SUMMER TRAINING REPORT

OnNEAR 2 NATURE “ TO STUDY THE CONSUMER BUYING

BEHAVIOUR AND MARKETING MIX OF

ORGANIC FOOD IN

DOMESTIC MARKET “

Submitted in partial fulfillment of the requirements of the two year

Post Graduate Programme (PGP).

Submitted by Ashish Kumar Singh Chauhan

Roll No: PG20095343

Batch: 2009-2011

IILM Institute for Higher Education

DECLARATION FORM

I hereby declare that the Project work entitled,

“TO STUDY CONSUMER BUYING BEHAVIOUR AND MARKETING MIX

OF ORGANIC FOOD IN DOMESTIC MARKET” submitted by me for the

partial fulfillment of the Post Graduate Program (PGP) to IILM

Institute for Higher Education, is my own original work and has

not been submitted earlier either to IILM or to any other Institution

for the fulfilment of the requirement for any course of study. I also

declare that no chapter of this manuscript in whole or in part is

lifted and incorporated in this report from any earlier / other work

done by me or others.

Place: Sector-56, Gurgaon

Date : 10.07.2010

Name of Student: Ashish Kumar Singh Chauhan

Address: Plot No. 46, D402, Smriti Apt., Sec-56, Gurgaon

ACKNOWLEDGEMENT

This report bears imprint of many people who have directly or indirectly made a significant contribution towards my project. I thank for kindness shown and contribution made by various people in this endeavor.

I am very pleased to acknowledge the help and guidance which I received from the members of Near 2 Nature.

I would like to thank my company mentor, Mr. Abhishek Singla, Operations Manager to grant me an opportunity to undertake my Management Research Project with this company.

I owe my sincere gratitude to Ms.Monica Mor , my faculty guide, with whose support this project could not have been possible for me.

I am also grateful to the respondents who filled my questionnaires and helped me in gaining an insight of Near 2 Nature as a brand in the Indian market. Their enthusiastic feedback has given my project a direction.

Last but not the least, I will always remain indebted to the organization and the helpful suggestions and advice provided to me by its members.

EXECUTIVE SUMMARY

At IILM Business School, the PGP programme has been designed keeping in mind the requirement of a company in the World at large. We, as students of IILM, are required to undergo two months company project study after completing the fourth trimester.

The objective of the training module is to help the students to understand the business environment well and equip themselves with the work culture of the companies in the present era.

I, Ashish Kumar Singh Chauhan, take the opportunity to introduce the reader the outlines of my Management Research Project. I have completed my Summer Internship from Near 2 Nature, Delhi.

My summer internship was divided into two halves: In the first half, I had to analyze consumer behaviour towards Organic food products i.e. what they perceive about organic food products. In the second half, I was engaged in selling of Near 2 Nature products .This is followed by a survey and its analysis and at the end the recommendations that could make Near 2 Nature more effective in the Organic food market.

Project Objectives:

To analyze the potential for organic products in the Indian domestic market.

To find out the awareness level about organic food in domestic market.

To identify the future scenario on the basis of collected facts and services provided by the consumers.

Reporting:

I reported to Operations Manager (Mr. Abhishek Singla) who kept guiding me during the SIP as and when required.

Learning:

I learnt a lot during my project. It helped me giving a basic idea of how organic food company caters to the need of its customers. I learnt about how the organic food company sells its products in the market and what are the customer’s preferences in terms of the services provided by the bank. I also learnt how to deal with the customers while engaged in marketing and selling of the products and services.

SIP also helped me to get used to the corporate environment & also helped me to improve my soft skills and business communication.

Achievements:

My evaluation regarding the products and services offered by various organic food companies would help the organization- Near 2 Nature in better understanding of their competitors in terms of the services provided by them, presence of the organizations, industry segments catered by the organizations, market share of different organizations etc.

