Developing Marketing Strategies

For Organic Products Employed by

Small and Medium Retailers in
Bangkok

Master Thesis

Submitted at
Hochschule fr Technik und Wirtschaft Berlin


Masters Program
Master of Business Administration & Engineering
By
Chusin Mateechaipong
Student Number: 537469


Supervisors
First Supervisor: Prof.Dr. Sven Prser
Second Supervisor: Mr. Chusak Suvimolstien

Submitted on
September 18
th
, 2011

Declaration

I hereby declare that I wrote this Masters Thesis by myself. All references used in
this work are properly quoted.


Berlin, September 18
th
2013 Signature

ii
Acknowledgement

This master thesis would not have been accomplished without help and support from
many people. I would like to express my deepest gratitude to the following:
My first supervisor, Prof. Dr. Sven Prser, who had helped me from the
scratch, for his meaningful advice and feedback that helped me to complete
this master thesis.
My second supervisor, Mr. Chusak Suvimolstien, who had helped me with
his support and guidance during the research period in Thailand. His
assistance was crucial for my survey and interview fieldwork in Bangkok.
Organic Key Actors and CEOs from Green Net, Thai Organic, Aden, Rangsit
Farm, Lemon Farm and Thailand Ministry of Commerce, for the support,
invaluable input to this master thesis, the productive discussions, and for the
access to relevant information and documentation.
All my friends and family members, who supported me during the research
period in Thailand and during writing the master thesis in Germany, for their
friendly, priceless advises and feedback.



Chusin Mateechaipong


Berlin, September 18
th
2013

iii
Abstract

Although Thailands organic sector is small, it has grown rapidly during the last
decade. Concerned about their health, targeted consumers tend to choose organic
products instead of conventional ones.
This master thesis aims to find the outstanding characteristics and reactions in
marketing mix of organic consumers in Bangkok, Thailand and develop the
marketing mix strategies for organic products employed by Small and Medium
Retailers in Bangkok. This thesis also purposes to identify strengths, weaknesses,
opportunities, and threats of the organic agriculture business in Thailand.
The research methods are composed of quantitative method that is the assessment of
organic product consumers characteristics and response towards marketing mix with
a standardized survey of 438 respondents, and qualitative method that is semi-
structured interview with five organic product retailers owners and one from
Thailand Ministry of Commerce.
The results show that most organic consumers have age over 40 years old and have a
bachelor degree or higher; also most of them are women. They usually have children
in the household and have a monthly income of over !250. Health and contamination
in food are the major concerned points for the consumers to purchase the organic
products.
The advantage of the organic retailers over the large department stores is that they
can interact directly with the consumers therefore they should take advantage of this
benefit and take actions accordingly. The organic retailers are encouraged to do cross
promoting between the products, communicate clearly to consumers why the prices
of the organic products are high and locate the shops in strategic locations.
Meanwhile, marketing communications of the organic products could be done
differently based on the characteristics of the retailers and consumers.

iv
Table of Contents
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vi
Illustration Index
Figure 1: Thai Organic Product Value ......................................................................... 2
Figure 2: Thai Organic Production Quantity ................................................................ 2
Figure 3: Thai Organic Product Life Cycle .................................................................. 2
Figure 4: Research Framework .................................................................................... 5
Figure 5: Framework of factors that affect purchase decision of consumers of organic
food products, taken from [23] ............................................................................. 8
Figure 6: Interactions between traditional and organized chains in modernizing food
systems, taken from [44] .................................................................................... 11
Figure 7: The Four P Components of the Marketing Mix, taken from [62] ............... 13
Figure 8: Organic agriculture growth in Thailand 1998-2011, taken from [2] .......... 13
Figure 9: A basic flowchart for retailers who are in wholesale, retail or operating
home delivery systems. ...................................................................................... 17
Figure 10: 34 marketing tactics for Natural and Organic Products, taken from [72] . 19
Figure 11: The marketing budgets in small, medium and large companies, taken from
[72] ..................................................................................................................... 20
Figure 12: Research Onion, taken from [76] .............................................................. 21
Figure 13: Age of the respondents ............................................................................. 27
Figure 14: Gender of the respondents ........................................................................ 27
Figure 15: Respondents have/have not children in the household ............................. 28
Figure 16: Monthly family income of the respondents .............................................. 28
Figure 17: Education level of the respondents ........................................................... 29
Figure 18: Structure of questionnaire and resulting groups of interviewees .............. 29
Figure 19: Respondents buy organic products ........................................................... 30
Figure 20: How long do the respondents buy organic products ................................. 31
Figure 21: How often the respondents buy organic products ..................................... 31
Figure 22: Reason to buy organic products ................................................................ 32
Figure 23: The respondents concerned about GMO in food products ....................... 33
Figure 24: The respondents concerned about pesticide residues on vegetables and
fruits ................................................................................................................... 34
Figure 25: The respondents knowledge about organic products ............................... 35
Figure 26: When the respondents are sick, do they think about organic products? ... 35
Figure 27: The respondents satisfaction with the range of organic products in
supermarkets ....................................................................................................... 36
Figure 28: Which organic products the respondents buy the most? ........................... 37
Figure 29: Are brands and labels influence the respondents to buy organic products?
............................................................................................................................ 38
Figure 30: Is the price of organic products a problem for the respondents? .............. 38
Figure 31: How many more percent are the respondents willing to pay for organic
products? ............................................................................................................ 39
Figure 32: Where do the respondents buy organic products? .................................... 40
Figure 33: Why do the respondents buy organic products at the above places? ........ 41
Figure 34: Do the respondents refer organic retailers to department store? .............. 42
Figure 35: Why do the respondents prefer organic retailers to department store ...... 43
Figure 36: Channels that the respondents know about organic products ................... 44
Figure 37: Service that the respondents like .............................................................. 45
Figure 38: Five forces of Thai Organic Product Industry, taken from [91] ............... 51
Figure 39: SWOT Analysis of organic business in Thailand ..................................... 53
Figure 40: Organic Consumer Segments in Thailand ................................................ 59
Figure 41: Organic Consumer Group and Approach ................................................. 60
vii
Figure 42: Product Strategy proposed by Igor Ansoff ............................................... 65
Figure 43: Pricing Strategy ........................................................................................ 68
Figure 44: Organic Consumer Hybrid Marketing Channel ........................................ 72
Figure 45: Facebook Campaign of Thai Organic Co.,Ltd ......................................... 73
Figure 46: Tops supermarket online shopping option ................................................ 74
Figure 47: Advantages and Disadvantages of 9 modes of Integrated Marketing
Communications ................................................................................................ 77
Figure 48: Integrated Marketing Communications and Product Life Cycle .............. 77
Figure 49: Cost-Effective of Three Different Communication Tools at Different
Buyer-Readiness Stages ..................................................................................... 80
Figure 50: Relative Spending on Promotion Tools in Consumer versus Business
Markets ............................................................................................................... 81
Figure 51: Green Net Organization Chart .................................................................. 83
Figure 52: Organic Agriculture Network ................................................................... 83
Figure 53: Green Nets Market Position .................................................................... 86
Figure 54: Green Net s Marketing Process ............................................................... 88



viii
Index of Table
Table 1: Trends in the organization of food systems from farm to plate, taken from
[44] ..................................................................................................................... 10
Table 2: Price comparison of fresh vegetables in Bangkok supermarket (baht/kg),
taken from [94] ................................................................................................... 15
Table 3: Demographic characteristics of respondents ................................................ 26
Table 4: How long have you buy organic products? .................................................. 30
Table 5: How often have you and/or your family buy organic products? .................. 31
Table 6: Reason to buy organic products ................................................................... 32
Table 7: Concerned about the use of GMO in food products versus Organic buyers
and non-buyers ................................................................................................... 33
Table 8: Concerned about pesticide residues on vegetables and fruit Versus Organic
buyers and non-buyers ........................................................................................ 34
Table 9: Do you think that organic and pesticides-free products are the same? ........ 34
Table 10: When you are sick, do you think about organic products? ........................ 35
Table 11: Are you satisfied with the range of organic products offered in the
supermarkets? ..................................................................................................... 36
Table 12: Which organic products do you buy the most? .......................................... 36
Table 13: Are brands and labels important for you in buying organic products? ...... 37
Table 14: Is the price of organic products a problem for you? .................................. 38
Table 15: How many more percent are you willing to pay for organic products
compared to normal products? ........................................................................... 39
Table 16: Where do you buy organic products? ......................................................... 40
Table 17: Why do you choose to buy organic products at the above places? ............ 41
Table 18: Do you prefer organic retailers to department store? ................................. 42
Table 19: Why do you think organic retailers are better compared to department
store? .................................................................................................................. 42
Table 20: Which channels are the most effective for you in knowing about organic
products? ............................................................................................................ 43
Table 21: Which service do you like the most? ......................................................... 44
Table 22: Initial and current perceptions on consumers of Thai Organic Food, taken
from [51] ............................................................................................................ 49
Table 23: Green Net Competitive Differentiation ...................................................... 63
Table 24: Green Nets Product Attributes .................................................................. 63
Table 25: Green Nets packaging methods ................................................................ 64
Table 26: Comparison of direct marketing and indirect marketing ........................... 69
Table 27: Pull and Push Strategy of Organic Organizations ...................................... 78
Table 28: Green Nets objectives about Consumer-readiness Stage .......................... 80
Table 29: Green Net position and responsibility ........................................................ 84
Table 30: SWOT Analysis of Green Nets Marketing ............................................... 85
Table 31: Green Nets target group ............................................................................ 86
Table 32: Green Net Promotion Activities 1995-1998 ............................................. 90




1. Introduction
1.1 Background and Problem Discussions
1.1.1 Organic Agriculture in Thailand
There is an emerging consumption awareness and trend concerning organic products
in developed countries such as European countries, USA and Japan. Due to the latest
IFOAM (International Federation of Organic Agriculture Movements) survey, there
are 162 countries with certified organic agriculture and 37.2 million hectares of
organic agricultural land (including in-conversion areas) and the global market
reaches !47.44 billion [1]. IFOAM has defined organic agriculture as a production
system that sustains the health of soils, ecosystems, and people. Organic agriculture
combines tradition, innovation, and science to benefit the shared environment by
promoting fair relationships that provide improved quality of life for all involved.
Thailand is called Kitchen of the World, implying that Thailand is an agricultural
world leader. Thailands organic sector is small but has grown rapidly over the past
ten years in line with global trends; the organic product value has increased by five
times between 2001 and 2011, from !9.38 million to !44.98 million as shown in
Figure 1. This growth is attributed mainly to growing consumer consciousness,
declining incomes from conventional farming, and environmental concerns [2]. In
2007 the total volume of organic products in Thailand delivered to market was
estimated at 33,678 tons, a substantial increase from 9,756 tons in 2003 as indicated
in Figure 2 [2]. Right now, according to Thai Organic Trade Association, there are
7,499 organic farms, 432 processed and fresh organic products, which count as !4.5
billion in Thailand [2]. There are 21,768 hectares which count as 0.21% of the whole
agriculture area in Thailand; 43% is rice, 21% is tea, 11% is coffee and 9% is fruits
and vegetables [3, 4]. Based on the life cycle analysis illustrated in Figure 3, the
organic market in Thailand is somewhere between introduction and growth phase
especially in Bangkok. A maturing market for organic produce is increasingly
expanding to conventional consumers rather than only core idealistic organic
consumers. However, most consumers in Thailand lack of organic knowledge in
general, regarding organic production methods and its differentiation from other
labeled products [5]. According to Agriculture Ministry of Thailand, Thailand
agriculture undergoes the difficulties concerning the high external input system.
Most conventional producers use chemical pesticides and fertilizers, which are
imported at a very high price. As a result, there are 400,000 people/year suffering
from immediate agricultural chemical toxicity [6]. From the survey of Asian Institute
of Technology studying organic distribution channels in Bangkok and its adjacent
area in 2004 [5], there are 242 places, where the organic products can be sold.
Furthermore, 29 places more from the authors online and fieldwork research in
Bangkok till June 30
th
, 2013. The organic market in Thailand is expected to
significantly expand in order to serve customers needs especially in the big cities.
2

Figure 1: Thai Organic Product Value

Figure 2: Thai Organic Production Quantity

Figure 3: Thai Organic Product Life Cycle

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1.1.2 Problem Discussions
Organic retailers have encountered a rough competition from large supermarkets.
According to Kasterine, Ellis and Panyakuls study [7], supermarket has replaced
organic retailers store recently. To compete with their competitors, organic retailers
have to develop their marketing mix (4Ps) strategy. Before that, the problems of the
marketing mix (4Ps) in organic products are identified as follows.
The problems regarding the organic products are that organic produces are not
consistent and meet consumer demand especially fresh fruits and vegetables.
Moreover, certifying and quality control issues need to be improved. The organic
produces are often far from the distribution channels. Hence they need to be
managed in terms of collecting, transporting, which result in higher prices. Those
problems remain unsolved and do not have enough attention due to unorganized
planning between producers and marketers. Furthermore, discount stores do not
concern about the organic products since they are not mainstream products and lack
of uniqueness.
The problems regarding prices are that there are no research study and analysis about
the cost of organic production. The organic producers and retailers appear to use
feeling instead of fact in setting the prices. In some cases, there are some
attempts in assigning the prices based on production cost analysis yet they are not
stable and not efficient enough. The prices of the same product could go a lot higher
or sometimes lower than the other competitors in the market. Generally, the prices
of the organic products are higher than conventional products and the consumers do
not have knowledge for the reason of higher prices, so they are unwilling to pay.
The problems about the distribution channels are that there is a trend of
supermarket/modern trade superseding organic retailers/specialized stores. However,
most environmentalists believed that modern trade and supermarket could destroy
the relationship between producers and consumers as well as they could possibly
take advantage of the customer. In addition, there are a limited number of
distribution channels for organic products.
The problems concerning promotion are that there are a limited number of public
relations. Most promotions are cost-free and aim for healthy, pesticide-free and good
quality products, which sometimes lack of standard certifications.
Consequently, the thesis aims to help retailers by developing marketing mix (4Ps)
strategy for organic retailers and to find the solution to the problems of 4Ps that
mentioned previously. The organic consumers characteristics, motivations,
perceptions and attitudes as well as their satisfaction and decision in selecting
organic 4Ps will be studied. The qualitative and quantitative methods will be used in
order to target the right organic consumers and develop marketing mix strategy.
Furthermore, there is limited and scattered body of knowledge in organic product
business in Thailand and some problems of organic producers, which have to be
taken into consideration. There is a limited number of organic producers in Thailand
since most farmers and producers practice conventional farming and the organic
producers lack of confidence in changing to organic agriculture. The producers do
not have knowledge about organic production and certification. With a limited
number of organic raw materials and misuse of technology to good soil, the produced
organic products are not the high quality ones [89]. Moreover, there is very limited
number of organic agriculture network. Therefore this project directs to organize the
4
marketing mix strategy and conduct SWOT analysis, that help broaden organic
retailers organic business knowledge as well as contribute the best practices and
strategies in organic business in Thailand for private organizations, marketing
research and governmental sector.
1.2 Research Questions, Objectives and Framework

Research Questions

1. What are the characteristic, motivations, perceptions and attitudes of organic
consumers in Bangkok, Thailand?
2. What is the organic consumers satisfaction and decision in choosing
marketing mix (4Ps) of organic products?
3. What are strength, weakness, opportunity and threat of organic agriculture
business in Thailand?
4. How can organic small and medium organization/retailer use Marketing Mix
(4Ps) and Marketing Mix Strategies to attain its objectives by marketing
organic products to a certain customer group?

Objectives

1. To find outstanding characteristics and reactions in the marketing mix (4Ps)
of organic consumers in Bangkok, Thailand
2. To develop the marketing strategies and marketing practices based on the
marketing mix and consumer survey and organic key actor interview for
organic small and medium organizations/retailers in Bangkok, Thailand
3. To identify strength, weakness, opportunity and threat of organic agriculture
business in Thailand.


5
Research Framework

Figure 4: Research Framework
Figure 4 shows the research framework of this thesis. The framework aims to study
the connection between the characteristics of organic consumers and retailers, which
are used to develop marketing mix strategies and contribute to the sustainability
benefits in various aspects as follows.
1. Economics (cost)
- Retailers and consumers have food security.
- Retailers understand the characteristics, motivations, attitudes and
perception of organic consumers as well as their reactions towards 4Ps so
they can set up their marketing mix strategy according the consumers
needs.
- Retailers know how to survive among the highly competitive
environment with large discount stores and gain advantage among others
- Help Retailers and Thai farmers to have a steady income and clear debt
2. Social and Culture (value)
- Fair Trade Movement between retailers and consumers
- Retailers and consumers learn more about the concept of organic and
sustainable agriculture
- Learning between retailers and consumers
3. Environment (cost and value)
- Retailers and consumers help in conserving the resources and
environment
- Retailers and consumers help increase biodiversity

4. Health (cost and value)
- Producers and consumers have good health and good mood
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1.3 Structure of the Thesis
The master thesis is organized into five following chapters
Chapter 1 Introduction: This chapter explains the background of the thesis
presenting the holistic view of organic agriculture business in Thailand and identifies
problems occurred on the topic, refines research questions, objectives, research
framework, and eventually describes the organization of the thesis.
Chapter 2 Literature Review: A theoretical section is presented to serve literature
review of organic consumers including factors influencing the purchase of organic
products, and their characteristics, organic retailers characteristics and marketing
mix of the organic products.
Chapter 3 Research Methodology: This chapter elucidates the methods utilized in
the thesis. The topics consist of research review, research approach, research
strategy, time horizon, location, data collection methods, which are consisted of
survey questionnaires and key actor interview and finally the limitations of the
research.
Chapter 4 Results: This chapter presents the results of the survey questionnaire and
interview of key actors. The author categorizes the results into three main topics
mainly about 1) organic consumers, which includes the respondents demographic
characteristics, purchase and consumption of the organic products and the
consumers satisfaction and decision in selecting marketing mix of the organic
products 2) organic small and medium retailers in Thailand, which consists of
leading organic retailers and organizations and Five Forces Analysis of the industry
3) organic agriculture business in Thailand, which composes of SWOT analysis of
the subject in details.
Chapter 5 Discussion: This chapter organizes to present the applications of the
results, which can be applied to the organic consumer segments, the marketing mix
strategy, and blue ocean strategy. The chapter also includes the case studies of the
successful organic retailers and organizations to be used as the best practices and
strategies for the organic retailers and organizations.
Chapter 6 Conclusion and Recommendations: The last chapter reveals the main
thoughts and ideas of the findings and sets the areas for future research. The topics
consist of summary of results, recommendations and outlook.
Chapter 7 References: The author uses Vancouver Style for reference format.
Chapter 8 Appendices: This chapter composed of list of expert interview, survey
questionnaires and consultation hour with Prof. Dr. Sven Prser and Mr. Chusak
Suvimolstien.



7
2. Literature Review
2.1 Factors Influencing Purchase of Organic Products
A survey by Birgit Roitner-Schobesberger [8] conducted on 848 consumer
interviews with a standardized questionnaire in seven different supermarkets in
Bangkok. The respondents were divided into three groups: 40% have purchased
organic products; 26.9% have heard of it but don't buy and 33% of respondents have
never heard of organic farming. The survey showed that the main motives for
purchasing organic products were expected positive effects on health and the lack of
pesticides. Some consumers buy them because they have uniqueness, better quality
and safety attributes compared the conventional ones [9]. Consumers, for this reason
did not purchase organic products due to lack of knowledge; also they confused
organic products with pesticide-free products and found difficulties in finding
organic products. However, there were several other reasons working together, for
example, supporting organic farming or protecting the environment [10]. After health
issues, environment issues were another main reason that people buying organic
products. This confirmed by many studies in many countries [11, 12].
Whereas, the main reasons that prevented consumers from buying organic food were
expensiveness, limited availability, unsatisfactory quality, lack of trust, lack of
perceived value and misunderstanding of organic food production processes [13, 14,
15, 16].
Consumers with high income tended to have a broad range of motives for buying
organic food. Hedonist and Altruistic were one of the main reasons. Medium and
low-income consumers focused more on animal welfare and health. Furthermore,
households with children worried more about environment and animal welfare [17].
Consumers in the US paid more attention on health and nutrition before taste and the
environment as reasons why they purchased organic food [19]. Interestingly, the
consumers in Germany, production without chemicals and additives, a taste, which
reminds of former times, preventing illnesses and a better taste were their main
reasons for purchasing organic food [20]. In Italy, consumers valued organic food as
more tasty and nutritious than conventional ones [21].
Nevertheless, the organic products information was asymmetric, as a consumer
might not detect the presence or absence of organic characteristics even after
purchase and consume. Consumers might only know that the product was organic
when they were informed [22]. As a result, organic labels had to come into place to
enable consumers to be more aware and easily access product quality [23]. A number
of studies have found a positive relationship between consumer purchase decision
and organic product labeling [24, 25, 26, 27]. There were many factors that influence
the decision of organic consumers shown in Figure 5.

