MARKETING

CONSUMTION PATTERN
Definition:

The combination of qualities, quantities, acts and tendencies characterizing a community or

human group's use of resources for survival, comfort and enjoyment.

1. Introduction
The household consumption surveys carried out by the National Sample Survey (NSS)
are now in the public domain. In particular, the large consumer expenditure samples are
available over 4 time points covering almost 2 decades, 1983 to 1999-00. Prior to the
availability of this data, much of the research was confined to aggregate variables and it
was difficult to study the consumption patterns (and hence, the well-being) of micro
households. The study of household behaviour is essential for social welfare policies and,
this data should therefore serve a useful purpose.
The objective of this study is to identify some important estimates of how
households behave. It is a purely statistical exercise, suggesting what can be done, rather
than what should be done. In particular, it is not an econometric exercise. It is more of an
exploratory trip, trying to identify issues that are worth examining in a more rigorous
fashion.
In particular, we do three types of exercises. First, we derive the empirical
distributions of consumption over the four time points, 1983, 1987-88, 1993-94 and
1999-00. Second, we construct the proportions of expenditure on various commodity
groups, by sector and state for the different years. And finally, we calculate the NSS
estimates of total expenditure for each of the commodity groups and compare them to
what is reported in the National Account Statistics (NAS).

Consumtion Pattern of Coffe and Tea.

Production and distribution of coffee and tea
The Worlds total production of coffee is around 6 million tons and is leaded by Brazil
which has more than 30 per cent share in the Worlds total production; Vietnam and
Columbia
follow Brazil, respectively. The major consuming and importing countries of coffee are
United
States, Canada, Japan and European countries like Germany, Italy, United Kingdom, Poland
and Spain. Other than the above mentioned countries it is also imported by the African
countries. The net imports of coffee figures around 4.5 million tons. The major share of
exports in the World is also held by Brazil followed by the other leading production countries
like Columbia, Indonesia, Uganda, etc.
There are around 25 varieties of coffee under Coffea known to the World. But only

two of these varieties, coffea arabica and coffea canephora (or coffea robusta) are very much
popular and are widely used throughout the World. About 70 per cent of the coffee production
is constituted by coffea arabica and 25 per cent by coffea robusta. Coffea arabica is largely
produced by Brazil and Columbia and is known for its best quality.
India stands 6th in the list of coffee producing countries, but contributes only 4 per
cent of the Worlds coffee production. The production of coffee in India fell drastically in
200203 like in the other countries of the World but started recovering slightly in 2003-04. Coffee
production during 2005-06 was about 2.74 lakh tons and was estimated at 3.0 lakh tons for
the year 2006-07. A total quantity of 2.02 lakh tons of coffee was exported from India during
the year 2005-06, valued at 349 million US dollars, earning a foreign exchange of Rs.1510
crore. At present India produces about 5 Million Bags of coffee. Local consumption of coffee
is about one million bags; and rest is exported. The areas having a good altitude are covered
by coffea arabica and the low-lying areas having a hot climate cultivate coffea robusta.
Robusta coffee production contributes about 65 per cent of the total coffee production,
whereas Arabica contributes about 35 per cent. Karnataka has the maximum cultivated area
(53 per cent) under coffee. Karnataka is the largest producer of coffee in the country and
accounts for 56.5 per cent of total coffee production in India.
According to the FAO report, tea production in 2004 has reached a record 3.2 million
tonnes, a 2 per cent increase compared to 2003. China, the second largest tea producing
country, produced 800,000 tonnes of tea and exported 280,000 tonnes to other countries, of
which over 75 per cent is green tea. In the next decade, FAO expects the World green tea
production to grow at a faster rate than black tea at 2.3 per cent a year, but volumes are
much smaller at a projected total of 975,000 tonnes by 2014. The growth is mainly driven by
the health benefits of green tea consumption.
Tea industry in India is about 170 years old. It plays a crucial role in the national
economy. Robert Bruce in 1823 discovered tea plants growing wild in upper Brahmaputra
Valley. In 1838, the first Indian tea from Assam was sent to United Kingdom for public sale.
Thereafter, it was extended to other parts of the country. However, owing to certain specific
soil and climatic requirements its cultivation was confined to only certain parts of the
country.
Tea plantations in India are mainly located in rural hills and backward areas of Northeastern
and Southern states. Major tea growing areas of the country are concentrated in
Assam, West Bengal, Tamil Nadu and Kerala. The other areas where tea is grown to a small
extent are Karnataka, Tripura, Himachal Pradesh, Uttaranchal, Arunachal Pradesh, Manipur,
Sikkim, Nagaland, Meghalaya, Mizoram, Bihar and Orissa. Unlike most other tea producing
and exporting countries, India has dual manufacturing base. India produces both CTC and
Orthodox teas in addition to green tea. The weightage lies with the former due to the
domestic
consumers preference. Orthodox tea production is basically dependent on the export
demand. Production of green tea in India is small. The competitors to India in tea export are
Sri Lanka, Kenya, China, Indonesia and Vietnam.

