THE ANALYSIS OF INFLUENCE PRODUCT
DIFFERENTIATION, IMAGE DIFFERENTIATION AND
WORD OF MOUTH TO PURCHASE DECISION “MAICHI”
(Study Case: Consumer of MAICHI around UIN Syarif Hidayatullah Jakarta)
By Nur masyitha ID :10808110008
DEPARTMENT OF MANAGEMENT
INTERNATIONAL CLASS PROGRAM
FACULTY OF ECONOMIC AND BUSINESS
SYARIF HIDAYAHTULLAH STATE ISLAMIC UNIVERSITY
JAKARTA
ii
THE ANALYSIS OF INFLUENCE PRODUCT
DIFFERENTIATION, IMAGE DIFFERENTIATION AND
WORD OF MOUTH TO PURCHASE DECISION “MAICHI”
THESIS
(Study Case: Consumer of MAICHI around UIN Syarif Hidayatullah Jakarta) Submitted to Faculty of Economics and Business in Partial Requirements for
Acquiring the Bachelor Degree of Economics
By Nur masyitha ID :10808110008
DEPARTMENT OF MANAGEMENT
INTERNATIONAL CLASS PROGRAM
FACULTY OF ECONOMIC AND BUSINESS
SYARIF HIDAYAHTULLAH STATE ISLAMIC UNIVERSITY
JAKARTA
vi
SHEET STATEMENT
AUTHENTICITY SCIENTIFIC WORKS
Signature below :
Name : Nur Masyitha
Student Number : 108081100008
Faculty : Faculty Of Econand Business
Deparment :Department Of Management ( International Class Program) Hereby declare that in the writing of this thesis, I:
1. Not use other people’s ideas without being able to develop and accountable
2. Do not plagiarism of other people’s work manucript
3. Do not use other people’s work without mentioning the orinal 4. Own work and able to work responsible for this work
If in the future there is a demand from the other side of my work, and have been accountably proved, was indeed found evidence that I have violated the above statement, and then I am ready to be sanctioned according to rules applicable in the Faculty of Economics and Business Syarif Hidayatullah State Islamic University Jakarta
Thus statement truly made with sincerely.
Ciputat September 2013
vii
CURRICULUM VITAE
I. PERSONAL IDENTITY
1. Name : Nur Masyitha
2. Place and date : Lamongan,January 31 1990
3. Address : Jl. Cipinang pulo maja rt/rw 006/010 cipinanng Besar Utara Jatinegara Jakarta Timur
4. Phone : 081389288171
II. EDUCATION
1. 1994-1996 : Tk Bunga Harapan Lamongan 2. 1996-2002 : Mi Islamiyah Lamongan 3. 2002-2005 : Smp Wahid Hasyim Lamongan 4. 2005-2008 :Man 1 Lamongan
5. 2008-2013 : FEB Uin Syarif Hidayatullah Jakarta
III. QUALIFICATIONS:
1. Following training ESQ leadership training: basic training ESQ 2008 2. Day Indonesia Insurance Committee, Insurance Goes To Campus:
"The Role of Insurance in the Era of Globalization" 2010
3. Following the presentation contest Indonesia's Young Entrepreneurs 2011 in Prasetya Mulya Business School
viii IV. Work Experience:
1. Year 2011: Secretary at Cooperative Sakinah Ciputat
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ABSTRACT
The aim of this research is to analyze the influence of product differentiation, image differentiation and word of mouth to purchase decision of the“maichi”. The method of determining the sample used is the Convenience sampling methods. Respondents in this research amounted to 80 respondents which is a sample of research and 20 respondents as try out people customers Maichi especially in around Uin Syarif Hidayatullah Jakarta. Previous research findings indicate that there are positive relationships among influence product differentiation, image differentiation and word of mouth to purchase decision. The methodology applied in this elaboration is the multiple linear regression method. The result of this research shows that there is simultaneously influence among product differentiation, image differentiation and word of mouth to purchase decision.
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ABSTRAK
Tujuan utama dari penelitian ini adalah untuk menganalisis pengaruh diferensiasi produk, diferensiasi citra dan word of mouth untuk keputusan pembelian "Maichi". Metode penentuan sampel yang digunakan adalah metode convenience sampling. Responden dalam penelitian ini berjumlah 80 responden yang merupakan contoh penelitian dan 20 responden sebagai percobaan. orang pelanggan Maichi terutama di sekitar Uin Syarif Hidayatullah Jakarta. Temuan penelitian sebelumnya menunjukkan bahwa terdapat hubungan yang positif antara diferensiasi produk, diferensiasi citra dan dari word of mouth terhadap keputusan pembelian. Metodologi yang digunakan dalam pengembangan ini adalah metode regresi linier berganda. Hasil penelitian ini menunjukkan bahwa ada pengaruh secara simultan antara diferensiasi produk, diferensiasi citra dan dari word of mout terhadap keputusan pembelian.
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PREFACE
Alhamdulillahi rabbil ‘alamin, I would like to say thanks and being grateful to Allah SWT that already gives His gift, bless and concentrate to me and also regard to prophet Muhammad SAW, so that this thesis could be finished in hopping that it could be worthwhile for every reader. The writer also expects for any suggestions to improve the content of this thesis.
In making this thesis, the writer was not alone but i was supported and taught by many parties. In this opportunity, the writer would like to say my huge thankful to:
1. My lovely my parent for their effort to help, pray and support to me.
2. My lovely all my family, expesially for Mba’In, Mba’Is, Riro, Mas Anas and Mas Masykur always pray ad support me.
3. Prof Dr Abdul Hamid MM as Dean FEB UIN Syarif Hidayatullah Jakarta, thank you for the sacrifice of time and knowledge that has been given.
4. Arief Mufraini, Lc. MS as the primary supervising writer who patiently provided guidance to the author in preparing the thesis.
5. Leis Suzanawaty, SE, M.Si as second supervisor my thesis thank you for the sacrifice of time and knowledge that has been given
xii 7. Lecturers UIN Syarif Hidayatullah Jakarta, which has contributed his knowledge to the author and his colleagues for this author. Thank you for the sacrifice of time and knowledge that has been given to the author and his friends other students.