8

Figure 5: Framework of factors that affect purchase decision of consumers of
organic food products, taken from [23]
Some consumers bought organic products based on the trust of the organic retailer
shop, the sales persons advices, where the product came from and some recognized
organic logos and labels. Some purchased organic products directly from the organic
farm where they could surely trust where the product were traced from. Moreover,
direct contact with organic farmers helped maintaining and increasing trust as well as
providing feedback on product taste and quality [28].
There were some doubts about organic products were really healthier and whether
they were strictly controlled [20]. Moreover, the costs and availability of organic
products were constraints [29].
2.2 Characteristics of Organic Consumers
The linkage between gender and environmental acts were found by several studies.
Baneerjee and McKeage [90] found that women tended to be more environmentally
conscious than their male counterparts. Some western studies found that women
were more likely to buy organic food [20, 29] and men tended to be less interested in
food in general [20] especially men between 40-60 years old [30]. The maturity of
the market was one of a factor, which influenced the demographic composition of
organic consumers. If the organic market was less developed, women and higher
incomes tended to be overrepresented. In mature markets, the socio- demographic
features of organic consumers were more diversified [31].
A study of Lockie et al. [29] showed that income had an effect on the consumption
of organic products. The reason of the general assumption was that the majority of
organic products were more expensive than conventional ones. Hence, such products
were determined by people with higher income. However, the income did not
necessarily have an impact on the interest in organic products. Several studies stated
that income did not have an impact on green purchasing [32, 33, 34, 35]. The level of
Prod. characteristics
- Price
- Taste
- Value
- Certification
- Packaging
- Labelling
Product related factors
Perceived attributes
- Health benefits
- Food safety
- Animal welfare
- Environm. impact
- Origin
- Social standards
Consumer related factors
Social and
demographic variables
- Gender
- Age
- Education
- ncome
- Family size
Values and attitudes
- Health issues?
- Environment?
Knowledge & awareness
- What is organic?
- Uniqueness?
Consumer preference
Organic product purchase decision
Exogenous factors
- Market environment
- Public legal standards
- Private control institutions
- Food quality and safety level
9
education also influenced the buying of organic foods [29, 36] and there were a trend
indicates that bigger households were likely to buy organic products [17].
On the other hand, a number of researches argued that there were no relations
between socio-demographic characteristics (age, gender, income) and environmental
consciousness [18, 34, 37]. A study by Shamdasani et al. [38] indicated that
Singaporean consumers green buying decisions were influenced by personal factors
rather than environmental awareness. Many researchers suggested that personality
and attitude were considered to be better predictors than socio-demographics.
Moreover, Tutunjian [39] found that organic food consumers shared attitudes and
values rather than demographics. Overall, redefining organic food consumer profile
helped to better address the specific values underlying their food consumption.
However, there was still no finite conclusion to what extent socio-demographic
characteristics play a role in differentiating organic consumer from non-organic
consumer.
Most of the research about characteristics of organic consumers was conducted in
different countries, usually in the west. Hence, there are cultural differences that
need to be taken into consideration. Furthermore, people from different countries
shared different attitudes and values, which affected their buying decisions [40]. As
in Thailand, many studies found that Thai organic consumers shared both the
similarities and dissimilarities when compared to Western organic consumers. Both
Thai and Western consumers were younger, had access to higher education and were
in higher social status [41, 42, 43]. However, western consumers thought that they
could help preserve the environment by buying green products whereas Thai
consumers did not think the same [40]. This might be because of the lack of
environmental awareness as well as organic products were not widely and readily
available to Thai society.
A study of Hamzaoui and Zahaf [28] categorized two sets of organic consumers:
hardcore and regular organic food consumers. The hardcore consumer was
committed to the environment whereas the regular consumer was committed to
personal health. The hardcore consumers were looking for fair trade organic foods,
while regular consumers looked for regular or local organic foods. Organic food
consumers could be also classified as classic or emergent consumers. The former
was highly educated, a professional or white-collar worker. They are willing to pay a
premium for organics and to search out sources of organic food products (e.g.
producer or farm markets). The latter was also highly educated, a professional, and
committed to personal health. They prefer shopping in supermarkets since
convenience was an important factor in his/her purchasing decision [28].
2.3 Characteristics of Organic Retailers and Organization
The most trusted channel of distribution across all organic food consumers was the
organic food store, then health food stores, and producer-to-consumer channel.
Suppliers clearly stated that an important attribute for an increasing number of
organic food consumers was the local origin of the organic product [28].
A various literature described the reorganization that has taken place in food chains,
with implications for chain participants and for the broader economy shown in Table
1.
10
Table 1: Trends in the organization of food systems from farm to plate, taken
from [44]

It was usual in Thailand where supermarket penetration was quite low. Farmers
selling fresh fruits and vegetables directly to retailers and supermarkets tended to
obtain agricultural products directly from farmers or farmer groups [68]. The
advantage of wholesalers was that they could be better positioned to meet retailers
and processors requirement than particular farmers or small holders since
wholesalers could assemble a big volume of produce from market shed. Still
traditional chains were practiced widespread in agriculture-based economies, farmers
and traders supplied traditional wholesalers, who sold to small processors and
retailers. On the contrary, modern chains were practiced by farmers and traders
supply specialized wholesalers or distribution centers, who then sold to organized
retailers and processors. Both chains might exist from side to side in countries with
modernizing food systems, with some exchange between them as conditions allow,
as illustrated in Figure 6.
Specialized wholesalers have captured important market segments in developing
countries [45, 46] because they could better keep good quality and information, and
response demand from retailers and wholesalers promptly [47, 48]. For organized
retailers, bypassing traditional wholesalers gave better quality control and could
lower costs if savings from reduced spoilage offset the costs of managing the
distribution facility. In developing country, high spoilage rates in traditional
wholesale markets presented retailers strong motivations to bypass traditional
wholesalers.

Traditional Structured Industrialized
Consumption Rising caloric intake,
diversifcation of diets
Diet diversifcation, shift to
processed foods
Higher value, processed foods
Retail Small scale, wet markets Spread of supermarkets, less
penetration of FFV
1
Widespread supermarkets
Processing Limited processing sector Processing ofers employment
and value addition
opportunities
Large processing sector
for domestic and export
markets
Wholesale Traditional wholesalers,
with retailer bypassing
for exports
Traditional and specialized
wholesalers, some retailer
bypassing
Specialized wholesalers and
retailer bypassing through
distribution centres
Procurement Via traditional markets Via structured (regulated)
markets
Via managed chains, advance
arrangements
Production systems Diversifed, low input
systems
Intensive input use,
specialization of cropping
systems
More focus on conservation
Safety in food system No traceability Traceability in some chains
with private standards
HACCP
2
system, private
safety standards and public
accountability (liability)
Vertical coordination Relationships Relationships/rules Binding agreements, ICT
3

systems for efcient
consumer response
1
FFV = fresh fruit and vegetable.
2
HACCP = hazard analysis and critical control point.
3
ICT = information and communications technology.
11

Figure 6: Interactions between traditional and organized chains in modernizing
food systems, taken from [44]
In Southeast Asia, specialized wholesalers had a small market share but play a vital
part in quality segmentation [49]. Retailer store prefers working through wholesalers
because the demand for organic products was high and wholesalers can provide large
quantities at regular delivery times. Some farmers and producers thought that they
could increase the amount of supply, but it turned out that this brought down the
product quality resulting in poor supply trust and poor availability at the demand
level.
For organic suppliers, the most reasonable access to consumers in many countries
was through the conventional retailers [50]. Hence it was necessary for them to
establish a closer collaboration between the supply chain actors.
From the organic specialized stores point of view (e.g. independent stores and chain
stores), supermarkets and specialized stores were different in terms of variety, price
and quality. Supermarkets strengths were that they were easily accessible, have a
variety of products with cheaper prices while specialized stores strengths were that
they had better quality and originality of the products. From a producers
perspective, the main difference between suppliers was established in terms of short-
direct / long channel of distribution, with producers providing quality and
traceability.
Most companies involved in marketing and trading of organic products in Asia were
very new, usually less than five years old. Price competition and logistic
arrangements were the main problems in the organic market. In Thailand, Vietnam
and Singapore, organic products, especially vegetables, had to compete with
products grown with a limited use of chemical fertilizers and pesticides, such as IPM
(Integrated Pest Management) vegetables or safe and hygienic vegetables.
Consumers usually confused about the differences between organic products and
those low-chemical products. Moreover, the latter one always promoted as being
organic. Therefore, certified organic products had to compete with self-claim and
hygienic/safe products on price, product varieties and regularities. Some retailer store
Small retailers and
processors
ndependent smallholders
Traditional chains
Domestic organized
chains
Organized export
chains
Specialized
exporter
Specialized
wholesaler / DC
Domestic supermarkets
and processors
?
Cooperative
Large farmers
Lead farmer
Formalized procurement systems
Exported
Traditional
wholesale market
12
started with direct marketing, for example home delivery, mobile markets or organic
bazaars, which would not require much equipment, staff and overhead costs. In terms
of promotion, direct promotion (e.g. word of mouth, targeting specific events) was
often used.
Most of the retailers tried to cut off some intermediary links and lower the cost of
organic food in order to attract consumers who interested in cheap organic products.
NGO could be a great support for organic retailers since financial constraints were
one of the obstacles that retailers have at the beginning. They sometime operated
from the farm or home or "sit in" with another organization, such as an NGO due to
insufficient budget for office rental. There might be some drawbacks if the retailers
operated from home or farm since the impression about the professionalism of the
organization were sometimes not good.
Some believed that having as many products as possible might attract consumers.
However, some thought that having reliable, high-quality products were more than
enough to attract loyal consumers. Some retailers adapted the market bit by bit by
starting with fresh produce, such as vegetables and fruits then adding another item
later on since they believed that the success of one product could lead to other
initiative developing another products.
Some store decided to sell low-pesticide products, which were not organic.
Nevertheless, this had the disadvantage that consumers were often confused about
the differences between organic and low-pesticide products. Other retailers even
planted their own products in their own farm instead of buying from contracted
producers. This would give them more control over production issues, such as
quality, quantity and variety.
Some NGOs have made several attempts to go into business themselves, but
eventually they all encountered conflicts between their commercial and their social
and development operations. It seemed that those two could not go together since
they required very different working attitudes and organizational cultures. It was
recommended that setting up a separate business unit of the NGO was a better option
[51].
2.4 Marketing Mix
Marketing Mix is defined as the set of marketing tools the firm uses to pursue its
marketing objectives by marketing its products in an effective manner to the certain
customer group. McCarthy classified these tools into four broad groups called the
4Ps: Product, Price, Promotion and Place. Figure 7 explains the Four P Components
of the Marketing Mix.
13

Figure 7: The Four P Components of the Marketing Mix, taken from [62]
2.4.1 Organic Product
According to Figure 8, in the last 11 years, the total land under organic farming in
Thailand was 20 times increased from 1,052 to 21,939 hectares. Unfortunately,
Thailands certified organic area is one of the lowest in the world, at below 1% of
total agricultural land, and remains insufficient to meet the demands for export and
within the country [52].

Figure 8: Organic agriculture growth in Thailand 1998-2011, taken from [2]
The number-one sale product is organic rice, primarily Hom-mali jasmine rice from
the northeast region, followed by fresh vegetables and herbs. Organic vegetables
consist of leafy vegetables, especially the salad type and Chinese vegetables,
produced mainly in central Thailand and in Chiang Mai province. Organic orchards
Target market
Place
Channels
Coverage
Assortments
Locations
Inventory
Transport
Promotion
Sales promotion
Advertising
Sales force
Public relations
Direct marketing
Price
List price
Discounts
Allowances
Payment period
Credit terms
Product
Product variety
Quality
Design
Features
Brand name
Packaging
Sizes
Services
Warranties
Returns
Marketing Mix
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14
are also becoming more popular. Many organic vegetable farms also produce organic
fruits. Mango, papaya, and longan are the major fruits.
A study of Thode-Jacobsen [53] stated that Thailand is a country that has a potential
to produce and export organic products (both basic and processed) to EU member
countries. The study found that dried fruits, canned fruits and canned vegetables,
fruit juices and vegetable juices, and processed cereal foods have greatest market
potential in this respect. Non-food organic products too (e.g. clothing, toiletries,
decorative and spa products) are of considerable interest as well.
The basic problems for agricultural products are different from other kind of
products [5] in that they are perishable. In addition, usually the production takes
place in small-scale, scattered, and rural area whereas the main consumer market is
in the big city. Therefore, effective transport has to be provided in order that the
products can reach to the consumers as soon as possible before they are perished. As
a result, the products require higher cost, for example packaging cost. Packaging
should be durable and attractive to the customers, yet should not be too expensive.
Their bulkiness is also one of the reasons that may increase the cost of transportation,
packaging and maintenance of products. Furthermore, some farmers are lack of
knowledge in selecting seeds, organic fertilizers and pesticide so that diseases and
insects destroy the products during harvesting. High cost of production can occur if
the farmers are lack of farm organization and irrigating management.
Some agricultural products can be collected in different seasons. Thus the type of
products and their quality can be varied according to the season during the year.
Furthermore, the consumers demands are not related to picking-up season.
Therefore, the complication of standard grading can occur as their quality varies
differently from year to year and season to season.
Credibility is one major factor for consumers to buy organic food. Hence a
transparent and recognized certification system is of paramount importance [54].
Certification and labeling systems are able to enhance distribution and market
development, create trust, and foster confidence [28].
2.4.2 Price of Organic Product
The prices of organic products varied depending on the country and on the product
(on average more than 30%). The reasons behind the premium price were because of
higher input costs, lower yields on the farm level, and higher quality due to higher
environmental friendliness of the production. From Table 2, the price of organic
produces was highly variable compared to conventional vegetables. Whilst the
organic products were popular in the market, the premium price levels were awaited
to reduce [54].
A study conducted by Gil et al. [55] stated that current and potential organic
consumers were willing to pay a higher price on fresh organic meat, fruits, and
vegetables than conventional ones. Furthermore, there were studies in organic
consumers willingness to pay premium prices for organic products [55, 56] and
even more influential for people who were at health risks [55].

15
Table 2: Price comparison of fresh vegetables in Bangkok supermarket
(baht/kg), taken from [94]

A survey of Italian consumers [56] found that they often concerned about the
pesticides-contaminated products and were willing to pay higher prices for pesticide-
free produces. Around 70% of the consumers agreed to pay 10% higher compared to
the regular price. Another survey from Boccaletti and Nardella [56] indicated that
consumers, who had trust in organic retailers, were willing to pay 20% higher than
conventional prices. Yiridoe et al. [23] found that the acceptable level of a premium
price for organic was between 10-20%.
Green Net found that consumers could accept up to 10 - 15% price differentiation. In
more mature organic markets like in some European countries, where surveys
indicated consumers could accept around 20 - 30% higher price for organic products
[61]. The price of an organic product was important for sale and critical if the
marketing organization intended to expand the market to other consumer groups.
However, organic products were purchased mostly by (upper) middle-class
consumers, whose decision to buy, was not so much influenced by price.
A study of Zhou Zejiang, (OFDC, China) [51] conducted a survey on consumer
income and the price of organic vegetables at Nanjing Planck. It indicated that 40%
of the respondents whose income was over $400 per month said that the shop offered
a reasonable price for its organic vegetables. Sixty percent of consumers, whose
income below $400, believed that the price was too high or a bit too high. The survey
reported that 80% of the consumers could accept a price premium of 10 30% while
the rest admitted a price premium of 40 90%. In rare cases, a price premium of
100% could be admitted under conditions of organic product undersupply.
Due to recession in Asia in the last few years, the need to review the price of organic
food was necessary. The quicker the organizations could adapt to organic product
prices, the higher their chances to gain advantage in the organic market. Some
organization took advantage in economy of scale by increasing volumes to reduce
the costs on a per kilo basis in transportation service.
There was an important term called Willingness-To-Pay (WTP) for environmentally
friendly products, which were widely discussed in a great amount of research [57,
58, 59]. This WTP was a general tendency, and despite the increasing availability of
Conventional
vegetables
Hygienic
vegetables
1
Organic
vegetables
Organic premium
(compared with
hygienic vegetables)
1
Organic premium
(compared with
conventional vegetables)
Dec 01 40.18 54.79 88.375 61% 120%
Jul 02 41.28 60.28 66.99 11% 62%
Mar 03 38.98 35.29 65.94 87% 69%
Dec 03 57.49 56.75 64.28 13% 12%
Mar 04 29.45 46.29 76.77 66% 161%
Aug 04 34.85 83.3 135.29 62% 288%
Feb 05 29.85 48.24 52.37 9% 75%
Aug 05 49.29 64.22 45.84 -29% -7%
Apr 06 46.03 75.38 108.03 43% 135%
Jul 07 43.88 103.06 134.17 30% 206%
Dec 07 42.13 105.26 122.80 17% 191%
1
Hygienic vegetables are produced using good agricultural practice.
16
organic food products, there were few studies that examined the variability of WTP
for organic products in terms of product categories and organic consumer segments.
Generally, one reason why consumers were willing to pay a premium was to ensure
product quality [60]. However, some consumers were willing to select higher-priced
products themselves [58]. The research studied two groups of consumers, which
were regular and hardcore consumers. The result showed that each group had
different willingness to pay due to their respective motivations. Health is the main
motivation for regular consumers while hard-core consumers tended to support the
environment, local community, and health.
Organic retailers placed their pricing based on initial point from farmers and added
their margin. The margins could be ranged depend on different consumers, for
example, the margin was high for home delivery and low for schools. The premium
cost of an organic meal compared to a conventional one corresponds to +32.5% for
catering societies and +20.8% for restaurants [54]. Fair trade could be applied by
pricing the products transparently with a clear margin. It is noted that organic
organization could use their margins for their operational expenses e.g. store running
cost, wages for their employees, market expansion, and some emergency cases.
Some organic organizations supported farmers to convert to organic agriculture by
applying various premium prices for organic and in-conversion products. For
example, in Hanoi organic, the prices of organic products were 10-15% higher than
that of the in-conversion products and much higher than the conventional prices.
Some strategy was to apply a lower margin (in percentage) on the low-value
products compared to the more high-value ones. A number of organic marketing
organizations initiated fair trade principles in their price setting policies stating that
the price that the producers sold their products should at least cover their cost of
production [51].
2.4.3 Distribution Channels of Organic Product
Distribution Channel means a channel structure consists of organizations that
transport products and service to a target market. Organizations that bring products
to the target market are called marketing organizations. Generally, distribution
activities include transportation, warehousing, storage management and inventory
management. Meanwhile, distribution channel is the route of products, which
includes direct channel from producer to consumer or to industrial user [62]. The
distribution impacts the environment in two ways. Firstly, long distance
transportation can lead to problems of destroying the produces. Secondly,
transportation usually consumes fuel and energy and lead to air pollution. Therefore,
marketers should consider these impacts before planning distribution strategies.
Figure 9 shows a basic flowchart of product distribution for retailers, who are in
wholesale, retail or operating home delivery systems.
In a last decade, retailers stores counted as 95% of the organic market share and 5%
were supermarkets. Currently, the trend is the opposite [63] since the organic product
industry is heading from niche markets to mainstream market [64, 65].