Consumption trend of coffee and tea

Coffee consumption in urban markets in India is estimated at around 55,000 tonnes
annually, excluding those under the age of 15 years and captive consumption by the armed
forces, according to the first comprehensive survey on coffee consumption in India. The
"Coffee Consumption in Urban India 2001" report was commissioned by the Indian Coffee
Board to better understand coffee drinking habits and practices, coffee demand by location

and preparation method, the daily share of coffee within the overall beverage sector, attitudes
towards coffee and opportunities for and barriers to coffee consumption.
The Indian survey shows that penetration of coffee as a beverage is high at 82 per
cent compared with the 93 per cent rating for tea, which is the dominant beverage even in the
traditional coffee areas of Southern India. Three out of four adults across India had consumed
instant coffee at least once in a year, while roast and ground coffee has a penetration of 19
per cent. Per capita consumption of coffee in India is estimated at 0.5 cups as opposed to 2
cups for tea, with coffee drinking being practically non-existent in the north and east.
Annual tea consumption varies from country to country, with the highest consumption
of 2.3 kg per capita in UK. World consumption is approximately 0.56 kg per capita. Green tea
is the primary form consumed in China, Japan and some Middle Eastern countries.
Tea is an essential item of domestic consumption and is the major beverage in India.
Tea is also considered as the cheapest beverage amongst the beverages available in India.
Tea Industry provides gainful direct employment to more than a million workers mainly
drawn
from the backward and socially weaker sections of the society. It is also a substantial foreign
exchange earner and provides sizeable amount of revenue to the State and Central
Exchequer. The total turnover of the Indian tea industry is in the vicinity of Rs.8000 crores.
India consumes the largest quantity of tea in the World, accounting for nearly 14 per
cent of global retail volume sales. Geographically, tea is widely consumed in the North, East
and West of India. It is popular with a wide variety of social classes and consumer age
groups.
Tea is the most traditional and affordable beverage in India and it is perceived as
being old fashioned and less functional than some substitute products. As per the Tea Board
of India estimates, tea was consumed domestically to the tune of 511 mn kgs during 1991,
and during 2005, it was estimated to be consumed to the tune of 757 mn kgs. However, it
ranks 7th in value terms, due to relatively low unit prices. Black standard tea constitutes
nearly 80 per cent of value sales, although green tea has seen its popularity rise.
Malt-based beverages such as Horlicks (GlaxoSmithKline) and Bournvita (Cadbury
Schweppes), are the favourite type of hot drink in the South, and are also the fastest growing.
This drink is consumed as a substitute for milk in this milk-deficient region, and is favoured
for
its functional benefits. Furthermore, in the south, coffee is bigger as a proportion of total hot
drinks than in the rest of the country. Local preferences are different in the south, India's main
coffee-producing region. Soft drinks such as carbonates also represent a significant threat to
the ongoing dominance of tea in the longer-term, with aggressive marketing campaigns from
leading multinationals successfully persuading many young consumers to migrate from tea to
soft drinks for various drink occasions.
The development of tea bars and coffee shops will encourage out-of-home
consumption. Tea bars offer a wide selection of teas at premium prices and are considered
fashionable among a certain Indian demographic. Hoping to emulate the success of coffee
shops witnessed in many major cities, including in emerging markets, they mainly target
expatriates, the corporate entertainment market, or high income locals keen to show
individual tastes.

