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CHAPTER I
INTRODUCTION
1.1. Background of the Study
This research on “Factors Affecting Consumption of Organic Tea in Kathmandu” emphasizes consumers’ awareness and preference of organic tea. The study was based on the existing tea market.
The history of tea is long and complex, spreading across multiple cultures over the span of thousands of years. Tea likely originated in Yunnan, China during the Shang Dynasty (1500 BC–1046 BC) as a medicinal drink. The earliest credible record of tea drinking dates to the 3rd century AD, in a medical text written by Hua T’o. Tea was first introduced to Portuguese priests and merchants in China during the 16th century. Drinking tea became popular in Britain during the 17th century. The British introduced tea production, as well as consumption to India, in order to compete with the Chinese monopoly on tea. (Javita Coffee Comapny , 2015)
Although in average, a majority of Nepalese people would drink a cup of tea at least once a day, many might not have idea about the history of the tea plantation in Nepal. We all know that tea was originated in China. Many of us would at least know that the major tea plantation in Nepal takes place in the Eastern region or especially the Ilam tea fields which is popular in Nepal. To specify, history states that at the time of the rule of Late Prime Minister Jung Bahadur Rana, the first tea bushes were sown in with the seeds gifted by the Chinese Emperor at the time. This being said, the tea industry of Nepal took birth under the colonization of India i.e. the East India Company run by the British. Henceforth, 10 years after the first tea plantation in Darjeeling, Nepal’s first tea plantation Ilam Tea Estate was established and other tea plantations were established accordingly keeping in mind the future prospects of tea industry in Nepal.
The market of organic food has grown continuously over the last few decades, which represents a multi-billion industry (Organic Trade Association, 2011). Despite the growth trend of organic food products industry and continued support from various organizations, there is little research on organic tea in Nepal.

1.2. Statement of Problem
While the term organic and organic products are slowly, but surely growing in the market, with evidence from organic farms and organic restaurants to soaps and farmer’s market every Saturday, the abundance of people who consume organic products is still very low. Despite social media being used to share information, marketers lack effective marketing activities and promotional activities for organic products even though it is known that they are better for the individual, society and community as a whole. People lack trust in the product due to ineffective labeling and quality assurance practices.
Many businesses are starting up with the name organic attached to their names. I remember that about a couple of years back, I wanted to purchase a set of tea products for my cousin brother who resides in the USA. The tea boutique, as I would like to call it, was fabulously decorated, and had a large variety of tea, but there were very few customers.

The few customer that were there, were foreigners looking for a souvenir. I am confident the need for organic tea and the idea of organic tea has changed since then, but what reasons are steering us towards the concept of organic tea and most importantly, which reason is the most convincing??

1.3. Objectives of study
The major research objectives of this research are highlighted below:
a. General objective:
To analyze general factors affecting consumption of organic tea in Kathmandu Valley

b. Specific Objectives:
To examine the relationship between organic tea and taste
To examine the relationship between organic tea and health concern
To examine the relationship between organic tea and environmental concern
To examine the relationship between organic tea and price

1.4. Research Questions
For the purpose of study, the research question will be based on the following questions:
• What is the relationship between taste and consumption of organic tea?
• What is the relationship between health concern and consumption of organic tea?
• What is the relationship between environmental concern and consumption of organic tea?
• What is the relationship between price and consumption of organic tea?

1.5. Significance of Study
We are all aware of how popular tea is in Nepal. Although the concept of coffee is recently getting popular in Nepal, we know that majority of people would prefer a good cup of tea over coffee in Nepal. The reason this topic has been brought into limelight is that people are getting more and more health conscious now. It is uncanny how we never realized that our elder generation had it right all along. The world has completely turned into a circle. We went from natural products to artificial and now we want to shift to natural products again.
These days, with reference to a ‘ healthy lifestyle ‘ people look at the products they buy with caution. Needless to say, this consciousness of health was also seen in tea preference given that more and more people are looking forward to healthier and lighter tea. For instance, a growing number of people were leaning in towards green tea.
• This research was primarily conducted to know and understand the awareness of people about awareness and preference of organic tea.
• The study was also conducted to capture respondent’s intentions, attitudes, behavior and demographic characteristics which differentiate one from the other.
• The study would be useful to the organic tea manufacturers and organic tea farming enthusiasts to know about the preference and taste of the consumer.