17

Figure 9: A basic flowchart for retailers who are in wholesale, retail or
operating home delivery systems.
Alternative distribution channels are classified by a link between the producer and
the consumer [66]. There are two main types of consumption; regular consumers
using standard distribution channels for example supermarkets and hardcore
consumers utilizing alternative channels for example box delivery, farmers market,
specialized and grocery stores [28].
Supermarkets are the main organic product distribution channels, which are above
50%, in 27 European countries (incl. Switzerland, Croatia and Norway; excl. the
Baltic states). The highest market share was in Northern Europe country e.g.
Norway, Finland, Denmark and Sweden [67]. Interestingly, in Germany and the
Netherlands, specialized stores are the main channels for organic products [30].
However, German conventional supermarkets have entered the market and gained a
market share of 49%. In Poland, Spain, Italy, Greece or Portugal, specialized organic
shops were still the dominant channels covering at least 50% of all organic sales
[67].
In Lebanon, recommendations from shop owners or sales representatives in the
specialized store were the main motives for consumers to buy organic products.
Moreover, the consumers believed the organic products were more trustworthy in the
specialized store than in the supermarket since some consumers cannot differentiate
the organic labels [73]. Direct channels such as the farmers market, was aimed
toward consumers that looked to interact directly and socially with the producers, to
find out about products production methods, originality, variety, and cooking tips
[66].
Community Support Agriculture (CSA) or Teikei systems and the supermarket had
equally market channels for organic food in Japan [30]. In the USA, the organic
market was widely ranged from supermarkets, CSA or farm-gate sales, and natural
food stores. In 2009, supermarket and natural food stores were almost the same share
counting 49% and 48% respectively. The rest of 3% was in direct sales [69].
Some research examined some out-of-home channels that distributed organic food
such as food service channels and organic canteens in school and hospitals, which
would be an increasing trend [54].
In Thailand, the most popular organic channel in Thailand was supermarket, which
has replaced health shops recently [7]. However, the other distribution channels were
the member system (weekly deliveries to subscribed customers within the
%&'()*+,'-
.,/+&,0)+,'- +' &1+2,31&/4
5'61 (13,71&84
.,&1*+ 9231/
:'6;,31 (162-( <)2-+,+8
2-( ,-='&6 =2&61&/4
;&'()*1&/ 2**'&(,->38
%2*?2>,-> 2-( 9+'&,-> :'331*+,'- 2-( @&2-/;'&+2+,'-

='33'E/R
O3+A')>A -'+ ,- 233 '&>2-,/2+,'-/ E,+A +A1 /261 +A'&')>A-1//4 233 '&>2-,/2+,'-/ 2;;38 <)23,+8 *'-+&'3 612/)&
18
community), weekly markets, retail health shops, health supermarkets, and organic
restaurants. The location was one of the most important for organic retailers to sell
organic products. It was recommended that the stores should locate in the vicinity of
residential areas with a relatively higher-level education of consumers and high rate
of consumption. The ideal location to open organic stores should be accessible by
private, commercial and public transportation and parking should be available.
Moreover, they should be visible by pedestrians and available all year round.
2.4.4 Promotion of Organic Product
Organic retailers and organizations use different tools for promotion considering
which is the most suitable for their customers and marketing objectives.
A survey conducted by AWeber communications [72], among the 34 marketing
tactics for Natural and Organic Products shown in Figure 10, the most effective ten
marketing tactics are: 1) Live Demos 2) Television Advertising 3) Websites 4)
Facebook 5) Coupons 6) Email Newsletters 7) Print Advertising 8) Event
Marketing 9) Buzz Marketing 10) Search Engine Optimization. Email marketing and
social media are among the most effective methods right now in terms of cost and
result tracking. Since email marketing is widely used by natural product marketers,
and social media such as Facebook are very effective to target online consumers and
used not only to interact with customers, but also as a popular market research tool.
The statistical data from Natural Products Marketing Benchmark Report 2011, from
a 44-question survey of 411 natural products companies in Figure 11, [72] reported
that most natural product businesses spent less than $100,000 on consumer
marketing. The amount they spent was directly proportional to the size of the
company. The majority of small companies (revenues less than $1,000,000) spent
less than $10,000. Medium companies (revenues of $1,000,000 to $15,000,000)
spent between $10,000 and $250,000. Large companies (revenues over $15,000,000)
spent between $500,000 and $10,000,000. In summary, organic and natural food
organizations spent the average of 3.26% of their revenue on marketing, which was
considered low compared to other industries.
In Europe, a study [54] indicated that the market was very heterogeneous and there
were no dominant global/international organic brands owned by the food industry.
Most brands are small and local. Hence communication activities were mainly low
budget for example creating events, fairs, and promotions or direct marketing from
farmers associations or NGOs and activities are carried under governmental
institutions or NGOs.
Word-of-mouth and mass media were important primary sources for consumer to
know more about organic products [71, 70]. From a study of German organic
consumers [70], it showed that television and lifestyle magazines were the first
source of information, followed by word-of-mouth communication, and the third was
TV cooking shows, then women magazines and magazines with independent product
tests respectively.

19

Figure 10: 34 marketing tactics for Natural and Organic Products, taken from
[72]
It found that regular organic consumers obtained different sources of information
from hardcore organic consumers. Regular consumers got information about organic
agriculture and healthy nutrition from the media press as the most important trigger
for consumption of organic food whereas hardcore consumers indicated word-of-
mouth communication from friends or relatives are the main consumption reason
[71]. A reason behind this could be that the hardcore consumers are more similar
with organic products since they have tried a wide range of organic products and
more active information search behavior thus leading to a stronger word-of-mouth
stance [54].

20

Figure 11: The marketing budgets in small, medium and large companies, taken
from [72]
The best ways to market the organic products, during a time of financial crisis and to
consumers who have very little awareness about organic farming, were direct
communication. There were advantages of direct communication, which include
getting immediate feedback from consumers. However, the sales representatives had
to have good knowledge about organic issues so that they could clarify the issues
promptly and clearly. The direct communications could be in the stores or one could
conduct the lunchtime talk, cooking demonstration and at the same time to promote
the awareness of organic products. It was very essential to create the bridge to the
mass media and journalists, who were willing to publish about organic agriculture
because it helped to create a trend of health and sustainable environment. A good
article by a journalist could contribute more than a paid advertisement and came at
no cost. To create a successful marketing campaign, marketers should consider both
culture and characteristics of consumers, so the marketers could predict which were
the most suitable channels for the consumers. There were many marketing initiative
methods. For example, IIRD, an organic organization in India, set up consumers
meetings in association with women's groups and social clubs e.g. the Lions, the
Rotarians, etc. to discuss the importance of organic agriculture, food security and
health as well as promoted their upcoming organic bazaars in the same time [51].

21
3. Research Methodology
Research methods used in the research are reviewed in this chapter. Topics in the
chapter consist of research overview, research approach, research strategy, time
horizon, location, data collection methods and the limitations of the research.
3.1 Research Overview
Planning both appropriate and effective research strategies is an important part of
conducting research in order that the researchers can establish the frameworks and
confirm that the collected data is compatible with theories and explanations that are
given [74]. Saunder et al. [75] mentioned that The research strategy will be a
general plan of how you will go about answering the research question you have
set.
Saunders et al. [76] had developed the figure, Research Onion which is shown in
Figure 12. The diagram is targeted to assist researchers design research and help
them make sense of the choices of research approaches as the diagram shows
specific and clear overviews. Through the diagram, researchers can consequently
proceed on to discussing and providing any justifications for their choice of research
design. The layers of the onion, in the diagram, show stages in increments. Stages are
in the following order of research philosophy, approach and strategies.


Figure 12: Research Onion, taken from [76]

3.2 Research Approach
This research aims to answer research questions using both deductive and inductive
approaches. Quantitative data are the first key to the study while some qualitative
data are also required. Both types of data are analyzed deductively in order to
describe the characteristics, motivations, perceptions and attitudes of organic
consumers and retailers in Bangkok and later use the analyzed data to develop
marketing strategies and guidelines for Organic Small and Medium Retailers.
However, previous literature may not be sufficient for the whole subject, satisfactory

(Source: Saunders et al., Research Methods in Business, 2006)

3.2) RESEARCH PHILOSOPHY
etal.(2003,p.84)describesitas
.
22
answers from both processes are needed to collect data inductively to be studied and
implemented in the conceptual framework. In the nutshell, both deductive and
inductive methods are used in this thesis since it is the most suitable method to
answer the thesiss objectives and research questions [77].
3.3 Research Strategy
The reason of quantitative approach is used in this study is due to its quantifications
of the processes of data collections and data analyses [77, 78]. Bryman and Bell [78]
mentioned that the quantitative method is easy to be distributed on a larger scale and
able to reach large numbers of participants in a short duration hence the author
decides to use the quantitative method as it is the most effective for the first part of
the research.
The author chooses a mixed method approach since this method illustrates both
qualitative and quantitative data collection and analysis procedures where the
quantitative aspects are first highlighted, and later the qualitative aspects. There are
controversies among researchers regarding a mixed method approach that it does not
exist by itself in isolation yet such approach allow researchers to gain better
opportunities in studying subjects, rather than focusing on any one method [78, 79].
Qualitative approach depicts philosophical assumptions of relevant qualitative
inquiries in order to obtain knowledge of complex phenomena. The semi-structured
interview of six organic key actors about their views for the organic business in
Thailand and their marketing strategies displayed their multiple realities as
experienced by any individuals looked into.
Qualitative methods in this specific research are as important as the quantitative
approaches due to the research's emphasis on both insight of opinions and empirical
data. Mere numbers do not allow the researcher to focus deeper into the research and
it allows the author to gain new ideas and thoughts beyond what has already been
displayed by the surveys and discover other insight subject that are beyond any
existing research. There is some drawback with qualitative approach due to its small
sample size, which gives less credibility than the larger sample size [80].
3.4 Time Horizon
The time horizon applies in this research will be the cross-sectional horizon, mainly
because of the restricted time limit of one month from the 15th of April to the 15th
May 2013. This research cannot employ a longitudinal approach, which is a diary
perspective that observes people over time. Consequently, this research is a cross-
sectional study where data collected at a particular point of time [76].
3.5 Location
Because of the time constrictions and authors own constraints, the questionnaires
were given out both online and on the street to the populations in Bangkok, Thailand.
The data were collected from the 15th of April to the 15th May 2013. Later on, the
gathered data would be interpreted, analyzed and presented in the following chapters.
3.6 Data Collection Methods
The most proper methods of data collection are selected after implementing the
mixed-method approach. The most appropriate methods would be ones that can
systematically answer all research questions [79].
23
3.6.1 Survey Questionnaire
3.6.1.1 Development of the Questionnaire and Sample Size
First, the questionnaire was drafted in both English and Thai. The questions and
issues raised were based on the results from the literature research, the expert
interviews and recommendation from Prof. Dr. Sven Prueser on the fifth consultation
hour on March 20
th
2013; please refer to Appendices 8.3 for further details.
The first draft of the survey questionnaire was discussed with a second supervisor,
Mr. Chusak Suvimonstiean on the second consultation hour on March 25
th
2013;
please refer to Appendices 8.3 for further details. In this first evaluation step the
focus was to see whether the topics covered were relevant for the Thai situation
regarding characteristics, satisfactions and decisions of organic product consumers
concerning 4Ps and 4Cs. Another aspect was to find out which issues should be
added, edited or addressed more in detail.
The final draft of the questionnaire was analyzed and corrected by the second
supervisor, Mr. Chusak Suvimonstiean on the third consultation hour on April 1
st

2013 (please refer to Appendices 8.3) to ensure that the questionnaire was
convenient, make sense an appropriate for surveying Thai organic products
consumers in both Thai and English.
The English and Thai versions of the questionnaire were tested with the interviewers.
A pilot test has been conducted by collecting data of 30 questionnaires and data
collected is analyzed using SPSS (Statistical Package for Social Sciences). Lastly, a
reliability coefficient (alpha) is calculated and is equal to 0.75 that is considered
acceptable reliability [81].

The population that was considered in collecting data through a quantitative survey
was both male and female, Bangkok residents who age between 16 65 because they
are the ones who make their own purchasing decisions. According to Department of
Provincial Administration, Ministry of Interior, the number of registered Bangkok
residents between the ages of 18 and 60 was more than 3.6 million in December
2011. Therefore, the author determined the sample size based on Taro Yamane's
(1967) Formula for determining sample with confidence level of 95% and error of.
5%.
n =
!
!!!!!!
!
Where; n = sample size
N = population size
e = sampling error (e = 0.05)

Therefore, n =
!!!"#!!"#
! !!!!"#!!"# !!!!"!
!

When the formula was applied to the above, the author chose 400 people to be the
sample and added 38 people which were around 10% error in case that some
information was missing on some questionnaires.

24
3.6.1.2 Content of the Questionnaire
The questionnaire is divided into 3 sections as follows:
A) Demographic information
In this section, gender, age, children in the household, monthly family income, and
level of education were asked to see if the difference of consumers characteristic
will strongly affect on their purchasing behavior and on 4Ps
B) Purchase and consumption of organic products
Questions about the purchase and consumption of organic products and looks for the
reasons why people buy or do not buy organic products.
C) Consumers satisfaction and decision on choosing 4Ps of organic products
The satisfaction and decision with the current product selection available and what
are the consumers opinions about products, price, place and promotion (4Ps) of
organic products
3.6.1.3 Data Analysis
The collected data were entered into a Microsoft Excel. Once the data were
successfully in place, the author checked them again and tried to eliminate errors
caused by data entry and to ensure complete data sets. The data were analyzed with
SPSS 11.0 for Windows, the methods applied were descriptive analysis, cross tables
and the Chi-square test that was carried out at a significance level of 5 percent.
Several books, online SPSS tutorial and SPSS experts are consulted to confirm a
correct statistical data analysis.
3.6.2 Interviews with Key Actors
An exploratory research in the form of qualitative interviews with six organic experts
and key actors in Thailand are conducted. According to Gilbert and Churchill [82],
an exploratory study makes the analyst more familiar with the obstacles and provides
information on the practical possibilities of the research.
Key actors from different organizations and companies dealing with and involved in
organic farming were interviewed. The interviewees are 5 dynamic CEOs of
different organic product retailers and one from Thailand Ministry of Commerce;
please refer to Appendices 8.1 for further details.
A semi-structured guide is conducted, which covers the following topics:
How and why are you/is your organization involved in organic farming?
What are the visions and policies of your organization?
What are your marketing strategies (in 4Ps and 4Cs) in your organization?
What are your target groups?
What are your main products?
Which organic product groups are available & bought?
25
What are the reasons for consumers to purchase organic products?
Influence of health and safe foods on the market for organic?
What are the SWOTs of the organic business in Thailand?
What are the future and obstacles of doing the organic business in Thailand?
The interview questions asked depend on the interviewee and his/her background.
The results of these interviews are used to evaluate and revise the questionnaire.
There are four important organic events where the author participated in qualitative
interviews. The author attended
1) The 3
rd
Organic Symposium 2013, where Thailand Organic Key Actors come to
give a seminar talk to audiences from May 10
th
-11
st
, 2013 in Bangkok Thailand.
2) The author also participated Organic and Natural Expo 2013, from May 9
th
-12
nd,

2013 at Queen Sirikrit Convention Center Bangkok Thailand, where over 200
organic SME and SML organic companies exhibit their booth as they promote their
organic products and services. This event is the biggest event for organic exhibition
in Thailand.
3) Furthermore, the author also appeared at the Organic Pavillion at Thaifex- World
of Food Asia, from May 25
th
- 29
th
, 2013 at Impact Arena, Muang Thong Thanni
Thailand, where SME and SML organic businesses all around the world showcase
their organic products and services.
4) The author also took part in the Thai Traditional Health Exhibition at Wat Po,
Bangkok, from April 24
th
-28
th
, 2013 where organic and healthy food organizations
exhibit their organic and healthy food and services.
The interview of Organic Key actors and management of organic organization is
conducted at the above-mentioned four events, and by telephone if more information
is required.
3.7 Limitations
There are some obstacles, which could affect the results and research process that
have to be taken into consideration.
Most respondents misunderstood organic products that it was the same as pesticide-
free or hygienic products since the word hygienic or pesticide-free were translated
in Thai literally. However organic are translated in such a way that people may
misunderstand to something else if they never heard or be educated about it before.
In fact, organic products mean that the products contain no chemicals used in the
process of growing and no methods that could destroy the environment. Yet
pesticide-free or hygienic products are the products containing the chemicals that are
safe to consume. Moreover, they are produced in such a way that they do not concern
about the biodiversity.


26
4. Results
4.1 Demographic Characteristics of Respondents

Table 3: Demographic characteristics of respondents

Variable
!"#$%& !"
!"#$%&'"&(#
!

Organic
non-
buyers
Organic
buyers
!"#$"%"&'$&( !"
!"##$%$&'$ !"#$""%
!"# !"#$%&
!

Age (in
years)
ns
<20 years 18 22.2% 77.8%
20-30 years 249 17.3% 82.7%
31-40 years 85 11.8% 88.2%
>40 years 85 10.6% 89.4%
Gender ns
Male 179 47.00% 39.60%
Female 259 53.00% 60.40%
Children in
the
household
ns
Yes 118 11% 89%
No 319 16.4% 83.6%
Education
level
*
Secondary
School
12 9.1% 90.0%
High school 46 17.4% 82.6%
BSc 238 17.2% 82.8%
MSc or more 142 11.3% 88.7%
!"#$%&
!"#$%&
!"# !"#$!
!

*
<10,000 baht 9 22.2% 77.8%
10,000-
20,000 baht
86 11.8% 88.2%
200,001-
30,000 baht
65 13.8% 86.2%
>30,000 baht 277 15.9% 84.1%
1: Some information was missing on some questionnaires so not all categories add up to 438
2: Significance: * = Pearson Correlation Sig. (2 -tailed) ! 0.05; not significant: ns
3: The National Office for Statistics in Thailand reports that the average monthly family income in
Bangkok in 2011 was approx. 23,236 baht (100baht = 2.4euro)



27

Figure 13: Age of the respondents
As seen in Figure 13, the main age group of organic buyers in Bangkok is 31-40
years old and 40 years old (88.20% and 89.40% of these groups buy organic products
respectively). Whereas, people age below 20 years old tend to buy less (77.80% of
this group buy organic products).


Figure 14: Gender of the respondents
Figure 14 displays gender of organic buyers. Organic buyers tend to be women,
which is 86.50%, compared to 82.60% of men.
22.2u%
17.Su%
11.8u%
1u.6u%
77.8u%
82.7u%
88.2u%
89.4u%
<2u yeais 2u-Su yeais S1-4u yeais >4u yeais
/CJ
0iganic non-buyeis 0iganic Buyeis
17.4u%
82.6u%
1S.Su%
86.Su%
0iganic non-buyeis 0iganic Buyeis
4JY
Nale Female
28

Figure 15: Respondents have/have not children in the household
From Figure 15, 89% of organic buyers have children in the household, compared to
83.60% of organic buyers do not have children in the household. Noted that the age
of the youngest child living in the household is 1 year old and the oldest is 40 years
old. The mean age is 9.15 years old and the standard deviation is 8.04 years old.
Also, the women are slightly more likely to have a child living in their household
(59.3% of women, compared to 40.7% of interviewed men).


Figure 16: Monthly family income of the respondents
Figure 16 indicates that people who have monthly family income more than 10,000
baht are more likely to buy organic products. As seen that only 77.80% of people
who have family income less than 10,000 baht have bought organic products, which
is around 10% less than the other three groups. While there is not much difference in
those three groups, that is, around 85% of the respondents have bought organic
products.
11%
89%
16.4u%
8S.6u%
0iganic non-buyeis 0iganic Buyeis
+OFHQBJE FE ROJ OPIUJOPHQ
Yes No
22.2u%
11.8u%
1S.8u%
1S.9u%
77.8u%
88.2u%
86.2u%
84.1u%
<1u,uuu baht 1u,uuu-2u,uuu baht 2u,uu1-Su,uuu baht >Su,uuu baht
6PEROHT VDMFHT FEGPMJ
0iganic non-buyeis 0iganic buyeis
29


Figure 17: Education level of the respondents
Figure 17 shows that consumers with a lower level of education are likely to buy
organic products. However, the number of secondary school respondents are 12
people (3% of the respondents), which is unlikely to represent the whole group as 7
out of 12 people are aged above 40 years old, hence the author decides to neglect this
secondary school group. Most of the respondents are mainly BSc and MSc or more,
which accounted for 87% of the respondents. Therefore the author concludes that
those who hold a higher academic degree are more likely to have bought organic
products.
4.2 Purchase and Consumption of Organic Products

Figure 18: Structure of questionnaire and resulting groups of interviewees

9.1u%
17.4u% 17.2u%
11.Su%
9u.uu%
82.6u% 82.8u%
88.7u%
Seconuaiy School Bigh school BSc NSc oi moie
.QIGDRFPE HJZJH
0iganic non-buyeis 0iganic Buyeis
Bave you evei
buy oiganic
piouucts.
(n=4S8)
Yes (S71) No answei (1) No(66)
30

Figure 19: Respondents buy organic products
As shown in Figure 18, there are 438 respondents in the survey. The figure shows
that 371 people have bought organic products, 66 people have never bought organic
products and 1 person has no answer. Translating this into a percentage, Figure 19
displays that 85% of respondents have bought organic products and 15% of the
respondents have not bought organic products.

Table 4: How long have you buy organic products?
Years Frequency Percent
<1 156 35.6
2-5 165 37.7
5-10 32 7.3
>10 18 4.1
Non-buyers and
no answer
67 15.3

Total 438 100


8S%
1S%
u%
)FQ TPI [IT PBCDEFG \BPQIGRU]
Yes
No
No answei
<1 yeai
S6%
2 to S yeais
S8%
S to 1u yeais
7%
>1u yeais
4%
Non-buyeis
anu no answei
1S%
5P^ HPEC ODZJ TPI [IT PBCDEFG
\BPQIGRU]
31
Figure 20: How long do the respondents buy organic products

Table 4 and Figure 20 show that 36% of the respondents have bought organic
products for less than one year. 38% of them have bought the organic products for 2-
5 years. Only 7% and 4% of them have bought the organic products for 5-10 years
and more than 10 years respectively.

Table 5: How often have you and/or your family buy organic products?
Frequency Percent
Every week

70 16
Once a month

149

34

Once every few
months

143

32.6

Never and no
answer
76 17.4

Total 438 100


Figure 21: How often the respondents buy organic products
Table 5 and Figure 21 indicate that 34%, 33% and 16% of the respondents have
bought organic products once a month, once every few months and every week
respectively.


Eveiy week
16%
0nce a
month
S4%
0nce eveiy few
months
SS%
Nevei anu no
answei
17%
5P^ PVRJE ODZJ TPI DEQWPB TPIB
VDMFHT [IT PBCDEFG \BPQIGRU]
32
Table 6: Reason to buy organic products
Frequency Percent
better taste

Yes 129 29
No 309 71
fresher than the other products

Yes 209 48
No 228 52
good for my health

Yes 339 78
No 99 23
good for my children

Yes 194 45
No 240 55
not contain pesticides / have
lower residues

Yes 316 73
No 118 27
want to try something new

Yes 214 49
No 221 51
good for the environment

Yes 58 13
No 375 87
trendy/fashionable to buy
organic products

Yes 55 13
No 380 87
I have a record disease Yes 43 44
No 380 56
*Some information was missing on some questionnaires so not all categories add up to 438


Figure 22: Reason to buy organic products

129
2u9
SS9
194
S16
S8
214
SS
4S
Su9
228
99
24u
118
S7S
221
S8u
S8u
u% 1u% 2u% Su% 4u% Su% 6u% 7u% 8u% 9u% 1uu%
bettei taste
fieshei than the othei piouucts
goou foi my health
goou foi my chiluien
not contain pesticiues have lowei
iesiuues
want to tiy somethcing new
tienuyfashionable to buy oiganic
piouucts
goou foi the enviionment
I have a iecoiu uisease
'JDUPE RP [IT PBCDEFG \BPQIGRU
Yes
No
33
Table 6 and Figure 22 show the reasons why the consumers buy the organic
products. Health (78%) is the major concern for the organic consumers. Followed by
organic products do not contain pesticides and has lower residues (73%), the
consumers want to try something new (49%), fresher than other products (48%),
good for their children (45%), the consumers have a record disease (44%), better
taste (29%), good for the environment (13%), and fashionable to buy (13%).

