group 1 crp2
TRANSCRIPT
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ANALYSIS OF THE ORGANIC FOOD INDUSTRY
IN AUSTRALIA
Presented By:
Gazal Shah MJAN15CMM036
Harsh Nahata MJAN15CMM010
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WHAT ARE ORGANIC PRODUCTS ?
• Subjective definition.
• Limited use of chemicals and pesticides.
• Follows production standards.
• Meets guidelines set by the regulatory bodies.
• Different from natural products.
• Different for different countries.
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GLOBAL PERSPECTIVE
Global Organic Food Market Geography Segmentation: $ Million, 2014
Geography 2014 %
United States 35,891.90 42.6
Europe 34,800.70 41.3
Asia-Pacific 8,338.90 9.9
Middle East 171.80 0.2
Rest of the World 5,077.70 6.0
Total 84,280.90 100%
SOURCE: MARKETLINE
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GLOBAL ORGANIC FOOD MARKET TREND
65.60
72.0076.80
82.70
91.90
99.60
106.60
113.10
0.00
20.00
40.00
60.00
80.00
100.00
120.00
2010 2011 2012 2013 2014 2015 2016 2017
SA
LE
S V
OL
UM
E (
'00
0 T
ON
NE
S)
YEAR
Organic Packaged Food Retail Volume (Tonnes)
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Source: Euromonitor Passport, Organic Packaged Food Retail Volume sales Statistics
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CONCEPTUAL FRAMEWORK
Accreditations and
certifications
Perceived Product
Quality
Price
Product
Availability
Sales Promotions
Consumer
Perception
Consumer Trust
Attitudinal Consumer
Loyalty
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RESEARCH METHODOLOGY
• Research Questions:
• What hinders Australians from purchasing organic foods in all food categories?
• How to increase sales of organic foods?
• Research Objectives:
• To identify the factors influencing the sales of organic foods.
• To identify the factors hindering the purchase of organic foods in all the food
categories.
• To identify the category in which organic foods sales are low.
• To understand influencers in sales of organic foods in those low categories.6
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LITERATURE REVIEW
7
Certifications
Product
Price
Sales
Promotion
Product
Availability
Perceived
Quality
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LITERATURE REVIEW
8
Certifications
Product
Price
Sales
Promotion
Product
Availability
Perceived
Quality
Types of Organic Certification Details
100% Organic 100%
Organic 95-99%
Made with Organic Ingredients 70-94%
Others < 70%
Source: Rehan, K. (2007). Feeding the organic demand. Candy Industry, 172(9), 50-52.
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LITERATURE REVIEW
34%
21%
45%
Certificate Recognition
Australia Certified Organic
NASAA
Others
9
70%
30%
Decision Influencer
Influences No Infleunce
75%
52%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Branded Products Home Brand
Trust Factor Trust…
Source: Australian Organic Report, 2014
Certifications
Product
Price
Sales
Promotion
Product
Availability
Perceived
Quality
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LITERATURE REVIEW
10
Certifications
Product
Price
Sales
Promotion
Product
Availability
Perceived
QualityH1: Accreditations and Certifications
have boosted the consumer trust towards
organic foods in Australia.
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LITERATURE REVIEW
11
Certifications
Product Price
Sales
Promotion
Product
Availability
Perceived
Quality
• Low barriers to entry.
• Correlation between income
& purchase tendencies.
• Perceived high quality.
• Concerns for developing
countries.
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LITERATURE REVIEW
12
Certifications
Product Price
Sales
Promotion
Product
Availability
Perceived
Quality
H2: Price of the product influences the
consumer’s trust towards the product.
H3: Price of the product influences the
consumer’s attitudinal loyalty towards the
product
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LITERATURE REVIEW
13
Certifications
Product Price
Sales
Promotion
Product
Availability
Perceived
Quality
• Lucrative growth rates.
• Greater profit margins.
• New research models are required.
Source: Australian Organic Report, 2014.
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LITERATURE REVIEW
14
Certifications
Product Price
Sales
Promotion
Product
Availability
Perceived
Quality
H4: In-store marketing campaigns have a
positive impact on the attitudinal loyalty the
shoppers.
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LITERATURE REVIEW
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Certifications
Product Price
Sales
Promotion
Product
Availability
Perceived
Quality 0
10
20
30
40
50
60
70
80
90
100
Supermarkets Greengrocers Wholefood stores
Segmentation of Retail outlets preferred for Organic food
Shopping
Segmentation of Retail outlets preferred for Organic food Shopping
Source: Australian Organic Report, 2014.
