International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 - 6510(Online), INTERNATIONAL JOURNAL OF MANAGEMENT (IJM) Volume

e 4, Issue 5, September - October (2013)

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

IJM
IAEME

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 decisionmakers determines the success or failure of food products in todays 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.
14

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

15

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 Likerts 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 Respondents classification respondents Regular buyer Occasional buyer Total sample 214 86 300

S. No 1 2

Percentage to total 71.33 28.67 100.00

16

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 Independent variable F value Significance inant loadings Literacy Occupation Distance (km) Family income No items purchased Purchase frequency Purchase intention Loyalty towards organic tea Innovativeness to buy organic tea Health benefits Attitude 2.228 1.204 3.894 58.743 50.160 286.812 1140.460 37.009 NS NS ** *** *** *** *** *** 0.041 0.571 0.349 0.697 0.803 0.581 0.416 0.146

S. No 1 2 3 4 5 6 7 8

9 10 11

50.338 765.170 1516.138

*** *** ***

0.126 -0.031 -0.023

Eigen values = 7.884 Canonical Correlation = 0.942 Wilks' Lambda = 0.113 Chi square ( 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
17

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 ( 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), 902915. 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, 85104. 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.

18

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 Malaysias 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), 89100. 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 agricultural sciences, Dharwad. 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.

19