CONSUMER PERCEPTION TOWARDS ORGANIC FOOD IN

SUNCITY AREA: SPECIAL PERFERENCE TO ORGANIC

VEGETABLES

By: Smriti Rai

Kathmandu Don Bosco College

August 2022
Lazimpat, Kathmandu
 DECLARATION
I, Smriti Rai declare that the report entitled Consumer Perception towards Organic
food in Suncity Area: Specific Preference to Organic Vegetables submitted to Mr.
Ram Krishna Dongol for internal assessment. This report has not been submitted
anywhere for the award of any degree or commercial purpose. In keeping with ethical
practice in reporting scientific information, the acknowledgements have been made
wherever the findings of others have been cited.
 ACKNOWLEDGEMENT
The research topic entitled “Consumer Perception towards Organic Product in Suncity
Area: Special Preference to Organic Vegetable” has been prepared under the
Undergraduate Research Project as internal assessment of Bachelors in Business
Studies (BBA) under the faculty of Management, Purbanchal University.

Firstly I would like to express my gratitude towards Mr. Ram Krishna Dongol our faculty
member, for his continuous guidance, encouragement and valuable feedback from the
start to the end of the study, without which the completion of the research would not
have been possible.

I would like to thank all the respondents without whom the study would not have been
possible and my friends whose suggestions and support contributed in improving and
completing the research.
 TABLE OF CONTENTS
Title Page

Declaration

Acknowledgement

Chapter One: Introduction

1.1. Background of the study

1.2. Statement of the problem
1.3. Objectives of the problem
1.4. Research Hypothesis
1.5. Significance of the study
1.6. Limitations of the study
1.7. Organization of the study

Chapter Two: Literature Review

2.1. Review of the literature

 CHAPTER ONE
INTRODUCTION

1.1 Background of the study

Organic farming is defined as a product from a farming system which avoids the use of
synthetic fertilizers and pesticides. Organic farming makes the use of natural resources
and materials for production so that the quality of soil remains intact and is fertile even
with the passage of time. The use of chemical and fertilizers without any doubt increase
the production initially but it hampers the soil while using for a long period of time and
makes the soil infertile and results to zero production. Besides, organic vegetables are
grown in peace with the nature and where the productivity might be less in initial phase
but it will continue throughout our life as soil doesn’t lose its fertility, produces healthy,
quality vegetables for the consumers.

Organic agriculture promotes a healthy relationship and a better quality of life for every
individual and makes the use of local resources rather than the use of modern
chemicals and techniques that affect the soil and its production level.

Nepal is an agricultural country. More than 80 percent of the population is involved in

agriculture. Agriculture is the main source of food, income, employment of our country.
In majority regions of Nepal, farming technique is done in traditional way and in some
parts of hilly region they never or hardly use any chemical based fertilizers. Here,
farming is done in harmony with the nature and promotes healthy existence between
soil, plants, animals and people. We Nepalese enjoy doing farming.

In Nepal agriculture industry for over an era, the methods used by the farmers in hilly
and mountain regions are very close to techniques used in organic farming. The
traditional farming knowledge and skills give positive point for promoting the organic
agriculture in Nepal. There is increasing trends of using inorganic chemicals destroying
seeds and adopting high input technologies. The population growth and demanding
cash income to run a household has leaded the farmers to increase their agricultural
production, where the farmers adopt modern farming techniques. As, the increase in
the use of pesticides and different modern techniques it has effected human health
even animal health and the environment we are leaving.

Demand for organic vegetable in the domestic market has flowed with people turning
towards chemical-free food. Once considered to be expensive, organic food stuffs are
now being sold fast. Organic vegetables reduce the health risk. They cost 30 to 40
percent more than the vegetables produced using different pesticides. Likewise, in
context of Nepal the biggest retail chain supply BhatBhateni also focus on organic
products. The store offers wide varieties of vegetable items including leafy vegetables,
potatoes, onions and wide range of pulses, among others. Due to significant
improvement in the demand, a variety of organic vegetables is added in the inventory of
BhatBhateni Department Store (Bishan, 2012).