PART ‘A’COMPANY STUDY

INDUSTRY SNAPSHOT

The global demand for organic food products is growing at a very rapid rate. Ever since the environmentalists raised their concern regarding harmful effect of increasing use of chemicals in farming, the consumers are getting conscious and selective about edible products. This increasing awareness has caused shifts in consumers’ tastes and preferences which have led to the domestic as well as global rise in demand for organic products. The organic food industry in the world is worth US $ 35 billion with a growth rate of 15 percent with most of the growth concentrated mainly in U.S.A, U.K. and Japan (Willer, 2004). To supplement this demand, farmers have taken to organic farming for getting price premiums which resulted in around 3.5 million hectare land across the globe  under organic farming .In India, the farmers have followed the path for organic food production, but the share of India in the world organic market is less than one percent. In order to boost trade in Indian agricultural products and capture significant share in global market, it is an imperative that India focuses on organic products which give it competitive edge in global market, namely organic cotton, spices, essential oils, medicinal and aromatic plants and fresh fruits and vegetables. Organic farming in irrigated and intensive farming areas holds another kind of promise, a source of sustainable and value added commercial farming.

An Overview of Current Organic food market in India

The organic farming is an old concept in India in terms of the extensive farming carried out in the country. The organic food market is worth USD 129.3 mn and shows huge potential for growth in future. The increasing export market coupled with government’s support has driven the market. 

The market overview section compares the global and domestic organic food market. An analysis of the drivers explain the factors for growth of the industry including the huge export market, organized retail enhancing distribution network, government initiatives and increasing health consciousness among consumers. The key challenges identified encompass high prices of organic food, lack of integrated supply chain and difficulties for farmers, certification barriers. The competition section provides an overview of the competitive landscape including brief profiles of key domestic producers and promoters of organic food products. The key developments section provides an insight on sector related developments in last one year.

The global organic food market grew by 9.7% in 2009 to reach a value of $60 billion.

In 2014, the global organic food market is forecast to have a value of $96.5 billion, an increase of 60.7% since 2009.

The fruit and vegetables segment generated 31.5% of the global organic food market's overall revenues.

Central strategy on organic foods has always slanted toward the global market, leaving the critical mass of domestic consumers out in the cold.

Currently, about 70 per cent of organic agriculture items produced in India being exported.

Organic products fetch a 20-30 per cent higher price than

inorganic products in the world market.

According to the Indian Competence Centre for Organic Agriculture, the global market for organically produced foods is $26 billion and is estimated to increase to $102 billion by 2020.

As part of 10th Five Year Plan (2002-07), the government earmarked Rs 100 crore (Rs 1 billion) for the promotion of sustainable agriculture in the country, but the main components of this initiative have benefited exports, from the establishing of national organic standards under NPOP (National Programme for Organic Production), putting in place a system of certification for products, and establishing APEDA (Agricultural and Processed Food Export Development Authority) as the nodal agency to promote exports opportunities.

Domestic retail avenues for organic produce have traditionally been the odd cottage emporium, fruit mart, bakery and kirana store along with an upmarket provision store here and a delicatessen there.

Today, however, marginal growth is slowly becoming evident in the increase in organized producers, retailers and product offerings in the market, where before the movement had been

driven entirely by the spirit of individual initiatives of the farmers, the odd entrepreneur and non-governmental organizations.

When organic farmers and traders are operating in an anonymous market, certification is developed to show and guarantee to consumers that a product has been produced in consistency with organic standards.

While certification has provided Indian-produced organic products with inroads into foreign markets, domestic bound produce is largely uncertified, owing to the fact that most producers are either small or marginal farmers, small cooperatives or fair trade companies.

Under current government policy, it takes approximately three years for a farm in conversion to be certified as organic, and costs are hefty for the small farmer.

Organic Food Consumption in India is on the Rise

Some people believe that organic food is only a “concept” popular in the developed countries. They think that when it comes to organic food, India only exports organic food and very little is consumed. However, this is not true.

Though 50% of the organic food production in India is targeted towards exports, there are many who look towards organic food for domestic consumption.

ACNielsen, a leading market research firm, recently surveyed about 21,000 regular Internet users in 38 countries to find their preference for functional foods – foods that have additional health benefits. The survey revealed that India was among the top ten

countries where health food, including organic food, was demanded by the consumers.