8. All academic staff FEB UIN Syarif Hidayatullah Jakarta, which has worked well to serve students.
9. Thaks full to all my friend Zuket Community always give me support.
The finally the writer expect for any critics as well as suggestion that could improve the content of this thesis. Hopefully this thesis could be worthwhile for all of us. Amien, thanks.
Jakarta, September 2013
xiii
LIST OF CONTENTS
COVER
IN COVER...ii
ACCEPTANCE of LETTER...vi
CURRICULUM VITAE...vii
ABSTRACT...ix
ABSTRAK...x
PREFACE...xi
LIST of COUNTENT...xiii
LIST of TABLE...xviii
LIST of FIGURE...xx
CHAPTER I INTRODUCTION A. Research Background...1
B. Problem Formulation...7
C. Purpose and Benefits...7
xiv
2. Benefit ...7
CHAPTER II LITERATUR RIVIEW A. Marketing...9
B. Marketing Strategy………....10
C. Differentiation...10
1. Definition ………...10
2. Dimension of Diferentation...11
D. Product Differentiation………...12
E. Advantages of Product Differentiation……….14
F. Image differentiation...14
G. Word of Mouth...16
1. Definition of word of mouth...16
2. Character of Word Of Mouth...18
3. Categories of WOM...20
H. Purchase Decision ...20
1. Definition of Purchase Decision...20
2. Process of Purchase Decision...21
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J. Conceptual framework………...29
K. Hypothesis……….………...30
CHAPTER III RESEARCH METHOD A. Scope of Research...34
B. Sampling Method...35
C. Data Collection Method...35
1. Primary Data...35
2. Secondary Data………36
D. Analysis Method...36
1. Validity and Reliability Test...36
a) Validity Test………...………36
b) reliability Test……….…37
2. Classical Assumption Test………...37
a) Multicollinearity Test………...…….37
b) Heteroscedasticity Test……….…38
c) Normality Test………..39
3. Multiple Linier Regression………..40
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b) Simultaneous Test of F test……….……..42
c) Partial test of t-test………43
E. Operational Variable………...45
1. Product Differentiation (X1)………..………46
2. Image Differentiation (X2)………..………..47
3. Word Of Mouth (X3)………...48
4. Purchase Decision (Y)………48
5. Table Operational Variable………51
CHAPTER IV ANALYSIS A. General Description of Research Object …...…..54
1. History of Maicih………...54
2. Marketing Strategies of Maicih………...56
B. Analysis and Discussion……….57
1. Validity and Reliability Test………..57
a) Validity Test……….………..57
b) Reliability Test………...60
2. Descriptive Analysis...63
3. Classical Assumption Test ………71 a) Multicollinearity Test………..………...71 b) Heteroscedasticity Test………...……72 c) Normality Test………...……….73 4. Multiple Linier Regression…………..…..………74
xvii b) Simultaneous Test of F test………….……...76 c) Partial test of t-test……….……….78
CHAPTER V CONCLUSIONS and IMPLICATION
A. Conclusions………...81 B. Implication……….………...82
REFERENCE
xviii
List of Table
3.1 Likert scale of five (5) levels……….…45
3.2 Operational variable………...……51
4.1 Validity Test: Product Differentiation (X1)………...58
4.2 Validity Test: Image Differentiation(X2)………. 59
4.3 Validity Test: Word of Mouth (X3)……….…. 59
4.4 Validity Test: Purchase Decision (Y)………..…..………60
4.5 Reliability Test: Product Differentiation(X1)………61
4.6 Reliability Test: Image Differentiation(X2)………...………61
4.7 Reliability Test: Word of Mouth(X3)……….…...……62
4.8 Reliability Test: Purchase Decision (Y)………...……..62
4.9 Population Data around State Islamic University in Jakarta……….63
4.10 Maichi has variety size of spicy level………..……..…64
4.11 Maicih has variety shape of chips………...64
4.12 Maicih has many variant product……….………..65
4.13 Maichi has high quality and low price………...65
4.14 Maichi has a more elegant packaging………66
4.15 Maicih have a unique logo that is easy to remember and simple……...…66
4.16 Maicih have different promotion from the others is the social media…...67
4.17 Maicih sponsoring Sundanese arts……….67
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4.19 Get a recommendation from someone else to buy chips Maichi………...68
4.20 Get an encouragement to buy Maichi chips from others…………...……69
4.21 Maicih chips is a primary need for me……….…..69
4.22 Search information on chips Maicih………..70
4.23 Consider the benefits provided in the purchase Maichi…………..……...70
4.24 Purchase decision of chips Maicih……….71
4.25 Multycoloniarity test………..……71
4.26 Heteroscedasticity test………...…….…72
4.27 Multiple linier regression………...………74
4.28 Cooeficient determinant……….………...……….75
4.29 F-Test……….76
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List of Figure
2.1 5 Stage Model Of The Consumer Buying Process……….21 2.2 Step between evaluation of alternative and purchase decission…………25
2.3 Conceptual Model……….30
1
CHAPTER I
INTRODUCTION
A. Research Background
Intense competition in business field, push the businessmen to look for an appropriate strategy to sell their products. They have to be able to take exact marketing strategy to attract the costumers, so they can dominate the market share. The purchase decision becomes the most important thing to be concerned about, because it will surely become consideration of how a marketing strategy will be applied by the company later.(Purba, 2011:1)
According to Schiffman and Kanuk (2004:547) purchase decisions is the selection of two or more alternative options purchase decisions, meaning that one can make decisions, should be available some alternative options. The decision to purchase could lead to how the decision-making process is done. Meanwhile based on Kotler and Amstrong (2010: 179) purchase decision is the buyer’s decision about which brand to purchase.
2 evaluation of alternative, purchase decision, post purchase behavior. (Kotler and Amstrong, 2010: 179)
According Siti Marlia (2009:94) purchase decision can be affected by differentiation strategy. Based on Ahmad M. Zamil (2011:25) word of mouth plays an important role in the purchase decision to the final consumer.
According to Kotler and Amstrong (2010:215) differentiation is the actually differentiating the market offering to create superior customer value. Meanwhile Based on Carpenter and Sanders (2009:176) differentiation is strategic position based on products or offers services with quality, reliability or prestige that is discernibly higher than that of competitors and for which customers are willing to pay.
