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FACTORS AFFECTING THE REGULARITY OF PURCHASE OF ORGANIC TEA – AN APPLICATION DIS

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FACTORS AFFECTING THE REGULARITY OF PURCHASE OF ORGANIC TEA – AN APPLICATION DIS Powered By Docstoc
					International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
  INTERNATIONAL JOURNAL OF MANAGEMENT (IJM)
Volume 4, Issue 5, September - October (2013)

ISSN 0976-6502 (Print)
ISSN 0976-6510 (Online)                                                              IJM
Volume 4, Issue 5, September - October (2013), pp. 14-19
© IAEME: www.iaeme.com/ijm.asp                                               ©IAEME
Journal Impact Factor (2013): 6.9071 (Calculated by GISI)
www.jifactor.com




 FACTORS AFFECTING THE REGULARITY OF PURCHASE OF ORGANIC
        TEA – AN APPLICATION DISCRIMINANT ANALYSIS

                                 Dr.V. SAKTHIRAMA, Ph.D.,
              Research Associate, Department of Agricultural and Rural Management,
                               Tamil Nadu Agricultural University,
                                      Coimbatore -641003.
                                  Dr. R.VENKATRAM, Ph.D.,
                   Professor, Department of Agricultural and Rural Management,
                               Tamil Nadu Agricultural University,
                                      Coimbatore -641003.
                                  Dr.S.D.SIVAKUMAR, Ph.D.,
                   Professor, Department of Agricultural and Rural Management,
                               Tamil Nadu Agricultural University,
                                      Coimbatore -641003.


ABSTRACT

         This study examined the regularity of purchase of organic tea. A model was developed using
a number of factors which evaluate with discriminant analysis towards regular purchase of organic tea.
Sample data are collected at random from 300 respondents of five selected organic stores based on sales
volume in Coimbatore city. Result of this study show that distance, family income, number of items
purchased, purchase frequency, purchase intention were identified as good predictor for regular purchase
of organic tea. The other variables like loyalty, innovativeness to buy organic tea, health benefits and
attitude were the weaker predictors.

Key words: organic tea, Regularity of purchase, discriminant analysis, predictors.

INTRODUCTION

        Consumers are the most important segment of the food system. Their role as food decision-
makers determines the success or failure of food products in today’s consumer-driven food
marketplace (Senauer et al., 1991; Sloan, 1994). The consumers are centre approach is followed in
every successful market. Nowadays the food markets are follow more consumerism strategies to
attracts, make them purchase and retain the consumers.

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International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
Volume 4, Issue 5, September - October (2013)

        To survive the competition, an organic food product has to be bought repeatedly, and
therefore it has to be developed considering consumers’ wants and needs. Therefore, in consumer
research, study about regularity is crucial in the development of organic foods. Hence, in marketers’
perspective to know the factor influence the regular purchase of consumer is vital to formulate
strategies. This study attempts to examine factors that may influence the regularity of purchase of
organic tea.

REVIEW

        Thompson and Kidwell (1998) estimated a discrete choice model to assess the impact of
factors like prices and demographic characteristics on the choice of organic produce concerning fresh
vegetables in the U.S. Vanit and Schimdt (2002) analyzed the factors that most influenced
consumers’ decision to regular purchase pesticide safe vegetables in Thailand using logistic
regression. The results showed that most important influencing factors were income, awareness of
pesticides, adverse health impact, vegetarian diet, education and age.
        In addition the factors such as health consciousness, perceived value, food safety concern and
religious factors and its impact towards the customer purchase intention (Shaharudin et al. 2010;
Chakrabarti, 2010).
        Similarly Lockie et al. (2004) studied factors of consumer behavior towards organic foods
with path analysis of attitudinal, motivational, demographic and behavioral factors influencing food
choice among Australian consumers who had consumed at least some organic food in the preceding
12 months. Income, age, political and ecological values and willingness to pay a premium for safe
and environmentally friendly foods all had extremely minor effects.
        Results of the study Varun (2008) stated that only education of the respondents turned out to
be statistically significant with respect to demand of coffee in urban areas. It could be observed that
family size and income had a positive influence on coffee demanded, while the price per unit of
coffee negatively influenced the demand for coffee. While considering certification and branding, an
organic label and certification made the environmentally friendly attribute salient, this had a positive
impact on perceived quality (Larceneux et al. 2012).
        Thus, there are many factors affecting the regular purchase behavior of consumers and
consumption of organic tea. In this study, the factors driving the regular purchase of organic tea was
considered as one of the main aspects and evaluate with discriminant analysis. It would helpful to
maintain the regular as loyal consumers.

METHODOLOGY

        Sample data are collected from five selected organic stores based on sales volume in Coimbatore
city. The 300 respondents were contacted at random and 60 valid responses were used for each
selected store. Well structured the Interview schedule was used for survey.