The most important reason for buying organic food was the concern for the health of children, with over 66 percent parents preferring organic food to non organic food. Though organic food is priced over 25 percent more than conventional food in India, many parents are willing to pay this higher premium due to the perceived health benefits of organic food.

The increase in organic food consumption in India is evident from the fact that many organic food stores are spurring up in India. Today (2006) every supermarket has an organic food store and every large city in India has numerous organic food stores and restaurants. This is a huge change considering that the first organic food store in Mumbai was started in 1997.

However, the Indian organic food consumer needs education. There are many consumers who are unaware of the difference between natural and organic food. Many people purchase products labeled as Natural thinking that they are Organic. Further, consumers are not aware of the certification system. Since certification is not compulsory for domestic retail in India, many fake organic products are available in the market.

Who are the organic consumers?What we consider as the “organic consumer” is that person who is responsible for buying food for the household and who buys organic food at least once or twice per month. So, if there are people who buy randomly or less than once a month then they are not considered regular organic consumers. 

Values and behavior of organic consumersWhat do organic consumers think, that is, what is in their minds concerning organic products, is a determinant factor of consumer preference for organic food. In spite of taking cognizance, a change in attitude and thinking about organic food is prerequisite, in order to feel confident and positive about this new direction. An organic consumer has more positive beliefs concerning organic products. For example, this product tastes better, is more natural, is healthier-they believe that more than non-organic consumers. They believe that the people who are important to them, people who are close to them, also by organic products- they believe that it is a good thing that they buy organic products. The other aspect of what the organic consumer think, as compared to non-organic consumers, is their moral norms indicate they are doing a very good thing for the environment, the right thing for society. This is something that differences them from non-organic consumers. Non-organic purchases do not associate those beliefs to buy organic products.Consumers’ values to make a choice for organic food can be seen in two terms-use values, such as utility from taste, health and freshness, i.e., private good attributes which can only be enjoyed by actually consuming the product. The other non-use values are public good values related to improved environment and animal welfare. The majority of all consumers-acknowledges and value organic goods for their non-use values (environmental or animal welfare attributes), as well as for their use values (health, taste or freshness attributes). The group of consumers having use values only is negligible. In the same way that most people agree exercise- is important; they also agree that a sustainable, clean environment is important.Wier and Anderson (2003) studied consumers’ attitudes, values and purchasing behavior for organic foods. They concluded that organic buyers were more health concerned, more focused on

residues, animal welfare and environmental attributes less focused on low prices and more often they preferred domestic products.

 There is no question that consumers are changing the way they buy. A variety of societal factors are driving consumers to increasingly seek out unique and differentiated products that fit their lifestyle. Consumers purchase of green or sustainable organic products are not just motivated by the produces themselves but by the values they represent. We can change non-organic consumers minds to make them believe that organic products are better in different ways-for the taste, health or the environment and demonstrate that people who are important to them, whether it’s people who are related or not, such as celebrities, if they buy and consume organic product, then we might be able to move these consumers into the organic market.

India can take advantage of the growing opportunities in this sector making use of its varied agro-climatic conditions and traditional organic resources and farming practices.  There are certain challenges to be met before India takes on to the world organic markets. The Indian produce has to create a competitive niche in global markets. The challenges in international marketing of organic food are standardization of products according to the customers’ tastes and preferences, certification, consumer education, branding and promotion. Production of organic products also face challenges with regard to availability of right and quality inputs, research and dissemination of appropriate technologies, processing, certification, production information and infrastructure support and also policies of the government need to be revisited to fulfill its objectives to tap global organic markets. Therefore, the study is based on the strategic analysis of Indian organic product industry with respect to global markets.