Despite a significant flow in sales, the market for organic items is struggling for further
improvement due to lack of smooth supply of organic vegetable products. Due to lack of
organic vegetable manufactures and increase in demand they have not been able to
fulfill the requirement of the consumers. In Kathmandu, the organic vegetables come
from different places of Nepal, like Karvre, Panauti, Chitwan, Banepa and even other
parts.

During the last decade, in different developing countries consumer interest towards
organic products is growing rapidly. Despite the growth trend of organic food products
industry and continued support from various organizations, there is a little research on
organic food products in Nepal. It can be seen that more and more people leaving in
urban areas are being health conscious, which led to increase in demand of organic
food. Thus, the consumers with the average income are also consuming organic
products from different places. So, are people really developing a positive attitude and
behavior towards organic food? Therefore, the main objective of this research is to find
out the answers to such questions and have a concept of how consumers perceive
organic vegetables.
1.2. Statement of the problem
Many of the farmers in Nepal face the problems that the organic products are not
perfect in shape, size and color in comparison to those products produced by using
chemical fertilizers and pesticides. So, they are in dilemma about how consumer
evaluate with their eyes and organic products are hard to compete in the market. Where
consumer don’t concern about the way of production of the product.

Consumers think that organic products are expensive and hard to be affording it. At
village level the local seeds are completely replaced by the hybrid and imported
varieties especially in cereals and vegetables. In comparison to those products
produced by using fertilizers and pesticides, organic food market are not wide in market.
People don’t have more knowledge about organic market so it has become main
problem in prospect of the market.

The present research has been conducted keeping in view a single statement of the
problem: What are the different factors and how it affects the consumer preference
towards organic vegetables?

The supporting research questions for the study are mentioned below:

Q1: Is there any significant relationship between consumer perception towards organic
vegetables and independent variables?

Q2: How do different factors influence consumer perception towards organic

vegetables?

Q3: How independent variables impact on consumer perception towards organic

vegetables?

1.3. Objectives of the study

The general objective of this research is to make an evaluation of the consumer perception
towards organic vegetables.

Especially this research is aimed to fulfill the following objectives:

1. To examine the effect of price, product attributes and making efforts on consumers.
 2. To examine the relationship between dependent and independent variables.
3. To explore the availability and accessibility of the organic vegetables for the consumers,
4. To determine the impact of independent variables on dependent variable.

1.4. Research Hypothesis

1. There is no significant relationship between price factor and consumer perception
towards organic vegetables.
2. There is no significant relationship between core product and consumer
perception towards organic vegetables.
3. There is no significant relationship between marketing efforts and consumer
perception towards organic vegetables.
4. There is no significant relationship between place of availability and consumer
perception towards organic vegetables.

1.5. Significance of the study

This research on finding consumer perception towards organic vegetables will be highly
beneficial to the producers of the organic vegetables as well as to government and non-
government organizations,

This report will help the producers to invest in this sector and know more about the
market. People from every sector will have knowledge.

This report will even help the students to get detailed information regarding the given
topic.

1.6. Limitations of the study

1. The study is based on the respondents’ preference and perception within Suncity
area only.

2. Some results may be biased due to the wrong information provided by the
respondents.

3. The respondents of the research are limited to 130 so it may not represent the
population effectively.
4. It cannot be unspecified.

1.7. Organization of the study

This report consists of three major sections: preliminary report, body and
supplementary. The preliminary part includes: Title Page, Declaration of Authenticity,
Acknowledgements, Table of Contents, List of Tables, List of figures and Common
Abbreviations used in the report and Executive Summary.