Health benefits of coffee and tea

In recent decades, some 19,000 studies have been done examining coffee's impact
on health. And for the most part, their results are as pleasing as a gulp of freshly brewed
Breakfast Blend for the 108 million Americans who routinely enjoy this traditionally morning
-and increasingly daylong -- ritual. In practical terms, regular coffee drinkers include the
majority of U.S. adults and a growing number of children.
Drinking a cup of coffee is helpful in counteracting sleepiness during the day and also
mental sluggishness, brought about by prolonged concentration and mental effort, such as in
a repetitive job. More importantly, caffeine has been shown to induce a positive effect and it
is
this ability to lift an individuals mood that makes coffee an important source of pleasurable
activity and individual happiness. Like the much publicized green tea, which has garnered
considerable attention due to its high antioxidant content, researchers have found that coffee
is quite high in antioxidants. Coffee may help to manage asthma and control attacks when
medication is not available and stops headache, boosts mood and even prevent cavities
according to a recent study.
Recent research shows that any tea derived from camellia sinensis has cancerfighting
properties. The leaves of this plant contain chemicals called polyphenols which gives
antioxidant properties. Tea also has fluoride for strong teeth, virtually no calories, and half the
amount of caffeine found in an equally-sized cup of coffee. Drinking black tea may lower the
risk of heart disease because it prevents blood from clumping and forming clots. In a recent
study, researchers found that while drinking black tea, the participants had lower levels of the
blood protein associated with coagulation. Green tea, rich in antioxidant treasures that protect
against heart disease and cancer, now shows promise as an allergy fighter.
To sum it up - by drinking 2-4 cups a day of tea, you can reap in the numerous
curative and preventive tea benefits.
In the present context, consumerism is gaining more importance and the market
researchers are concentrating more on the tastes and views of the consumers. Not many
studies have been conduced to understand the preferences of the consumers, hence this
study would be able to guide the researchers towards understanding the consumers
regarding their preferences for coffee and tea.
Keeping all these points in view, a modest research attempt has been made to study
the consumption behaviour of coffee and tea in Karnataka, with the following specific
objectives.

Objectives of the study

1. To study the consumption pattern of coffee and tea in Karnataka.
2. To examine the socio-economic factors influencing the consumption of coffee and
tea in Karnataka.
3. To analyze the consumer preferences for different brands of coffee and tea and
their quality traits.
4. To study the health related issues associated with consumption of coffee and tea.

Factors influencing consumption

Gluckman (1986) studied the quality preferences for wine in Europe. The attributes
were classified into two, namely, explicit factors and implicit factors. Explicit factors
included
brand name, price, quality and taste. Implicit factors identified through extensive questioning
were colour and appearance. The results of the study revealed that most consumers
preferred white wine to red. Packaging, appearance, colour and graphics were the attributes
considered very important by the consumers.
Haripuram et al. (1986) conducted a consumer preference analysis of biscuits using a
sample of 470 consumers. From the study it was found that consumers gave the first
preference to taste. Freshness, crispness, brand price and availability, in that order, were the
other attributes which were given importance to by the biscuit consumers.
Kumar et al. (1987) analyzed the factors influencing the consumption of various food
products, using a sample of two hundred respondents. Country of origin and brand were
cross-tabulated against age, gender and income. Results of the study revealed that brand
image was the most important factor that influenced their consumption. The consumers
considered country of origin less important.
Inamke et al. (1995) conducted a study to identify the factors influencing the milk
consumption behaviour of urban and rural consumers in western Maharashtra. The results
indicated that, for both, urban and rural consumers, family income was the factor that most
significantly influenced milk consumption. Family size and occupation were the other
significant factors.
Singh et al., (1995) studied the factors influencing consumer preference for milk. He
found that milk quality, convenient availability, supply in desired quantity, flavour, colour,
freshness and mode of payment showed higher levels of consumer satisfaction.
Hugar and Vijay Kumar (1996) in their study on the factors influencing the
consumption of vegetables in Dharwad district of Karnataka, revealed that education level
and gender had significant influence on the quality and frequency of consumption as females
purchased more when compared to males. Income and price also had a significant influence
on the quantity purchased.
Poonam Sharma (1997) in her study found that the demand for cut flowers was
significantly influenced by education of the respondents, expenditure on entertainment by
consumers, frequency of cut flowers purchased by consumers for own use and monthly
income of the consumers family.
Sharma (1997) conducted a study to determine the factors influencing food
consumption in general. The results indicated that price was an important factor which
influenced the consumers choice of food items. Other factors like sensory attributes, regional
preferences, age, gender, interest, motivation, discrimination and income also influenced food
consumption.
Amitha (1998) studied the factors influencing the consumption of selected dairy
products in Bangalore city. The results of the study indicated that income and price were the
factors that significantly influenced the consumption of table butter. Price had a negative
impact and income a positive impact, on consumption. The consumption of ghee was
positively influenced by income, price and family size. Cheese, just as in case of table butter,
was influenced by its price.
Hanumantha Rao (2000) identified the factors influencing the higher per capita