Table 7: Concerned about the use of GMO in food products versus Organic
buyers and non-buyers
Are you
concerned
about the use of
GMO in food
products?
Organic
Buyers
Organic
non-
buyers
!"#$"%"&'$&( !"
!"##$%$&'$ !"#$""%
!"# !"#$%&
!

Very much 8.90% 12.30% ns
Often 13.50% 7.70%
Sometimes 62.80% 53.80%
Not at all 14.80% 26.20%
Total 100% 100%
1
: Significance: * = Pearson Correlation Sig. (2 -tailed) ! 0.05; not significant: ns


Figure 23: The respondents concerned about GMO in food products
Table 7 reports that 8.9% of organic buyers are very much concerned about GMO
in food products whereas 14.8% of them are not at all concerned about it. Figure 23
illustrates that 10%, 13%, 61% and 16% of the respondents are very much, often,
sometimes and not at all concerned about the use of GMO in food process
respectively.

veiy much
1u%
0ften
1S%
Sometimes
61%
Not at all
16%
/BJ TPI GPEGJBEJQ D[PIR ROJ IUJ
PV 76( FE VPPQ \BPQIGRU]
34
Table 8: Concerned about pesticide residues on vegetables and fruit Versus
Organic buyers and non-buyers
Are you concerned
about pesticide
residues in
vegetables and
fruits?
Organic Buyers
Organic non-
buyers

!"#$"%"&'$&( !"
!"##$%$&'$ !"#$""%
!"# !"#$%&
!

Very much 40.60% 33.30% *
Often 29.60% 19.70%
Sometimes 27.80% 37.90%
Not at all 2.00% 9.10%
Total 100% 100%
1
: Significance: * = Pearson Correlation Sig. (2 -tailed) ! 0.05; not significant: ns


Figure 24: The respondents concerned about pesticide residues on vegetables
and fruits
Asked about their concerns regarding pesticide residues on vegetables and fruits,
Table 8 presents that 40.6% of organic buyers are very much concerned about it
whereas 33.3% of organic non-buyers are very much concerned about it. The 2% of
organic buyers are not at all concerned about it while 9.1% of organic non-buyers
are not at all concerned about it. Figure 24 states that 40% of the respondents are
very much concerned about the pesticide residues. The rest 3% of the respondents
is not at all worried about pesticide residues in food products. Of the respondents,
28% and 29% are often and sometimes concerned about it respectively.

Table 9: Do you think that organic and pesticides-free products are the same?
Frequency Percent
Yes 304 69.4
No 134 30.6
Total 438 100

veiy much
4u%
0ften
28%
Sometimes
29%
Not at all
S%
/BJ TPI GPEGJBEJQ D[PIR
\JURFGFQJ BJUFQIJU PE ZJCJRD[HJU
DEQ VBIFR]
35

Figure 25: The respondents knowledge about organic products
Table 9 and Figure 25 describe that most respondents (69%) misunderstood that
organic and pesticides-free products are the same.

Table 10: When you are sick, do you think about organic products?
Frequency Percent
Yes 274 62.6
No 164 37.4
Total 438 100


Figure 26: When the respondents are sick, do they think about organic
products?
Table 10 and Figure 26 state that 63% of the respondents think about organic
products when they are sick.

Yes
69%
No
S1%
)P TPI ROFE_ RODR PBCDEFG DEQ
\JURFGFQJU`VBJJ \BPQIGRU DBJ ROJ
UDMJ]
Yes
6S%
No
S7%
1OJE TPI DBJ UFG_= QP TPI ROFE_
D[PIR PBCDEFG \BPQIGRU]
36
4.3 Consumers Satisfaction and Decision in Choosing Marketing Mix (4Ps) of
Organic Products
4.3.1 Product

Table 11: Are you satisfied with the range of organic products offered in the
supermarkets?
Frequency Percent
Yes 202 46.1
No 191 43.6
Never buy and no answer 45 10.3
Total 438 100


Figure 27: The respondents satisfaction with the range of organic products in
supermarkets
Table 11 and Figure 27 report that 46% of the respondents satisfy with the range of
organic products offered in the supermarkets.

Table 12: Which organic products do you buy the most?
Frequency Percent
Fruits&Vegetable 322 73.5
Eggs 21 4.8
Rice&Cereal 21 4.8
Dairy Products 8 1.8
Bread&Pasta 5 1.1
Meat 4 0.9
Juice 7 1.6
Canned food 0 0
Never buy and no answer 50 11.5
Total 438 100
Yes
46%
No
44%
Nevei buy anu
no answei
1u%
/BJ TPI UDRFUaFJQ ^FRO ROJ BDECJ PV
PBCDEFG \BPQIGRU PVVJBJQ FE ROJ
UI\JBMDB_JRU]
37

Figure 28: Which organic products the respondents buy the most?
Table 12 and Figure 28 depict that fruits and vegetables are the most popular organic
products that consumers buy, which count as 73%. Followed by eggs, rice & cereal
each for 5%, milk for 2%, bread & pasta and meat each for 1% respectively.

Table 13: Are brands and labels important for you in buying organic products?
Frequency Percent
Yes 357 81.6
No 46 10.5
Never buy and never buy 35 8.0
Total 438 100

Fiuits&vegetable
7S%
Eggs
S%
Rice&Ceieal
S%
Nilk
2%
Bieau&Pasta
1%
Neat
1%
}uice
2%
Nevei buy
11%
1OFGO PBCDEFG \BPQIGRU QP TPI [IT ROJ
MPUR]
38

Figure 29: Are brands and labels influence the respondents to buy organic
products?
Table 13 and Figure 29 point that 82% of the respondents agree that brands and
labels is vital for them in choosing organic products.
4.3.2 Price

Table 14: Is the price of organic products a problem for you?
Frequency Percent
Yes 192 43.8
No 199 45.4
Never buy and no answer 47 10.7
Total 438 100


Figure 30: Is the price of organic products a problem for the respondents?
Owning to Table 14 and Figure 30, 44% of the respondents say that the price of
organic products is a problem for them whereas 45% mentioned an opposite.
Yes
82%
No
1u%
Nevei buy anu
nevei buy
8%
/BJ [BDEQU DEQ HD[JHU FM\PBRDER
VPB TPI FE GOPPUFEC PBCDEFG
\BPQIGRU]
Yes
44%
No
4S%
Nevei buy anu
no answei
11%
$U ROJ \BFGJ PV PBCDEFG \BPQIGRU D
\BP[HJM VPB TPI]
39
Table 15: How many more percent are you willing to pay for organic products
compared to normal products?
Frequency Percent
1-3% 113 25.8
5% 113 25.8
10% 103 23.5
20% 51 11.6
30% 8 1.8
40% 6 1.4
No answer 44 10.2
Total 438 100


Figure 31: How many more percent are the respondents willing to pay for
organic products?
In accordance with Table 15 and Figure 31, 52% of the respondents are willing to
pay 1-5% more for organic products than conventional ones. Of the respondents,
23% and 12% are willing to pay 10% and 20% premium price respectively. While
1% and 2% of them are obliged to pay 30% and 40% price premium respectively.


1-S%
26%
S%
26%
1u%
2S%
2u%
12%
Su%
2%
4u%
1%
No answei
1u%
5P^ MDET MPBJ \JBGJER DBJ TPI
^FHHFEC RP \DT VPB PBCDEFG \BPQIGRU
GPM\DBJQ RP EPBMDH \BPQIGRU]
40
4.3.3 Place

Table 16: Where do you buy organic products?
Frequency Percent
Carrefour 117 26.7
Villa 86 19.6
Tops 65 14.8
Lemon Farm 57 13.0
Au Tor Kor Market 67 15.3
Bonmache Market 25 5.7
Royal Project 6 1.4
Food Land 4 0.9
Gourmet Market 1 0.2
Green market 0 0
Hospital Market 1 0.2
Organic Exhibition 1 0.2
Organic Farm 0 0
Organic Retailer 2 0.5
Never Buy 6 1.4
Total 438 100


Figure 32: Where do the respondents buy organic products?

Caiiefoui
27%
villa
2u%
Tops
1S%
Lemon Faim
1S%
Au Toi Koi
Naiket
1S%
Bonmache
Naiket
6%
Royal Pioject
1%
Foou Lanu
1%
0iganic Retailei
1%
Nevei Buy anu no
answei
1%
1OJBJ QP TPI [IT PBCDEFG \BPQIGRU]
41
Due to Table 16 and Figure 32, more than half of the respondents tend to shop the
organic products more in department store than in specialized stores or in the wet
market. The main department stores, where the respondents buy the organic products
in Bangkok is Carrefour (27%), Villa (20%), TOPS (15%), Foodland (1%). The main
specialized stores, where people purchase the organic products in Bangkok are
Lemon Farm (13%), Royal Project store (1%) and other retailers (1%). The major
wet organic markets in Bangkok are Au Tor Kor market (15%) and Bon Mache
Market Park (6%).

Table 17: Why do you choose to buy organic products at the above places?
Frequency Percent
Close to home 119 27.2
Reliable 80 18.3
Variety of products 28 6.4
Fair price 25 5.7
Good service 11 2.5
Fresh products 78 17.8
Certified products 49 11.2
No answer 48 10.9
Total 438 100


Figure 33: Why do the respondents buy organic products at the above places?

Close to home
27%
Reliable
18%
vaiiety of
piouucts
6%
Faii piice
6%
uoou seivice
4%
Fiesh piouucts
18%
Ceitifieu
piouucts
11%
No answei
11%
1OT QP TPI GOPPUJ RP [IT PBCDEFG
\BPQIGRU DR ROJ D[PZJ \HDGJU]
42
The main reason for the respondents to purchase the organic products at the preferred
location, illustrating in Table 17 and Figure 33, is comfortable for organic consumers
in terms of distance from home (27%). The following second reason is reliable and
fresh products (18%). The remaining reasons of buying organic products at the
favorable location are the products are certified (11%), a variety of products (6%),
fair price (4%), and good service (4%).

Table 18: Do you prefer organic retailers to department store?
Frequency Percent
Yes 273 62.3
No 107 24.4
No answer 58 13.3
Total 438 100


Figure 34: Do the respondents refer organic retailers to department store?

Table 19: Why do you think organic retailers are better compared to
department store?
Frequency Percent
Better quality 170 38.8
More variety 87 19.9
Have specialist 39 8.9
No answer 42 32.4
Total 438 100

Yes
62%
No
2S%
No answei
1S%
)P TPI \BJVJB PBCDEFG BJRDFHJBU RP
QJ\DBRMJER URPBJ]
43

Figure 35: Why do the respondents prefer organic retailers to department store
Table 18, Table 19, Figure 34 and Figure 35 report that 63% of the respondents
prefer to purchase organic products at specialized and retailers stores more than in
department store due to the fact that the consumers believe in specialized stores that
they will provide better quality (39%), more variety (20%) and they have specialist
in the shop (9%).
4.3.4 Promotion

Table 20: Which channels are the most effective for you in knowing about
organic products?
Frequency Percent
TV 212 48.4
Radio 5 1.1
Books and Magazines 39 8.9
Social Media 47 10.7
SMS 6 1.4
Organic Exhibition 34 7.8
Internet 24 5.5
Ads Board 10 2.3
Asking specialist in the
shop
16 3.7
Shop Booth 37 8.4
No answer 8 1.8
Total 438 100

Bettei
quality
S9%
Noie vaiiety
2u%
Bave specialist
9%
No
answei
S2%
1OT QP TPI ROFE_ PBCDEFG
BJRDFHJBU DBJ [JRRJB GPM\DBJQ RP
QJ\DBRMJER URPBJ]
44

Figure 36: Channels that the respondents know about organic products
Table 20 and Figure 36 depict that the respondents use TV (48%) as the most
effective channels in knowing about organic products whereas Radio and SMS are
the less effective ones (each 1%). Followed by social media (11%), books and
magazines (9%), organic exhibition and shop booth (each 8%), Internet (6%) and
asking specialist in the shop (4%).

Table 21: Which service do you like the most?
Frequency Percent
Home Delivery 128 29.2
Giving Information about
organic
99 22.6
Specialist in the shop 47 10.7
Product replacement 23 5.3


Discount 91 20.8

Suggestion box 5 1.1
No answer 45 10.3
Total 438 100

Tv
48%
Rauio
1%
Books anu
Nagazines
9%
Social Neuia
11%
SNS
1%
0iganic
Exhibition
8%
Inteinet
6%
Aus Boaiu
2%
Asking specialist
in the shop
4%
Shop
Booth
8%
No answei
2%
1OFGO GODEEJHU DBJ ROJ MPUR JVVJGRFZJ
VPB TPI FE _EP^FEC D[PIR PBCDEFG
\BPQIGRU]
45

Figure 37: Service that the respondents like
Talking about which service people like the most, owning to Table 21 and Figure 37,
the respondents refer home delivery as the most likable service in the organic shop
(29%) while suggesting box is the least likable one (1%). There are many services
that organic buyers mention as follows: giving information about organic (23%),
discount (21%), specialists in the shop (11%) and product replacement (5%).
4.4 Organic Small and Medium Retailers (SMRs) in Bangkok, Thailand
4.4.1 Leading Companies and Organizations in Thailand
There are three different categories of organic organizations: 1) Direct Sales/Farmers
Markets, for example the organic bazaars 2) Retail 3) Wholesale/Retail/Export. Most
of organic organizations presented in this chapter are in the third category.
Green Net (Thailand)
The summary of Interview and presentation [2] in Organic Symposium 2013
with Mr. Vitoon R. Panyakul, the Thai Organic Trader Association (TOTA)
Chairperson, on May 10
th
- 11
st
, 2013 at Meeting room 1-2 of Queen Sirikrit
Conventional Centre, Bangkok. The author also consulted with articles,
journals and books in a Green Net library.
About
Green Net, a co-operative of organic farmers, was formed in 1993. It wholesales
organic products made by Thai farmers to retailers, as well as exports. About 80
percent of its products are exported, mainly to Europe. Its product range comprises
Bome Beliveiy
29%
uiving
Infoimation
about oiganic
2S%
Specialist in
the shop
11%
Piouuct
ieplacement
S%
Biscount
21%
Suggestion box
1%
No answei
1u%
1OFGO UJBZFGJ QP TPI HF_J ROJ MPUR]
46
of organic rice, fruit, vegetables, herbs & spices, shrimps, and herbal tea. At present,
it sells through four channels; 1) shop in Bangkok, 2) wholesale to Green Health
shops in Bangkok and other provinces in Thailand, sell organic products to
convenience shops, 3) export of rice to European fair-trade groups, and 4) direct sale.
Green Net has initiated an information database on its producer groups to support
Green Net's publicity activities. Green Net Marketing policies are as follows:
1) Fair Trade for Thai Farmers
2) Organization centralized, expand distribution channels as well as retailers
shop, wholesale and retail chain stores, expand the production source
3) Promote the expansion of production lines, product development and product
processing.
4) Promote an alternative health and environment-friendly food for Thai organic
consumers
5) Create campaign to boost consumers organic agriculture knowledge. Enable
them to realize the drawbacks of food chemicals and understand the organic
food consumption concept, which relates to farmers benefits. Reduction of
chemical export and pesticide sickness. Improvement of economic, and
environment. Farmers can sell their products in fair trade and consumers
adapt to food consumption according to season and environment.

More analysis and Case study of Green Net Marketing Strategies and Plans will be
discussed more in Section 5.5. Please refer to Section 5.5 for further details.

Aden
The summary of Interview with an Aden CEO, Mr. Kitipong Pataraturanan in
May 23
rd
2013 (14.20 p.m.-15.20 p.m.)
About:
Aden was established 15 years ago. Aden focuses on 2 main businesses 1) Organic
Aden Super Store 2) Aden International. The Organic Aden Super Stores, which are
in charge of domestic products, have 10 branches located in the main city in
Thailand e.g. Bangkok, Cheng Mia, Lam Pang, Kon Kaen and Ubon Ratchathanni.
Whilst Aden International is responsible only for the export market, its market focus
has changed from 80% export/20% domestic to 90% export/10% domestic. Its shops
change from 10 stores to 6 stores. Aden provides around 2,000 organic items. The
main export products are all kinds of organic rice as the first place followed second
by processed organic food.
Vision:
Promoting sustainable environment and improving human health by avoiding
chemical and pesticide polluted products. Mr. Kitipong mentioned that nowadays
people in Thailand suffered from diseases such as cancer. One of the reasons of
people having cancer is that they eat polluted food. He said it is a shame that right
now hospital business is so booming because Thai people tend to get sick.
Highlighted Marketing Strategies:
- Membership systems: in each store around 10,000 members, 3% discount (for
customers who do not bring their own shopping bag), 5% discount (for customers
47
who bring their own shopping bag)
- Promote environment awareness: reduce using plastic bags
- Monthly newsletter about organic farming, organic products, health and promote
environmental awareness
- Contract Farming: promote farmers to convert to organic farming and send
products to the stores once or a few times per week. The advantages are that Aden
can have more variety of fresh fruits and vegetables all year round.
- Certification: Organic Thailand Certification is enough to export within Thailand
and Asia. Other certification is necessary depending on target countries.
- E-Commerce: consumers buy products online and home delivery becoming a trend.
Mr. Kitipong believed that there is no need for consumers to come to the shop
anymore since most of the transaction should be done via online in the future.
Mr. Kitipong told that Aden and other organic organization in Thailand do not need
to fully focus on the marketing budget since the organic supply is not that sufficient
to the demand. He recommended that the new organic retailers should start slowly
and firmly in this organic agriculture business. He saw many organic organizations
failed because they cannot provide ample products to the market due to various
reasons, for example, adverse weather condition (e.g. extremely hot weather in
Thailand) and insufficient products to the market. Hence organic food process and
organic produces species are recommended to be developed in order to stand for
such extreme weather condition in Thailand.
Target Group:
Focus on 35 year-old women who have children in the household, Distance of 1-
kilometer proximity from each store. 80% of consumers are 35 year-old women who
have children in the household. 15% of consumers are elders and patients. Mr.
Kitipong mentioned that the people, who have children in the household, tend to buy
healthy food. They also concerned about their health and other family members.
Organic Business in Thailand:
- In Thailand, organic business is growing and it is time for promoting and
giving knowledge to Thai people about organic products. Mr. Kitipong
mentioned that there is a 300% increase in health awareness of Thai people
who concern about organic especially people with high level of education.
However, the organic sales are not that much increase (only 15% increase
from last year) due to the high cost of living in the big city and the effects of
the economic crisis in Thailand. He told that Thai people have the same
income but things are getting more expensive. Therefore, they spend most
income for rent and transportation.
- In terms of competitors, Mr. Kitipong said that there is no competition in this
organic market because the business is quite new and growing. The more
competitors are actually good for overall Thailands organic market since
they will drive Thailands organic market from niche market to the
mainstream market and get Thai consumers know more about organic food.