So based on the definition above, differentiation is the process of adding a set of meaningful and valued differences to distinguish the company’s offering from
competitors’ offerings.
3 According the Amstrong and Keller (2009: 220) product differentiation can be defined brand differentiated on features, performance, or style and design. Image differentiation is a person responds differently to company and brand images. Identity comprises the ways that a company aims to identify or position itself or its product, whereas imageis the way the public perceives the company or its products.(Hitesh Bhasin: 2011)
According Philip Kotler (1994:295) the main of image differentiation are: symbol, media, atmosphere and event.
In addition analysis influence differentiation strategy to purchase decision there is also influence word of mouth to purchase decision. According to Scffman and Kanuk (2010:512) word of mouth is a form of informal communication between individuals of a particular product or service. Meanwhile based on Bughin, Doogan, and Vetvik (2010:4) word of mouth is undeniably complex and has a multitude of potential origins and motivations, they are identified three forms of word of mouth that marketers should understand: experiential, consequential, and intentional.
4 increasingly free to communicate without the constraints of space and time, this will cause make of word of mouth.
Word of mouth is the primary factor behind 20 to 50 percent of all purchasing decisions. Its influence is greatest when consumers are buying a product for the first time or when products are relatively expensive, factors that tend to make people conduct more research, seek more opinions, and deliberate longer than they otherwise would. And its influence will probably grow: the digital revolution has amplified and accelerated its reach to the point where word of mouth is no longer an act of intimate, one-on-one communication. Today, it also operates on a one-to-many basis: product reviews are posted online and opinions disseminated through social networks. Some customers even create Web sites or blogs to praise or punish brands. (Bughin, Doogan, and Vetvik 2010:2)
According to kotler and keller (2009:585) social network, such as facebook and twitter have become an important force in business to consumer and business to business marketing, a key aspect of social networks is word of mouth.
Many things and topics discussed by consumers in different occasions, from a conversation between friends and family. Many rumors relating to a product that spread in among of the consumer either positive or negative. The rumors mean word of mouth.
5 Maichi is one of the most famous cassava chips made in Bandung. Maicih is one of the brands of cassava crackers that appear in the midst of complex competition between cassava chips’ companies, have distinctive spicy flavor to
the audience themselves. Business established since June 29, 2010 in Bandung is a trend among teens in addition to a sense of how the promotion is also very different from the others. (Silvia, Hakim and Erlangga,2012:44)
Maichi is one of the snack food products that is loved by young people these days. A product is chips with different levels of spicy. There are 10 levels of hotness/spiciness in Maicih, level 1 to 10 but the popular ones are the level 3 (gray colored packaging) and level 5 (colored red packaging). The customers can get the level of spicy product that fit the best. Different level of spicy it includes one of them example product differentiation. (TesaTioarina: 2012)
Maichi has products differentiation with other product. Maichi products can
be differentiated in form, feature, performance quality and style. Maichi’s image
in social media has an event to create a Maichi’s jargon for the stakeholder by
management. For instance “nenek” for chip marker, “cucu” for the consumer,
“jendral” for the reseller, “ichier” for the fans Maichi, “republic Maichi” for the
management Maichi and “tericih-icih” for the addicted fans of Maichi product. Through the family connection social media, Maichi’s management creates issue
6 Through the internet like in twitter Maichi trying to create issue word of mouth with the different levels of spiciness by chips. And not only that Maicih chips is not sold in regular supermarkets or snack shops but in particular and determine location that can only be known through twitter.
MAICHI made a breakthrough way of communication and marketing products using social media like twitter and Facebook. Maichi includes the most famous MAICHI brand in twitter by magazine marketing mix December 2011 edition . This proves that MAICHI success in promotion through word of mouth. (Bambang sukma:2011)
Each month continues to increase, from a turnover of only a few become many. Currently, a month has touched a turnover of Rp 4 billion, with an average per week over Rp750 million. This indicates that consumer purchase decisions are also higher. (Pipiet, Anda and Febry: 2011)
Data maicih respondent age was 72% of respondents aged 17-25 years and 28% aged 25-34 years, this means Maichi very popular among young people. (Linsky Oktavia: 2011)
Study case around Sharif Hidayatullah State Islamic University Jakarta because Maichi product very popular in young people and usually Maichi sold among students like around State Islamic University in Jakarta.
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TO PURCHASE DECISION “MAICHI” with study case of Maichi Consumer
around Sharif Hidayatullah State Islamic University in Jakarta.
B. Problem Formulation
Problem formulation is very important in a research to limit the problem becomes obvious that can be used as guidelines in conducting the research. The problem formulation in this research is:
1. Does the product differentation significantly influence purchase decision?
2. Does the image differentiation significantly influence purchase decision? 3. Does the word of mouth significantly influence purchase decision? 4. Do the product differentiation, image differentiation and word of mouth
significantly influence purchase decision?
C. Purpose And Benefits
1. Purpose
The purpose of this research is to determine effect of product differentiation, image differentiation and word of mouth to purchase decision on product Chips Maichi at Consumer.
2. Benefit
8 The study is expected to be input for a better understanding the product differentiation, image differentiation and word of mouth to purchase decisions in order to develop more effective marketing strategies in the future.
b. For the author
The results of this research are expected to provide an opportunity to increase knowledge and insight of marketing especially are product differentiation, image differentiation and word of mouth in consumer decision-making.
c. For other researchers
9
CHAPTER II
LITERATURE REVIEW
A. Marketing
According to Amstrong and Kotler (2009:38)marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
Based on Lamb, Hair and Mc Daniel (2009:4) marketing is organizational function and a set of process for creating, communicating and delivering value to customer and for managing customer relationship in ways that benefit the organization and its stakeholder.
According to Kotler and Armstrong (2010:5) marketing is the social process by which individuals and organizations obtain what they need and want through creating and exchanging value with others. In a business setting marketing involves building and managing and managing profitable exchange relationship with customer.
10
So based on definition above at marketing is the management process through which goods and services move from strategy to customer need and their satisfaction.