consumption of cereals in rural areas. They were; higher prices of non-foodgrain and nonfood
items, higher energy requirement due to heavy manual labour, payment of wages in kind
by the large farmers in the form of cooked food, and the poor state of healthy and
environmental resulting in low efficiency of conversion of food into energy.

Consumption pattern
Puri and Sangera (1989) conducted a survey to know the consumption pattern of
processed products in Chandigarh. Jam was found to be the most popular among the
respondents irrespective of their income. The consumption of orange squash was highest in
high and middle income families. The consumption of pineapple juice increased with rise in
income of the respondents.
Gursharn (1995) in his study on consumption of walnut found that family size, family
education and disposable income of the family were the factors affecting its consumption.
Furthermore, per family consumption of walnut increased with the increase in income group.
It
was 3.11 kgs in the poor class and 13.08 kgs in the rich class.
Daisy et al. (1999) conducted a study on consumption pattern and consumer
preference for milk products in Madras city. The results of the study revealed that family size,
monthly income and education levels had a significant and positive influence on consumption
of milk and milk products. Furthermore, the preference of the households was found more for
toned milk in all income groups. The preference for other milk products like standardized
milk,
skim milk and skim milk powder, table butter, cooking butter, khoa and yoghurt increased as
income increased which was due to the higher educational level of the head of the household.
Apoorva Palkar (2004) studied the consumer preferences in purchase of ready to eat
snacks-branded potato chips. Random sampling technique was employed covering 150
consumers and 50 retailers. The results revealed that nearly 60 per cent of the consumers
prefer Lays to Peppy, Cheetos and Kurkure. The spicy and the salty flavors were found to be
most preferred in chips consumers and they said that taste or time pass was the most
important reason for purchasing chips. Nearly 66 per cent of the consumers purchase the
products at least once in a week. Consumers prefer to purchase once or twice a week. The
habitual purchasers buy Lays brand indicating the loyalty of the consumers.
Radhakrishnan (2004) conducted a study on perspectives and prospects of coffee
consumption in India. The result indicated that coffee consumption had shown an annual
average growth of 2.14 per cent between 1951 to 2003. In absolute terms the off take in
domestic market had grown from about 18, 400 tonnes to about 70, 000 tonnes during 2003.
For various reasons the decade between 1991 to 2000 did not show any noticeable growth in
consumption. Most of the earlier growth had come from Robusta than Arabica. Though,
during the pool marketing, the period between 1981-90 showed higher volume of
consumption (well above 50, 000 MT and peaked about 63, 000 MT) and the highest growth
rates were achieved only during the period 1951-1960 and 1971-1980 at a CGR of 7.23 and
3.28 per cent, respectively. Market development in non- traditional areas, consolidating
traditional markets, retail space: outlets and distribution, product forms, consumer education
and focus on the youth were some of the policies implied by him.
Randhwa and Chahal (2005) conducted a study on consumption pattern of milk and
milk products in rural Punjab. The study was conducted to examine the consumption pattern
of milk and milk products and to investigate the factors affecting their consumption in rural
Punjab. The requisite data was collected through personal interview method by adopting
multistage sampling technique. The results showed that the expenditure elasticities were 0.89
and 0.65 for liquid milk and for milk products, respectively.