48
Thai Organic Co.,Ltd 25.05.2013
The summary of Interview of Mr. Karn Reitkajorn, the general manager of
Thai Organic Co.,Ltd on May, 25
th
2013 at Organic Pavillion, Thaifex- World of
Food Asia, Thailand
About:
Thai Organic Farm located in Ratchaburi province and its area is 6 hectares. It has
opened for 13 years. The most popular product is seasoning sauce, organic vinegar.
Fresh fruits and vegetables have a steady sale since they have loyal customers for 13
years. It has got 2 contract farmers producing organic vegetables, herbs, and rice.
Most of these products are sold locally in Thailand. It received certification in 2001,
from ACT Thailand and it also is a member of IFOAM. Thai Organic Co.,Ltd
distributes products to various stores in Thailand e.g. TOPS, MaxValue, Lemon
Farm, Agency in each province (one shop each province).
Highlighted Marketing Strategies:
- Organic Farm One-Day Tour: Thai Organic Co.,Ltd lets customers go to its
organic farm in Ratchaburi province and it arranges organic farming activities
such as organic vegetable planting and picking, organic lunch and drinks. As
a result, the customers know more about organic food
- Facebook (Like and Share to expand the base of online consumers): this is
the most popular fan page for organic product in Thailand
- Event within Thailand and in Biofach Germany
- Customer recommended each other
Now they are shifting focus to Processed food such as an organic seasoning sauce,
organic vinegar export to UK, Switzerland, Austria, and France. However, organic
market in Germany is very hard to entry even though they have been to BioFach in
Germany for nine times.
Target Group: Women of 35 years old with children in the household. Besides,
there is a shift of consumers perception. Table 22 represents the initial and current
perceptions on consumers of Thai Organic Food.
Organic in Thailand: Mr. Karn said the organic market in Thailand is growing
rapidly and the price will become cheaper since most of organic organizations would
like to bring products into the mass market. He mentioned that some of his product
such as organic vinegar is even cheaper than one in the supermarket.
Obstacles doing organic business:
Mr. Karn mentioned As SME business, we have limited technology, and limited
fund for research development. Some SME business finds the solution by loaning
from the bank but we dont do that. This is why we are not that fast in terms of
expanding our exported market compared to other SMEs. However, we have
sufficient products available and ready to rock the market as our price is quite cheap
compared to our competitors. We also would like to expand our market abroad

49
Table 22: Initial and current perceptions on consumers of Thai Organic Food,
taken from [51]

*IPM: Integrated Pest Management or Safe or Hygienic

Rangsit Farm
The summary of interview and presentation [95] of Mr. Parinya
Pornsirichaiwattana, the Rangsit Farm CEO on May, 10
th
2013 at Meeting
room 1 of Queen Sirikrit Conventional Centre, Bangkok.
About:
Rangsit Farm is the leading supplier of organic fruit & vegetables in Thailand.
Formed in the mid 1990s, the company grows organic fresh produce, wholesales to
retailers and other channels. It mainly deals with organic leafy vegetables like
lettuce, spinach and cabbage. Other organic products include fruits like bananas,
jackfruit, and papayas; vegetables like cucumber, tomatoes, beans; herbs & spices
like lemongrass and chilies. Marketed under the Organic Siam brand, its products are
mainly found in supermarkets. It also supplies health food shops, hotels, cafs, as
well as direct to consumers. It uses integrated crop production on its farm and
promotes the relationship between producers and consumers.
Vision:
Doing Organic Agriculture uses art and science. We are passionate and have a
good attitude about organic agriculture. The organic agriculture promotes our
health and environment, economic and social to be better and sustainable
Highlighted Marketing Strategies:
Rangsit Farm does not export since its focus is in domestic. Its main strategies are to
drive local consumptions and to drive country image e.g. promotion through a luxury
hotel like Grand Hyaat Thailand, and promotion through popular chef. Rangsit Farm
wants to make organic products to the mainstream products in the future so that
Thailand can minimize organic products import, as it is a high potential organic
producer in Thailand.

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50
Health Society Co.,Ltd (Lemon Farm)
The summary of interview of Ms. Suwanna Langnamsung, the Health Society
Co.,Ltd CEO on May, 15
th
2013
About: Over the past 12 years, Lemon Farm operates organic food stores, which are
located in the middle of the metropolis, utilizing organic market to link between
urban consumers to rural producers. The ninth branch of Lemon Farm has just
opened in the large shopping center with a macrobiotic restaurant in the midst of
many consumers interested in organic food and products.

Vision: To find, develop and manage high quality organic products and food in
sufficient quantity to meet the consumers needs. At the same time, she mentioned
We also support producers, that is rural farmers doing good work and growing
organic produces Ms. Langnamsung said that We are not born to use our lives in
any which way, but we were born to consider with this life that we were given what
can we do and what are we ready to do while we live

Marketing Strategies: Ms. Suwanna mentioned We work with over 200 rural
small-scale farmers, invite and support them to make a transition to organic farming.
We work as the farmers friends and fellow invested partner, through tough times
and good times, solving problems together. We plan our production and marketing
together in a new way, upholding and in balance with nature, the seasons and the
life of the producer. Moreover, we would like to gain the trust of consumers and
spread the organic knowledge, be honest, connect producers and consumers as
equals.

Difficulties in doing organic business: Ms. Langnamsung mentioned that After we
invite conventional farming producers to convert to organic farming, we aim that we
will need to take care them and take responsibility together because organic
agriculture is hard work starting from the producer level onwards. The producers
need to give their heart to it. If they are not really convinced, they may give up easily
since the produce yields may drop 30-50%. Hence, they have to be confident that
there is a market that sees the value of this work

Thailand Ministry of Commerce
The summary of interview and presentation [3] of Mr Sithiporn Bangkaew,
Thailand Ministry of Commerce in Surin Province, on May, 10
th
2013 at
Meeting room 2 of Queen Sirikrit Conventional Centre, Bangkok.
Mr. Bangkaew told that Thailand Ministry of Commerce sets up four major
marketing strategies to support all the organic organizations in Thai organic market
and to satisfy the growing number of organic consumers in Thailand. Organic
Product Promotion Strategies from Ministry of Commerce are as follows.
1. Capacity Building
- Educate producers, contributors, processors and exporters about organic
business and organic product marketing
- Coordinate and help fund the organic organization
- Build an organic network

2. Market Expansion
- Marketing outside Thailand e.g. Biofach 2013 in Germany and Organic
Pavillion at Thaifex- World of Food Asia in Bangkok
51
- Marketing inside Thailand e.g. Organic and Natural Expo, Organic
Symposium, Organic Business Community (Permanent and Temporary)

3. Value Creation
- Development of R&D
- Promotion of Organic Branding, Product and Packaging Development
- Educate organic organization about the certification issue

4. Trade Facilitation
- Promote various kinds of distribution channels
- Educate related parties in terms of logistics, supply chain to reduce the cost
and preserve products quality

4.4.2 Five Forces Analysis
Porters five industrial forces framework (1985) is an important tool to analyze the
main forces acting on an industry and whether the industry presents high barriers or
tough competition. Companies should always use the framework to develop an edge
over rival firms and use this model to better understand the industry context in which
the firm operates, determine the profitability of a new market they are planning to
enter and develop their strategy. Some markets and industries exhibit extreme
competition with high entry barriers whereas some others are still maturing in order
to be fit for new entrants. In this part of the analysis, retailers such as supermarkets
will be taken as industry players and consumers will be stated as buyers. Porter
divides the forces acting on an industry into five parts: Buyer power, supplier power,
degree of rivalry, threat of new entrants, and threat of substitutes. The acting powers
on Thai Organic Product Industry are illustrated in Figure 38.

Figure 38: Five forces of Thai Organic Product Industry, taken from [91]
1. Buyer Power: The vast volume of potential customers of the food retail industry
diminishes the power of individual consumers. The revenue generated by any
particular consumer is virtually insignificant for the retailer. However, collectively,
consumers have the power, as buyers and their interest will decide the future of the
industry. Therefore, retailers cannot afford to disregard consumer trends and

Figure 4: Five Forces oI Norwegian Iood retailing industry (Source: DataMonitor, 2010)
52
demands. Due to this bi-polarity, the buyer power in the food retail industry is
considered to be moderate.
2. Supplier Power: Suppliers of the organic retailers are food manufacturer, farmers
and agricultural co-operatives, club and network. Large retail chains such as Green
Net often maintains strong relationships with a number of suppliers in order to
establish stability in terms of food supply and price. Therefore, suppliers have a
power over the retailers as they control the input to their businesses. However, the
huge size of the retail chains often diminishes such bargaining power since losing a
single customer can mean losing half of suppliers business. Therefore, the bargaining
power of suppliers is considered moderate.
3. Degree of Rivalry: The degree of competition in the food retail industry is often
one of the fiercest ones among all industries. There are a substantial number of new
organic retailers enter into an organic market compared to the past few years as
organic business is growing. The lack of substantial switching costs for the
consumers places a huge pressure on retailers to secure their loyalty. Such pressure
often exhibits itself in price wars enhanced furthermore, by the limited availability of
differentiation in the product range. Therefore, the degree of rivalry in the industry is
considered high.
4. Threat of New Entrants: Large scale, established retailers e.g. Maxvalue
supermarket who is recently opened many of its branches around the populated
community selling both conventional and organic products, hold an uphold
advantage in operating their businesses in ways that benefits significantly from
established connections, economies of scale and by being able to employ aggressive
pricing schemes that cannot possibly be matched by small players in the long term.
However, even the large retailers are not invulnerable to the threat of new entrants
due to the exit and entry costs been relatively low in the industry. Therefore,
although a possible fact that may bother industry players from time to time, the threat
of new entrants is considered to be moderate.
5. Threat of Substitutes: The only possible substitutes for the food retailing industry
are food service such as organic restaurant and fast food chains and subsistence
agriculture where individuals grow their own food such as city farm project in
Bangkok, where organic organizations promote Bangkok people to grow their own
organic produces in their backyard and at the roof deck. On the other hand,
restaurants, fast food and subsistence agriculture alternative in Thailand is in small
scale, thus they are not able to hold a reasonable position as a substitute.
Furthermore, individual farming practices are usually unrealistic in a big city like
Bangkok where the majority of the population resides in urban areas. Therefore, the
threat of substitutes in the industry is considered to be low.
4.5 SWOT Analysis of Organic Agriculture Business in Thailand
To understand how Thai organic product sales have grown to more than !5 million a
year for a last few years [Figure 1] and what actions will be executed to continue this
trend, the six key actors of organic business in Thailand were interviewed. The
author incorporated SWOT analysis, the overall evaluation of Thai organic
businesss strengths, weaknesses, opportunities and threats. Essentially, strengths and
weaknesses are considered from an internal environment, whereas opportunities and
threats explain external factors. SWOT findings can be very useful to lead the
organic retailers and community to meet their marketing objectives.
53
In order to facilitate the readers to gain full understanding about Thai organic
business, the author consolidated a cross-reference at the bottom of each section that
connects possible strengths and weaknesses to coordinating threats and opportunities
and vice versa. Figure 39 describes SWOT analysis of organic business in Thailand.


Figure 39: SWOT Analysis of organic business in Thailand

STRENGTHS
The key actor interviewees were asked what were the biggest strengths of the organic
business in Thailand, several advantages are displayed including consumer demand,
audition and certifications, supporting organizations, organic legislation, and
Thailand as an agricultural country. A number of research also show the benefit of
organic versus conventional products.
Consumer demand
According to the authors survey, 85% of consumers have bought the organic
products meaning that Thai consumers strongly support organic products. There are
growing numbers of organic consumers in Bangkok. The distribution channels are
also expanding to the city hospital, city school, city department store, and several
green markets. These groups of consumers influence producers and farmers to turn
into organic farming.
Threats: Information and choice overload, Demand over supply, Global trade barriers
Opportunities: Rising domestic market, Mounting export market, Consumer education
Audition and certification bodies
There is an organization and management bodies in Thailand, who are responsible
for organic audition and certification from production, and process. They try to make
their certification be accepted by other countries. Moreover, the organic distributors
are willing to pay for audition and certification expenses. There are also internal
audits among a group of farmers, which can save a lot of money.
Weaknesses: Consumer confusion
Threats: Information and choice overload, Opportunity: Consumer education
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54
Strong green network and export organization
There are mainstays in each community who are successful in commercial organic
farming. Some are even able to educate other farmers and people, and hold seminar
in doing organic farming. A group of producers is able to create a green network
among their community in order to attract consumers to purchase the organic
products. The green network is in the main city, for example, Bangkok, Chieng Mai,
Surin, Mayasarakam, and Songkra. Export organization in Thailand has good
management and organization experiences in exporting the organic products.
Therefore fresh products are kept in good condition for a longer period of time. For
example, export organization uses outstanding packaging to promote the product
images and prolong the products age.
Weaknesses: Producer motivation, Threats: Global trade barriers
Opportunities: Rising domestic market, Mounting export market
Organic legislation
The act regarding agricultural products, from 20
th
February 2012 onwards, scripted
that agricultural producers must control the standard in using chemicals and be
responsible for consumer loss due to polluted produces. This encourages producers
to grow organic products.
Weaknesses: Consumer confusion
Threats: Conflicting voices, Opportunities: Consumer education
Thailand as an agriculture country
Thailand is always known as Kitchen of the World which refers to its importance
as a producer and exporter of food commodities. Thailand has sufficient resources,
suitable climate for organic products all year round. An agriculture area in Thailand
varies in different height ranging from 50 meters to 500 meters. Especially in upland
areas, where use of pesticide is minimal, may be ideal for establishing certified
organic production zones without the need to pass through a long transition period
before certification is granted. Moreover, producers can produce all kinds of high
quality vegetables including organic, local, and winter vegetables. For example,
Organic Thai Hom Mali Rice is the original, genetically unmodified species of Thai
rice, which is globally renowned for its excellent taste. Efforts have been made by
several countries to grow it, but none has managed to outperform the Thai quality so
far.
Weaknesses: Producer motivation, Price barrier, Insufficient agriculture research
Opportunities: Rising domestic market, Mounting export market
Threats: Global trade barriers
WEAKNESS
As organic market in Thailand is young, there are many issues to be improved.
According to the key actor interviewees, they pointed out many problems comprising
of consumer confusion, producer motivation, price barrier, and insufficient
agriculture data.
Consumer confusion
The author survey indicates that 69% of respondents confused between organic and
pesticide-free products. Furthermore, the study of Birgit Roitner-Schobesberger
pinpointed that organic consumers in Bangkok cannot differentiate the labels
meaning. Mr. Karn from Thai Organic Co.,Ltd also confirmed that most consumers
confused about the use of technical language to define organic. He mentioned that
55
most consumers do not easily understand terms such as organic in Thai and often
fail to connect with a term on an emotional level.
Threats: Information and choice overload, Conflicting Voices
Opportunities: Consumer education
Producer Motivation
Ms. Suwanna from Lemon Farm mentioned that farmers are skeptical to change from
conventional to organic farming due to no financial support for the organic start-up
farmers. So, they may be in the loss in the short period when they first begin their
organic farming. In addition, types of vegetables, which are produced by SME
organic organizations, are mainly consumed within Asian countries but not the main
products in USA, Europe and Japan. The main products of USA, Europe and Japan
are bamboo shoot and baby corn. She explained that organic producers in each
province are not able to network firmly. Hence, they cannot plan in advance to grow
a variety of produce as well as unstable quantity. Small-scale production is done
because large-scale production needs lots of financial and labors. Meanwhile,
farmers do not have knowledge about documentation, internal audition, quality
control and standard procedure. They are lack of equipment and facilities, for
example, cool room facility, and cooling systems for organic produces to be
transported to distant areas.
Strengths: Consumer demand, Thailand as an agricultural country, Threats: Conflicting voices
Opportunities: Rising domestic market, Mounting export market
Price barrier
According to the result, 44% of consumers think that the organic products are costly.
Mr. Kittipong from Aden told that the price of the organic products in Thailand is
relatively high compared to the other countries in Southeast Asia.
He commented that the demanding tasks are to educate consumers about the true
costs and values associated with the organic products.
Strengths: Consumer Demand, Threats: Demand over supply, global Trade Barriers
Opportunities: Consumer Education
Insufficient agriculture research
There are a small number of research institutes, information source regarding organic
production, marketing, and R&D. Moreover, there are no links between organic
organizations and governmental organizations.
Strengths: Strong green network and export organizations
OPPORTUNITIES
The key actor interviewees were requested to give their opinions about the biggest
opportunities for organic business in Thailand. Responses included rising domestic
market, mounting export market, environmental leadership, and consumer education.
Rising domestic market
Mr. Sithiporn from Thailand Ministry of Commerce responded that organic market is
growing in Thailand as he saw there were twice of organic retailers in Organic
Natural Expo this year compared to last year event. There are plenty of annual
organic events, where producers are able to promote and negotiate with the traders
e.g. Thaifex event, Thailand Health & Beauty event, Made in Thailand event, and
OTOP city event. There are many organic business associations establish to promote
56
and give knowledge to consumers about organic agriculture through mass media and
other sources. As he mentioned that the government supports and promotes
producers to use organic fertilizers instead of chemicals so that the farmers are
interested in doing organic farming. In addition, there are several new marketing
channels, for example, chef from famous restaurant, hospitals, and spa center, where
active organic buyers are willing to purchase the organic products from them.
Weaknesses: Consumer confusion, Producer motivation, Price Barrier, Insufficient agricultural
research, Threats: Demand over supply
Mounting export market
Mr. Karn from Thai Organic Co.,Ltd told that European countries, USA, and Japan
are current market for Thai organic products. Meanwhile, Asian countries are new
market. Therefore, an organic organization is able to negotiate the price with the
current market and expand the products in the new market. Besides, there is a clean
and healthy food consumption trend. The market is wide open for the new kinds of
organic food. Furthermore, there are a lot of potential organic distributors in foreign
market and many channels to export fresh and processed organic food.
Weaknesses: Consumer confusion, Price Barrier, Insufficient agricultural research
Threats: Demand over supply
Environmental leadership
There is a big trend in conserving environment and organic agriculture is a pioneer of
sustainability movement. Nevertheless, from the authors result, environmental
concern is among the lowest reason to purchase the organic products for the
consumers. Mr. Karn from Thai Organic Co.,Ltd said that When we host one of our
organic one day tour, the consumers are very curious to learn about how we can
grow the produces organically and interested in knowing about how organic will help
our environment.
Weakness: Consumer Confusion, Threats: Information and choice overload
Consumer education
There are mounting opportunities to communicate, correct the misunderstanding and
educate consumers about organic. The organic retailers and organizations should be
proactive in their messaging strategies. Online marketing are the most effective tools
to stimulate and engage online conversation about organic agriculture and products.
Thus, the organic retailers have the opportunity to elevate the emotional
attractiveness of organic agriculture and products.
Threats: Conflicting voices
THREATS
Threats are described as external conditions that could damage performance or
growth. While these things may be out of the organic businesss control, it is
worthwhile to be aware of these threats and take actions to minimize any plausible
negative effects. The key actor interviewees specified the threats, which include
information and choice overload, demand over supply, global trade barriers, and
conflicting voices.

57
Information and choice overload
Consumers are confused since there are too many organic brands, labels, and
certifications. Thus, the organic retailers and organizations need to put an effort to
both educate consumers about the unique benefits of organic products.
Strengths: OrganiclLegislation, Weaknesses: Consumer confusion
Opportunities: Consumer education
Demand over supply
Mr. Kittipong referred that Aden had some problems that the demand of the organic
products are more than the supply. Therefore, Aden needs to expand its contract
farming agreement with more farmers. While importing products maybe a solution,
some organizations are skeptical to do so because they believe that it may hinder the
expansion of organic domestic market. In addition, some consumers hesitate to
purchase import product due to food safety.
Strengths: Consumer Demand, Strong green network and export organizations
Weaknesses: Insufficient Agricultural research
Opportunities: Rising domestic market, Mounting export market
Global trade barriers
Mr. Sithiporn from Thailand Ministry of Commerce mentioned that European
countries, USA and Japaneses market has their own certifications. Therefore, a
complication of auditions and certifications may occur because they do not support
different organic certifications. Furthermore, Thailand is not in the list of Article II
List Countries of the European Union. Therefore, there is more cost regarding
documentations and exporting issues if it would like to export its organic products to
Europe. Besides, some values, for example, Food Miles* are the main obstacles for
Thai organic organizations to export to another country.
Strengths: Strong green network and export organizations
*Food Miles is a term, which relates to the distance food is transported from the time of its
production until it reaches the consumer.
Conflicting voices
The organic business in Thailand is at risk due to the many conflicting voices that
create an intensive discussion in the media. Thus, it distributes consumer confusion
on issues, for example, organic regulation and agreement.
Weaknesses: Consumer confusion, Opportunities: Consumer education


58
5. Discussion
5.1 Summary of Research Results
The authors survey confirms the assumption that women are mentioned as being
more interested in purchasing organic products [20, 29]. Men tend to be
overrepresented in the group of organic non-buyers and underrepresented in the
group of organic buyers. The majority of age is above 40 years old for the organic
consumers. The relationship between education and the group of organic buyers and
non-buyers are also significant, which agree with the results from Torjusen et al. [56]
and Wier and Andersen [54]. Furthermore, the authors result is in accordance with
the study of Lockie et al. [29], indicating that income had an effect on the
consumption of the organic products.
From the authors survey, it shows that 77% and 73% of the respondents buy organic
products due to it is good for health and it contains no pesticides respectively. One of
them is a CONDOR research project. CONDOR research project [83] conducted a
survey of 8400 consumers in eight countries in Europe, which includes Denmark,
Finland, Germany, Greece, Italy, Spain, Sweden and the UK. It found that health
motivation was the strongest influence on purchase.
According to the authors result, only 29% of the respondents stated that organic
food does not have better taste comparing to conventional ones. This result is
affirmed by Harriet Vogts study [84] that organic enthusiasts do not necessarily pick
the organic or even distinguish it from its non-organic counterpart. Qualitative
research indicated that sometimes consumers describe positive taste attributes to
organic foods where no appreciable difference necessarily occurs. Some suggest that
it associated with feel-good factor, which can be translated into a genuine sense of
enjoyment.
Due to the authors survey, 45% of the respondents say that organic food is good for
their children. It was affirmed by the study indicating that the birth of a child was the
trigger for buying organic food for the first time. In UK, organic baby food
accounted for 43% of the total baby food market. Furthermore, the demand is so high
that Sainsburys has discounted its own-label non-organic baby food range [85].
There is a significant relationship between the group who concern about pesticide
residues in food products and those who buy organic products, which is confirmed
by the research of Birgit Roitner-Schobesberger [8]. According to the survey, 69% of
the respondents confuse about organic products VS low-pesticide products therefore
the organic retailers should provide them with a constant knowledge about the
organic product differentiation.
5.2 Organic Consumer Segmentation
Organic Consumer Segments are an initial step for product positioning. The name
given to segments or how a market is divided into segments can vary greatly
depending on the countries. Each country can be divided into different consumer
segments allowing marketers and producers to easier target their organic consumers.
In this thesis, the author explains different segmentations illustrating consumers in
terms of their demographics, consumption readiness and organic product buying
motives. Furthermore, Green Nets case study focusing on its targeted market is also
presented.
59
5.2.1 Demographic Segmentation
A study from National Research Council of Thailand [5] confirmed the authors
result that organic buyers usually have children or elders in the household and prefer
to buy organic products in specialized organic retail store due to its better quality and
variety of products. In addition, their buying decisions are usually influenced by the
mass media, friends, sales representatives in the store and labels. The study [5]
categorizes Thai organic food consumers into 3 groups as follows:
1) Middle class: People who live in the city, have 1-2 children, have !750-!1,500 as
average monthly salary
2) Healthy women: Working women or housewife who has health awareness
3) Healthy people: People who can access to useful information about health
including organic food sources, healthy food and products
A 2011 report from Thai Organic Trader Association segments organic consumers
into 5 categories as shown in Figure 40. The report confirms the direction of the
authors survey regarding children in the household, sickness and health issues.
1) Healthy family with children (30%)
2) Healthy people (20%)
3) Patients family members (21%)
4) Elders family members (12%)
5) Foreigners (16%)


Figure 40: Organic Consumer Segments in Thailand

Bealthy
family with
chiluien
S1%
Bealthy
people
2u%
Patient's
family
membeis
21%
Elueis' family
membeis
12%
Foieigneis
16%
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60
5.2.2 Consumption Readiness Segmentation
From the study of National Research Council of Thailand [5], there are 5 organic
consumer groups based on consumption readiness. According to the authors survey,
loyal customers are the groups that have bought organic products every week for
more than 10 years. On the contrary, the suspect consumers are the groups that have
never bought the organic products. Please refer to Figure 20 and Figure 21 for further
details. To make organic products successful, different approaches are applied to
each group as shown in Figure 41.