B. Marketing Strategy
According to Kotler and Amstrong (2012:72) marketing strategy is the marketing logic by which the company hopes to create customer value and achieve profitable customer relationship.
Based on Walker, Mullins, Boyd and Larreche (2006: 11) marketing strategy is the process to effectively allocate and coordinate marketing resources and activities to accomplish the firm’s objectives within a specific product market.
So marketing strategy is a long-term course of action designed to optimize allocation of the scarce resources at the disposal of a firm in delivering superior customer experiences and promote the interests of other stakeholders.
C. Differentiation
1. Definition
Based on Amstrong and Kotler (2009:199) differentiation is actually differentiating the market offering to create superior customer value.
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According to Aeker (1989) which is noted by Dwi Endah Lestari (2005) a successful differentiation strategy should be a strategy that is able to:
a. Produce customer value
b. Raise the perception that the typical and well worth c. Appear as a distinct form that is difficult to replicate.
A key of successful differentiation strategy lies in the effort to develop “a point of differentiation” especially from perspective view of the customer rather than the perspective view of business operations.
Differentiation strategy can be used to build a strong brand and avoid the commodity trap, marketers must start with the beliefs that can differentiate anything. (Kotler and Keller ,2012:311)
So based on explanation above, differentiation is all the actions performed by a marketer to differentiate themselves from other competitors to get uniqueness. Differentiation is the strategy that can maintain purchase decision. With differentiation strategy the customer can gets more product value than other products.
2. Dimension of Differentiation
According to Amstrong & Keller (2009: 220) dimensions of differentiation are: product differentiation, channel differentiation, image differentiation and service differentiation.
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b. Service differentiation: service companies can differentiate itself by action through speedy, convenient or careful delivery.
c. Channel differentiation: a company gain competitive advantage through the way they design their channel coverage, expertise and performance.
d. People differentiation: hiring and training better people than their competitors do.
e. Image differentiation: a company or brand image should convey the product’s distinctive benefits and positioning.
D. Product differentiation
According to Amstrong and Keller (2009:360) product is anything that can be offered to a market to satisfy a want or need.
According to Cravens and Piercy (2009:98) product differentation is occur when a product offering is perceived by the buyer as different from the competition on any physical or nonphysical product characteristic, including price.
Brand can be differentiated on features, performance, or style and design. (Amstrong and Keller ,2009:220)
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1. Form: size, shape, physical structure of a product
2. Feature: that supplements their basic function. According to Kotler and
Amstrong (2006:348) feature is the variety of products offered
3. Customization: as companies have grown proficient at gathering
information about individual customers and business partner and as their factories are being designed more flexibly, they have increased their ability to individualize market offerings, messages and media.
4. Conformance quality: the degree to which all produced units are identical and meet promised specifications.
5. Performance quality: level at which the product’s primary characteristics operate, quality is increasingly important for differentiation as companies adopt a value model and provide higher quality for less money.
6. Durability: a measure of the product’s expected operating life under natural or stressful condition is a valued attribute for vehicles, kitchen appliances and other durable goods.
7. Reliability: a measure of probability that a product will not malfunction or fail within a specified time period.
8. Repair ability: measure the ease of fixing a product when it malfunction or fails.
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E. Advantages of Product differentiation
Some of the advantages to be gained by businesses and market participants of the product differentiation strategy: (www.bisnisUKM.com: 2011)
1. Product more memorable to consumers: everything that is unique and
different, it would be easier to recognize and remember the product, compared to other products that have been common in the market.
2. The product is superior compared to other products : if other products are
considered standard by the consumers of the products you will look superior to other products
3. Increase of selling prices product: consumers willing to pay expensive, to be able to enjoy the innovative products offered by market participants. 4. Overcome the issue of market saturation: differentiation of products can
help businesses and consumers when market participants boring with the regular product offers.
5. Helped create a product image: the more unique the product it will be even easier for consumers to recognize the product and the greater the opportunity to embed the product image.
F. Image differentiation
Image is formed as a result of all the experiences, values and the impression
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amount of time to build. A company's image can be described as the overall perception of the company. The image can be enhanced by promotional activities, environmental factors, competitor‟ s actions or by non- paid for activities, such as word of mouth. Image is formed as a result of all the experiences, values and the impression that external actors have about the company. (Jacqueline and Marjorie,2011: 20)
Even when competing offers look the same, buyer may perceive a difference based on company or brand image differentiation. A company or brand image
should convey the product’s distinctive benefits and positioning. (Amstrong and
Keller, 2009: 220)
According to Philip Kotler (1994: 295) even when competing offers look the same, buyers may respond differently to the company or brand images. The main of image differentiation are:
1. Symbol : a strong image consists of one more symbols that trigger
company or brand recognition. The company and brand logos should be designed for instant recognition.
2. Media : the message should be replicated in other publication,
such as annual report, brochure, and catalogs.
3. Atmosphere : the physical space in which the organization produces or
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4. Event : a company can build an identity through the type of events it sponsors and create event to explode a bombshell.
The uniqueness of the image that will differentiate a company formed with other companies and eventually the image will reflect the uniqueness of the situation, quality, and condition of the company’s own that can attract customers to use products or services from companies.
G. Word of mouth
1. Definition word of mouth
According to Khasali (2008) which is noted by Ervinna (2011), word of mouth is something talked by people, the conversation occure because there is a controversy which is differenciate with the ordinary and normal things in society.
According to Michael. R. Solomon (2004:379) word of mouth is product information individuals transmit to other individuals. Because we get the word from people we know, wom tends to be more reliable and trustworthy than messages from more formal marketing channels. And unlike advertising, wom often comes with social pressure to conform to these recommendations. Ironically, despite the money marketers’ entire
17
So word of mouth is the sound of new ideas up to our ears in several ways such as; telling stories, dialogs, conversations, shared experiences radio and etc., and its impact remains on our souls until we ear another story, thus, word of mouth helps us to know about what is new, and what is the latest.
According to Michael R Solomon (2004:381) wom is especially powerful when the consumer relatively unfamiliar with the product category. Talk gives the consumer an opportunity to generate more supporting arguments for the purchase and to garner support for this decision from other.