Sarker et al., (2005) in their study on the consumption pattern, marketing channel and
prices of spices in the panchayat samities of West Bengal, indicated that, of the total
consumption, turmeric stood the highest in dust, i.e., from 65.63 per cent to 67.63 per cent
among the spices, turmeric solid was also consumed significantly, i.e., 13.53 per cent to
15.40 per cent, followed by cumin (8.44 to 8.86 per cent) and chili (8.44 to 8.86 per cent). It
was reported that the consumption of spices was highest in winter season compared to other
seasons of the year.
Amy and Alka (2006) studied the household food consumption pattern in north
eastern states of India. The results of the study revealed that the per capita consumption of
cereals was 13.17 kgs in rural areas and 13.28 kgs in urban areas of north eastern states as
compared to all India consumption of 10.72 kgs and 10.42 kgs in rural and urban areas,
respectively. Rice contributed to more than 90 per cent of total cereal consumption in the
region. The share of rice in total cereal consumption was found nearly two times higher than
that of all India average, whereas the share of wheat and coarse cereals was found to be very
low. The per capita consumption of pulses, milk and milk products, fruits, edible oils and
sugar were relatively lower in north eastern states as compared to the all India average, but
the consumption of vegetables were relatively higher.
Jabir Ali (2006) conducted a study on structural changes in consumption and nutrition
of livestock products in India. The study revealed that the consumption pattern in India had
undergone significant changes towards high value commodities like fruits and vegetables,
milk, meat and egg due to increase in per capita income, urbanization, changes in lifestyle,
preference, relative prices and increased awareness about food nutrients among consumers.
During 1983 to 1999, consumption of cereals declined from 192 to 152 kg per year in rural
areas and 147 to 125 kgs in urban areas. But, on the other hand, consumption of fruits
increased by 553 per cent, vegetables by 167 per cent, milk and milk products by 105 per
cent and of meat, eggs and fish by 85 per cent in rural areas over the same period. These
changes in diet were even more dramatic in urban areas.
Mahajana Shetty et al. (2006) conducted a study on consumption pattern and
consumer preference of milk and milk products in Hubli-Dharwar urban conglomeration. A
multi-stage sampling procedure was followed for the selection of the respondents.
Households preferences for the attributes of liquid milk were studied using conjoint analysis.
The important attributes of liquid milk that influenced the consumers decision to purchase
liquid milk were identified in consultation with a sample of decision makers of liquid milk
consumption across different households in the twin cities. While liquid milk was used by all
the households; curds, butter, ghee and paneer were used by 87 per cent, 53 per cent, 44 per
cent and 29 per cent families respectively. The results of the study revealed that the percapita
expenditure incurred on liquid milk and the use of liquid milk for drinking purpose
increased with increasing family incomes. The results of conjoint analysis indicated that price
was of maximum relative importance and brand was of minimum relative importance in the
overall decisions regarding the purchase of liquid milk. They concluded that milk of any
brand
needs to be price competitive with good fat content in that urban conglomeration.
Soe and Singh (2006) conducted a survey on households food consumption pattern
in north eastern states of India. The study examined the level and pattern of household food
consumption pattern. They estimated the expenditure elasticities and projected the household
food consumption. The analysis indicated clearly that north eastern states consumed much
lower quantities of food items like pulses, milk and milk products, edible oils and fruits as
compared to all India averages and recommended levels. Projected household demand for
the year 2016 based on 7 per cent growth in net state domestic product (NSDP) suggested
the substantial increase in food demand, which necessitates more capital investment in

agriculture including greater financial support to research and extension.

Sangeeta et al., (2007) studied the consumption pattern and consumer satisfaction
for milk and milk products in urban Punjab. The results indicated that the family size was the
major variable for determining the demand for food items both at family level and at
aggregate
level. Whole milk was consumed by 99 per cent while only 17 per cent preferred skimmed
milk. Income of a family affected the consumption levels of milk and milk products as it
enhanced their purchasing power of a family. Per capita consumption of whole milk was
highest for the business category (954 ml), which included those who were self employed;
followed by that for the service category (635 ml) and the house wives (559 ml). The study
concluded that per capita consumption of milk and milk products showed a positive
relationship with income level, occupational structure and the literacy levels, while it was
negative with the food habits. Variation in the consumption levels of milk and milk products
across different socio-economic groups implied that the designing of a uniform policy and
treating the entire population as one homogeneous group could mislead the marketers.
Yesodha Devi and Kanchana (2007) conducted a study on consumption pattern and
consumer preference for processed chicken in Coimbature city. Simple random sampling was
adopted in selecting the respondents from Coimbature city in Tamil Nadu. The results
indicated that, of the 200 respondents selected for the study, 65 per cent consumed chicken
once in a week and 62 per cent of the respondents preferred broiler chicken. It was also
evident that 60 per cent of the respondents preferred to consume non-vegetarian items from
hotels. The study found that the personal factors of the respondents have no significant
influence on the quantity of the chicken purchased per week. It was concluded that age,
occupation, religion, income level and number of members in the family have significant
influence on the quantity of chicken purchased.

