Consumer Behaviour

Group Project on
Factors Influencing Consumer Decision Making Journey While
Choosing Organic Milk

Submitted By: Submitted To:

Group 2: Prof. Rajshri Debnath
311009 – Ayan Das
311010 – Nidhi Sharma
311011 – Arpit Arya
311027 – Kritik Sehgal
311046 – Shuvam Ghosh
 Declaration

We the members of Group 2 has submitted this project report entitled Factors

influencing consumer decision making journey while choosing organic milk towards

partial fulfilment of the requirements for the award of the Post Graduate Diploma in

Management (PGDM Batch-31/ PGDM(IB) Batch-16/ PGDM(FM) Batch-05/

PGDM(BDA) Batch-03) 2022-2024.

This Report is the result of our own work, no part of it has earlier comprised any other

report, monograph, dissertation or book.

 Acknowledgement

This report is done as part of continuous evaluation at “Fore School Of Management”

titled “Factors Influencing Consumer Decision Making Journey While Choosing

Organic Milk”. We are thankful to my project guide Prof. Rajshri Debnath, Fore School

Of Management, New Delhi for his invaluable guidance to successfully complete the

project. We also thank him for his constant support and timely feedback to optimize

the quality of the project. We also wish to extend my thanks to my peers who helped

us in this project.
Contents
Executive Summary ...................................................................................................... 5
1. Introduction ............................................................................................................. 6
2. Literature Review .................................................................................................... 8
3. Data And Methodology ......................................................................................... 10
3.1 Data Collection ................................................................................................... 10
3.2 Sampling ............................................................................................................. 10
3.3 Methodology....................................................................................................... 10
3.4 Analysis Plan ...................................................................................................... 11
4. Data Analysis ........................................................................................................ 12
4.1 Bartlett's Test of Sphericity: .............................................................................. 12
4.2 Kaiser-Meyer-Olkin (KMO) Measure: ................................................................ 13
4.3 Eigenvalues for Factor Extraction: ................................................................... 15
4.4 Inference ............................................................................................................. 20
4.5 Rotated Component Matrix: .............................................................................. 23
4.6 General Analysis of the survey questionnaire ................................................ 24
4.7 Demography ....................................................................................................... 24
4.8 Method of Purchase ........................................................................................... 25
4.9 Awareness .......................................................................................................... 25
4.10 Product Knowledge ......................................................................................... 25
4.11 Perceived value ................................................................................................ 25
4.12 Motivation ......................................................................................................... 26
4.13 Purchase intention ........................................................................................... 26
5. Summary, Limitations And Future Scope ........................................................... 27
5.1 Summary of the Study ....................................................................................... 27
5.2 Limitations of the study..................................................................................... 27
5.3 Future Scope ...................................................................................................... 28
6. References ............................................................................................................ 29
 Executive Summary

This study was conducted to assess consumer interest in organic milk as an alternative

to inorganic milk. The study found that there is a fair level of awareness of the harmful

effects of chemical preservatives present in inorganic milk and consumers are interested

in a healthier alternative. Organic milk is perceived as a greater value alternative product,

and consumers are willing to pay more for it. However, there is still a lack of awareness

about the intricacies and key ingredients of organic milk and their benefits.

The study also found that the survey respondents were mostly young professionals and

graduate/postgraduate students from urban tier 1 and tier 2 cities. These are considered

to be the likely early adopters and potential customers of organic milk. Further expansion

of the study is required to include more diverse opinions from other geographies and

demographics.
 1. Introduction

Organic milk is a type of milk that is produced from cows that are raised on organic farms.

Organic farms use only organic methods to raise their cows, which means that the cows

are not given antibiotics or hormones, and they are fed organic feed. Organic milk is also

free from synthetic pesticides and fertilizers.

In recent years, there has been a growing demand for organic milk, as consumers

become more aware of the potential health and environmental benefits of organic

products. However, organic milk is often more expensive than conventional milk, which

can be a barrier for some consumers.

This research study aims to identify the factors that influence consumer decision making

journey while choosing organic milk. The study will also examine the types of consumer

behaviour exhibited when choosing organic milk, and follow consumers on their purchase

journey stages.

The study will use a mixed-methods approach, including interviews, surveys, and

secondary research. Interviews will be conducted with a limited number of consumers to

gain a deeper understanding of their motivations and decision-making process. Surveys

will be used to collect data from a larger sample of consumers, and secondary research

will be used to review existing research on organic milk consumption.