Chapter II
Literature Review

2.1 Green Products
Today, the threats posed by pollution of the biosphere and the loss of natural resources have
become more and more evident. All human activities have an impact on the environment. The
landscape has changed, the quality of air and water is deteriorating, and effluents and noise
are increasing (Gevert, 2007).
A variety of environmental problems now affect our entire world. As globalization continues
and the earth’s natural processes transform local problems into international issues, many
countries around the world concern about the environmental protection. Industrial sector is
also playing important role to help and support this protection by producing Green products
that are environmentally friendly. However, these kinds of products are usually more
expensive than the conventional products. Increasing emphasis on sustainability by the
investment community is only one of the forces that are changing the landscape for businesses
today (Tuttle & Heap, 2008).
Over the past several years, public perceptions and attitudes concerning the causes and
importance of global warming have changed (Weart, 2006). In the West “green” marketing
has become a staple of corporate positioning, at the same time firms have exploited
environmentally-friendly messages for short-term marketing gains (Johri, & Lalit 1998).

2.2 The emerging concept of green tea
In the established tea market, tea is produced by traditional farming methods. The concept of organic tea is still quite new and marketers face difficulty in attracting customers with new product concepts. However, consumers are recently beginning to pay more attention to organic products as a result of the distinguished production method, which is different from the conventional one. This being said, along with different intrinsic causes, external factors highly influence the consumption of such products or buying intention of consumers. Keeping this in mind, this study is another initiative to argue that today consumers are not only searching for product quality and fair price, they also become conscious about health and environmental issues. Therefore, proposed model (Figure 1) is an extension by adding in health concern, environmental concern, and taste, in addition to the traditional means-end model of Zeithaml 20. In this study, the perceived value of the customers will be measured with the effect of the perceived quality derived from the product attributes, health benefit issues, environmental awareness, trust, and perceived price, because these attributes consequently influence the buying intention of the customers. Organic tea, which has been produced by natural substances as opposed to chemical ones, motivates customers toward organic consumption.

2.3 Consumer’s buying behavior towards organic products
Recently, according to a new global survey, it was found that more than half of global
consumers (53 percent/representing 1.1 billion people) prefer to purchase products and
services from a company with a strong environmental reputation (figure 1). The survey
sponsored by TANDBERG and conducted by IPSOS MORI, interviewed 16,823 consumers
in 15 countries in order to examine consumer and worker environmental attitudes and
behavior. The TANDBERG study surveyed respondents in Australia, Brazil, Canada, China,
France, Great Britain, Germany, Italy, Japan, the Netherlands, Norway, Russia, Spain,
Sweden and the United States (MORI, 2007).

In the environment of Asian countries, there are growing forces for green anxiety due to the
rising influences of communities on companies, the sky-rocketing cost of complying with
environmental regulations, and changing consumer attitudes (Peter, Somporn, ; Rajah 2006).

2.4 Review of past literature on organic tea
A recent study conducted on “Factors affecting the Buying Intention of Organic Tea Consumers of Bangladesh” by Razina Sultana Samir and Golam Kabir demonstrated trust and perceived price as the most affecting factors in buying intention of organic tea consumers over product attributes, health consciousness, and environmental concern.
Sneha Ghai on her paper termed “A Study on Consumer Perception and Preferences towards Organic Tea in Delhi-NCR” has pointed out that consumers are actually, open to the idea of organic tea. This comes from the fact that many respondents buy organic tea once in a month which depicts their positive attitude towards it. Since majority of consumers are health conscious, they give high priority to their health and safety and consult the doctor and considers the specific health benefits and medicinal qualities of tea before purchase. But there is not enough marketing of organic tea as there needs to be. The marketers needs to adopt a more competitive strategy to push the sales of Organic Tea as urban consumers have a higher buying potential and concern for health, safety and environment. Robust Promotional activities needs to be carried out on a regular basis like Free Tea Tasting, Sampling of Tea Bag and Organizing Health Camps. There is also a need to introduce new offers such as Rewards cards, gift coupons to increase customers’ loyalty towards their brand & increase Sales.
According to a research paper : ” Consumer preferences for organic tea – an empirical analysis” by Sakthirama, v. nowadays due to awareness of environmental degradation and the related issues on food, the consumer behavior is changing towards purchase of many environmental friendly and organic products. Among the many organic products, organic tea is one of the consumer food products produced and consumed in India. This research also represented that the adults in the family, monthly income, experience, frequency of consumption, familiarity and number of organic items purchased were positively influencing the quantity of organic tea consumed. The variables like distance and price were negatively influencing the quantity of organic tea consumed. With the results of the said research, the independent variables like distance, family income, number of items purchased, purchase frequency and purchase intention were identified as good predictors for regular purchase of organic tea. The other variables like loyalty, innovativeness to buy organic tea, health benefits and attitude were the weaker predictors.
Further, as per a research conducted by Eun-Ah Kim and Kwan-Sik Na titled as “The Effects of Well-being Lifestyle on Organic Tea Repurchase Intention” in South Korea, among the types of well-being lifestyle of the organic tea drinkers, the environmental resource saving type affected brand preference most strongly and this was the main reason behind organic tea repurchase intention

