 2 3 4 5 6 7 2 3 4 5 6 7 2 3 4 5 6 7 2 3 4 5 6 7

 1 1 1 1 1 1 1 2 3 4 5 6 7 2 3 4 5 6 7 2 3 4 5 6 7 2 3 4 5 6 7 2 3 4 5 6 7 2 3 4 5 6 7 2 3 4 5 6 7

26

10%

20% 30% 40%

27
2 3 4 5 6 7 "

1 1 2 3 4 5 6 7

1 2 3 4 5 6 7 "

1 2 3 4 5 6 7 "

English Questionnaire
Category Category 1: I have never bought organic foods and I am not thinking about buying organic foods now Category 2: I have never bought organic foods and I am thinking about buying organic foods sometimes in the near future Category 3: I have never bought organic foods and I am definitely planning to buy organic foods in the future Category 4: I used to buy organic foods, but I no longer buy them, I might start buying them again Category 5: I buy organic foods, but not regularly Category 6: I buy organic foods on most trips to Marketplace Social Demographic Questions Gender Male Female Age 16 - 25 26 - 35 36 - 45 46 - 55 56 - 65 66 or above Education Level Primary or below Junior secondary school Senior secondary school Undergraduate Postgraduate Occupation Executive / Manager Professionals Clerk Service worker / Salesperson Labour Worker Technician Housewife Student Unemployed Retired Self-employed Others Total Family

28

Monthly Income 5,000 5,000-9,999 10,000-14,999 15,000-19,999 20,000-24,999 25,000-29,999 30,000-34,999 35,000-39,999 40,000-44,999 45,000-49,999 50,000 or above

29

Environment Attitude (7 Item Scale) Answer your degree of disagreement or agreement (on a 1 to 7 scale where 1 is strongly Disagree and 7 is strongly agree) with the following sentences: 1) The current development path is destroying the environment (development destruction) 2) I prefer consuming recycled products (recycled products consumption) 3) I dispose my garbage in different containers (recycling practice) 4) Unless we do something, environmental damage will be irreversible (environmental damage) 5) I practice environmental conservation tasks (environmental conservation) 6) I bring my shopping bag when I go shopping. 7) I prefer to buy environmental friendly labelled products. Health and Safety (6 Item Scale) (1-7 Likter Scale) 1. I'm really worried about food safety because of my concerns with animal Diseases such as bird flu, influenza H1N1 2. I think it is important to know well how to eat healthily 3. I think that I take health into account a lot in my life 4. I always avoid eating foods with additives and preservatives. 5. I am concerned about my drinking water 6. I always pay attention to a balanced diet. Attitude (9 Item Scale) Answer the degree of disagreement or agreement (1 to 7 scale where 1 is strongly disagree and 7 is strongly agree) with the following sentences: 1. 2. 3. 4. Organic products are healthier (health benefit) Organic products have superior quality (quality) Organic products are a fraud (fraud) Organic products are tastier (tasty)

5. 6. 7. 8. 9.

Organic products have more freshness Organic products are worse than the conventional ones (worse) Organic products are more expensive (expensive) Organic products are more attractive (attractive) Organic products have not harmful effects (no harmful effects)

Willingness to Pay (1 Item Scale) How much would you be willing to pay for organic products? Same price 10% more 20% more 30% more 40 % more Price doesn't matter:

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Willingness to Buy (4 Items Scale) (1-7 Likter scale) 1. I would still buy OP if it costs more that conventional ones 2. I would buy OP because it is worth buying 3. I would buy OP because buying it helps preserve the environment 4. I would buy OP because it is higher quality than conventional products

Mathematical Analysis

1. CRONBACH ALPHA FOR ENVIRONMENT AWARENESS

Reliability Statistics Cronbach's Alpha .829 N of Items 7

31

Item-Total Statistics Scale Mean if Item Scale Variance if Deleted The current development path is destroying the environment I prefer consuming recycled products I dispose my garbage in different containers Unless we do something, environmental damage will be irreversible I practice environmental conservation tasks I bring my shopping bag when I go shopping I prefer to buy environmental friendly labelled products 31.3212 24.585 .709 .781 31.4121 28.073 .480 .823 31.1394 30.279 .405 .831 30.4424 27.041 .643 .794 31.1818 29.137 .597 .804 31.3212 28.280 .623 .799 30.8909 Item Deleted 27.598 Corrected ItemTotal Correlation .598 Cronbach's Alpha if Item Deleted .802