METHODOLOGY
This deals with the description of the study area, the sampling
techniques adopted, method of survey, the nature and source of data and the various tools
and techniques employed in analyzing the data in evaluating the objectives. They are
discussed under the following heads.
Description of the study area
Sampling design
Analytical tools and techniques employed

Sampling design
Sampling is the procedure of drawing representative samples from the population for
the study. Whatever inference is obtained can be used for inductive reasoning of the
population. Samples should always represent the population and the size of the sample must
be adequate to draw meaningful inference about the population.
3.2.1 Sample selection
To study the consumer behaviour towards consumption of coffee and tea, a multi
stage sampling technique was adopted. In the initial stage, north and south districts of
Karnataka were chosen for the study. Bangalore and Kodagu were selected from the south
and Dharwad as well as Belguam districts were selected from the north, to study the
difference in Karnataka, with respect to coffee and tea consumption. In the next stage, the
district headquarters and two villages was selected from each district. Following this, thirty
sample households were selected randomly from the district headquarters and was

considered as samples from the urban region; and from the two villages fifteen sample
households were selected at random and were considered as samples from the rural areas.
From Bangalore district, Nelmangalla and Kengari were selected as their rural
counterpart. Kalur and Murnad village from Kodagu; Yethinagudda and Narendra from
Dharwad; Wadagao and Sulebhavi village from Belgaum district were selected for the study.
Totally, from each district sixty samples were gathered, accounting to 240 sample households
from where information regarding their consumption behaviour towards beverages* was
studied using a well structured and pre-tested schedule. From these 240 sample households,
information on 932 respondents was obtained.
To study the health aspects associated with the consumption of coffee and tea, 20
doctors were interviewed. Five doctors from each of the four districts were selected for the
study. A well structured schedule was formulated and used to interview the doctors to obtain
the required information.
Features of the study area
Sl. No. Particulars unit Karnataka Bangalore Kodagu Dharwad Belguam
General features
1 Total area Sq. kms 191791 8005 4102 4260 13415
2 Number of districts no's 27 - - - 3 Number of sub districts no's 176 12 3 5 10
4 Number of villages no's 29406 2572 296 379 1270
Demographic features
1 Population Mn 52.85 8.40 0.54 1.60 4.21
a. Males Mn 26.89 4.38 0.27 0.82 2.15
b. Females Mn 25.95 4.02 0.27 0.78 2.06
2 Decadal growth rate Per cent 17.51 23.5 12.00 17.00 17.00
3 Sex ratio no's 965 931 996 949 960
4 Literacy rate (total) Per cent 66.60 73.85 78.00 71.60 64.20
a. Males Per cent 76.10 80.95 83.70 80.80 75.70
b. Females Per cent 56.90 66.25 72.30 61.90 52.3

Nature and source of data

The detailed information required for the study was collected from the primary
sources in order to accomplish the various objectives of the study.
The primary data relating to the consumption behaviour of coffee and tea were
collected from the respondents by personnel interview method to ensure that the data made
available by them was adequate, comprehensive and reliable.
Information on the following aspects was collected from 240 households is as follows;
1. General information from the individual respondents regarding their social,
economical and demographic characteristics like age, education status, occupation,
monthly income, family size and family type.
2. Monthly family expenditure on food and non-food items in general and coffee and tea
in particular were collected.
3. Information regarding the consumption pattern of coffee and tea was obtained.
4. Attributes influencing the preference of a particular coffee and tea brand was
obtained from the sample respondents.
3.2.3 Variables of the study and their measurement
For evaluating the socio-economic factors influence on consumption of coffee and
tea, few variables were selected for the study.
a) Age
Age was measured as the number of calendar years reported to have been
completed by the respondents at the time of interview. The respondents were categorized in
to three groups based on their age, using the formula: mean +/- (0.425 X Std dev)
Category Range (Years)
Younger age group Up to 35
Middle age group 35 50
Older age group Above 50
b) Education
It refers to the number of years of formal schooling, successfully completed by the
respondents. The respondents were grouped into the following categories: illiterate, primary

schooling, high schooling, SSLC, PUC, graduation and post graduation.