The study is structured around the following areas

• Consumer Decision-Making Journey

• Consumer Perception and Attitude

The findings of this study will be of interest to marketers of organic milk, as well as to

policymakers and other stakeholders interested in promoting organic milk consumption.

The remaining part of the study has been covered in the following sections. Section 2

discusses the relevant literature on the given context. Section 3 covers the data and

methodology. Descriptive and empirical evidences have been indicated in section 4.

Section 5 covers the conclusion and implications of the study.

 2. Literature Review
The demand for organic products has seen a significant surge in recent years as

consumers become increasingly health-conscious and environmentally aware (Hughner

et al., 2007; Padel and Foster, 2005). Among organic products, organic milk holds a

prominent place, but consumer decision-making processes when choosing organic milk

are complex and influenced by numerous factors. This literature review aims to shed light

on these factors and provide a comprehensive understanding of the consumer decision-

making journey in selecting organic milk.

Consumers' health concerns play a pivotal role in their choice of organic milk. Research

suggests that consumers perceive organic milk as healthier due to its lack of synthetic

pesticides, hormones, and antibiotics (Dimitri and Oberholtzer, 2009; Hughner et al.,

2007). The desire for safer and more nutritious dairy products motivates consumers to

opt for organic milk (Dimitri and Oberholtzer, 2009).

Environmental sustainability is another key driver influencing consumer choices in favor

of organic milk (Hughner et al., 2007; Padel and Foster, 2005). Organic farming practices,

which prioritize soil health and biodiversity, resonate with environmentally conscious

consumers (Padel and Foster, 2005). Consumers often perceive organic milk as a more

sustainable and eco-friendly option compared to conventional milk (Hughner et al., 2007).

Consumer trust in organic certification labels significantly impacts their decision-making

(Martinez, 2020). Organic milk's authenticity and adherence to organic standards are

crucial factors that consumers consider (Martinez, 2020; Dimitri and Oberholtzer, 2009).

Trust in the certification process assures consumers of the product's organic status and

quality.
The price of organic milk is a notable factor affecting consumers' choices (Hughner et al.,

2007; Padel and Foster, 2005). Organic milk often commands a higher price than its

conventional counterpart due to the costlier organic farming methods (Hughner et al.,

2007). Consumers who are price-sensitive may be deterred from choosing organic milk,

opting for conventional alternatives (Padel and Foster, 2005).

Marketing strategies employed by organic milk producers and retailers also play a crucial

role in shaping consumer choices (Martinez, 2020). Effective marketing campaigns that

highlight the health, environmental, and ethical benefits of organic milk can influence

consumer perceptions and preferences (Martinez, 2020; Padel and Foster, 2005).

Consumer decision-making in the context of choosing organic milk is a multifaceted

process influenced by factors such as health consciousness, environmental concerns,

trust in organic labels, price sensitivity, and marketing strategies. These factors interact

in complex ways, shaping consumers' perceptions and choices. Understanding these

dynamics is essential for both researchers and marketers in the organic milk industry.

Future research should continue to explore these factors and their evolving roles in

consumer decision-making to better inform marketing strategies and policy development.

 3. Data And Methodology

3.1 Data Collection

Data for this study was collected using a survey questionnaire. The questionnaire was

designed to measure consumer perceptions and attitudes towards organic milk, as well

as their decision-making process when choosing organic milk. The questionnaire was

distributed online through Google Forms.

3.2 Sampling

A convenience sampling method was used to recruit participants for the survey. The

survey was distributed to a variety of online platforms, including social media, email lists,

and online forums.

3.3 Methodology

The data was analyzed using SPSS software. The following statistical procedures were

performed:

• Kaiser-Meyer-Olkin measure: This measure was used to assess the sampling

adequacy for factor analysis.

• Eigenvalues for factor extraction: This procedure was used to identify the

number of factors to extract from the data.

 • Rotated component matrix: This procedure was used to rotate the factor solution

to make it easier to interpret.

• Descriptive statistics: This procedure was used to describe the demographic

characteristics of the sample and their responses to the survey questions.

• Inferential statistics: This procedure was used to test hypotheses about the

relationships between variables.

3.4 Analysis Plan

The data will be analyzed to identify the factors that influence consumer decision

making journey while choosing organic milk. The analysis will also examine the types

of consumer behaviour exhibited when choosing organic milk, and follow consumers

on their purchase journey stages.