Contract farming for organic crop production in India

Indian agriculture is progressing in all spheres to keep up with the ever-increasing population. In the Tenth Five-Year Plan (2002-07), the government envisaged at least 4% growth rate per annum, so that food security is assured and employment opportunities in agriculture are created. The National Agricultural Policy also aimed to strengthen the national economic growth through efficient marketing to accelerate foreign exports by establishing Agri-Export Zones for various crops in major crop-growing areas, where technical know-how and facilities for export will be provided. Therefore, there is a shift from sustainable to commercial agriculture. Farmers can increase their income from crop production. Similarly, in several developed countries, demand for organic food and fibre, and by-products is increasing day-by-day. This change is mainly due to overuse or misuse of chemicals, particularly synthetic insecticides, fungicides, herbicides, fertilizers, plant growth regulators, etc. that resulted in undesirable side effects not only in the agro-ecosystems, butalso on human health and life systems of beneficial fauna and microorganisms. These recent trends in consumerism haveopened a new vista for agricultural production on large scale by adopting contract farming, which can transform small farmersinto viable commercial producers by monitoring quality, quantity and cost of crop production, and can link production with the consumption. This change can help develop markets and bring about changes in the present conventional agriculture which is expected in India in near future. This note therefore discusses the present situation and future strategies of community cultivation.

Need for contract farming in organic agriculture

The organic agriculture includes growing of crops by a set of guidelines that prohibit the use of synthetic products/chemicalssuch as fertilizers, pesticides, plant growth promoters and livestock additives. Therefore, soil fertility and pest managementis achieved through cropping patterns (rotations, inter/mix-crops, pest and disease- resistant genotypes), manure (green manuring, organic manures, compost), biofertilizers, cultural practices (weeding, planting, conventional tillage) and biopesticides, including plant-derived products. At present, this system seems to be an ideal and valid solution to produce food and fibre without chemicals and to protect the environment. Further, consumersare becoming conscious and critical about the quality of food and by-products that affect their health though the toxicity depends,to some extent, on the type of food consumed. India being one of the signatories for the World Trade Organization, liberalization,privatization and globalization has opened new grounds for agricultural marketing. The National Programme for OrganicProduction of the Commerce Ministry and the State Governments are actively promoting investment in support of promising ventures in organic agriculture.

Considering the present socio-economic status of Indian farmers, contract farming seems to be an ideal option because this system would have certain advantages over the present crop production and marketing systems, such as:

1. Profit in produce sale is possible by capitalizing the scientific research in post-harvest technologies.

2. Indian agriculture per se is becoming commercial due to global demand for a variety of foods and fibre, and food products.

3. Any crop can be cultivated on a large area to obtain produce of uniform quality by adopting appropriate technology. Crop production is also possible on small land-holdings through cooperative/ corporate farming to enhance productivity and avoid admixture or inferior quality produce.

4. Technology transfer becomes easier due to large-scale adoption.

5. Risk involved due to fluctuation in market price is minimized. This point is relevant to the present strategy of farm economics as the Minimum Support Price is generally declared at the end of crop season and it often remains ambiguous.

6. Commercial and nationalized banks are coming forward to finance contract farming through soft loans and are revising prime lending rates.

7. Additional income from intercrops is certain due to crop diversification. Consolidation of small and marginal lands can make farming economically viable, resulting in higher (>30%) net returns than traditional/conventional farming systems.

Challenges for Contract Organic Farming

(i) Organic farming on contract basis requires a long-term approach as it is based on the trust of farmers, for which grass root intervention is critical for its success.

(ii) If it is not profitable to both parties, the written agreement becomes a useless effort. Thus, responsibilities of both parties should be fulfilled. The agreements differ according to the commodity produced by contracting farmers. Generally, farmers may not take cognizance at the time of signing of the clauses that

might be exploitative in short or long term; such agreements can jeopardize investments and interest.

(iii) Although 44% of the country’s GDP comes from retailing, retail marketing of organic food is limited compared to other countries, e.g. 85% in USA, 40% in Thailand, 35% in Brazil, 20% in China and only 2% in India.(iv) Convincing farmers about the economic benefits of contract farming through field demonstrations should be taken up urgently. This may consist of educating farmers about new farming techniques, marketing skills for organic food and fibre, seeking cooperation from business communities and firms, informing consumers about the ill-effects of chemicals, etc.