c) Family type
It refers to the classification of family as nuclear and joint family. Nuclear family
represents the families with single couple and unmarried children. Joint family is the family
consisting of more than one couple and married children living together. The respondents
were categorized accordingly and expressed in frequency and percentage.
d) Religion
Religion refers to the particular system of faith and worship. The respondents were
categorized under Hindu, Muslim, Christian and Jain religions.
e) Total family income
The total family income of the respondents was worked out by taking into account the
income generated by all the members of the family from income generating activities and
occupations in a month. Categorization of the respondents based on the total family income
was done using the formula: mean +/- (0.425 X Std dev). The categories were,
Category Income range (Rs)
Low income group Up to 11,375
Middle income group 11,375 to 23,125
High income group Moe than 23,125

Analytical tools and techniques employed

The collected data was tabulated and analyzed. The tools used for the analysis are
as follows.
Tabular analysis
Chi-square distribution
The chi-square distribution has many uses in the field of testing of hypotheses. They
are used to test whether a population has given variance; to test goodness of fit of a
theoretical distribution to a observed distribution; and to test independence of attributes in a
contingency table. Chi-square tests are also used for testing some non-parametric
hypotheses.
Let Z1, Z2,.Zn be n independently distributed standard normal variables. Then, the
distribution of chi-square is equal to Z1
2+ Z2
2+,.+Zn
2 is called chi-square distribution with n
degrees of freedom.
Here chi-square has n independent variable components. Therefore, its degrees of
freedom is n. the degrees of freedom of chi-square is the number of independent components
that it has.
In a population, suppose we consider two attributes, we may find dependence
(association) between them. For example, suppose workers of a factory are classified as
smokers and non-smokers and they are also classified as men and women. Here, we
may find the number of smokers is more among men than among women. And so, we
say
that the attributes smoking and sex is dependent (associated).
The statistical hypothesis under test is that the two attributes are independent of one
another. To test the hypothesis, we use the test statistics:

_2 = _ (O - E)2
E
Where,
O = Observed frequency
E = Expected frequency
3.3.2.2 Students t-distribution
When mean and variance are independent variables, the statistics t is distributed in
the form defined by Student and Fisher. This condition holds good only for samples drawn
from normal population. Therefore, t distribution is applicable only to samples which are
drawn from normal population.
The t distribution is similar to the normal curve since it is single peaked at, and
symmetrical about, a zero mean, for the case in which area under the distribution is unity. The
t distribution is a whole family of distribution, one for each value of degree of freedom. The
variance of t distribution is more than the variance of standard normal distribution but it
approaches the variance of the standard normal distribution as the degrees of freedom
increases. The statistic t ranges from negative infinity to positive infinity. The graph of t
distribution is lower at the centre and high at tails than standard normal curve.
X1m X2m
t = -----------------------------_ Sp
2[(1/n1) + (1/n2)]
With (n1 + n2 2) degrees of freedom
Where,
X1m = Mean of the first group
X2m = Mean of the second group
n1 = Number of observations of the first group
n2 = Number of observations of the second group
Sp
2 = Pooled variance and is given by,
S2 = (SS1 + SS2 )/ n1 +n2 - 2
Here, SS1 and SS2 are the sum of squares for first and second samples, respectively.
3.3.2.3 Functional/Regression analysis
To study the factors influencing on the quantity of beverage purchased by the sample
respondents, multiple linear regression analysis was used. In the analysis, monthly quantity of
beverage consumed was used as a dependent variable and the independent variable used
were price of the beverage, monthly family income, number of family members, age and
education. The function form of regression equation used was
D = f (X1, X2, X3, X4, X5)
Where,
D = Demand for coffee and tea (kgs per month)
X1 = Age (number of years)
X2 = Education (number of years of professional schooling completed)
X3 = Family size (number)
X4 = Total family income (Rs. per month)
X5 = Price per unit of the beverage (Rs. per kilogram)
3.3.2.4 Conjoint analysis
Conjoint analysis is a market research tool for developing effective product design.
Using conjoint analysis, the researcher can answer questions such as: what product attributes
is important or unimportant to the consumer? What level of product attributes are the most or
least desirable ones in the consumers mind? What is the market share of preference for