2.5 Review of Nepalese literature on Organic Tea
Kamal P. Aryal, Pashupati Choudhary, Sangita Pandit and Govinda Sharma carried out a research paper on “Consumer’s Willingness to pay for Organic Products: a Case from Kathmandu Valley”. According to the research, the consumption of organic products is increasing; however, product development and innovations in certification, processing, labeling and packaging are needed to further stimulate demand. The said research has stated that quality characteristics affect consumers’ preferences for organic products; with the most important including health and nutritional value, taste, and fresh and general appearance.
In a research paper conducted ,titled “An analysis conducted on consumer’s purchase behavior on organic foods in Kathmandu Valley” (Ram Kumar Phuyal, 2016), it was stated that consumer concerns about healthy food and safety, quality and nutrition are becoming increasingly important in all around the world, which has provided increased opportunities for organic foods in recent years. In the survey, the 160 respondents were taken into consideration to identify the relationship between the attitude and purchase behavior of organic foods. Although many literatures contributed in accepting that the food, of course, has to be tasty, nutritious, value-for-money; however , the major reason for purchase of organic food in Kathmandu valley was that it is healthy for consumers and their family members followed by the nutritional factor present in organic foods. Identical to that of consumers in various parts of the world, the major barrier for not purchasing the organic foods regularly in Kathmandu valley was un-affordability.

2.6 Research Gap
While research on organic products or green marketing is no news that is different, there are few researches done on the aspect of organic tea and in the Kathmandu valley. With the help of reviews from different researchers, this research will help portray the factors affecting the consumption of organic tea in Kathmandu valley and which factor is most likely to affect the said consumption.

2.7 Conceptual Framework and Hypothesis

2.7.1. Health Benefit
Due to a greater awareness about the ill effects of the chemicals used in conventional food
production, consumers are more willing to buy organic food. Consumers believe that organic food is free from chemical residues and food additives and preservatives. Therefore, people become interested in consuming organic tea instead of traditionally produced tea. In North America, 78% of consumers purchased organic food because they perceive these products to be healthier choices for themselves or their children. In Thailand, health consciousness has been the main motive of customers to buy organic food. In many studies on organic food items, health and health benefits are identified as one of the major motivational factors behind the purchase of organic food
Hypothesis (H1). Health concern has a positive effect on consumption of organic tea in Kathmandu.

2.7.2. Environmental Concern
Several environmental benefits have been attributed to organic farming and they have been confirmed by the available literature in the area of soils, farm ecosystems, ground and surface water protection, and farm inputs and outputs. Organic farming reduces the use of external production factors and avoids the use of synthetic chemicals such as fertilizers, pesticides, and medical supplies for animals by substituting them with natural manure and pesticides that are safe for the health of human beings and animals. Therefore, an interest in the welfare of the environment and for the animals has directed customers toward consuming organic products.
Hypothesis (H2). Environmental concern has a positive effect on consumption of organic tea in Kathmandu.