(v) Certification cost for organic produce is comparatively high and needs to be reduced drastically.

(vi) Facilities for storing and verification of quality of agricultural commodities at village level are lacking.

(vii) Participation of processing firms/ purchasers is limited, as they are not aware of the long-term benefits and they also need large areas, which is difficult in regions where small and fragmented land-holdings are common.

(viii) Banks are ready to finance contract farming in organic agriculture to only those farmers who are not defaulters.

(ix) Under unfavorable climatic conditions, the quality of farm produce cannot be maintained or the whole crop may fail. Crop insurance initiated by the Government needs to be implemented on a large scale.

HISTORICAL PROSPECTIVE

In 1939, Lord North borne coined the term organic farming in

his book Look to the Land (1940), out of his conception of

"the farm as organism.

This is different from the scientific use of the term "organic,"

to refer to a class of molecules that contain carbon,

especially those involved in the chemistry of life.

It was with the advent of the ‘green revolution’ that the

natural way of growing crops started becoming unpopular

and economically less feasible.

Organic food farming continued in small, mostly family-run,

farms or kitchen gardens where people grew food for their

own requirements.

The produce was sold in farmer’s markets. Large scale

organic farming was begun by farmers and scientists, as a

mark of protest to the agriculture industrialization.

Now, organic food is widely available and has become very

popular, with soaring sales.

COMPANY PROFILE

FOUNDER- Mr. Vinod Goel

Few men in history made as dramatic a contribution to their country’s economic fortunes as did the founder of B.S. associates Mr. Vinod Goel. Fewer still have left behind a legacy that is more enduring and timeless.

Near 2 nature has been established with the essence of purity

and belief that the right of every individual to EAT HEALTHY and

LIVE HEALTHY is accomplished.

As with all great pioneers, there is more than one unique way of

describing the true genius of Vinod Goel .The corporate visionary,

the unmatched strategist, the proud patriot, the leader of men, the

architect of India’s organic food markets.

Under Vinod Goel’s extraordinary vision and leadership, near 2

nature is one of the greatest growths in organic food industry in

India and want to become India’s largest private sector enterprise.

ABOUT NEAR 2 NATURE

Near 2 nature means “Close to Nature”. Near 2 nature believe

and committed to thee values of excellence, purity, and Eco-

friendly & best quality organic food for all.

The company has a constant endeavor to serve the customers

with highest quality organic foods and bring them back to nature,

the Mother Nature which has taken care of us for al long time.

Organization is formed with a view in mind that “We will try to

bring to people the highest quality organically grown food at their

doorstep with full customer satisfaction and commitments made.

The fresh food from all kind of pesticides fertilizers & chemical

preservatives to gives you a healthy, longer & quality life.

CORPORATE OBJECTIVEAt Near2nature Company, we strongly believe that as life is

different at every stage, organic foods must offer health and brand

trust to organic foods. We are fully prepared and committed to

guide the consumers on organic foods through survey and people

awareness. It advised to competent the market and customers in

the best possible way.

It is our aim to become one of the top organic food

companies in India and to become a cornerstone of B.S.

associates In India.

CORPORATE MISSION“To be an ethical and innovative global leader in providing

genuine organic products and solutions for conscious and healthy

living.”

OBJECTIVE

We at near 2 nature need to create awareness among the people regarding the benefits of organic foods and their advantages over the conventional foods we are eating nowadays.

To bring people back to pre green revolution era food that is our

basics, which justify our saying of “BACK TO BASICS”.

NEAR 2 NATURE PRODUCTSPulsesuradh wholeuradh chilkauradh dhulimoong wholemoong chilkamoong dhulichana dalkabuli chanaarhar dalpahdi moatLobiyarajma redkala chana

Spiceschilly powderdhaniya powderhaldi powderjeera wholeblack peperElachimeethi seedmeethi leafLaungtej pattaAzwain

Pickle and Murabba amla muaraabalemon sweet picklelemon salty pickle

mixed pickle

Sweetner'sBurabrown sugarrose squashbhel squash

Flour'swhole wheat attasugand basmati ricemustard oilDaliyaBesanragi flourghee sunflower oiltea leavesamla candy

COMPETITORS LIST

Fabindia Overseas Ltd.