2. CRONBACH ALPHA FOR HEALTH AND SAFETY CONCERNS

Reliability Statistics Cronbach's Alpha .811 N of Items 6

32

Item-Total Statistics Scale Mean if Item Scale Variance if Deleted I'm really worried about food safety because of my concerns with animal diseases such as bird flue, influenza, H1N1 I think it is important to know well how to eat healthily I think that I take health into account a lot in my life I always avoid eating foods with additives and preservatives I am concerned about my drinking water I always pay attention to a balanced diet 26.8364 17.613 .755 .736 26.4545 21.067 .447 .810 27.0485 19.681 .634 .768 26.5394 23.018 .419 .811 26.1455 20.247 .630 .770 26.5515 Item Deleted 19.676 Corrected ItemTotal Correlation .563 Cronbach's Alpha if Item Deleted .784

CRONBACH ALPHA FOR ATTITUDE TOWARDS ORGANIC FOOD PRODUCTS

Reliability Statistics Cronbach's Alpha .846 N of Items 9

33

Item-Total Statistics Scale Mean if Item Scale Variance if Deleted Organic products are healthier Organic products have superior quality Organic products are a fraud Organic products are tastier Organic products have more freshness Organic products are worse than the conventional ones Organic products are more expensive Organic products are more attractive Organic products have not harmful effects 36.8303 37.300 .466 .839 36.8121 33.434 .720 .811 36.4121 39.158 .385 .846 37.9576 37.968 .349 .854 37.7576 37.0727 36.6364 37.270 33.068 36.513 .394 .751 .666 .849 .808 .822 36.4364 36.5455 Item Deleted 36.040 33.506 Corrected ItemTotal Correlation .614 .783 Cronbach's Alpha if Item Deleted .825 .806

CRONBACH ALPHA FOR ENVIRONMENT AWARENESS (REMOVING

ATOP3 & ATOP6 because cronbach coefficient for these 2 scales was<0.4, so they have been removed)

34
Reliability Statistics Cronbach's Alpha .866 N of Items 7

Item-Total Statistics Scale Mean if Item Scale Variance if Deleted Organic products are healthier Organic products have superior quality Organic products are tastier Organic products have more freshness Organic products are more expensive Organic products are more attractive Organic products have not harmful effects 29.4303 24.844 .490 .868 29.4121 21.488 .771 .827 29.0121 26.268 .424 .873 29.6727 29.2364 21.758 24.499 .742 .666 .832 .845 29.0364 29.1455 Item Deleted 24.084 22.088 Corrected ItemTotal Correlation .614 .779 Cronbach's Alpha if Item Deleted .851 .827

CRONBACH ALPHA FOR WILLINGNESS TO BUY

Reliability Statistics Cronbach's Alpha .897 N of Items 4

35

Item-Total Statistics Scale Mean if Item Scale Variance if Deleted I would still buy OP if it costs more that conventional ones I would buy OP because it is worth buying I would buy OP because buying it helps preserve the environment I would buy OP because it is higher quality than conventional products 14.7030 7.869 .826 .847 14.7576 8.502 .691 .897 14.9394 8.130 .787 .862 15.2000 Item Deleted 8.405 Corrected ItemTotal Correlation .787 Cronbach's Alpha if Item Deleted .863

MEANS AND STANDARD DEVIATIONS

a) For Environment Awareness

36
N E(Environment Awareness) Valid N (listwise) 165 165 Mean 31.3212 Std. Deviation 4.95835

b) Health and Safety Concerns

N Health And Safety Concerns (HS) Valid N (listwise) 165 165

Mean 31.9152

Std. Deviation 5.29658

c) Attitude towards organic food products

N A( Attitude towards Organic products) Valid N (listwise) 165 165

Mean 34.1576

Std. Deviation 5.60265

d) Willingness to Buy

N W (Willingness to buy) Valid N (listwise) 165 165

Mean 19.8667

Std. Deviation 3.76041

e) Willingness to Pay

N How much would you be willing to pay for organic products? (WTP) Valid N (listwise) 165 165

Mean 2.2485

Std. Deviation .89991

37

REGRESSION ANALYSIS

a) Between Attitude towards Organic products(ATOP) & Environment awareness(EA)

Std. Error of the Model 1 R .404a R Square .163 Adjusted R Square .158 Estimate 5.14128

a. Predictors: (Constant), E

Standardized Unstandardized Coefficients Model 1 (Constant) E a. Dependent Variable: A B 19.867 .456 Std. Error 2.567 .081 .404 Coefficients Beta t 7.738 5.635 Sig. .000 .000

b) Between Attitude towards Organic products(ATOP) & Health and Safety concerns(HS)

Std. Error of the Model 1 R .469a R Square .220 Adjusted R Square .215 Estimate 4.96295

a. Predictors: (Constant), HS

Standardized Unstandardized Coefficients Model 1 (Constant) HS a. Dependent Variable: A B 18.319 .496 Std. Error 2.367 .073 .469 Coefficients Beta t 7.740 6.782 Sig. .000 .000

38

c) Between Attitude towards Organic products(ATOP) & Willingness to buy(WTB)

Std. Error of the Model 1 R .545a R Square .297 Adjusted R Square .293 Estimate 3.16295

a. Predictors: (Constant), A

Standardized Unstandardized Coefficients Model 1 (Constant) A a. Dependent Variable: W B 7.376 .366 Std. Error 1.526 .044 .545 Coefficients Beta t 4.834 8.295 Sig. .000 .000

d) Between Attitude towards Organic products(ATOP) & Willingness to Pay(WTP)

Std. Error of the Model 1 R .247a R Square .061 Adjusted R Square .055 Estimate .87461

a. Predictors: (Constant), A

Standardized Unstandardized Coefficients Model 1 (Constant) A B .891 .040 Std. Error .422 .012 .247 Coefficients Beta t 2.113 3.259 Sig. .036 .001

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a. Dependent Variable: How much would you be willing to pay for organic products?