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Consumers use word of mouth to talk about dozens of brand each day, from media and entertainment products such as movies, TV shows and publications, for example to food products, travel services and retail stores. Word-of-mouth has been proven to be an effective method of obtaining useful information for purchase decisions. (Mark Hughes, 2007: 31)
Increasingly ,word of mouth is being driven by social media in the form of online communities and forums, blogs, and social networks such as Fcebook, Twitter, an YouTobe. (Kotler and Keller, 2012: 584)
In order to influence consumer decisions a successful word-of-mouth message should address important products or service features. (While marketers tend to build campaigns around emotional positioning, consumers actually tend to talk—and generate buzz—about functional messages). Word-of-mouth equity is a brand’s power to generate messages that influence the consumer’s decision to purchase. In essence,
this is the average sales impact of a brand message multiplied by the number of word-of-mouth messages. (Stratmann:2010)
2. Character of word of mouth
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a. Positive Word of mouth (PWOM) is the form of word of mouth that can arise when a product that has been consumed successfully satisfying customers. Consumers who are satisfied are not necessarily going to tell anyone. Word of mouth new positive will emerge from an experience that is considered remarkable by the consumer, who at that time a high level of emotional satisfaction.
b. Negative word of mouth (NWOM) is the form of word of mouth that
can arise when product consumption were disappointing. Is a phenomenon of the most feared company because a disappointed consumer would speak, not only the people closest to it. Consumers will try to convey his disappointment to many people as possible. According to Sumardi (2009) word of mouth also takes also takes many forms online or off line. Three noteworthy characteristics are: a. Credible: because people trust others they know and respect word of
mouth can be highly influential.
b. Personal: word of mouth can be a very intimate dialogue that reflects personal facts, opinions and experience.
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3. Categories of WOM
According to Andy Sernovitz (2012:6) there are 2 (two) categories of word of mouth are:
a. Organic word of mouth
Organic word of mouth that springs naturally from the positive qualities of your company. Many experts would argue that this is the only legitimate form of word of mouth.
b. Amplified word of mouth
Word of mouth that is started by an intentional campaign to get people talking.
Word of mouth can be measured with sub variable process spreading, with the indicator as follows: (Rachmanda: 2009 in Satwika, Dipta Rizky: 2011: 43)
a. Talk positively by other about the product b. Recommend products by others
c. Encouragement by others to make a purchase
H. Purchase Decision
1. Definition of Purchase Decision
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Based on Schiffman and Kanuk (2004:547) purchase decisions is the decision as the selection of action of two or more alternative choices.
Based on definition above, purchase decision is a process of selecting a few alternative options, to take one of the many alternative choices.
2. Process of purchase decision
Specific decision-making process consists of the following sequence of events are: problem recognition, information search, evaluation of alternative, purchase decision, post purchase decision. (Kotler and Keller ,2012: 188) Buyer decision process can be seen in the chart as follows :
Problem Recognition
Information Seacrh
Evaluation Of Alternative,
Purchase Decision
Post Purchase Decision
Figure 2.1
5 Stage Model of the Consumer Buying Process
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In detail, the stages can be described as follows:
a. Problem recognition: the buying process starts when the buyer
recognizes a problem or need triggered by internal or external stimuli.
With an internal stimulus, one of the person’s normal needs-hunger,
thirst, sex-rises to a threshold level and become a drive. A need can also be aroused by external stimulus.
The need is anything that humans needed to prosper. Human needs reflect the feeling unsatisfied want fulfilled in man which appears naturally in order to survive. Types of needs human needs are many and varied. Broadly speaking, human needs can be divided into four groups, as follows: (Fardani: 2013, acces from okezoned.blogspot.com/2013/02/various-human-needs-and-kind.html)
1) Needs Primary or Necessity: primary needs are primary needs
that must be met in order to sustain human life. In other words, the primary requirement is a requirement that must be met in order for humans to live. Those needs comes naturally. Primary need is also called 'natural needs'. Examples are included in the primary requirement is the need to eat, drink, clothing, and shelter.
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needs to be fulfilled after the primary needs are met. Examples include secondary needs include the need for televisions, refrigerators, desks, chairs, books, and stationery. 3) Tertiary Needs: the need for tertiary are needs that must be
met after the primary and secondary needs are met. Basically, tertiary needs is a human need for goods and services that are considered luxury (lux), such as luxury cars, yachts, private aircraft, and tours abroad.
b. Information search: consumer often search for limited amounts of
information. First step is a person simply becomes more receptive to information about the product and then second step is person may enter an active information search.
Consumers can obtain information from any of several sources. These include personal sources (family, friends, neighbors, and acquaintances), commercial sources (advertising, salespeople, web sites, dealer, packaging, displays), public sources (mass media, consumer rating organizations, internet searches), experiential sources
(handling, examining, using the product). The relative influence of these information sources varies with the product and the buyer. (Amstrong and Kotler, 2009:178)
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evaluation process: first, the consumer is trying to satisfy a need. Second, the consumer is looking for certain benefits from the product solution. Third, the consumer sees each product as a bundle of attributes with varying abilities to deliver the benefit. The consumer will pay the most attention to attribute that deliver the sought after benefit.
The consumer arrives at attitude toward different brands through some evaluation procedure. How consumers go about evaluating purchase alternatives depend on individual consumer and the specific buying situation. (Amstrong and Kotler, 2009:179)
d. Purchase decision: the consumer forms preference among the brand in the choice set and may also from an intention to buy the most preferred brand.
In the evaluation stage, the consumer ranks brands and forms purchase intention. Generally, the consumer’s purchase decision will
25
Figure 2.2
Step between evaluation of alternative and purchase decision
(Kotler and Keller, 2012)
e. Post purchase decision: after purchase, the consumer may have noticed a discrepancy due to certain features that disturb or hearing things that are fun about other brands, and will always be alert to information that supports his decision.
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making process starts before the actual purchase and continues even after the purchase. It also encourages the marketer to focus on the complete buying process and not just on the purchase decision.