Figure 41: Organic Consumer Group and Approach
1. Suspect consumer approach: From the authors survey, the respondents who have
never bought the organic products are in this group. This group needs to be educated
to become loyal organic consumers. Therefore, mass media is the most effective
channel to educate them about organic products.
2. Prospect consumer approach: According to the authors result, this group of
consumers can be the people who have bought the organic products once every few
months for less than one year. This group knows about organic products but do not
realize how important they are regarding an effect of pesticide food, destroying
environment and society. Health and environment campaign could be a way to
provide relevant information to this group.
3. Consumer approach: As shown in the authors survey, this consumer groups have
purchased the organic products once or once every few months for 2-5 years. This
group can quickly develop to advocate and loyal consumer if they have better
financial status. As a result, the development of household economic becomes an
important factor to increase the household income. Meanwhile, the production and
logistics system of organic products has to be developed in order to reduce the costs.
These allow consumers to access the products easier.
4. Advocate consumer approach: This group often buys organic products however 4.
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61
4. Advocate consumer approach: From the authors result, this group has bought the
organic products every week for 5-10 years. This group often buys organic products
however they may wonder and would like to ensure on the quality of the products.
Hence a clear and recognized labeling, logos and certification are very important in
building trust to this consumer group. Moreover, establishing consumer-
producer/retailer network is the way to build more trust.
5. Loyal consumer approach: From the authors survey, this consumer group has
bought the organic products daily or once a week for more than 10 years. This group
strongly believes in organic products. They realize not only their health, but also
sustainability and environment. This group should be knowledge-based society
where they can share the organic knowledge to other group
5.2.3 Organic product buying motive Segmentation
The British Market Research Bureau originally develops the segmentation used for
the UK Governments Department of the Environment and Rural Affairs (DEFRA)
bureau. By using DEFRA standards, the organic consumers in Thailand market can
also be divided into following seven distinct segments based on buying motive.
1. Positive greens: their buying behaviors are driven by the sustainability issues.
They are mostly well educated and believe that are critical in todays society and
humans are largely responsible for current environmental problems. This group tends
to buy organic not only because it is healthier but also it is more environmental
friendly on the production stage.
2. Waste watchers: they are concern about the environment and sustainability issues.
However, their actions are mainly driven by a need to avoid waste rather than
minimize the environmental impact. They lack awareness of other issues and are
skeptical about the scale and urgency of environmental problems. Therefore, their
organic consumption is limited by personal interest in taste or health.
3. Concerned consumers: they are motivated by environmental and social concerns
but their consumption choices are egotistical and focused to make them feel less
guilty about environmental damage. They are also concerned to be perceived as an
environmental- friendly person by the social. This group has the potential to buy
organic as they feel the need to be perceived as green with their shopping
behaviors.
4. Sideline supporters: they are generally consumers who have an environmentalist
worldview but are not convinced about the urgency of the problem just yet.
Therefore, they lack of actions, as they believe that governments are the one who
responsible, not themselves. This group will buy organic if they have personal
preference such as taste and health.
5. Cautious participants: they are consumers who have an average environmental
worldview. They are likely to accept that there is an upcoming crisis or problems, but
they are, at the same time, pessimistic about their ability to tackle the problem
individually. Therefore, this group is not bothered about the environmental benefits
of organic farming too much.
6. Stalled starters: this group composes of consumers whose environmental views
are quite confused. They have the lowest level of knowledge about environmental
issues and are generally disinterested about the topic. Therefore, the group will only
62
buy organic if they like the taste better or cheaper than the conventional food.
7. Honestly disengaged: they have a total disregard on ecological worldview. They
refuse responsibility for environmental damage and are skeptical about the scale of
the threat. They believe that such problems, if exist; can be solved without any
change in lifestyles.
Eighty seven percent of the respondents, from the authors survey, do not aware that
the organic products are good for the environment. Besides, health is the major
buying motive for the surveyed respondents. Therefore, the author concludes that
Thai consumers are in the group of Sideline supporters
5.3 Marketing Mix Strategy
5.3.1 Organic Product Strategy
5.3.1.1 Summary of Best Practices and Case Studies
Organic Product Strategy can be divided into 3 aspects:
1. Product Characteristics and Service
A study from the Soil Association Research [86] found that 55% of organic
consumers tried fruits and vegetables before other categories, followed by eggs and
dairy products. The study can be compared with the authors survey, where fruits and
vegetables are the most popular (73%) organic products followed by organic eggs
(5%), rice and cereals (5%), milk (2%), juice (2%), and meat (1%). Organic buyers
can be persuaded to drive this cycle by cross-promoting some categories to the
buyers of others. For example, Go Organic promoted its pasta sauces through
miniature recipe leaflets attached to organic egg boxes. Tesco markets its organic
grocery lines using leaflets in the packaging of fruits and vegetables. Some market-
leading organic businesses and retailers (e.g. Aden Organic Super Store in Thailand)
initiate the reduce, reuse, recycle campaign in the way that their products are
packaged and promote their customers to reuse the shopping bags.
According to IFOAMs proceedings [51], there is no different in marketing organic
and conventional fresh produce since both of them have to meet consumers
demands in terms of quality, consistency and variety. However, organic produce
aims for the higher standard (e.g. taste and appearance) than conventional ones in
order to make a significant market impact.
For some organizations that like to expand their market in organic products, high
amount of long term investment (processing technology, recipes and equipment) and
external collaboration have to be taken into consideration. In most cases, the
marketing organization buys directly from the producers, often based on long-term
contracts. Keystone (India) has a specific policy to buy through intermediaries if
their credentials can be verified. This has allowed the procurement to expand into
new areas where people acknowledge about the organization and its basic principles
and philosophy. Some organizations set up more than one producer group within one
category of products, for example tea or vegetables, so that there is more reliable
availability as well as a bit of competition among the groups to increase in product
quality and to reduce the risk in terms of natural disasters, pest/disease outbreaks and
other calamities. Nevertheless, this strategy is not that effective in creating "friendly"
competition among producer groups so that they will "naturally" improve their
63
quality.
Organic retailers shop should be staffed with managers and salespersons that have
knowledge about organic farming and organic food and can explain to curious
customers. Lemon Farm and Aden Organic Superstore have a formal system to
document customer feedback through the availability of a suggestion box and
immediately replace any product with a defect or complaint.
Green Net (Thailand) differentiates their products by creating wide range, high
quality products with certified organic bodies. Regarding to their service, they are
not only sale the products but also present how and where the products are produced
and processed. Environment and fair trade is also a unique image, which
differentiates Green Net from other competitors. Table 23 and Table 24 display
Green Net competitive differentiation and its product attributes respectively.

Table 23: Green Net Competitive Differentiation
Product Differentiation High quality, wide variety and standard
organic certification
Service Differentiation Information and data about products and
services dissemination
Personal Differentiation Information about the background and
sources of production
Image Differentiation Focus on environment and fair trade

Table 24: Green Nets Product Attributes
Core Product Organic food and green product
Tangible Product Good quality, fresh, hygienic and high
nutrition
Expected Product Free from pesticide
Augmented Product Protect environment
Potential Product Help local farmer and community
development

2. Controlling production standard
Fruit and vegetable production nowadays are lack of product diversity and
sometimes fail to deliver on a regular basis. This is because of limited technical
skills, unpredictable weather and natural calamities, unavailability of good organic
seed, and lack of soil improvement techniques. Therefore, it is quite impossible to
expand the market for organic produces, which are available for a few months since
there is a limited range and unstable production of organic fruits and vegetables.
High investment cost have to be invested (e.g. cool storage or cool truck) in order to
maintain the good quality of the products during transport since the produces can be
destroyed during the transportation especially when the volume builds up. Realizing
these problems, some retailers such as Rangsit Farm and Green Net decide to start
with a subscription or box scheme, in which the subscribers within the near
community have little choice in what they receive in their weekly or biweekly bag or
box. Another option would be to target for example schools, who only need a few
kinds of vegetables per week that are in the season. On the other hand, while these
64
problems still remain, it is impossible to expand and to reach out more customers,
such as supermarkets, restaurants and hotels.
From the author's view, there are 3 ways to control and certify organic products:
1) Corporate with local and private organization such as northern of Thailand
organic certification, for example, Healthy Organic Vegetable Network in Supanburi
Province and Organic Agriculture Community Network in Chieng Mai Province.
2) Corporate with organic agriculture organization, for example, IFOAM
(International Federation of Organic Agriculture Movement) and Organic
Agriculture Certification Thailand
3) Self-controlling, for example, Green Net (Thailand) and Hanoi Organics
(Vietnam) decided to organize their own extension network or to employ their own
extension staff to responsible for other non-perishable products, which are often
harvested once a year. So, producers are able to plan their production (i.e. to align
with consumers demand) to reduce the problem of over-supply and unnecessary
competition among organic producers. Nevertheless, high investment cost has to be
funded in order to set up such systems and strategies have to be well planned to start
with a quantity that the farmers can grow according to their resources. Then more
produces could be added as their organic farming experience, technique and
knowledge increase; off-season planting could be initiated accordingly. As a result,
consumers are able to continually access the products as needed.
3. Packaging and Logo
The organizations packaging and logo are the important means of communication.
A good logo should be attractive, easy to recognize and confirming the organic
identity of both company and products. From the authors survey in Figure 29, 82%
of organic consumers in Bangkok believed that organic brands and labels influence
their buying decision. Moreover, certification is also a vital factor to build consumer
trust though it is an expensive mean. From the authors interview, Green Net
categorizes its packaging methods into three parts, which show in Table 25.
Table 25: Green Nets packaging methods
Packaging Methods Product Type Remarks
Pack from producer Organic shampoo,
conditioner, lotion and
liquid soap
The products were packed
from producer in the
factory.
Self-pack Organic rice, sugar, snack,
fresh fruits and vegetables
Simple package, less vivid
color, area minimized to
reduce waste and save
cost, use only
environment-friendly
package (foam container is
prohibited)
Self-pack with specific Organic tea, coffee and
herb as powder and leaf
Green Net designs in
small package for those
65
packages forms products in order to
maintain their quality and
the package should be
marked by produced and
expiry date, production
source, quantity, and
consume method etc.

5.3.1.2 Theory meets Practical
A number of organic retailers and organizations utilize Igor Ansoffs product
strategy [87], which shows in Figure 42.

Figure 42: Product Strategy proposed by Igor Ansoff

1) Market Penetration Strategy
This strategy aims to penetrate the market by increasing sales in the current product
and current market. The activities include expanding the place of distribution (e.g.
opening more branches), promotion (e.g. discounts, free trail, free items, ads
campaign, event marketing), buying competitors business. According to the authors
interview, Green Net, Lemon Farm, Aden and Rangsit Farm apply this strategy to
their organization.
2) Market Development Strategy
This strategy targets to develop the market by rising sales in the current product in
the new market. The actions include expanding the new target group, for example,
changing from B2C (Business to Customer) to B2B (Business to Business) or to
B2G (Business to Government) as well as exporting companies products abroad or
different locations. According to the authors interview, Green Net and most of small
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66
organic retailers utilize part of this strategy expanding the market to government
places in the main city. Rangsit Farm sells its organic products within its own shops
and to other organic retailers e.g. Lemon Farm and Tops Supermarket.
3) Product Development Strategy
This strategy is utilized to increase sales by introducing new products in the current
market, for example, product replacement, new packaging, adjusting size, changing
of brand identity. Many organic organizations adapt this strategy developing their
products and packages to satisfy consumers needs, for example, Rangsit Farm and
Aden change their organic salad package into the salad box with various dressings
and a fork inside. Their salad boxes come out in many styles such as Thai spicy style
and Japanese sesame, teriyaki and salmon style.
4) Diversification Strategy
This strategy points out to immerse into entirely different market to lower the risk in
doing only one business. There are 2 approaches 1) Concentric Diversification
approach e.g. Green Net, who distributes fresh fruits in the local market, wants to
expand the export market into dried fruits and organic rice. 2) Conglomerate
Diversification approach e.g. Food company want to expand their business to
telecommunications.
5.3.2 Price Strategy
5.3.2.1 Overview of Best Practices
Of the four marketing mix, price is the only element that produces revenue; the
others produce costs. Price, as always discussed in market research, is one of a
critical factor determining whether people buy organic products. According the
authors result, 52% of organic buyers accept to pay 1-5% premium price and 23%
of them has no problem paying 10% premium price. As Yiridoe et al. [23] and Green
Nets survey [61] estimated, consumers were willing to pay a premium 10-20% and
20-30% respectively for organic products. Nonetheless, the price comparison in
Table 2 showed that in 2007, the premium price of the organic products in Thailand
is 191% more expensive than the conventional ones, which is way expensive than the
acceptable price.
Padel and Foster [92] mentioned that price is a major cause for the consumers not
buying the organic products. One interviewed organic key actor also commented that
the price of the organic products would confine their purchase for the lower level of
income group. From the authors survey, 45% of consumers said that the price of
organic products are worth paying while 44% of consumers mentioned that the high
price of the organic products are one of the factor they do not buy the products
[Figure 30]. In addition, 21% of consumers agreed that they like to see special low-
price offers on organic products [Figure 37].
There are two major reasons for the high prices of the organic products: 1) high cost
of production and 2) Fair trade. At the initial level, preparing the farm for organic
produce to be planted increases the cost. Although producers do not need to use
pesticide and chemical, which make the cost lowered, they have to spend more time
and labor to look after the organic produces such as pest control. In fact, organic
products not only fulfill the needs of customers in consuming healthy food but,
ultimately, also serve the society through Fair trade. However an ordinary customer
67
may not know their significance. Organic retailers therefore need to communicate
with the consumers by all means, preferably through mass media, to ensure
consumers are clarified the reason of higher prices. If the environmental and social
costs were added in the actual cost of conventional products, they would not remain
cheap. Use of pesticides at the farm level and addition of chemicals at processing of
conventional products, have disastrous effects on the whole ecosystem. The
chemicals use in conventional agriculture products, settle down deep into the soil and
pollute the underground water resources. Some of the chemicals may be
carcinogenic. The worker in the farm is also exposed to these poisonous chemicals,
which may have disastrous effects on their health. Many cases of abnormal and
premature birth have been reported when women were exposed to these conditions
[6]. If organic retailers provide this information to consumers, this can give a clear
picture of the high prices of organic products. Hence, the consumer would be
satisfied and understand why they need to pay higher.
In setting pricing policy, organic retailers should follow a six-step procedure [62]. 1)
They select their pricing objective and 2) they estimate the demand curve. 3) The
suitable quantities they will sell at each possible price are identified. 4) They
evaluate how their cost change at different levels of output, at levels of accumulated
production experience and for differentiated marketing offers. Then, 5) they
investigate a pricing method and 6) finally pick the final price. However, the organic
retailers do not often set a single price, but rather a pricing structure that shows
variation in geographical demand and cost, market-segment requirements,
purchasing time, order levels and other factors. Many pricing adaption strategies are
available including 1) geographical pricing 2) price discounts and allowances 3)
promotional pricing and 4) discriminatory pricing
5.3.2.2 Summary of Theory
Pricing strategy is important for the organic retailers who would like to discover the
price point where they can maximize sales and profits. The organic retailers may
utilize a variety of pricing strategies, depending on their own unique marketing goals
and objectives. Owning to Figure 43, the author summarizes the pricing strategies as
follows:

1) Skimming Pricing Strategy
By setting the price higher than the price in the market, this strategy is suitable for
products that need to build the brand and for the high-income person e.g. Gucci bag,
Porsche car. This strategy is not suitable for organic products since the price of
organic products are already high compared to the conventional products. Besides,
Thai consumers might not prefer high prices of the organic products, according to the
survey.
2) Penetration Pricing Strategy
By setting the price lower than the price in the market, this strategy aims to penetrate
competitor in the market and reach the target group quickly e.g. Tesco and Carrefour
department store. This strategy can be applied when organic organizations start their
business and would like to get customers to know their products first.
3) Competitive Pricing Strategy
68
By setting the price same as the price in the market, this strategy is used when the
organic retailers compete with their competitors. This strategy applies to most of
organic retailers, for example, Green Net sets and compares its prices with other
organic retailers in the market.
4) Dynamic Pricing Strategy
This strategy set the price according to the season, cost and needs of customer e.g.
organic vegetables and fruits, meat, oil, gold, fuel. Most organic retailers such as
Lemon Farm utilizes this strategy set the price of seasonal organic products to be
cheaper than a conventional one as well as provide discount in monthly basis for a
monthly organic fruits and vegetables for the members.


Figure 43: Pricing Strategy

5.3.3 Place Strategy
5.3.3.1 Overview of Best Practices
Marketing Channels are sets of interdependent organizations involved in the process
of making a product or service available for use or consumption. Due to the survey,
62% of organic consumers prefer organic retailers to the department store. The
reasons are the retailers provide a specialized and good quality product assortment
focusing on the preferences of their loyal regular customers. In addition, there are
skilled staffs who offer advices and stimulate the interest of customers on ethical and
environment-related topics. Moreover, some products are regional and offer at lower
prices because of direct purchases from producers. Higher prices are applied for
national or international products due to lower economies of scale and higher
administrative costs. Some organic retailers even offer an additional service to
customers e.g. warm meals for lunch.
Still, most organic consumers choose to shop in the large department store such as
Carrefour, Villa and Tops. This is because it is more convenience in terms of
transportation and distance from home. In addition, most department stores are often
accessible by car and local transportation, and there is a variety of activities that
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69
consumers can do e.g. buying other products, having food in the restaurant, and
watching movies. Besides, they allow the consumers to buy organic and
conventional products at a single point of sale. The organic products in supermarket
are also reliable, fresh, offered at lower prices (but high quality and easier to
compare with conventional food) and with certification. Therefore, the organic
retailers should find a strategic location, where the consumers can access the
products conveniently in order to compete with the large department stores.
In general, there are different types of marketing distribution system. Consumers are
able to buy the products from different market place. All these distribution strategies
consist of producer, wholesaler, retailer, and consumer. There are mainly four types
of marketing distribution channel:
Table 26: Comparison of direct marketing and indirect marketing
Direct Marketing Indirect Marketing
Membership Personal
Selling
Organic
Retailer
Store
Organic
Corner in
department
store
Supermarket
Advantages Direct
interaction
with
consumers
! ! !
Consumers
are
accessible
! !
Variety of
products
! ! !
High sale
volume
! ! !
Regular sale ! !
Cash
payment
! ! !
Disadvantages Low sale
volume
!
Highly
competitive
! !
Focus only
a few
products
!
Credit
payment at
least 1
month
! ! !
Complicate
accounting
issues
! ! !
Need good
management
skills
! !
Time-
consuming
! ! !