Regularity of Purchase of Organic Tea
        In this present study, there were two types of consumers namely consumers who purchased
organic tea regularly or those who purchased only occasionally. So it is imperative to identify the
factors that could influence the purchase behavior of both the regular and occasional buyers. Hence
in the present study, a discriminant function was fitted to identify the factors that could discriminant
the regular buyers of organic tea from the occasional buyers.
        Discriminant function analysis is a parametric technique to determine which weightings of
quantitative variables or predictor best discriminate between the two or more than two groups of


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International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
Volume 4, Issue 5, September - October (2013)

cases. The analysis produces a discriminant function which is a linear combination of the weightings
and scores on these variables.
        Hence for this study, the regularity of purchase by sample respondents was taken as the
dependent variable. A value of 1 was assigned if a consumer was a regular buyer and 0 if
occasional. The independent variables considered were literacy, occupation, distance from residence,
family income, number of items purchased, purchase frequency, purchase intention, loyalty towards
organic tea, innovativeness to buy organic tea, health benefits and attitude.

Discriminant linear function of this analysis is as follows
Di = d0 + d1LITERA+ d2OCCUP+ d3DIST+ d4INCOME+ d5OORGANIC +d6PURFEQ + d7PURINT
     +d8LOYALTY+d9INNOVAT +d10HEALBENE+ d11ATTITUDE
Where,
Di             =      Score on discriminant function (1- if regular buyer or 0 otherwise)
do             =      Constant
di             =      Discriminant coefficient for the independent variable i.
LITERA         =      Literacy of the respondent (primary-2, middle school-3, high school-4, higher
                      secondary intermediate / Diploma-5, graduates/post graduate-6 and
                      professional-7).
OCCUP          =      Occupation of the respondent (Unemployed-1, Government-2, private-3,
                      business-4 and others-5)
DIST           =      Distance from the residence to retail store (meter)
INCOME         =      Family monthly income (Rupees)
OORGANIC =            Number of organic items purchased including organic tea
PURFEQ         =      Purchase frequency of the respondent
PURINT         =      Purchase intention to buy organic tea
LOYALTY =             Loyalty to purchase of organic
INNOVAT =             Innovativeness to buy organic tea
HEALBENE =            Health benefits of organic tea
ATTITUDE =            Attitude towards organic tea

       The variables PURFEQ, PURINT, LOYALTY, HEALBENE and ATTITUDE were measured
through various relevant statements (items) and also using Likert’s scale (Strongly agree-5, Agree-4,
Neutral-3, Disagree-2, Strongly Disagree-1).

RESULTS AND DICUSSION

Purchase Regularity of Organic Tea
       The consumer respondents were grouped into two categories as regular and occasional buyers
of organic tea. The results are furnished in Table 2.

                        Table 2. Purchase Regularity of Organic Tea
                                                           No. of                Percentage to
  S. No            Respondents classification
                                                        respondents                  total
     1     Regular buyer                                         214                  71.33

     2     Occasional buyer                                       86                  28.67

                      Total sample                               300                 100.00


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International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
Volume 4, Issue 5, September - October (2013)

        From the Table 2, it could be explained that, 71.33 per cent of the consumer purchased
organic tea regularly. The major reasons for buying organic tea occasionally were that sometimes the
preferred brands and flavor were not available and specific preference among the family members
induce them to purchase as and when required.

Factors Influencing Regularity of Purchase of Organic Tea
        In this study, a discriminant analysis was performed to identify the factors influencing regularity
of purchase of organic tea. The regular purchase by sample respondents was taken as the dependent
variable (discriminant variable). A value of 1 was assigned if a consumer was a regular buyer and 0 if
occasional. The independent variables considered were literacy, occupation, distance from residence,
family income, number of items purchased, purchase frequency, purchase intention, loyalty towards
organic tea, innovativeness to buy organic tea, health benefits and attitude. The results were presented in
the Table 3.

                 Table 3. Factors influencing regularity of purchase of organic tea
                                                                        Structure Matrix/
                                                                                    Discrim
       S. No    Independent variable      F value     Significance
                                                                                      inant
                                                                                    loadings
         1     Literacy                       2.228           NS                    0.041
         2     Occupation                     1.204           NS                    0.571
         3     Distance (km)                  3.894            **                   0.349
         4     Family income                 58.743           ***                   0.697
         5     No items purchased            50.160           ***                   0.803
         6     Purchase frequency            286.812          ***                   0.581
         7     Purchase intention          1140.460           ***                   0.416
               Loyalty towards
         8                   organic         37.009           ***                   0.146
                             tea
               Innovativeness to buy
         9                   organic         50.338           ***                   0.126
                             tea
        10     Health benefits               765.170          ***                  -0.031
        11     Attitude                    1516.138           ***                  -0.023
      Eigen values = 7.884
      Canonical Correlation = 0.942
      Wilks' Lambda = 0.113
      Chi square ( χ 2) = 638.9 [11df] ***
       98.7% of original grouped cases correctly classified
Note: ***Significant at 1 per cent level, **Significant at 5 per cent level, *Significant at 10 per cent
level,
NS – Not Significant