MEDIATION EFFECT
a) Mediation Effect Of Attitude towards organic products (ATOP) between Environmental Awareness (EA) & Willingness to buy (WTB)

i)

Regression between EA & W

Change Statistics Std. Error of Model 1 R .456a R Square .208 Adjusted R Square the Estimate .203 3.35650 R Square Change .208 F Change 42.845 Sig. F Change .000

a. Predictors: (Constant), E

Standardized Unstandardized Coefficients Model 1 (Constant) E a. Dependent Variable: W B 9.030 .346 Std. Error 1.676 .053 .456 Coefficients Beta t 5.387 6.546 Sig. .000 .000

ii)

Regression between EA & ATOP

Change Statistics Adjusted R Model 1 R .404

a

Std. Error of the Estimate

R Square Change .163 F Change 31.755

Sig F change .000

R Square .163

Square .158

40

5.14128

a. Predictors: (Constant), E

Standardized Unstandardized Coefficients Model 1 (Constant) E . Dependent Variable: A B 19.867 .456 Std. Error 2.567 .081 .404 Coefficients Beta t 7.738 5.635 Sig. .000 .000

iii)

Regression between E & W in presence of mediating variable A

Change Statistics Adjusted R Model 1 R .603a R Square .364 Square .356 Std. Error of the Estimate 3.01853 R Square Change .364 F Change 46.260 df1 2 df2 162 Sig. F

Change

.00

a. Predictors: (Constant), A, E

Standardized Unstandardized Coefficients Model 1 (Constant) E A a. Dependent Variable: W B 3.284 .214 .289 Std. Error 1.763 .052 .046 .282 .431 Coefficients Beta T 1.863 4.119 6.288 Sig. .064 .000 .000

Partial Mediation effect because significance < 0.05, mediation effect is 0.456- 0.282= 0.174

b) Mediation Effect Of Attitude towards organic products (ATOP) between Health and safety concerns(HS) & Willingness to buy(WTB)

i)

Regression between HS & WTB

41
Change Statistics R Square Change .388 F Change 103.254 Sig. F Change .000 Estimate 2.95127

Std. Error of the Model 1 R .623a R Square .388 Adjusted R Square .384

a. Predictors: (Constant), HS

Standardized Unstandardized Coefficients Model 1 (Constant) HS a. Dependent Variable: W B 5.756 .442 Std. Error 1.408 .044 .623 Coefficients Beta t 4.090 10.161 Sig. .000 .000

ii)

Regression between HS & A

Change Statistics Std. Error of the Model 1 R .469a R Square .220 Adjusted R Square .215 Estimate 4.96295 R Square Change .220 F Change 46.002 Sig. F Change .000

a. Predictors: (Constant), HS

Standardized Unstandardized Coefficients Model 1 (Constant) HS a. Dependent Variable: A B 18.319 .496 Std. Error 2.367 .073 .469 Coefficients Beta t 7.740 6.782 Sig. .000 .000

iii)

Regression between HS & W in presence of mediating variable A

Change Statistics Adjusted R Model 1 R .685a R Square .470 Square .463 Std. Error of the Estimate 2.75535 R Square Change .470 F Change 71.732 Sig. F Change

42

.000

a. Predictors: (Constant), A, HS

Standardized Unstandardized Coefficients Model 1 (Constant) HS A a. Dependent Variable: W B 1.773 .334 .217 Std. Error 1.537 .046 .043 .471 .324 Coefficients Beta t 1.154 7.266 5.000 Sig. .250 .000 .000

Partial mediation effect 0.623-0.471=0.152

SOBEL CALCULATOR RESULTS FOR MEDIATION EFFECT OF ATTITUDE TOWARDS ORGANIC PRODUCTS (ATOP) BETWEEN HEALTH AND SAFETY CONCERNS (HS) & WILLINGNESS TO BUY (WTB)

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SOBEL CALCULATOR RESULTS FOR MEDIATION EFFECT OF ATTITUDE TOWARDS ORGANIC PRODUCTS (ATOP) BETWEEN HEALTH AND SAFETY CONCERNS (HS) & WILLINGNESS TO BUY (WTB)

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