2.7.3. Taste
In a study on the motives of organic food buying behavior, Davis et al. reveal that along with environmental concern and health consciousness, safety, quality concerns, and purchase motives are also attributed to specific product attributes, such as nutritional value, taste, freshness, and price. Nigerian consumers believed that organic food is healthier, tastier, has no harmful effects, and is of a better quality than inorganic food. Consumers perceive organic food as more natural, safer, better in taste, and more enjoyable than conventional produce. Therefore taste, natural content, and the nutrient value of organic tea makes it popular choice for people.

Hypothesis (H3). Taste has a positive influence on the consumption of organic tea in Kathmandu

2.7.4. Price
From a customer’s perspective, the price of the product is something lost or sacrificed to attain a product. In a study by Monroe and Krishnan 39, the actual price is considered a stimulus to the customers. The high price of organic tea sometimes acts as a barrier to its growth. Wier et al. 45 indicated high price elasticity in the demand for organic tea. Hack 42 and Jolly 23 point out that high price is one of the important reasons that prevent people from buying organic food. As a huge number of the population is ignorant about the health properties of organic food, the price is considered as one of the important factors that could affect their purchase decisions 13. Willer et al. 46 have found that because of the high price, organic food is relatively unpopular with consumers in developing countries. Therefore, the perceived price of organic tea negatively influences the perceived value of the product. In another study, Dodds 47 identified a negative effect of price on a product’s value but a positive effect on the perceived product quality.

Hypothesis (H6). Price has a negative influence on consumption of organic tea in Kathmandu

Chapter III
Research Methodology

3.1. Research Design
The research design refers to the overall strategy that you choose to integrate the different components of the study in a coherent and logical way, thereby, ensuring to effectively address the research problem; it constitutes the framework for the collection, measurement, and analysis of data. (Trochim & William, 2006)
In this particular research, the researcher will be using both causal comparative research and relational research. This is because the study will be studying the relationship between the dependent and the independent variables and the influence of the independent variables on the dependent variables
3.2. Methodological Paradigms of Research
Methodological paradigms could be understood as the main governing methodologies of the research. This research would be both quantitative and basic. As questionnaires will be used for collecting the data and finding the solutions or answers of the research questions, it would be a quantitative research and as the research would be carried to solve the problem as a whole not of a particular organization, in that sense it would be a basic research.
3.3. Population/ Sample
Survey as a technique of research will be considered for the study. Convenience sampling will be considered for the study whereby, random respondents near and easy to interact would be chosen. Furthermore, the diversity of respondents in the sample – in terms of gender, age and education level – would be tried to maintain.
3.4. Nature and Sources of Data
For the purpose of research, the data I collect would be both qualitative and quantitative. In this research, both primary and secondary data would be used. The sources of data would be websites as well as the direct interaction with the individual consumers and the business that were engaged in organic tea farming or distribution.
3.5. Data collection techniques
Scientific methods would be used as they are most reliable and convenient methods to know the accurate information about the situation. In research, the following methodology for the data collection would be applied as far as analyzing the true picture of the subject following technique of data collection:
1) Questionnaire:
A questionnaire as the technique of data collection will be used that would help to ease our study. Distributing questionnaires to individual consumers would help to collect important information that would be useful for this research. On the basis of the information generated, the information will be generalized to prepare the report.
3.6. Data Analysis Procedures
The data collected would be analyzed using descriptive statistical tools such as mean, weighted average mean, standard deviation and likert scale to describe the data after which we use inferential analysis such as co-relation to see relationship between dependent and independent variables and regression analysis specially t-test to reject or accept our hypothesis. The collected data will be analyzed using computer software like SPSS and other tools like MS Excel.
3.7. Ethical Considerations
The ethical considerations that were followed while doing this research were:
i. The participants will be informed exactly what they are being asked to do, and what they will be taking part in.
ii. No pressure would be kept on individual to participate on the research.
iii. The participant’s autonomy will be respected and they will be given freedom to withdraw from the study at any time, without giving a reason.
iv. Anonymity as well as Confidentiality would be maintained.

3.8. Limitations of the Study
This research could be conducted under various limitations. The limitations observed were:
i. The sample drawn for this research was representative of the population which might not be sufficient to make decisions related to research objective.
ii. The sample might not include representative in equal number from different gender, education background and occupation, etc.
iii. The research was conducted by taking the sample only from limited area.