I. Previous Research
This literature review conducts the research with comparing than previous research studies, such as:
1) Effect of Differentiation Strategy to Purchase Decision on Prepaid Card
IM3 in Malang. (Siti Marliah,2009)
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2) Analysis Influence Differentiation, Promotion and Positioning to Purchase
Decision on Honda Motorcycle in Semarang. (Frendy Prasetya ,2011) This research was to examine the relationships between variable differentiation, promotion and positioning to purchase decision on Honda Motorcycle in Semarang. The data collection technique uses questioner with sample 100 respondent and focus on customers Honda motorcycle. Data analysis method uses validity, realibility, the classic assumption test, multiple regression analysis, hypothesis testing with (t test and F test), and analysis of coefficient of determination (R2). The result shows that the coefficient of determination shown in the adjusted R Square of 0.704, which means that its influence purchasing decisions can be explained by the three independent variables in this research that differentiation, promotion, and positioning of 70.4%, and the remaining 29.6% can be explained by other variables outside the model of this research.
3) The Impact of Word of Mouth (WOM) on The Purchasing Decision of The Jordanian Consumer. ( Ahmad M. Zamil ,2011)
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mouth from family, friends, peers and relatives has greater impact on the buying decision than other sources such as the company staff and salesmen. Where the calculated T was 21.041 and it is larger than 1.96, which means the acceptations of the hypothesis that states. There is a significant statistically relationship between the buying decision of the final consumer and the source of word of mouth.
4) Analysis Influence Promotional Mix and Word Of Mouth to Purchase Decision of Life Insurance Product. (Dipta Rizky Satwika,2011)
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mix the variable dis not significantly influence the purchase decision because the t count value is smaller than t table that is 1,105<1,672. While the variable word of mouth is partially significant effect on purchase decisions because t count value is greater than the table t value 5, 312>1,672. So means word of mouth more signicantly influence to purchase decision than promotional mix.
J. Conceptual Model
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That relationship can be seen in the chart as follows:
Figure 2.3
Conceptual Model
K. Hypothesis
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Based on problem definition and literature review that explained already, the hypothesis development can be formulated as:
1) The relationship between product differentiation and purchase decision
According to Siti marliah (2009:01) differentiation is a chain of differences which means to differentiate company’s offering from
competitor’s offering. The choice of goods among many products is
always based on differences, implicit or explicit. A consumer will consider differentiation offering in choosing products that will be bought; they will be influenced by products differentiation. So product differentiation can affect purchase decision.
Product differentiation is the process in which companies offer products or services with unique attributes to customers. Customers crave product distinctions to make purchasing decisions. (Laura Acevedo: www.eHow.com)
So based on explanation above the the hypothesis can be drawn as follows:
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2) The relationship between image differentiation and purchase
decision
A company brand image should represent the products benefits and the company positioning on the market. The image represents the promise that the products will perform to expectations of the customers. A good brand that process good image would make the customer feel uncomfortable buying from any other brand. That mean image differentiation affect purchase decision. (Jacqueline and Marjorie, 2011:11)
According to Siti marliah (2009:01) differentiation is a chain of differences which means to differentiate company’s offering from competitor’s offering. The choice of goods among many products is
always based on differences, implicit or explicit. A consumer will consider the differentiation offering in choosing products that would buy; they will be influenced by image differentiation. So image differentiation can affect to purchase decision.
So based on explanation above the the hypothesis can be drawn as follows:
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3) The relationship between word of mouth and purchase decision
Word of Mouth is the sound of new ideas up to our ears in several ways such as; telling stories, dialogs, conversations and shared experiences radio.Word of mouth from family, friends, peers and relatives has greater impact on the buying decision than other sources such as the company staff and salesmen.Word of mouth may be positive or negative the customers who are satisfied will continue purchasing the product. So there is a significant statistically relationship between the buying decision of the final consumer, and the source of word of mouth. (Ahmad M. Zamil, 2011:24)
According to Mark Hughes (2007:31) consumers use word of mouth to talk about dozens of brand each day, from media and entertainment products such as movies, TV shows and publications, for example to food products, travel services and retail stores. Word-of-mouth has been proven to be an effective method of obtaining useful information for purchase decisions.
So based on explanation above the the hypothesis can be drawn as follows:
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CHAPTER III
RESEARCH METHODOLOGY
A. Scope of Research
This research was conducted to analyze the influence of differentiation strategy (product differentiation, image differentiation) and word of mouth to purchase decision on Maichi Chip product.
The research will be conducted at Sharif Hidayatullah State Islamic University Jakarta, its implementation in March 2012 until the completion writing, determination of the target is consumers who have purchased product Maichi Chip. The case studies of Maichi Consumer Sharif Hidayatullah State Islamic University in Jakarta because Maichi product very popular in young people and usually Maichi sold among students like in State Islamic University in Jakarta.
35 B. Sampling Method
According to Sugiyono (2009: 81) sample is a member of the selected population using a specific procedure that is expected to represent its population. Meanwhile based on Malhotra (2009:370) sample is a subgroup of the elements of the population selected for participation in the study. According to Malhotra (2009:377) convenience sampling is a non probability sampling technique that attempts to obtain a sample of convenient element. The selection of sampling units is left primarily to the interviewer. In the development of this study researcher used a 100 questionnaire respondents. The use of these 100 questionnaires with technical reasons is greater speed of data collection and lower cost. (Cooper and Schindler,2006:403)
The use of these 100 questionnaires with technical reasons because the proper sample for this research between 30 to 500 people. (Sugiono,2010: 74)
C. Data Collection Method
1. Primary Data
Primary data is data the researcher collects to address the specific problem of the research question at hand. (Cooper and Schindler,2006:89) Primary data obtained from direct consumer review how the object of research and the techniques used Questionnaire.
36 2. Secondary Data
According to Cooper and Schindler (2006: 89) secondary data is the result of studies done by others and for different purpose than the one for which the data are being reviewed.
Secondary data is data obtained indirectly or through another party, or a historical report prepared in the archives, published or not. Secondary data use: book, magazines and the internet. (Malhotra ,2009:124)
D. Analysis Method
1. Validity and Reliability Test
a. Validity
According to Malhotra (2009: 316) validity is the extent to which observed scale scores reflect true differences among objects on the characteristic being measured, rather than systematic or random errors.