Address: New Delhi, Gurgaon

Sapthsathi organic agriculture project (Surendra Kumar Tiwari)

Manufacturers of Organic Food Grains

Address: 414, 5th Floor Onam Plaza A.b. Road Old Palasiya, Indore, Madhya Pradesh

Ishan herbotech international (Nidhi Maheshwari)

Manufacturers of Herbal Tea and all types of tea like Assam, Green, Organic, Black, White, Organic Food.

Address: D-10, Export Promotion Industrial Park, Site-V, Kasna, Greater Noida, Gautam Budh Nagar, Uttar Pradesh

Nblc stores (Arun Bagga)

Manufacturers of Fibre Biscuits, Herbs, Aloe Vera Juice, Roasted Namkeen, Organic Foods.

Address: D-144 Shankar Rd. Mkt. New Rajinder Nr. New Delhi-60

Value plus (J.p.chauhan)

Manufacturer of Organic and Natural Food.

Address: G-92, Time Square, Vidhyadhar Nagar, JAIPUR, Rajasthan

Jayvin organic foods (Mr. Nitin Bhad)

Manufacturers of Organic Food, Wheat, Raw Cotton, Maize, Soya, Vegetable, Banana, Orange, Pomegranate, Mango, Sugar and Jaggary.

Address: LG- 46, Orbit Mall, AB Road, Indore, Madhya Pradesh

A plus inc. (Manager)

Manufacturers of Straw Furniture, Terracotta Paintings, Wooden Carving, Spices, Pulses, Organic Food, Tin Food and Pickle

Address: A-99, New Palam Vihar, Gurgaon, Haryana

Himalayan healthfood (Gutzeit)

Manufacturers of Organic Health Food.

Address: Main Road, Kullu, Himachal Pradesh

PART ‘B’MARKET RESEARCHAnalysis and Findings

INTRODUCTION

Organic agriculture offers trade opportunities for farmers in the developing and developed countries. This market of organic products is expected to grow globally in the coming years and high growth rates over the medium term (from 10-15 to 25-30%) are expected.

The organic market expansion makes it possible for farmers to reap the benefits of a trade with relatively high price premiums. However, this market is not very well known to most farmers, especially those living in the developing countries.In India, a country with a huge number of small farmers who still use traditional methods and do farming with few agricultural inputs. An organic movement is now emerging in India on different levels. So dissemination of information about the opportunities and challenges for Indian organic products on the domestic market.

Objectives of the study

1. To study the consumer buying behaviour for organic foods in the Indian domestic market.

2. To analyze the potential for organic products in the Indian domestic market.

3. To study the marketing mix of organic foods in India.

RESEARCH METHODOLOGY

Since it is basically a market research project along with some marketing and selling of organic products, various market research methods were used to accomplish its goals. I conducted a market survey to know about the consumer behaviour towards organic foods in India.

The stepwise methodology that was used is:

1. Secondary Research: Company description was obtained through websites, business magazines, and journals and from the organization itself

2. Sampling:

Selecting the sample: Population that was taken as a sample included randomly selected customers of organic foods.

Sampling Technique: Simple Random Sampling

Sample Size: 100 respondents (total)

3. Primary Research: Primary research was conducted through surveys via:

a. Interaction with customers at Malls and other market places.b. Interaction with customers at their homes.

Questionnaires were designed to conduct interviews.

4. Preparation and tabulation of data: After the data has been collected, it was entered into Microsoft Excel and was prepared for analysis.

5. Data Analysis: The data so collected was analyzed in Microsoft Excel with the help of bar diagrams, pie charts, etc.

Finally, the information thus obtained from the survey was used to discover the potential segment for generating new business for the organization and thereby devise strategies to generate new business from that potential segment.

