if you have access to the database via a tool like phpMyAdmin, log in to it, select your database (tadand) and click the SQL tab in the main navigation.
you will see a textfield, in that you paste:
ALTER DATABASE `tadand` DEFAULT CHARACTER SET utf8 COLLATE utf8_general_ci
click the "go" button after, and you should be done. see the attached screenshot.
developers: this really isn't that easy to understand if you're not quite familiar with databases, is it possible to make install / upgrade run this command itself, and not asking the user to do it?
if not, some more whitespace in the message would also help, like:
[blue]Database xx is not in UTF8. Please set the database character set to UTF8 before continuing by using the following query:
ALTER DATABASE `xx` DEFAULT CHARACTER SET utf8 COLLATE utf8_general_ci
To use ALTER DATABASE, you need the ALTER privilege on the database.[/blue]