According to Duwi Priyatno (2010:90) in determining the worth / absence of an item to be used, usually performed significance test of correlation coefficient at 0.30 limitations minimal correlation, meaning that an item is considered valid if the total score is greater than 0.30.
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b. Reliability
Reliability refers to the extent to which a scale produces consistent results if repeated measurements are made. Therefore, reliability can be defined as the extent, to which measures are free from random error (Maholtra, 2009:315)
According to Ghazali (2006:46) reliability measurements can be done in 2 ways:
1) Measure or measurements repeated: here someone will be given the same questions at different times, and then see if he remains consistent with the answers.
2) One shot or one-time measurement: here measurement only once and then the results were compared with another question or measure the correlation between answers to questions.
This research will use one time measurement that using Cronbach alpha test (α). A variable is said to provide reliable if the Cronbach alpha values > 0.60. (Ghozali, 2006:46)
2. Classical Assumptions Test
a. Multicollinearity Test
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1) The value of R2 is generated by an empirical regression estimates are very high, but individually variable, independent variables are many that do not affect the dependent variable.
2) Analyzing the correlation matrix of variables-the independent
variable. If there is a correlation between independent variables is quite high (usually above 0.90), then this is an indication of multicollinearity. If below 0.90, the absence of multicollinearity. 3) Multicollinearity also can be seen from the value of tolerance and
Variance Inflation Factor (VIF). Both these measures indicate each independent variable which is explained by other independent variables. Tolerance measures the independent variables were selected that are not explained by other independent variables. Low tolerance value equal to a high VIF value (because VIF = 1/Tolerance). Value commonly used to indicate the presence multicollinearity is tolerance value > 0.10 and the value of VIF < 10. Each investigator must determine the level of colinearity which it still can be tolerated.
b. Heteroscedasticity Test
39
According to Duwi Priyatno (2012:158) glejser test is done by regressing between the independent variable with residual absolute value. If the value of significance between independent variable with absolute residuals more than 0.05, so there is no problems heteroscedasticity. Step analyses in SPSS are as follows:
1. Find the value of unstandardized residuals: click Analyze> Regression> Linie
2. Classify the dependent and independent table 3. Click Save> unstandardized> Ok
4. Search for absolute residual values: click Transform> Compute Variable
5. ABS_RES click on the Target Variable and enter the Numeric
Expression unstandardized residuals at the start with the words ABS 6. Regressing the independent variable with the absolute value of
residuals: click Analyze> Regression> Linear
7. Enter ABS_RES of Dependent table and enter the variable X1, X2, X3 in the Independent table > OK
c. Normality Test
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purpose normally distributed data is that data will follow a normal distribution form.
There are two ways to detect whether or not residual normal distribution, those are with graph analysis and statistical tests. One of the easiest ways to see the normality of residuals is to look at a histogram graph comparing observational data with the distribution of near-normal distribution. Normal distribution will create a straight line diagonal and plotting residual data will be compared with the diagonal line. If the residual data distribution is normal, then the line that describes the actual data will follow the diagonal line.
E. Multiple Linier Regression
Multiple linear regression analysis is to measure the magnitude of the effect between two or more independent variables and to predict dependent variable using the independent variable. (Duwi Priyatno, 2012:127)
Multiple Linear Regression Equation:
Y = a + ß1X1 + ß2X2 + ß3X3
Y =Dependent Variable (Purchasing Decision)
X1, X2, X3 =Independent Variable (Product differentiation (X1), Image differentiation (X2) and Word of mouth (X3))
ß1, ß2 = Regression Coefficient
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From the counting with SPSS 20 gain the information and explanation on the coefficient determination, F test, and T test to answer the formulation of the problems. These are the following explanation that is connecting to the problem above, that is:
a. The Coefficient of determination Test(R2)
According to Imam Ghozali (2006:202) the coefficient of determination (R2) essentially measure how far the ability of models to explain variation in the dependent variable. The value determination of coefficient is between zero and one. The R2 is small means that the ability of independent variables in explaining variations in the dependent variable is very limited. Value close to one berate the independent variables provide almost all the information needed to predict the variation of the dependent variable.
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b. Simultaneous Test of F test
F test essentially indicates whether all the independent variables or independent variables included in the model have jointly influence on the dependent variable. The probability is smaller than 0.05, then the result means that there are significant effects of independent variables collectively against the dependent variable. Step to examine the hypothesis with F test as follow (Ghazali,2006, 203) :
1) Determine Hypothesis:
Ho: β1, β2, β3=0, there is no significant influence
simultaneously among variable of product differentiation, image differentiation and word of mouth to purchase decision Ha: β1, β2, β3≠0, there is significant influence simultaneously
among variable of product differentiation, image differentiation and word of mouth to purchase decision
2) Determining level of significance
Criteria for testing the significance level is amount 5% or (α) =0.05.
3) Determining the criteria acceptance and reject of Ho
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If F test < F table, so Ho accepted and Ha rejected, means independent variable simultaneously don’t have significant
influence to dependent variable. c. Partial test of T-test
This test method is used to partial test or t test aims to determine how big the influence of each independent variable (X) individually partially toward dependent variable (Y) (Ghozali, 2006:88).
T test method is as follows (two tail test): 1) Determine Hypothesis
Product differentiation hypothesis:
Ho: β1=0, there is no significant influence partially between
Product differentiation and purchase decision.
Ha: β1≠0, there is significant influence partially between product
differentiation and purchase decision. Image differentiation hypothesis:
Ho: β2=0, there is no significant influence partially between
image differentiation and purchase decision.
Ha: β2≠0, there is significant influence partially between product
differentiation and purchase decision Word of mouth hypothesis:
Ho: β3=0, there is no significant influence partially between
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Ha: β3≠0, there is significant influence partially between trust in
word of mouth and purchase decision
2) Determining level of significance (Lind et al.,2010:338)
Criteria for testing the significance level is amount 5% or (α) = 0.05, because use two tailed so α value divided 2 so 0.025
3) Determining t table (Lind et al.,2010:338)
Distribution of t table searched on α = 5% with degree of freedom (df) = n-k-1 (number of questionnaire-number of independent variable-1)
4) Comparing value t test with value t table (Suharyadi,2009:90) If -t test < - t table it means Ho rejected and Ha accepted, so independent variable partially has significant influence toward dependent variable.