The findings of the analysis will be used to develop recommendations for marketers

on how to reach and convert consumers who are interested in organic milk.
 4. Data Analysis

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling 0.882
Adequacy.
Bartlett's Test of Approx. Chi-Square 1105.636
Sphericity

df 190
Sig. 0.000

4.1 Bartlett's Test of Sphericity:

• Bartlett's Test is used to assess whether the correlation matrix of your variables is

significantly different from an identity matrix. In simpler terms, it checks if there are

significant relationships between the variables in your dataset.

• The null hypothesis for Bartlett's Test is that the variables are uncorrelated in the

population. If the p-value of the test is below a chosen significance level (e.g.,

0.05), you can reject the null hypothesis and conclude that there are significant

correlations in the data.

• If Bartlett's Test indicates that there are significant correlations, it suggests that

factor analysis could be appropriate because it relies on the presence of

correlations between variables.

4.2 Kaiser-Meyer-Olkin (KMO) Measure:
• The KMO measure is used to assess the sampling adequacy for factor analysis. It

quantifies how well your data meets the assumptions required for factor analysis,

particularly whether the variables are suitable for this technique.

• The KMO measure is a value between 0 and 1. Higher values (closer to 1) indicate

that the data is more suitable for factor analysis. In general, a KMO value above

0.7 is considered acceptable.

• KMO takes into account the partial correlations between variables and compares

them to the correlations expected if the data were completely independent. A high

KMO value indicates that the data is appropriate for factor analysis.
 Total Variance Explained
Extraction Sums of Rotation Sums of
Initial Eigenvalues Squared Loadings Squared Loadings
% of % of
% of Cumula Varianc Cumula Varianc Cumula
Component Total Variance tive % Total e tive % Total e tive %
1 9.398 46.991 46.991 9.398 46.991 46.991 5.099 25.497 25.497
2 2.067 10.335 57.326 2.067 10.335 57.326 4.372 21.861 47.358
3 1.239 6.193 63.519 1.239 6.193 63.519 3.232 16.161 63.519
4 0.962 4.810 68.329

5 0.860 4.300 72.629

6 0.841 4.204 76.833

7 0.700 3.498 80.331

8 0.558 2.792 83.123

9 0.550 2.748 85.871

10 0.490 2.448 88.320

11 0.408 2.038 90.358

12 0.351 1.757 92.115

13 0.316 1.582 93.697

14 0.266 1.332 95.029

15 0.238 1.190 96.218

16 0.187 0.934 97.152

17 0.170 0.849 98.002

18 0.158 0.791 98.792

19 0.142 0.709 99.501

20 0.100 0.499 100.00

0
4.3 Eigenvalues for Factor Extraction:
• Eigenvalues are used to decide how many factors to retain in a factor analysis.

This is a crucial step in the analysis and is often referred to as "factor extraction."

• The common approach is to calculate the eigenvalues of the correlation or

covariance matrix and then examine the scree plot. The scree plot is a graphical

representation of the eigenvalues in descending order.

• In the scree plot, you look for an "elbow" point, where the eigenvalues drop off

sharply. The number of factors to retain corresponds to the number of eigenvalues

before this drop-off point.

• Eigenvalues after the drop-off point are considered small and represent noise in

the data, while eigenvalues before the drop-off point represent the meaningful

factors.
Factors Factor Loadings Eigen value % variance Cumulative %
explained variance
explained

Environmental 5.099 25.497 25.497

Awareness
I am aware that 0.795
organic milk does
not contain any
synthetic
chemicals or
preservatives