leading competitors products versus the existing or proposed product? Answers to these
questions are of crucial importance in the design and launch of a successful product.
The virtue of conjoint analysis is that it asks the respondent to make choices in the
same fashion as the consumer presumably does by trading off features one against
another. There are two general approaches to collect data for conjoint analysis the
twofactorat-a-time trade off method and the multiple factor full-concept method. With the trade
off method, respondents are asked to rank the cells of a series of matrices, each matrix
crossing the levels of one factor with the levels of another.
The two-factor-at-a-time is hardly used today. The full-concept method is considered
more realistic because all factors are considered at the same time. In the full concept method,
the respondent is asked to rank, order or score a set of profiles or cards according to
preference. On each of these profiles, all factors of interest are represented and a different
combination of factor levels (features) appears. The respondents task is to rank each profile
from the most to the least preferred. From these rankings or scores, conjoint analysis derives
utility scores for each factor level. These utility scores, analogous to regression co-efficients
are called part-worths and can be used to find the relative importance of each factor. Such
information is very useful while deciding which combination of factor levels is best for a new
product or service and when predicting various outcomes, such as sales, given certain
combinations of factor levels.

Socio-economic factors influencing consumption of

coffee
and tea
To identify the factors influencing the demand for the coffee and tea, a multiple linear
regression method was used. This functional form was selected as it gave a better fit to the
data. The dependent variable selected for the model was quantity of beverage consumed,
measured in kgs. The independent variables were age, education, family size, family income
(Rs. Per month) and price per unit (Rs. ). The results of the regression are presented

Monthly expenditure pattern of urban and rural households

The expenditure pattern of the sample households in the urban and rural areas are
given in the Table 4.5. The results show that the urban households spent higher (Rs.
2620.93) compared to the rural household (Rs. 2129.88) in case of total food items. The total
food expenditure of all the sample households stood at Rs. 2375.40. Looking into the
percentage of income spent on food items, the rural households had to spend more
percentage of their income (23.88%) while the urban counterparts spent about 23.88 per cent.
On an average, about 20 per cent of the total income of the sample respondents was spent
on the food items.
The urban households purchased a total of 1.25 kgs of coffee and/or tea powder
every month, while the rural ones purchased 1.16 kgs. The average total quantity of coffee
and/or tea powder purchased by all the sample respondents was 1.20 kgs per month. Its tvalue
was non-significant at 1.01. Comparing the expenditure, urban households spent
relatively more at Rs. 235.13 and the rural households spent Rs. 160.39. On an average, Rs.
197.76 was spent on coffee and/or tea powder every month. Looking into the percentage of
income spent on the coffee and/or tea powder, it was 1.17 per cent of the income for urban,
1.33 per cent of the income for rural respondents.
Milk was consumed by almost all the households, in both rural as well as urban
areas. In the urban region, on an average 29.13 litres of milk was consumed by spending
about 2.87 per cent of the total income at an average of Rs. 475.42 per month. The rural
households spent about Rs. 402.49 and purchased 24.76 litres per month. Their income per
cent spent on milk stood at 5.07. Totally, about 26.94 litres of milk was consumed by the
sample households spending around Rs. 438.95, taking away 3.97 per cent of their income
on an average.
Classification of sample respondents based on age and income
The distribution of sample respondents based on age and income is furnished in
Table 4.2. The respondents were classified into three age groups, namely, young age group
(25.40%), which comprised of respondents below 35 years of age; middle age group with
49.20 per cent of the total respondents, with a age ranging from 35 to 50 years and the old
age group which comprised of respondents above 50 years of age and had a share of 25.40
per cent. In the urban area, 33 respondents (27.50%) belonged to the young age group and
23.30 per cent of the rural respondents were below 35 years of age. Middle age group had
the highest number of respondents in both the regions. It was 48.30 per cent in the urban and
50 per cent in the rural area of the selected districts. There were 29 respondents (24.20%)
from the urban and 32 respondents (26.70%) from the rural area, who belonged to the old
age category.
The income of the respondents was greatly diverse with a minimum income of Rs.
3,000 to the maximum of Rs. 85,000. It was grouped into 3 categories, they are, low income
group, which consisted of respondents below Rs. 11,375 and had 36.70 per cent of the total

sample respondents. The middle income group had an income range of Rs. 11,375 to Rs.
23,125 and contained 49.20 per cent of the selected sample respondents, while the high
income group with a range of more than Rs. 23,125 had about 38.80 per cent of the total
respondents.
Monthly expenditure pattern of urban and rural households