Conventional Marketing channel: consists of an independent producer, wholesalers
and retailers. Each is a separate business seeking to maximize its own profits. No one
has complete control over the others. For example, Xongdur Organic Food
(producer) produces organic cereals and distributes to wholesalers and retailers such
70
as Lemon Farm and consumers collect the product from the retailers respectively.
Once producers collect the organic products, they have to find distribution channels
through direct or indirect marketing. Table 26 compares the pros and cons of direct
and indirect marketing. Conventional marketing channels along with e- marketing
channels can be exploited to advertise organic products. The organizations, which
are actively involved in buying and selling organic products, can offer these products
through e-commerce. With online shopping, organic consumers save their time and
energy going back and forth.
Vertical Marketing channel: comprises of the producer, wholesalers and retailers
acting as a unified system. One channel member, the channel leader, owns the others
or franchises them or they all cooperate. The channel leader can be the producer, the
wholesaler or the retailer. For example, Aden and Lemon Farm have contract farmers
and the contract farmers have to sent organic produces once or few times per week to
the store.
Horizontal Marketing channel: two or more unrelated organizations chain together
resources or programs to exploit an emerging marketing opportunity. The companies
might work with each other on temporary or permanent basis or create a joint venture
company. For example, organic supermarkets have arrangements with local banks to
offer in-store banking. In Thailand, Lemon Farm has arrangements with Bang Jak
Gas Station to open organic store in the gas station around Bangkok.
Hybrid Marketing channel: occurs when a single firm uses two or more marketing
channels to reach one or more customer segments. Nowadays most companies adopt
Hybrid Marketing channels. As seen in Figure 44, the producer can be divided into
two types in Thailand. The first type is self- production without certification and the
second type is with certification. The former one, the organic produces are consumed
within the household. When the produces are excess, they bring the produces for sale
without certification. The consumers have to rely on the producers themselves. The
latter one, the producer grows the organic products and request for recognized
certification from certified organization in Thailand or abroad. The consumers have
more choices in choosing the produces via various certifications. Generally,the
producer can be one of the following lists:
- Processor e.g. Doikham Food Product Co.,Ltd. (Green Net Cooperative Thailand
hires Doikham Product Co.,Ltd. to process its vegetable), Kaokho Talay Pu Co.,Ltd.
(rice, vegetable, dried herbs packaging), Natural Food Thailand Co.,Ltd (dry and
freeze all Thai herbs, vegetable and fruits)
- Producer and Processor e.g. Harmony Life International Thailand Co.,Ltd. (Salad
and vegetable packaging)
- Collector and Processor e.g. Supanburi Organic Club (collect and process fruits
and vegetables)
- Processor and Distributor e.g. Tippawan Best Food (2527) Co.,Ltd.(process and
distribute fruits and vegetables)
- Processor and Exporter e.g. Green Net Cooperative Thailand (process and export
rice, fruits and vegetables)
- Full equipped Operator (produce, process, distribute and export) e.g. Thai Organic
71
Food Co.,Ltd, River Kwai International Food Industry Co.,Ltd., Rangsit Farm, Song
Serm Kaset Innsri Co.,Ltd.
According to Figure 44, after the producer, distributor is one of the crucial players in
the supply chain. The distributor connects between the production and consumption
and gives right information to consumers. The distribution channels of organic
products are as follows.
- Membership Market: Market, which consumers and producers are in direct contact
by making an agreement to sell and buy products according to the season.
Consumers pay the money in advance. The products will be delivered to consumers
directly when they are ready according to the season. The products are usually rice,
fruits, vegetables and eggs. The producers can get guarantee that the products will be
bought before planting. There are membership markets in other countries as well e.g.
Community Support Agriculture or CSA (US), Box Scheme (Europe), Teikei
(Japan). In Thailand, there are some club and farm do this, for example, Supanburi
Organic Club, Daung Tawan Farm.
- Green Market/Community Market: Market often takes place in the populated
community or area. The advantage of Green Market is that the consumer are directly
interact with the producers. The market is opened once or twice per week on a period
of time. For example, Green Market at Regent House in Ratchadamri Rd., Bangkok,
opens every Thursday from 10.30 a.m.-16.00 p.m.
- Wholesale/Retail Market: The producers use intermediaries to distribute the
products using indirect channel. The wholesale/retail markets are as follows:
1. Specialized retailers with branch (chain store) e.g. Lemon Farm (healthy organic
and macrobiotic supermarket where has 9 branches in Bangkok), Aden (organic and
green store who has branches in Thailand)
2. Specialized retailers without branch e.g. Urban Tree Organics, in Bangkok,
Website: http://urbantreeorganics.blogspot.de/
3. Department Store: This channel of distribution is growing since the consumers
can easily access to modern trend and variety of products. Usually, they have special
section for healthy and organic products e.g. Tops supermarket, Foodland, Carrefour,
Gourmet Market, Tesco, Villa Market etc.
4. Hotel : Rangsit Farm distributes its organic product to Hyatt Hotel in Bangkok.
The hotel then uses the organic products to serve their guest.
5. Restaurant: Thai Organic Co.,Ltd distributes their organic vegetables to a number
of restaurants in Bangkok.
6. Hospital: Rangsit Farm distributes its organic products to hospitals in Bangkok.
The hospitals then use the organic products to serve patients.
7. School: The organic products can be delivered directly to schools. The products
are consumed by the students, teachers and school members.
8. Airlines: The number of products can be delivered to the Airlines kitchen and are
used for meals in the plane and at the airport canteen.
72


Figure 44: Organic Consumer Hybrid Marketing Channel
5.3.3.2 Summary of Theory
The author categorizes Place Strategy for Organic Retailers and Organizations as
follows:
1) Traditional Trade Channel Strategy: this strategy uses traditional channel like
wholesalers and retailers, which distribute products for all consumers in the
country. This strategy is appropriate for specialized store such as Lemon Farm,
Royal Project and Green Net, where they utilize this strategy to sell their organic
products in organic market in the big cities.
2) Modern Trade Channel Strategy: this strategy aims for modern channels through
convenience stores (such as 7-11), supermarkets, department stores, discount
stores specialty stores and category killers. The channels cover around the
country but have high cost through modern trade. Organic Thailand Co.,Ltd and
Rangsit Farm use this strategy to sell their organic products to modern trade in
large discount store such as Carrefour, TOPS, Villa Market etc. This strategy is
good for medium to large-scale producers, who like to distribute their organic
products through modern trade. It seems, in this strategy, producers can gain the
most profit since products in modern trade is always sold in large scale.
Moreover, from the authors survey, more than half of consumers bought the
products in department store rather than in organic retail store because all
supermarkets are easily reachable and the products are reliable and fresh.

3) Stand Alone Strategy: in this strategy, the company utilizes their own channels
and expands their branch among diverse areas. This strategy has some risks from
the stores profit that cannot cover the stores expenses. This strategy is suitable
for stand-alone specialized stores or retailers, who are located at a wet organic
market or other location such as Au Tor Kor market and Bon Mache Market
Park. Retailers have to continuously develop products quality and store location
to be accessible like large discount stores. According to the authors survey, 63%
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73
of consumers prefer to buy organic products at specialized store mainly because
of the products quality.
4) Franchise Strategy: building Franchise systems for interested businessperson to
participate e.g. 7-11 Convenience Store. This strategy helps expand the stores
very quickly and at low risks.
5) E-commerce Channel Strategy: using Internet and Online channels to attract new
generation consumer since they often buy products online. It is easy, accessible
anywhere anytime and uses low cost to operate. As indicated in Figure 45, Thai
Organic Co.,Ltd uses Facebook to promote their organic products. Consumers
can choose the products and pay by transfer the money to a certain bank account.
Then the products will be delivered directly to consumers door if the consumers
buy more than !12. Tops supermarket also provides online shopping option for
consumers as shown in Figure 46.


Figure 45: Facebook Campaign of Thai Organic Co.,Ltd

74




Figure 46: Tops supermarket online shopping option
6) MLM (Multi-Level Marketing) Strategy: this strategy targets through network
marketing channels using membership systems. Community Supported
Agriculture (CSA) is one of good membership example to develop a high level of
interaction and build trust between consumers and producers. The consumers are
directly involved in production matters, making payment before receiving
products, as well as price setting.
7) Direct Selling Strategy: this strategy directs to consumers person to person e.g.
telemarketing, catalogues, newsletters, cable TV, local radio, magazines and
newspapers etc. Carrefour and Tops supermarket utilize this strategy as they
market organic products through direct marketing at the point of purchase to
arouse consumers to buy the products.
5.3.4 Promotion Strategy
5.3.4.1 Overview of Best Practices
Promotion means a communication with the customers or consumers. It includes all
the ways available to make a product and/or service known to and purchased by
customers and clients [62]. According to the survey [Figure 22], 78% of Thai organic
consumers believe that health is the main reason to purchase organic products.
Therefore, in order to market organic products, health messages, good quality and
tasty products are the best way to get new customers on board. However, mass
education about several benefits is needed to unite consumer commitment and
increase spending. An example of a very successful specialized store is Lemon Farm
(Thailand), offering the convenience of supermarket shopping. It opens from 8 a.m.
to 8 p.m. daily, providing foods under one roof, bulk-buy savings and special
discounts for members. They also offers an outstanding ethical issue on fair-trade
foods, no air freighted products, friendly service, organic restaurant and caf and free
tastings.
Marketing communications are the methods that organizations use to inform,
persuade, and remind consumers, directly and indirectly, about their products and
brands. Though marketing promotion is often a crucial element of a marketing
75
communications program, it is usually not the only one, or even the most vital one, in
terms of building brand equity [62]. The marketing promotion mix in organic
business consists of nine major modes of communication. The advantages and
disadvantages of them are also presented in Figure 47.
Advertisements: Most organic retailers advertise in local newspapers distributed
around the shops area. Placing banners and ads board in strategic locations
within the city or near the shop are also recommended. According to the survey,
TV (48%) is the most usable tool that people get information about the organic
products. Even if broadcasting via local TV network is an expensive strategy and
may not always bring the effective outcome since organic business is still a niche
market. Green Net (Thailand), for example, initiates a policy of no-
advertisement as it sees that it is not worthwhile enough to cover such expenses.

Online: From the survey, social media (11%) is the second most practicable
mean for consumer to be informed about organic. Walters and Lancaster [88]
studied how Internet helps to interlink different players, spanning the distance
between the customers, suppliers and distributors from around the world, to carry
out business transactions, and processes, and exchange information with
remarkable convenience and ease. By dominating the e-channels, it enables
companies to bypass the others in value chain and helps to approach the target
consumers effectively. It also helps to produce and introduce new products and
services for existing customers as well as new customers. Particularly in case of
organic foods, the first aim of the organization is to educate the consumer about
distinguishing the unique features of the products. Then the second objective
comes, which is to sell the products. Internet and information technologies are
the most effective and affordable platform to communicate to all consumers.
Through online platform, the organic organizations and retailers not only
promote their products effectively with all promotional activities and special
discounts available but also enhance the trust of consumers on organic products,
by providing all the details regarding certificates and organic information to their
websites. Internet is changing the way people buy and sell products and services.
Organic consumers now use the Internet to search and purchase products/services
online. Hence, organic organizations unavoidably need online strategies and
presenting the marketing mix online to attract and retain customers. For example,
Thai Organic Co.,Ltd has their own Facebook to promote their products and
upcoming events, Farm to Tables organic ice-cream promote their organic ice-
cream shop through Facebook and YouTube.

Mass media: Due to the survey, books & magazine (9%) is the third most
workable way for the organic products promotion. Articles are published in the
printed media such as newspapers and magazines. There are many organic
organizations, which maintain relationships with journalists who are interested in
the organic agriculture issues and support the organic movement. Press
conferences are sometimes held and press releases are another way to further the
local organic movement.
Direct marketing and Point of Purchase (P.O.P): The bazaar, wet market or
specialized shop is a platform for person-to-person marketing of organic
products. This platform provides consumers to interact and know more about
organic products from the producers or specialized staffs. Some supermarket e.g.
Carrefour sets up the booth of organic products and creates an event to promote
76
particular products via free trail in order to arouse the consumers to buy. Green
Net promotion strategy is to encourage "product trial" so that the consumers are
introduced to organic product and can try some. Direct marketing can also be
conducted through door-to-door campaigns or over the phone. However, the
latter methods are labor and time consuming.
Brochures: Promotional materials are distributed to the target consumers and
registered members, providing information about the organization, discounted
products, events, and members benefits. They are printed in mass quantities and
have a few pages format.
Word of mouth: Many organic organizations take advantages from this kind of
word of mouth advertisement in their start up phase. When the consumers are
satisfied with the particular organic products, market or shop, they may
recommend them to their family members, friends and colleagues. This would
also help spread information about organic agriculture and the organic products
respectively.
Field visits: Many retailers organize regular meetings between consumers and
organic producers. By sharing experiences and offering recommendations, these
meetings are very useful to both parties. For example, Organic Thai Co.,Ltd has
initiated family organic field trip to its organic farm in order to promote organic
agriculture awareness and its organic products at the same time.
Newsletters: Some organic retailers send regular newsletters to their members or
regular customers. These newsletters include information about discounted
products and upcoming events, articles about organic agriculture or health issues,
and organic food recipes.
Event: Organic producers could display and sell their products at these events.
They are regularly organized in most countries at both the national and local
level, for example, Thaifex- World of Food Asia in Bangkok, Organic and
Natural Expo, and Organic Symposium.
5.3.4.2 Factors in Setting the Marketing Communications Mix
Companies must consider several factors in developing their promotion mix
including stage in product life cycle, push and pull strategy, consumer readiness to
make a purchase, type of product market and the companys market rank.
Product Life Cycle Stage
Communication tools also change in cost-effectiveness at different stages of the
product life cycle. In the introduction stage, advertising, events, experiences, and
publicity have the highest cost effectiveness. Followed by personal selling to gain
distribution coverage, sales promotion and direct marketing to induce trial. In the
growth stage, demand has its own momentum through word of mouth and sale
promotion. In maturity stage, sponsorship, events, personal selling, and experiences
grow more important. In the decline stage, personal selling continues strong and
other communication tools reduce, and salespeople give the products only minimal
attention. Figure 48 illustrates when integrated marketing communication can be
implemented in the product life cycle.
77


Figure 47: Advantages and Disadvantages of 9 modes of Integrated Marketing
Communications

Figure 48: Integrated Marketing Communications and Product Life Cycle

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31
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78
Push and Pull Strategy
The marketing communication mix is greatly influenced by whether the company
chooses the push or pull strategy to create sales. Push Strategy conducts sale
promotion in order to push the products or service to customers. Sales
representatives may get commissions or incentives so that they have the motivation
to sell more. This is especially suitable where there is low brand loyalty in a
category; brand choice is made in the store; the product is an impulse item; and
product benefits are well understood.
Pull Strategy advertises and conducts public relations using various marketing tools
to attract customers to buy the products or service. This is especially appropriate
when there is high brand loyalty and high involvement in the category; people
perceive differences between brands; and people choose the brand before they go to
the store. Some organic retailers use either pull or push strategy, some of them use
both strategies. The author summarizes pull and push strategy of organic
organizations of Green Net and Organic Thailand Co.,Ltd from the interview,
displaying consumer campaign, public relations, direct marketing, consumer-
producer linkages and product design and packaging as shown in Table 27.
Table 27: Pull and Push Strategy of Organic Organizations
Pull Strategy Push Strategy
Consumer Campaign 1. Direct mail
2. Brochures and leaflets
3. Ads board at point of
purchase in order to
get consumers to know
about concept green
products and the brand
4. Get consumers to
know where to access
organic retail shop
5. Market promotion
through organic retail
shop and new product
demonstration

Public relations 1. Activity news
2. Mass media
3. Environment and
health campaign
together with
marketing team at
point of purchase (e.g.
retail shop and organic
exhibition)

Direct Marketing 1. Sale promotion for
membership and for
seasonal products
1. Newsletters
2. Fax
3. Telemarketing
4. Sales representatives
79
Consumer-producer
linkages

1. Opening New
Organic Retail Shop
workshop
2. Eco-tourism in suburb
part of Thailand
3. Organic farming,
business training and
workshop to interested
people and producers
4. Get consumers and
retailers to know about
the production source,
characteristics of green
products, promote
social enterprise and
fair trade
Product design and
package
1. Design package, which
meets consumers
need
2. Logo and label about
product benefits,
production source and
expiry date


Consumer-readiness Stage
Promotional tools vary in cost effectiveness at different stages of buyer readiness. As
shown in Figure 49 [62], advertising and publicity play the most important roles in
the awareness-building stage. Primarily, advertising affects customer with
comprehension, while personal selling influences convicted customer. Personal
selling and sales promotion influence customer in order stage. Customers in reorder
stage are affected mostly by personal selling and sales promotion, and somewhat by
reminder advertising.
According to Green Nets interview, it adapts different Buyer-readiness Stage into its
objectives. Most of the problems are about organic consume awareness, which are
mentioned as follows:
1) Consumers do not consume seasonal fruits and vegetables
2) Consumers do not like expensive produces and do not aware about the basic
cost of organic production and farmers benefits
3) Consumers consume a few kinds of vegetables and do not know how to cook
season vegetables.
4) Consumers focus more on appearance rather than quality of products
5) Consumers cannot distinguish between pesticide -free and organic
vegetables
6) Consumers cannot access to organic retail shops
7) Consumers have a high education and a high income

80

Figure 49: Cost-Effective of Three Different Communication Tools at Different
Buyer-Readiness Stages
Therefore, Green Net sets its objectives considering Consumer-readiness Stage as
shown in Table 28.
Table 28: Green Nets objectives about Consumer-readiness Stage
Objectives Note
1) Consumers understand about organic
products (awareness and comprehension stage)

2) Consumers realize about chemical in food
(awareness and comprehension stage)
*Understand that organic
products are good for their
health, producers health and
environment
3) Consumers know about organic agriculture
and organic standard (awareness and
comprehension stage)

4) Consumers understand farmers and
producers (awareness and comprehension
stage)
* Know the differences
between pesticide-free and
organic vegetables
5) Consumers know where to find organic retail
shop (order stage)

* Fair trade to farmers
6) Consumers change their consumption habits
(conviction and (re) order stage)
* Consume seasonal fruits and
vegetables
7) Consumers realize their duty to society and
environment as Green Consumers (conviction
and (re) order stage)

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81
Type of product market
As Figure 50 [62] illustrates, promotional allocations vary between consumer and
business markets. Even though advertising is used less than sales calls in business
markets, it still plays a significant role in building awareness and comprehension,
serving as an efficient reminder of the product, generating leads, legitimizing the
company and products, and reassuring customers about their purchases. Personal
selling can also make a strong contribution in consumer-goods marketing by helping
to arouse dealers to take more stock and display more of the product, build dealer
enthusiasm, sign up more dealers, and grow sales at existing accounts.
The companys market rank
Market leaders acquire more advantages from advertising than from sales promotion.
The reason may be that market leaders have more budgets to spend for advertising.
On the other hand, smaller competitors obtain more by utilizing sales promotion in
their marketing communications mix.

Figure 50: Relative Spending on Promotion Tools in Consumer versus Business
Markets
5.4 Blue Ocean Strategy
The concept of Blue Ocean Strategy is an expanding market to uncontested market
space for an unknown industry. This is to avoid a growing number of competitors
with a relatively constant number of consumers in the conventional market (red
ocean) [93]. By creating new market niches for organic products, the organic
organizations can raise the high potential demand of health, environment and social
concerned consumers and reduce the influence of competition. The organic retailers
need to create value innovation of the organic products, which is good for health,
safe to consume and with high traceability. Cost management is made by eliminating
the cost of chemical and pesticide input, and by reducing the cost of grading and
sorting because most organic products are already graded as high quality.
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According to the authors result, there are 85% of the respondents have bought the
organic products hence the author assumes that organic market is already mature in
Thailand. Therefore, the Blue Ocean Strategy may not applicable for Thai organic
market. Nevertheless, from the authors interview, most organic organizations and
retailers realized and used the Blue Ocean Strategy in the past, when the organic
market was in the early stage. This could be the reason that organic market in
Thailand has grown successfully.
5.5 Green Net Case Study
The Green Net Case Study is a good example of how an organic retailers and
organizations are able to closely monitor and implement most, if not all, of the
embraced theories and frameworks presented in this thesis. Due to a strong market
position in a highly competitive food retailing industry, the Green Net Case Study
underlines that a broad spectrum of theories, strategies and marketing techniques
needs to be taken into consideration. Green Nets expertise in segmenting, targeting,
positioning, marketing and planning for its organic products, describe below. Those
capabilities are considered as a preferable benchmark for the organic food industry.
Organic retailers, and organizations that are currently competing with their organic
products or will launch new own organic products should take Green Net example
into account and learn from its success. Nevertheless, other players cannot apply
Green Nets capabilities, for example, their abilities to use company owned retail
chain to promote and market their own private label organic product line. Only
organic retail industry players that can also integrate backwards within the
production chain could achieve this expertness. However, Green Nets market
success can still be accomplished by understanding consumer behavior against
organic products and by executing the right marketing mix strategies.
Figure 51 depicts Green Net Organization Chart and Table 29 shows the position and
responsibility in Green Net. Green Net has four main objectives as follows:
1) Marketing: Green Net acts as a marketing intermediary for Thai locals, who is
doing organic agriculture. It aims to create an ideal fair trade market for farmers.
Farmers are able to name the price of their local products, gain their finance
without moving to a big city away from their home. Green Net therefore can gain
enough support financially instead of getting help from other foreign
organization. These make Green Net stays under social policy solving producers
marketing, process, information and customer service issues.
2) Social: Creating activities and distributing information about organic agriculture
to consumers as much as possible, Green Net is a link between producers and
consumers. These lead to economic, social, culture and environment
collaboration. Consequently, these will lead to consumers adapting consumption
behavior according to season and environment. Once consumers demand is high,
Green Net then tries to maintain production supply to be high by increasing more
organic producers.
3) Collaborate with organic agriculture network: It consists of private and local
development organization, which pushes organic agriculture constantly as a
result they can stand on their feet sustainably according to Figure 52.
4) Marketing development and organic agriculture: Green Net supports farmers
learning process about marketing and organic agriculture, for example, process
technique, product quality improvement, production plan, community business
and organic certification (Organic Thailand Certification). Moreover, Green Net
83
cooperates with private research organizations in order to make organic
agriculture accessible to family and community members, highlight importance
of body of local knowledge as well as gender equality.