I am aware that 0.736

organic milk
contains more
Omega-3 fatty
acids which is
very beneficial
for health
I feel good when 0.735
I purchase
organic milk
because of the
organic aspect of
the product
I believe organic 0.672
milk provides
unique health
benefits
I believe that 0.650
organic milk is
worth the extra
price because of
the benefits
I believe that milk 0.630
that is produced
organically is
beneficial for my
health
I am aware that 0.584
milk and other
food items
produced
organically are
good for my
health
I believe that 0.580
supporting
organic products
is good for the
environment
I am aware that 0.498
in organic milk
farms, the cows
are given only
non-gmo
(genetically
modified
organism) feed
Purchase 4.372 21.861 47.358
Intention
I am willing to 0.835
pay extra for
organically
produced milk
and other
products
I would consider 0.769
buying organic
food products as
it is more
environmentally
sustainable
regardless of
cost
I feel good about 0.714
contributing to
the environment
through the
practice of
supporting
organic food
items
In the future I am 0.676
willing to
purchase
environmentally
sustainable and
organic food
items
I would consider 0.674
switching to
organic milk and
other organic
products
because of the
health benefits
I feel guilty that 0.618
animals are
exposed to harsh
chemicals
because of
human
consumption
habits
My friends 0.593
opinion on
organic milk and
other organic
products
influence my
purchase
decisions
Product 3.232 16.161 63.519
Awareness
I am aware that 0.819
an alternative
source of milk
that is "organic
milk" is available
in the market
I am aware that 0.669
in organic milk
farms cows are
not exposed to
synthetic
hormones or
antibiotics to
increase milk
production
I am aware that 0.661
inorganic milk
contains many
chemical
preservatives
which are
harmful for health
I am aware that 0.656
preservatives
and other
chemicals that
are used in the
milk industry are
harmful for the
environment

4.4 Inference
• We can conclude that the consumer perception towards organic milk consumption

is a function of three factors Environmental Awareness, Purchase Intention,

Product Awareness

• These factors combined explains 63.519 % variance in the data

• So by influencing these three factors we can achieve positive impact on consumer

behavior for consumption of organic milk

 Rotated Component Matrixa

Component
1 2 3
I am aware that 0.795
organic milk does not
contain any synthetic
chemicals or
preservatives
I am aware that 0.736
organic milk contains
more Omega-3 fatty
acids which is very
beneficial for health
I feel good when I 0.735
purchase organic milk
because of the
organic aspect of the
product
I believe organic milk 0.672
provides unique
health benefits
I believe that organic 0.650 0.406
milk is worth the extra
price because of the
benefits
I believe that milk that 0.630 0.437
is produced
organically is
beneficial for my
health
I am aware that milk 0.584
and other food items
produced organically
are good for my
health
I believe that 0.580 0.484
supporting organic
products is good for
the environment
I am aware that in 0.498
organic milk farms,
the cows are given
only non-gmo
(genetically modified
organism) feed
I am willing to pay 0.835
extra for organically
produced milk and
other products
I would consider 0.769
buying organic food
products as it is more
environmentally
sustainable
regardless of cost
I feel good about 0.420 0.714
contributing to the
environment through
the practice of
supporting organic
food items
In the future I am 0.516 0.676
willing to purchase
environmentally
sustainable and
organic food items
I would consider 0.502 0.674
switching to organic
milk and other
organic products
because of the health
benefits
I feel guilty that 0.618 0.484
animals are exposed
to harsh chemicals
because of human
consumption habits
My friends opinion on 0.593
organic milk and
other organic
products influence my
purchase decisions
I am aware that an 0.819
alternative source of
milk that is "organic
milk" is available in
the market
I am aware that in 0.669
organic milk farms
cows are not exposed
to synthetic hormones
or antibiotics to
increase milk
production
I am aware that 0.661
inorganic milk
contains many
chemical
preservatives which
are harmful for health
I am aware that 0.656
preservatives and
other chemicals that
are used in the milk
industry are harmful
for the environment

4.5 Rotated Component Matrix:

• Once factor rotation is performed, the component matrix is transformed to create

the rotated component matrix.

• The rotated component matrix displays the relationships between observed

variables and the rotated (and often more interpretable) factors. It provides a

clearer picture of how each variable is associated with the rotated factors.
 • Each element in the rotated component matrix represents the correlation (or

covariance) between an observed variable and a rotated factor. These values are

typically more straightforward to interpret than the unrotated loadings.

4.6 General Analysis of the survey questionnaire

From the responses gathered via the questionnaire following observations are made and

inferences are drawn

4.7 Demography
The survey targeted at young people of Tier 1 and Tier 2 cities and which can be seen in

the responses as we see the responses that 70% respondents are from Tier 1 cities and

28% are from tier 2 city 72.6% of the respondents are of 18 to 24 years old and 23.6% of

the respondents are from 25 to 34 years old.

The gender ratio is well maintained with the 60-40 split between male and female so there

has been responses from both the genders.

The respondents are highly are well educated with the 52.4% respondents being

graduated on 45.2% respondents being postgraduate, the respondents are a mix of

students and service individuals, 54% are students and 37% are employees working in

the private sector.

Family size has been well split with the 15% respondents living alone 40% respondents

with families of four members and 19% with 2-3 family members and 25% with families

with more than four members.