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International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
Volume 4, Issue 5, September - October (2013)

         The results shown in Table3 suggest that the discriminant function was significant at one per
cent level with chi square ( χ 2) = 638.9 at 11 degrees of freedom. The canonical correlation is the
multiple correlations between the predictors and the discriminant function. The canonical correlation
value for this function was 0.942 and suggests that the model explains 89.7 per cent of the variations
in the grouping of variables viz. whether the respondents were regular buyer or occasional buyer of
organic tea. Wilks’ lambda indicates the significance of the discriminant function and provides the
proportion of total variability not explained. So in this study only 11.3 per cent variability
unexplained. The cross validates classification showed that overall 98.7 per cent were correctly
classified.
         The structure matrix shows the correlations of each variable with each discriminate function.
These Pearson coefficients are the structure coefficients or discriminant loadings. They serve like factor
loadings in factor analysis. Generally, discriminant loading 0.30 are seen as the cut-off between
important and less important variables. In this study family income, number of organic items purchased,
purchase frequency, purchase intention, loyalty towards organic tea, innovativeness to buy organic tea,
health benefits and attitude were found to be significant at one per cent level. The distance from residence
factor was significant at five per cent level. Also distance, family income, number of items purchased,
purchase frequency, purchase intention were having discriminant loadings as 0.349, 0.697, 0.803, 0.581
and 0.416 respectively. Thus these variables were identified as good predictor for regular purchase of
organic tea. The other variables like loyalty, innovativeness to buy organic tea, health benefits and
attitude were the weaker predictors.

CONCLUSION AND IMPLICATION

         Discriminant analysis of this study show that distance, family income, number of items
purchased, purchase frequency, purchase intention were identified as good predictor for regular purchase
of organic tea. The other variables like loyalty, innovativeness to buy organic tea, health benefits and
attitude were the weaker predictors. The factors such as distance, number of items purchased, purchase
frequency, purchase intention were highly related to frequent walk in to the organic store, which increase
the chance of organic tea purchase. Similarly family income was influence the purchase, in the mean that
higher income people preferred the organic tea, while it was fetch higher price than conventional tea. The
attributes loyalty, innovativeness to buy organic tea, health benefits and attitude were poor determinant,
which mean that influence both regular and occasional organic tea buyers. Hence the organic tea
marketer should consider these good predictors as well poor predictors to formulate the marketing
strategies.

REFERENCES

   1. Chakrabarti, S. (2010). Factors influencing organic food purchase in India – expert survey
      insights. British Food Journal, 112(8), 902–915.
   2. Larceneux, F., Benoit-Moreau, F., & Renaudin, V. (2012). Why Might Organic Labels Fail
      to Influence Consumer Choices? Marginal Labelling and Brand Equity Effects, Journal of
      Consumption Policy, 35, 85–104.
   3. Lockie, S., Lyons, K., Lawrence, G. and Grice, J. (2004). Choosing organics: a path analysis
      of factors underlying the selection of organic food among Australian consumers. Appetite.
      43(2), 135-146. Retrieved from www.ncbi.nlm.nih.gov.
   4. Senauer, B., Asp, E., Kinsey, J., 1991. Food Trends and the Changing Consumer. Eagan
      Press, St. Paul, MN.



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International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
Volume 4, Issue 5, September - October (2013)

   5. Shaharudin, M. R., Pani, J. J., Mansor, S. W., & Elias, S. J. (2010). Factors Affecting
       Purchase Intention of Organic Food in Malaysia’s Kedah State. Cross-Cultural
       Communication, 6(2), 105-116.
   6. Sloan, A.E., 1994. Top ten trends to watch and work on. Food Technology 48 (6), 89–100.
   7. Thompson, G. D., & Kidwell, J. (1998). Explaining the Choice of Organic Produce: Cosmetic
       Defects, Prices and Consumer Preferences. American Journal of Agricultural Economics. 80,
       277-287.
   8. Vanit-Anunchai, C. & Schmidt, E. (2002). Consumer Purchase Decisions for Pesticide-Safe
       Vegetables Using Logistic Regression: The Case of Thailand, Faculty of Economics and
       Business Administration, University of Hannover.
   9. Varun T.C. (2008). Consumption Behaviour of Coffee and Tea in Karnataka. Published
       thesis. Department of agricultural economics, College of agriculture, University of
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   10. Dr. Saurabh and Abid Sultan, “Issues and Concerns of Food Processing Manufacturing units
       in J&K”, International Journal of Management (IJM), Volume 3, Issue 3, 2012,
       pp. 160 - 168, ISSN Print: 0976-6502, ISSN Online: 0976-6510.
   11. Sakthirama.V and Dr. R.Venkatram, “A Structural Analysis of Purchase Intention of Organic
       Consumers”, International Journal of Management (IJM), Volume 3, Issue 2, 2012,
       pp. 401 - 410, ISSN Print: 0976-6502, ISSN Online: 0976-6510.




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