The body of the report includes five sections: Introduction, Related Literature and
Theoretical Framework, Research Methods, Analysis and Results, and Discussions,
Conclusions and Implications.
 CHAPTER TWO
LITERATURE REVIEW
2.1. Review of Literature
Review of literature helps in determining an appropriate research method for answering
the research question. Literature review is done particularly with the purpose to get
knowledge and ideas regarding the present study.

Aryal, Chaudhary, Pandit, and Sharma (2009), conducted a study on “Consumers’

willingness to pay for the organic products. A case from Kathmandu valley and found
that consumers are willing to pay price premium of 5-50% for organic products which
can be viewed as the cost of investment on human health. If people have knowledge
and understanding about organic products it can affect attitudes and perception about
the product and buying decisions of the consumers. It can bring positive attitude
towards organic food consumption. Vegetables followed by the fruits and beans are the
most preferred and highly demanded crops at the present and the vegetables specially
the leafy ones are higher than other normal vegetables. The consumer willingness to
purchase is determined by the limited and irregular supply, higher price of the products
and very limited access and information.

Pokherel and Pant (2009) have studied that Nepal has high potentialities and
comparative advantages of producing quality organic products. The government based
on some of its policy instruments is also committed to promoting organic farming in the
country. Insufficient research, extension services and manpower especially on
production and marketing information and input supply have hampered promotion of
organic agriculture.

Organic food is considered healthy as most of the researchers suggest that it contains
low pesticides and is the main reason for increase in the demand or organic food.
Additionally, organic food is found to be more nutritious as well as tastes better than
traditional food. As well, the fact that organic products are produced in harmony with the
environment which makes it more attractive to green eaters. So, it can be said that the
organic food contains more health benefits, nutrition, and is grown using farming
technique that is sustainable with the environment as per the observed data as well as
the consumer preference. Organic farming is beneficial to the environment as it
promotes and maintains land fertility; biodiversity and low energy output as well as
provides natural habitats for the wildlife. (University of Maryland, 2009).
Organic farming is not a new concept in Nepalese context, where a very high
percentage of agriculture farming is by default organic in nature. Over a century, mostly
resource poor and subsistent farmers are practicing organic farming in traditional way.
Despite a prevailing argument that whether such farming can be called an organic or
indigenous knowledge based, transforming the system to organic is not difficult in
Nepal. Moreover, such a development would be conductive to poverty alleviation in the
country (Pokherel Land Pant, 2009).

Salleh, Ali, Harun, Jalil, and Shaharudin (2010), in their paper “Consumer’s perception
and purchase intentions towards organic food products: Exploring attitude among
academician” suggested that health consciousness represent the strongest relationship
with academician intention in buying organic food products as compared to environment
concern factors. It seems that perception towards organic food and believe that organic
food is environment friendly are nor strong from each other. It can be arguing that
consumer who are increasingly concern and realized the essentials of environmental
issues does not show in their decision when they considering in making a purchase.

Since this study is concerned in finding out the consumer perception towards organic
vegetables in Suncity, the literatures are arranged as per the relevance with the topic of
the study, the objectives, and methodologies.

Tamang, Dhital, and Acharya (2011) conducted a study that stated the lack of clear
vision from government sector is one of the serious drawbacks for the slow
development of organic farming products in Nepal. The issues and agendas of the
organic agriculture are limited on certain people and yet to be reached in the public
mass. On the other hand, serious problem of youth migration hit hardest in the
agricultural sector in the village. Organic agriculture is not in the priority of the
government. Ministry does not take it seriously. The staffs in ministry are not clear about
the use of resource as clear guidelines is not given to them. Because of which people
who see a great capability in agriculture industry are also not interested in development
of it. In past years it’s been observed that even the organizations and campaigners who
were working in promoting organic agriculture have lost their hope and grown weaker.