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LITERATURE REVIEW
16
Certifications
Product Price
Sales
Promotion
Product
Availability
Perceived
Quality
Consumer trends with regards to Product
Availability
• Maximum consumers earlier comfortable
with direct buying
• Transition to Supermarkets as point of
purchase
• Supermarkets preferred due to wide
variety and perception of assured quality
Source: Organic Packaged food in Australia, 2014
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LITERATURE REVIEW
17
Certifications
Product Price
Sales
Promotion
Product
Availability
Perceived
Quality
H5: The location of purchase influences the
consumer trust towards organic foods.
H6: The place where the product is available
affects the attitudinal loyalty of the consumers
towards organic foods.
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LITERATURE REVIEW
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Certifications
Product Price
Sales
Promotion
Product
Availability
Perceived
Quality
Perceived Quality includes:
• Actual Quality of Product
• Health Benefits to consumer
• Environmental benefits to society
Conventional and Organic food quality almost the
same.
Perception is contrary to facts
Two types of intentions:
• Egoistic- Self Benefit
• Altruistic-Benefit to Environment
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LITERATURE REVIEW
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Certifications
Product Price
Sales
Promotion
Product
Availability
Perceived
QualityH7: Perceived Quality of organic foods increases the
consumer trust towards purchase of organic foods.
H8: Perceived Quality of organic foods increases the
attitudinal loyalty towards purchase of organic
foods.
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RESEARCH DESIGN
Research Methodology
Secondary Research
5 Forces Analysis
Category Segmentation
Primary Research
Discussion Guides 20
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SECONDARY RESEARCH
Porter’s Five Forces
Organic Food Category Segmentation
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Industry
Competition
Substitutes
Non Organic “Regular”
Foods
Natural Foods
Genetically Modified
Foods
Frozen Foods
Ready-to-eat Packaged
foods
Suppliers
Local Farmers
Multinational Co-operations
Supermarkets
Whole foods Stores
Co-operatives
New Entrants
New companies entering
Existing food giants making a move
in the Organic Foods market
Existing giants willing to enter the
organic food market
Supermarkets and suppliers
forward integrating
NGO/ Co-operative Society
Buyers
Health conscious people
Environment conscious people
Medically Prescribed audience
Taste driven consumers
B2B
Restaurants serving organic food
Status Conscious Consumers
5 F
OR
CE
S A
NA
LY
SIS
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CATEGORY SEGMENTATION
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PRIMARY RESEARCH
• Qualitative Analysis: Interviews
• Thirteen 1-on-1 and three telephonic interviews
• Place of Interview: Burwood Plaza. Westfield Mall
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FINDINGS
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Does It
affect?
Price
Perceived quality
Certifications
Availability
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FINDINGS
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Yes
Price
Perceived quality
Certifications
Availability
Subthemes:
• Choice of Organic Foods to be
purchased
• “Why purchase an organic Pizza
when I have it only once a
month?”
• Renowned Brand
• “How to decide which brand is
better than the other? I’d rather go
for a brand I know.”
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FINDINGS
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Mixed
Price
Perceived quality
Certifications
Availability
Subthemes:
• Premium consumers
• “I don’t mind paying extra if I can get
better quality food items for me and my
family”
• Conservative consumers
• “I have always been an advocate of
organic food but it is too pricey for me
to buy a lot of them…I have to restrict
myself to the basic fruits and veggies”
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FINDINGS
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Yes
Price
PerceivedQuality
Certifications
Availability
Subthemes:
• Consumption Adaptability
• “I don’t want me or my family to
eat too much organic over a long
period of time. If we get
accustomed to it, the normal non
organic food may not suit our
body anymore.”
• Ease of Usage
• “I don’t understand why organic
rice takes a lot longer to cook as
compared to the regular rice.”
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FINDINGS
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Mixed
Price
Perceived quality
Certification
Availability
Subthemes:
• Believing Consumers
• “I don’t believe that it’s organic
unless it’s specified on the label,
loud and clear. Of course, its
matters. After all, I’m paying a
premium for it.”
• Suspicious Consumers
• “Who knows how the
certifications process works? I’d
rather trust my neighbour when
she recommends something.”
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RECOMMENDATIONS
• Lower the prices.
• Provide more options.
• Deploy informational advertising.
• Add an emotional value preposition.
• Opportunity for industry leaders.
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REFERENCES
Global Organic Food Industry Profile. (2015). Organic Food Industry Profile: Global, 1-33.
Organic Federation of Australia,. (2015). Organic Federation of Australia. Retrieved 4
June 2015, from http://www.ofa.org.au/
Organic packaged food in Australia. (2014). Euromonitor International.
Stanton, J., & Guion, D. (2015). Perceptions of "Organic" Food: A view through Brand
Theory. Journal Of International Food And Agribusiness Marketing, 27(2), 120-141.
Organic products are popular in Australia. (2007). Market: Asia Pacific, 16(12), 3.
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