Figure 51: Green Net Organization Chart


Figure 52: Organic Agriculture Network

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84
Table 29: Green Net position and responsibility
Position Responsibility Division of work
Marketing Campaign
Director

- Policy and plans setting
- Finance and marketing
Management
- Rice export coordination
- Organic Agriculture
Coordination
Head of Campaign
Department


- Coordinate with producers
and consumers
- Campaign management
Data base officer

- Product and store data base
management
Organic Marketing
Coordinator


- Organic Marketing
management
Food
specialist/R&D


- Community Business
- Research and Development
of products and packages
Consumer
Campaigner


- Initiate campaign
- Consumer activities
Marketing
Manager

- Marketing Management
Administrative
Staff

- Support general marketing
tasks
- Internal control
Accountant

- Account and finance
Driver

- Transportation
- Bill and money collection
Packer1

- Pack, sale, stock
management and house
keeping
Packer2

- Pack, sale, stock
management and house
keeping
Part-time staff

- Pack, sale, stock
management and house
keeping


5.5.1 SWOT Analysis of Green Nets Marketing
SWOT Analysis, as indicated in Table 30, gives Green Net to work in the right
direction in such a way that consumer, producer and private organization work
together harmoniously. Moreover, it develops and educates its employees, producers,
distribution channels and consumers at the same time about organic agriculture and
marketing.


85
Table 30: SWOT Analysis of Green Nets Marketing
Strengths Weaknesses Opportunities Threats
1. Green Net has
strong connection
with more than
30,000 local
farmer families in
the network.
2. Strong
relationship
between producers
and marketing
organization
3. Information about
products in terms
of usefulness,
ingredients and
social enterprise
are greatly
available
4. Organic
agriculture is
developed
continuously
5. International
network
1. Lack of
marketing and
management
experience
2. Consumers lack
of organic
agriculture
knowledge
3. Small number of
organic food
distribution
channels
4. Insufficient
products variety
and quality
5. Packaging issue
has to be
improved
6. Lack of financial
to run marketing
campaigns

1. Thailand Act
number 11
(2012-2016)
supports
sustainable
agriculture
2. Consumers
grow more
interest in
green and
organic
products
3. Higher
channels for
export market
4. Number of
companies are
interested to
co-invest
1. Competition
from large
agriculture and
large discounts
store businesses
2. International
standard is
controlled by
foreign country
3. Limited
investment from
foreign country
4. Effects of
economic crisis


5.5.2 Green Nets Targeted Market
1. Market Segmentation
Green Nets market segmentation is a niche. It focuses on 2 main segments: Green
consumers and Pedestrians. Green Nets market segment strategy distinguishes it
from other competitors by presenting information about the organic product process,
quality, and fair trade. Table 31 depicts Green Nets target group, which is similar to
the consumer survey of the author in several points.

2. Targeting
Target groups of Green Net are consumers with a health concern. It educates a
health-concern group about environmental and fair-trade issues. Its target groups
include:
1) Middle to higher class of consumers with a high education, !250-!400 or
higher income per month, live in a big city such as Bangkok, Korat and
Sataheep.
2) Middle age women (aged above 30 years old), have a bachelor degree or
higher, married, have children in the household, work outside and their jobs
are usually about health and environment.

86
Table 31: Green Nets target group
Green Nets Why, Who, When,
Where, How
Answers
Why do consumers buy organic
products?

1) Safety food is basic need to survive
2) City life style
3) Health concern
4) Fashion
Who are the influencers?

1) Consumers themselves
2) Family members e.g. children, elders,
sick person.
When do consumers buy organic
products?

1) Usually buy a few times per week,
often on weekends
Where do consumers buy organic
products?

1) Supermarket
2) Minimart
3) Green shops
How do consumers know about organic
products?

1) Through mass media
2) Through Internet
3) Through talking with friends, family
members and person with organic
knowledge
4) Through product packages, logo and
labels

3. Positioning
Green Net focuses on the environmental issues than other competitors. Figure 53
indicates that Green Nets market position is in high quality and environmentally
friendly.

Figure 53: Green Nets Market Position

5.5.3 Development of Green Nets Marketing Concept
Green Net has its development in marketing concept. It mentions that marketing is
one of a tool to develop organic agriculture in Thailand. For example, technology
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87
and knowledge transfer, building product line and basic marketing structure,
information circulation of the organic products, services and lifestyle development.
However, Green Net also has to take demand and supply into consideration. It
concentrates on the five issues as follows.

1) Promoting organic agriculture network that has no market support
Green Nets organic agriculture marketing started from promoting and supporting
farmers and producers to convert to organic farming as well as educate them to
realize about health and environment issues. So, they can grow their produces for
themselves to consume within their household. When the products are too much,
they can sell the products to a local market without intermediaries. Nevertheless, the
farmers are not able to sale their products since they are lack of marketing, financial
management knowledge and market support. Therefore, only promoting and
supporting farmers are not sufficient for the farmers to succeed in the market. Green
Net also needs to consider about the market support.

2) Marketing Management does not go with production
There is insufficient amount of fair market supporting organic products as a result
the organic produces cannot be sold extensively. The market is a lack of
organization, which supports the organic produces and can cooperate among
consumers and the market. Consequently, it is unlikely that organic market can be
completely developed and produced in Thailand.

3) A need of organic marketing organization, which can take full responsibility
Since Mr. Vitoon, a founder of Green Net, was a student in a university, he had a
chance to interact with local farmers in rural areas and pointed out the problems of
organic agriculture and initiated the solution of the organic marketing organization.

4) Building compiling and distributing systems of organic products
The core activity of Green Net are that acting as an intermediary, which collects the
products from organic producers and distributes to the consumers in the city. Green
Net accepts all kinds of organic produces and aims not to focus on profits but on
social enterprise. It establishes the fair trade to support the farmers, who grow the
organic produces. Green Net first started organic market on 15
th
November 1993 in
Chiengmia province, and on 2
nd
December 1993 in Supanburi province. Green Net
received around 1,000 kilograms of the products per week, which valued around
!300/week. For the first few years, Green Net did not focus on profits but it tried to
expand organic market as much as possible by educating local people about organic
farming and coordinating with local organization. These helped Green Net to connect
with local market in each province of Thailand.

5) Promoting production and consumption of organic products
Green Net promotes people who interested in opening organic retail shop to expand
its fair distribution channels broadly. It also supports the program called city farm
which people in Bangkok grow their own organic produces in their garden. This
project attracts people who are interested in organic agriculture, health and
environment issues. As a result, the organic network in Bangkok expands vastly.

5.5.4 Green Nets Marketing Process
Green Net considers how environmental problems affect consumers and producers. It
finds the solution and develops marketing mix to fulfill organic consumers and
producers needs. Green Net focuses on 2 main issues: customer satisfaction and
88
environment. Figure 54 describes Green Nets marketing process. It identifies and
analyzes its target market using marketing mix planning and following its marketing
objectives. The author divides the topic, which include market analysis, market
opportunity, and situation analysis as follows.


Figure 54: Green Net s Marketing Process
5.5.4.1 Market Analysis
Market Analysis is the first step of marketing process. Green Net analyzes the
organic market with marketing coordinator, marketing manager and head of
campaign department. Market Analysis considers the following topics.

1. Market Opportunity
Analyzing through documents, news and literature review from various institute,
Green Net estimates and concludes marketing opportunity to satisfy organic
customers needs. The organic consumers are expected to increase therefore organic
marketing need to increase in order that consumer have health benefits and producers
have financial benefits. There are a number of surveys, which Green Net supported.
For example, Thai Farmers Research Centres, Asian Institute of Technologys and
King Mongkuts Institute of Technologys research reported about the demographics,
perceptions and attitudes of organic and green consumers in Thailand. These surveys
studied about organic market opportunity. For example, when farmers produce their
products, they need to find distribution channels to sell their products. Therefore,
Green Net helps them to indicate marketing channels, recommend the best
technology and give them how to market their organic products.

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2. Situation Analysis
Green Net conducts a situation analysis in areas of marketing, product,
competitiveness, distribution and environment from various sources e.g. conference
proceedings, financial report, retail shop listings, interview and surveys from
retailers and consumers. Marketing coordinator, marketing manager, data base
officer, food specialist /R&D, accountant and marketing officer are responsible for
situation analysis. There are 5 important situations to consider as follows:

1) Market Situation
There is a significant growth in terms of organic retail shop in Thailand. From year
2009 to 2011, there is an increase of organic product volume from 19,222 to 21,939
hectares [Figure 8]. Long-term growth of organic products is expected to increase, as
consumers concern more about health and environment issues. During economic
crisis, organic products are expected to affect in positive and negative side. For
negative side, consumers tend to spend less for unnecessary things, which affects
some part of organic market. However, for positive side, consumers may change
their lifestyle, where they mostly cook at home. Thus, fresh vegetables, fruits and
rice will be basic foods they buy and such products will be sold more.

2) Product Situation
There are problems about product that Green Net tries solve in various aspects as
follows.
- Most products are seasonal grown and they cannot be sold for the entire lot.
Hence, the price would be very low since supply is more than demand. On the
contrary, outside that season, those products are not at all available.
- Most products are lower than grade C and most consumers buy grade A organic
products.
- Unstable products quality
- Limited variety of products hence Green Net needs to improve new products
especially processed organic food.

3) Competition Situation
Organic market has started recently so the market is not yet mature and competitive.
Providing a constant and a variety of product supply may be a big issue for
competitive situation. Nevertheless, the organic marketing organization can join
together and finds the new distribution channels. Once the organic market is mature,
the competitive issues will be moved to product and services quality.

4) Distribution Situation
Organic products are usually sold through organic retailers or organic corner of
department store. Organic retailers have an advantage over department store due to
the fact that they can interact with customers. On the other hand, department store
has more branches and can be easily accessed by customers in terms of
transportation and product variety. Moreover, there are other distribution channels,
for example, green market, home delivery, direct marketing, exhibiting events, which
allowed producers to directly connect with customers to know the customers
feedbacks. Then the organic retailers can improve their products and services.

5) Environment Situation
Environment is concerned as a big issue especially in the big city since most
consumers in the big city are highly educated. Therefore, organic and green products
are promising products for people in the big city due to their concern about health
90
and environment. However, some retailers mislead consumers that pesticide-free
products are the same as organic products, which makes consumers refused to buy
organic products since it is more expensive than pesticide-free products.

5.5.5 Green Net Plan
Green Net collaborates between marketing and consumer plan, whose objectives are
sale promotion based on social and environment issues. According to Green Nets
objectives from year 1997-2000, it focused on three following plans:
1) Marketing Plan
- Increase sale to !75,000/year (1997-2000), gross profits not below
!7,500/year
- Get consumers to know about Green Net
2) Consumer Plan
- Access 100,000 persons/year through mass media e.g. magazines, radio,
exhibitions and newsletters
- Organic consumer event e.g. Organic Agro Tour, Organic Seminar
3) Production Plan
- Add product diversity up to 12 products
- Add 6 Community businesses

The results of Green Nets objectives from 2nd September 1997-2000 were as
follows:
1) Organic market expanded to 50% in year 2000
2) Marketing department could fully support themselves financially in the next 3
years
3) Consumers realized about an importance of organic consumption
4) At least 3 groups of producers were able to create their own production
processes, activities in developing and processing of organic products, and
expanded the distribution channels.
5) Organic Thailand Certification initiated

Green Nets Activities can be categorized into 3 main activities as shows in Table
32.
Table 32: Green Net Promotion Activities 1995-1998
Activities Number of Times Total
1995-1996 1996-1997 1997-1998
1. Marketing
(4Ps)
13 7 4 24
2. Public
Relations
(Newsletters,
Radio,
Exhibitions and
Eco-Tourism)
6 11 - 17
3. Collaboration
with other
organizations
(government,
private and
NGOs)
1 9 2 12
Total 20 27 6 53
91
6. Conclusion, Outlook, and Future Works
6.1 Conclusion and Outlook
The characteristics of organic consumers are likely to be women, tend to have
children in the household, age above 40 years old, with higher level of education
with a degree and with monthly income over THB 10,000 or !250. According to the
result, the main reasons that the consumers buy the organic products are health
concerns, followed by the products contain no pesticides. There is a significant
relationship between the consumers who are concerned about pesticide residues in
food products and those purchasing organic foods.
As the organic consumers buy organic vegetables & fruits the most, cross promotion
between the products is recommended. In order to make a market impact and the
products stand out from the crowd, the organic retailers should make their product in
high standard with perfect quality control and certification, as well as strong logo and
packaging. Solving the difficulties of non-continuity of products, the organic retailers
are suggested to set up more than one producer group within one category of product
and they are also encouraged to do contract farming with the farmers.
The organic retailers should indicate the benefits of organic food and give clear
picture why the prices of the organic products are high due to the additional
environmental and social cost.
The selection of distribution channel should be ideally prioritized the consumers
convenience. However, the organic organizations need to consider their company
size, readiness and limitation.
As most successful organic retailers focus on Social Enterprise, Fair Trade, Health,
Environment and Social aspects, the common communication tools are mainly less
costly, that include, social media, internal mass media, organic tourism, direct
marketing, memberships and exhibition. Moreover, the organic retailers should take
the factors in setting marketing communication mix into consideration.
According to the leading retailers, Thai Organic Market is growing rapidly so as their
competitors, and the more competitors, the better the organic market to grow and
expand to capture the attention of the consumers. The main strength of the organic
business in Thailand is that Thailand has suitable climate and area as well as a
growing number of organic consumers. The major weakness is that organic farming
is still small compared to the whole agriculture area in Thailand since most
producers do not have confidence to make transition to organic farming. The crucial
opportunities are that domestic and export market are growing and there is lots of
support from governmental bodies. The important threats are that the consumers are
lack of knowledge about organic, unstable and unpredictable products. Moreover, the
government and organic organizations cannot corporate.
Consumer awareness, quality of product and market are some of the issues, which
have to be developed in Thai organic market. Therefore, consumers have to be
educated through constant communication about the information of organic products
VS low-pesticide products. Usually consumers buy conventional products since they
only concern about the cheaper prices and do not care about the benefits of their
health and the environment. There are challenges, which organic products cannot
compete with the conventional ones. An amount of organic consumers is very small
92
and organic retailers are competing for the same people. Furthermore, there is limited
expertise in marketing and organic suppliers are smaller than conventional ones.
6.2 Future Works
This master thesis is a starting point of further organic product industry research in
Thailand. The author suggests that making expansion of the organic consumers
survey to collect the data from other major provinces in Thailand such as Chaing
Mai, Kon Kaen and Ko Rat, instead of only collecting the data in Bangkok. For the
results representing Thailand as a whole, further analysis on Thailand organic
agriculture is necessary to be carried out. It should be noted that there is insufficient
data on the economic costs and viewpoints of organic brands, which makes it
difficult to judge its success in Thai markets. Furthermore, the consumer survey
could be conducted through a research on the subject of psychology, which may
unveil the consumers psychological behaviors. If marketers have this
comprehensive insight into psychological characteristics, marketing of the organic
products will be simplified. However, the author believes that even though these
problems and issues are out of scope of this master thesis, these subjects can be
carried on as a research area of marketing PhD or by professional researchers.

93
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99
8. Appendices
8.1 List of Expert Interview

1. Mr. Vitoon R. Panyakul, the Thai Organic Trader Association (TOTA)
Chairperson
2. Mr. Kitipong Pataraturanan, the Aden CEO
3. Mr. Karn Reitkajorn, the general manager of Thai Organic Co.,Ltd
4. Mr. Parinya Pornsirichaiwattana, the Rangsit Farm CEO
5. Ms.Suwanna Langnamsung, the Health Society Co.,Ltd CEO
6. Mr Sithiporn Bangkaew, Thailand Ministry of Commerce in Surin Province


100
8.2 Questionnaire

Survey of Organic Food for People in Bangkok

I am a student from University of Applied Science Berlin conducting a survey on
Developing Marketing Strategy for Small and Medium Organic Product Retailers in
Bangkok. I would be pleased if you could contribute to my survey and answer some
questions for me. The questionnaire will take about 10 minutes. Thank you very
much for your participation.

Section A) Demographic Information

1) Age: < 20 years 20 - 30years 30 - 40years < 40 years

2) Gender: Female Male
3) Do you hav children in the household?
Yes No
If yes: What is the age of the younges child ? ____ Years

4) What is the highest education level you have completed?
Secondary School High School
Bachelor Degree MSc and above

5) Monthly Family Income
>10,000 Thai Baht
10,000 20,000 Thai Baht
20,001 30,000 Thai Baht
< 30,000 Thai Bah t




101
Section B) Purchase and consumption of organic products
6) Have you and/or your family ever buy organic products?
Yes No

7) How long have you buy organic products? _________________

8) How often have you and/or your family buy organic products?
Every week Once a month Once every few months Never

9) What is the reason you buy organic products?
I buy organic products because... Yes No
b etter taste

fresher than the other products


good for my health


good for my children


not contain pesticides / have lower
residues


want to try somethcing new


good for the environment


trendy/fashionable to buy organic
products


I have a record disease

10) Are you concerned about the use of GMO in food products?
Very much Often Sometimes Not at all

11) Are you concerned about pesticide residues on vegetables and fruit?
Very much Often Sometimes Not at all

12) Do you think that organic and pesticides-free products are the same?
Yes No

13) When you are sick, do you think about organic products?
Yes No



102
Section C) Consumers satisfaction and decision in choosing 4Ps of organic
products
Product
14) Are you satisfied with the range of organic products offered in the
supermarkets?
yes, I can find all the products I would like to buy
no, I would like to buy more organic products

15) Which organic products do you buy the most?
Fruits&Vegetable Eggs
Rice&Cereals
Dairy Products
Bread&Pasta
Meat
Juice
Canned Food

16) Are brands and labels important for you in buying organic products?
Yes No
Price
17) Is the price of organic products a problem for you?
Yes No

18) How many more percent are you willing to pay for organic products
compared to normal products?
1-3% 5% 10% 20% 30% 40%

Place
19) Where do you buy organic products?
Carrefour Villa Tops Lemon Farm
Au Tor Kor Market Bonmache Market
Royal Project Foodland Gourmet Market
Green market Hospital Market
Organic Exhibition
Organic Farm _______________________________
Organic Retailer______________________________
20) Why do you choose to buy organic products at the above places?
Close to home Reliable Variety of products Fair price
Good service Fresh products Certified products


103
21) Do you prefer organic retailers to department store?
Yes No

22) Why do you think organic retailers are better compared to department store?
Better quality More variety Have specialist

Promotion

23) Which channels are the most effective for you in knowing about organic
products?
TV Radio Books and Magazines Social Media SMS
Organic Exhibition Internet Ads Board
Asking specialist in the shop Shop Booth

24) Which services do you like the most?
Home Delivery
Giving Information about organic
Specialist in the shop
Product replacement
Discount
Suggestion Box

Thanks very much for your cooperation

104
8.3 Consultation hour

With First Supervisor: Prof. Dr. Sven Prser
1. On 23rd January 2013: Discussed generally about the listed of proposed topic and
was given comments on the proposed topic
2. On 6th February 2013: Handed in the updated listed of proposed topic and chose
one topic from the list and was asked to write an expose and a table of content
3. On 27th February 2013: Handed in the expose and table of contents, discussed
about the chosen topic, and got feedback about the expose and table of content.
4. On 6th March 2013: Refined and updated the expose and the table of contents,
discussd about the methodology.
5. On 20th March 2013: Discussed about collecting data in Thailand and asked the
recommendations about the questionairres and key actor interview questions.
6. On 19th June 2013: Reported what were done so far in Thailand e.g the updated
conceptual framework, the result of the consumers questionaires and Thailands
marketing channels for organic business etc.
7. On 14th August 2013: Last checked on the table of contents and subject topics,
discussed regarding the overview of thesis report, second supervisor issue and
presentation
8. On 11th Semptember 2013: Discussed about the overall of Master Thesis final
version

With Second Supervisor: Mr. Chusak Suvimolstien

1. On 27
th
February 2013: Discussed about the proposed topic and asked Mr.
Suvimolstien to support the author as the second supervisor.
2. On 25
th
March 2013: Discussed about the first draft of questionnaires and
interview of key actors in Thai and English and the author was recommended to add
and change some questions in the survey.
3. On 1
st
April 2013: Sent the final version of the survey questionnaires and Mr.
Suvimolstien confirmed that the questionnaires were ready.
4. On 10
th
April 2013: Field research interview and organic market observation in
Santi Asok Organic Market in Bangkok.
5. On 23
th
April 2013: A second field research at organic retailer called Namon
Organic Shop and Restaurant in Bangkok and discussed about organic product
business in Thailand.
6. On 29
th
May 2013: The author presented the results of the survey and the
interview and was given some feedback.
7. On 31
st
August 2013: Reported about the overview of thesis report
8. On 1
st
September 2013: Sent the final version of the master thesis and reported the
final results.