4.8 Method of Purchase
Milk purchase is predominantly done from local Milkman or local nearby grocery stores

with the split of 54 and 37% only 9.5% respondents order milk online so it is necessary

to penetrate in the retail and direct to home subscription channels.

4.9 Awareness
Health - 66% respondents are aware that inorganic milk contains chemical preservatives

which are harmful for health.

Environmental - 76% respondents are aware that inorganic milk industry uses chemical

preservatives which are harmful for environment.

Alternative - 69% respondents are aware that organic milk is available as an alternative

option, 87% respondents agree organic food products are better for health.

Overall, there is a fair level of awareness of the harmful effects of chemical

preservatives present in inorganic milk and the potential of organic milk as an

alternative is further discussed below

4.10 Product Knowledge

66% of respondents are aware that organic milk is free of synthetic chemical

preservatives however only 48% people are aware that organic milk farms have cows fed

on non-GMO feed and only 49% of people are aware that organic milk contains more

omega-3 fatty acids which is beneficial for health this awareness needs to be increased

4.11 Perceived value

60% respondents agree that they feel better while purchasing organic milk due to the

organic aspect of the product, 76% respondents agree that organic milk provides health

benefits, 76% respondents agree that supporting organic products is a good cause for
the environment and 67% respondents agree that organic milk is worth the extra price for

its benefits so there is greater perceived value compared to inorganic milk.

4.12 Motivation
66% respondents feel good about contributing to the environment by the practice of

supporting organic food items,

69% respondents feel guilty that animals are exposed to harsh chemicals because of

human consumption habits

Only 41% people agree that their friends opinion on organic milk and other organic

products influence their purchase decision while 20% people are split and 38% people

deny that their friends opinion influences them to purchase organic so the motivation to

purchase organic milk is not necessarily influenced by peer and friend opinion it

is more of an individualistic choice for health and environmental concern

4.13 Purchase intention

64% respondents are willing to pay extra for organically produced milk and other organic

products, 77% respondents are willing to purchase environmentally sustainable and

organic food items in the future,

73% respondents would consider switching to organic milk and other organic products for

health benefits and 65% respondents would consider buying organic food products as it

is more environmentally sustainable.

Thus, the health and environmental consciousness amongst the customer makes

organic milk a high potential product.

 5. Summary, Limitations And Future Scope

5.1 Summary of the Study

The study was undertaken to find out whether there is consumer interest, appetite,

demand for organic milk as an alternative to inorganic milk, to test this respondents were

surveyed through a questionnaire, based on the data collected and upon its analysis it

could be concluded that there is a fair level of awareness of the harmful effects of

chemical preservatives present in inorganic milk and consumers are interested in an

alternative to this, as they are substantially health and environment conscious, organic

milk is perceived as a greater value alternative product and there is an interest amongst

consumers to pay more to avail this greater value option. However, there is still a bit lack

of awareness about the intricacies and key ingredients of the product and their benefits

To establish organic milk as a category, brands need to provide more knowledge of the

ingredients and benefits of the product to increase the product knowledge amongst the

potential customers. Furthermore, milk is sold through local door to door delivery and

local retail outlets so to penetrate organic milk consumption in the market these channels

have to be taken.

5.2 Limitations of the study

The survey respondents were mostly young professionals and graduate, post graduate

students from urban tier 1, tier 2 cities, they were considered as the likely early adapters,

potential customers to this product. Further expansion requires more diverse opinions

from other geographies and demographics

5.3 Future Scope

Expand the reach of the survey by interviewing middle aged and 60+ age group

customers and not limit the study to tier 1 and tier 2 cities, data collection through product

sample testing and other methods.

 6. References

• Dimitri, C., & Oberholtzer, L. (2009). Marketing organic milk: A comparison of

conventional and organic dairy farmers. Renewable Agriculture and Food

Systems, 24(3), 229-237.

• Martinez (2020). Determinants of consumer buying behavior toward organic

products: An application on organic milk. International Journal of Economics,

Commerce, and Management, 3(11), 151-165.

• Hughner, R. S., McDonagh, P., Prothero, A., Shultz, C. J., & Stanton, J. (2007).

Who are organic food consumers? A compilation and review of why people

purchase organic food. Journal of Consumer Behaviour, 6(2-3), 94-110.

• Padel, S., & Foster, C. (2005). Exploring the gap between attitudes and behaviour:

Understanding why consumers buy or do not buy organic food. British Food

Journal, 107(8), 606-625.