QUESTIONNAIRE

Name: Mobile:

e-mail: Occupation:

Age: Below 20yrs 21yrs-50yrs 50yrs above

Monthly Household Income: Up to Rs.20,000 Rs.20,001-Rs.50,000 Rs.50,000 above

1. Have you heard about organic food?

Yes No

2. If YES, then what do you perceive/think about organic food?

Pesticides/Chemical free No Adulteration Eco-Friendly

More Nutritious Costly

3. Do you purchase organic food?

Yes No

4. What types of organic food do you purchase? (You can tick more than one)

Produce Processed foods (cereal, etc.) Meats, Eggs, poultry, seafood Vegetables

5. How long have you been interested in organic foods?

More than 3 years 1 to 3 years 6 to 12 Months

0 to 6 Months Never

6. How did you first hear about organic foods?

Advertisement Magazine Newspaper

Internet Friends

7. In your opinion, what are the most important motivations that will persuade you to buy organic foods instead of non-organic foods?

1(Most Important) 2 3 4 5(Leastimportant)

Benefits

Packaging

Price

Taste/quality

Friends

Concern about health

8. Primary reasons you do not purchase organic foods.

1(Most important) 2 3 4 5(Less importat)

High price

Taste is not good

Low availability

Low trust

Poor appearance

9. How would you describe your overall opinion of organic food brands?

Very favourable Somewhat favourable Neutral Somewhat Unfavourable Very Unfavourable

10. Would you recommend organic foods to a friend or associate?

Definitely Probably Not sure

Probably not Definitely not

FINDINGS AND ANALYSIS

PART A: General Information

Above 5015%

Between 21-5085%

AGE GROUP

WORKING49%

HOUSE-WIFE51%

OCCUPATION

PART B: Information about Organic food

Characteristics of organic food as a productOrganic food as a product is the most important marketing-mix variable. Before organic food producers enter the organic product market, they should be prepared to correspond best to the wishes of their consumers by the design, purpose and function. What organic food consumers are most interested in are the following items: production program, product quality, packaging material, packing, product labeling, and price setting. This is closely related to the product image that implies everything a consumer creates about the product as an image, atmosphere or a feeling. Orientation towards

consumers intensifies problems regarding relevant factors in the design of the production program as a means to satisfy consumers ina demanding and competitive battle on the market and achieve goals in that way.

• Product– High Quality Natural and Organic Food – Offerings vary based on store size and tastes of local

clientele– Private label products– Emphasis on daily foods

Price as marketing-mix of organic foodPrice makes the second element of marketing-mix, which brings income, while other marketing-mix elements represent costs. The product price must be in line with product’s basic characteristics and features. Thus, it must closely correspond to product’s quality, design, packaging, etc., exemplifying at the same time therealized productivity.

• Price– Goal is competitive price at highest quality– Organic foods are 25 – 75% more costly to grow and

market– Price and Quality are competing forces– Near2Nature chooses to focus on Quality, therefore

prices are higher than conventional grocers

• Place– No standard store design. Layout customized for site

and product mix.– Presentation

• Highly regarded food displays, cleanliness, wide aisles

Promotion of organic foodDue to the easier and quicker access of potential consumers to the relevant information on organic food entering the market, i.e. in order to help customers decide on the purchase of certain organic products, producers advertise their products in media.

• Promotion– Primarily rely on word-of-mouth recommendations– 0.5% of revenue spent on advertising– Most marketing spend is for in-store signage and

events– Store personnel is knowledgeable and personable

Industry Analysis of Organic food

Porter’s 5 Forces – Near2Nature Market

Forces Description Force strength

Threat of Substitute products

Easy switch to the conventional retailers. Specialty stores built right in to their strategies.

High

Bargaining Power of Suppliers

Largest food processors acquiring organic food producers. Only 1% of farmland used for organics.

Medium to High

Bargaining power Buyers

For the most part, buyer can switch to other high quality products

High

Intensity of Competition

Degree of commitment by the conventional retailers will determine the intensity.