Paul and Rana (2012), in a study “Consumer behavior and purchase intention for
organic food” concluded that consumer’s attitude towards organic food is positively
influenced by demographic factors, education, health, availability. The consumers of
organic food are more satisfied that that of inorganic food and this satisfaction level is
affected by various other factors.
Smed and Andersen (2012) published an article on “Information or Prices, Which is
more powerful in increasing Consumer Demand for Organic Vegetables?” findings from
the study underlined the importance of targeting information to be in accordance with
the initial attitudes of the target group and to provide different types of information to
consumers at different stages of the purchasing process. Also, it was found that large
price flexibility for organic vegetables for the less dedicated organic consumers: prices
might be a barrier toward increasing the purchases of organic vegetables even though
these consumers have been converted into organic purchases. Hence special offers or
other ways of lowering the prices are likely to get those consumers to increase their
consumption of organic vegetables to a larger extent than it is dedicated consumers.

A worldwide growing industry, organic farming can be a good business opportunity for
organization and people who can go through the certification process to enter the
market. Over the last few years organic business have continued to expand and experts
forecast a steady growth of 9% or higher. Growth in organic sector has highlighted
issues that have to be addressed: shortage of organic raw materials such as organic
grain and organic sugar and competition from food marketed as ‘locally grown’ or
‘natural’. A shortage of affordable organic ingredients or products, such as corn and
soybeans for livestock feed, left organic producers unable to meet market demand
(Agriculture Marketing Resource Centre, 2013)

Iqbal (2015) conducted a study about “Consumer Behavior of Organic Food: A

Developing Country Perspective”, which showed that the consumers of organic fruits
and vegetables in Dhaka tend to be older, hold an academic degree and have a higher
income than those not purchasing organic products. Consumer behavior in purchasing
organic food in Dhaka has three motives: the tastier food search, expected health
benefits, and the attraction of new and fashionable products. The lack of information
consumers has an organic farming methods works as main barrier to purchase organic
products is. Indeed, the study reveals that the main reason for not buying organic
products was that they ‘do not know what organic means’.

Bruschi, Shershneva, Dolgopolova, Canavari, and Teuber (2015) carried out a study
entitled “Consumer Perception of Organic Food in Emerging Markets: Evidence from
Saint Petersburg, Russia” showed that the main factors affecting consumers”
purchasing decisions are mostly connected to the belief that organically grown products
are healthier, tastier, and more environmentally friendly than conventional products.

Deliana, Supyandi and Djuwendah (2018) in a study “Business Model for Promoting
Organic Vegetables” stated there are two business models in promoting organic
vegetables, using “Instagram” and training. The main constraint of producers in organic
vegetable is the waste from the environment that hampers organic vegetables
cultivation. For the consumer, the high price of organic vegetables is the main
constraint.

2.2. Research Gap

As awareness across the globe has been increasing about the quality and food safety of
organic foods people are getting more suspicious to conventional foods. The multibillion
industry of organic food has seen a continuous growth over the last few decades
(Organic Trade Association, 2011).

Still, the total share of organic food is small compared with the total food market. At
present, in Nepal, especially in the urban and semi urban areas there exists a great
business opportunity for organic farming as most of the healthy consumers have been
accumulated around cities and cities are the popular destinations for the high income
groups, business houses and tourists; who are considered to be the major consumers
of organic foods. Organics future relies on the motivation of final users but limited study
has been carried out to understand their purchase behavior and the factors that affect
the consumers purchase decision as compared to other countries.

Therefore, it is highly important to examine the underlying factors that might influence
the tendency of consumer to purchase organic food and develop marketing strategies
accordingly for rapid growth and development of organic market in the developing
countries like ours. Despite the growth trend of organic food products industry and
continued support from various organizations, there is little research on organic food
products in Nepal. So, the objective of this research is to understand about the
perception of the consumers towards organic vegetation and also to understand the
factors that drive consumers to purchase organic products.
2.3 Conceptual Framework
On the basis of overall literature review, the researcher has considered the research
done by Sharma, Uprety, and Phuyal (2016) as a base paper to develop the below
theoretical framework:

In
2.4 Specification of variables
Dependent variables

Dependent variable describes the problem under study. Its value depends upon
independent variables. Here in this study the dependent variable will be consumer
perception towards organic vegetation. This variable will be dependent on various
independent variables like cost factor, core product, place of availability, marketing
efforts, age, occupation and income

Independent variables

Cost factor refers to the price determinants which impact the profit margins, supply,
demand and marketing strategy. In this study, cost factor includes variables such as
price, willingness to pay, affordability, competitive pricing. If an individual cannot clearly
differentiate between two alternative products, a price premium on the organic product
can confuse or affect the individuals purchasing decision. Price refers to the quoted
price of the product; willingness to pay refers to paying a premium price, which depends
on how consumers pursue organic vegetables and the benefits of it, affordability refers
whether consumers can afford the quoted price which can be related to the occupation
as well as their monthly income and competitive pricing refers to how closely the quoted
process are competitive with its competitors and considers vegetables grown using
modern techniques and fertilizers/pesticides.

Core product can be either tangible goods or intangible services that fulfill the wants of
the consumer. It also refers to the core product attributes which counts the most and
makes it different from its competitors in the market. Core product in the study is defined
by variables: health benefits, quality, appearance, freshness and taste. Health benefits
refer to the nutritional ingredients that constitute to the good health benefits of the
consumers. Quality refers to the standard of something as measured against other
things of a similar kind; the degree of excellence of something. Appearance refers to
how the product looks in shape and size. Freshness and taste is related to nature,
freshness refers to the state of being recently made or obtained or not having decayed
and taste refers to the sensation of flavor perceived in the mouth and throat on contact
with the organic vegetables.

Marketing Effort refers to the strategies, actions and plans made by a company to make
its product visible in the market and to speed up the sales which includes activities such
as advertising, packaging, certification and labeling. Advertising affects the consumer
perception to set the need of the product in consumers mind. Advertising refers to the
promotional campaigns like banners, advertisements, commercials. Packaging refers to
how the product looks when it is displayed on shelf of distribution stores and how it
attracts the consumers. Certification means that the product is tested and confirmed to
meet the claims made by it which is approved from recognized government or private
institutions or labs. Labeling refers to the facts on the packaging by which the product
sells.

Place of Availability refers to the areas where consumers can purchase the organic
vegetables. Also these are the ideal locations where potential clients are converted into
actual clients. In this study place of availability has been described by four variables
near local grocery shops, departmental stores/ supermarkets, E-commerce sites, events
like farmers market. The numerous studies conducted on organic food products market
have stated that the market for the organic food products is very much narrow. Also, the
existing market has not been able to fulfill the overall demand as expected. As a result,
there is shortage of organic products due to shortage of the supplies.
 CHAPTER THREE
RESEARCH METHODOLOGY
The main purpose of this chapter is to provide with relevant information on various
methodological approaches tools and techniques used in this study for instance
research philosophy, research design, data collection methods etc. are discussed and
presented accordingly.

3.1 Research design and plan

Research is creative and systematic work undertaken to increase the stock of

knowledge. It involves the collection, organization and analysis of information to
increase understanding of a topic or issue. A research design serves as a framework for
the study, guiding the collection and analysis of the data, the research instruments to be
utilized, and the sampling plans to follow.

Quantitative approach helped the researcher to collect large amount of data to answer
the research questions, quantify relationship between variables and generalization.
Moreover, this approach is preferred when the area of study is large and there is a need
to deduce casual relations between variables (Gordon and Langmid, 1988).

The research design that is used follows descriptive study as frequencies, averages and
other statistical calculation based on survey is used in different variables to compute
various calculations.

3.2 Population and sample size determination

According to Malhotra (2007), the population is referred to elements or objects that has
the knowledge which is sought by the researcher and about which the conclusions are
to be deducted. The target population of the study should be defined clearly or it will be
ineffective and misleading. The scholar has further added that the target population
should be defined in terms of elements, sampling units, extent, and time.