High

Threat of New Entrants

Entrants are already there. Their intensity of their pursuit of the natural/organic market is the question.

Low – Medium

SWOT ANALYSIS

Near2Nature Foods

STRENGTHS Highest Quality Organic Foods Seller Huge selection/variety Free Home delivery First Mover in organic products Eco-Friendly

The export of Indian organic products is progressing. The Government support to organic agriculture, awareness for healthy food harmful effects of pesticides and presence of their residues. International and national certification bodies in India- these four facts are the dominating strengths.

WEAKNESSES Price – up to 75% higher Locations – only in affluent areas Advertising Budget very low (WOM approach) Promotional Offers – no coupons Certification

Major weaknesses are on the level of information/awareness: most farmers have only small holdings and quality consciousness is low besides lack of marketing skills (e.g. disjointed sector for the domestic market). Another weakness to be noted is that the organic market is not consumer demand -based, but supply driven. From this fact a lot of threats can be derived.

OPPORTUNITIES

Expand private label selection – lower price for customers Advertise more, create coupons and promotions to get

people in the store Hype right now is to eat healthier and protect the

environment Rewards program – frequent buyer cards Back to Basics – buy more local products that people will

pay more for.

To quantify the potential of the organic products is not simple because the fast development of the Indian society and economy. For further progress, more information should be gathered on the market opportunities. Nevertheless, the need assessment shows that on the level of the opportunities, a considerable potential for the organic market exists, even though the size of the potential can not be quantified exactly.

THREATS Conventional Supermarkets Bad Economy Local Farmers Markets/Independent Retail Chains

Some of the major threats are really dangerous. The awareness about pesticide residues is to be considered as strength. However, a bigger threat is that all kind of products are offered under declarations like “without pesticides”, “eco-friendly” or even “organic”.

Future Challenges for Near 2 Nature

• Pricing – being able to compete against the conventional grocery chains

• Getting more people in the store to buy organic food

• Convince new customers to shop at Near2Nature rather than more convenient stores

PART ‘C’CONCLUSION

AndRECOMMENDATIONS

RECOMMENDATIONS

The Indian organic market is a typical example for a market in the pre-growth-phase. There will be soon some relevant players on the domestic market. Those players (individual farmers, framer groups, middleman, supermarkets, traders and exporters) will certainly try to earn better income as quickly as possible from the organic market. This fact has to be considered positively. In the pre-growth-phase, there is already some awareness about food quality and pesticides residues among consumers. The expression “Organic” is still not protected and the awareness is diffused. It will be a difficult task to find the right approach to transform this improper awareness in the correct way among Indian consumers. So it is a very important task at the beginning itself to define what organic products are, how are they different from conventional products and also to describe the USP (Unique Selling Position) of organic products.

• Lower Price to Compete with Grocery Stores– Add a customer rewards program for frequent buyers– Coupons to customers

• Catering– Offer catering to local businesses & events

• Expand Private Label Selection– Lowers manufacturing costs, could offer discounts to

customer for using Near2Nature brand products

CONCLUSION

In the modern market economy, the system of organic agriculture, especially the system of organic food production, becomes more and more important factor of national and international economic system development. The importance of organic food marketingis conditioned by the fact that it enables producers for better understanding of customers’ needs, serving the purpose of better meeting their needs and it also enables consumers to realise better organic products supply. Defining the main feature of organic agriculture and its importance is the starting point for conceptual establishment of organic agriculture.

A quality guarantee of organic food products directly influences consumption intensity, absorption power of the market, packaging material design, advertising messages, choice of the distribution channel, and distinguishing organic from conventional products according to their market characteristics makes the fundamentalfactor of the product differentiation and diversification with the aim of producing such organic food that would certainly find its way to the consumer.

PART ‘D’

BIBLIOGRAPHY

BIBLIOGRAPHY

Internet Sites:

www.google.com

www.economictimes.com

www.near2nature.com

www.thedailygreen.com

www.dmoz.org/Business/ Food _and_ Related .../ Organic /

www.naturalnews.com