If t test > + t table it means Ho rejected and Ha accepted, so independent variable partially has significant influence toward dependent variable.
Measurement Scale of Variable
A measurement of each variable in this research uses linkert scale to measure attitudes, opinion and perceptions of individuals or groups social phenomena. (Sugiyono, 2009:94)
45 Table 3.1
Likert scale of five (5) levels (Sugiyono, 2009:94)
No Range Weight
1 Strongly agree (SA) 5
2 Agree (A) 4
3 Neutral (N) 3
5 Disagree (D) 2
6 Strongly disagree (SD) 1
F. Operational Variable
According to Cooper and Schindler (2006:40) variable is used as a synonym for construct or the property studied. A variable is a symbol of an event, act, characteristic, trait or atribute that can be measured and to which assign categorical values.
Variable used in this study consisted of two variables are independent variables and the dependent variable.
Independent variable is the variable manipulated by the researcher that gives influence or the causal of the changes happen or the effect from dependent variable. (Cooper,2006:63)
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Independent variables in this research are the product differentation (X1), image differentation (X2) and word of mouth (X3). Dependent variable is purchase decision (Y). These will be specified independent variable and the dependent variable through operational definition as follows:
1. Product Differentiation (X1)
According to Cravens and Piercy (2009:98) product differentation occur when a product offering is perceived by the buyer as different from the competition on any physical or nonphysical product characteristic, including price.
Based on Kotler and Keller (2012: 352) the product differentiation consists of:
a. Form: size, shape, physical structure of a product
b. Feature: that supplement their basic function. According to Kotler and Amstrong (2006:348) feature is the variety of products offered
c. Customization: as companies have grown proficient at gathering information about individual customers and business partner and as their factories are being designed more flexibly, they have increased their ability to individualize market offerings, messages and media.
d. Conformance quality: the degree to which all produced units are identical
and meet promised specifications.
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f. Durability: a measure of the product’s expected operating life under natural or stressful condition is a valued attribute for vehicles, kitchen appliances and other durable goods.
g. Reliability : a measure of probability that a product will not
malfunction or fail within a specified time period.
h. Repair ability: measure the ease of fixing a product when it malfunction or fails.
i. Style: describes the product’s look and feel to the buyer.
2. Image Differentiation (X2)
Based on Amstrong & Keller (2009 :220) image differentiation is a
company or brand image should convey the product’s distinctive benefits and
positioning.
According to Philip Kotler (1994: 295) the main of image differentiation are:
a. Symbol : a strong image consists of one more symbols that trigger company or brand recognition. The company and brand logos should be designed for instant recognition.
b. Media : the message should be replicated in other publication,
such as annual report, brochure, and catalogs.
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d. Even : a company can build an identity through the type of events it sponsors and create event to explode a bombshell.
3. Word Of Mouth (X3)
According to Schiffman and Kanuk (2010:512) word of mouth is a form of informal communication between individuals of a particular product or service.
Word of mouth can be measured with sub variable process spreading, with the indicator as follows: (Rachmanda: 2009 in Satwika, Dipta Rizky: 2011)
a. The customer’s willingness to talk positively about the product by others. b. Recommended products by others
c. Encourage by others to make a purchase the product
4. Purchase Decision
Based on Kotler and Amstrong (2010: 179) purchase decision is the buyer’s decision about which brand to purchase.
Specific decision-making process consists of the following sequence of events are: (Kotler and Keller, 2012: 188)
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to a threshold level and becomees adrive. A need can also be aroused by external stimulus.
The need is anything that human’s necessary to prosper. Human needs reflect the feeling unsatisfied want fulfilled in man which appears naturally in order to survive. Types of needs human needs are many and varied. Broadly speaking, human needs can be divided into four groups, as follows: (Fardani: 2013)
1) Needs Primary or Necessity: primary needs that must be met in order to sustain human life. In other words, the primary requirement that must be met in order for humans to live. Those needs come naturally. Primary need is also called 'natural needs'. Examples are included in the primary requirement is the need of eating, drinking, clothing, and housing.
2) Secondary Needs : after people can meet the needs of primary or
basic needs, humans still need other needs that are complementary. The need is a secondary requirement, which needs to be fulfilled after the primary needs are met. Examples include secondary needs include the need for televisions, refrigerators, desks, chairs, books, and stationery.
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luxury (lux), such as luxury cars, yachts, private aircraft, and tours abroad.
b. Information search: consumer often search for limited amounts of information.
c. Evaluation of alternative: the consumer judgment’s largely on conscious and rational basis. Some basic concepts to consumer evaluation process: first, the consumer is trying to satisfy a need. Second, the consumer is looking for certain benefits from the product solution. Third, the consumer sees each product as a bundle of attributes with varying abilities to deliver the benefit.
d. Purchase decision: the consumer forms preference among the brand in the choice set and may also from an intention to buy the most preferred brand. e. Post purchase decision: after purchase, the consumer may have noticed a
51 4. Table OperationalVariable
Table 3.2
Operational variable
Variable Sub variable Indicator Scale
Product
4) Style Packaging more elegan with paper bag
52
Variable Sub variable Indicator Scale
Image
2) Media Promotion is done through the
online media is different from others
Likert
53
Variable Sub variable Indicator Scale
54
CHAPTER IV
ANALYSIS
A. General Describtion of Research Object
1. History of Maicih
Maicih is established since June 29, 2010 with initial capital of IDR 15,000,000 (estimation USD 1621, 1 USD = Rp. 9,254 6 ) to buy raw materials and make fry cooker. Maicih business background began when Reza Nurhilman (the owner) graduated from high school in 2005. He was then jobless for the next four years while selling goods such as electronics and fertilizer. He entered college in 2009 but in the middle, his parent could not afford his college tuition fee anymore. So, for four years he got a little work, especially with Maicih. Indeed, the obtained billing classified as extraordinary, while only a year he settled. Maicih had a turnover of almost touched USD 4,000,000, with an average per week over IDR 750,000,000. The production had reached 75,000 packs per week. (Silvia, Hakim and Erlangga,2012:44)
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wallet as maicih wallet. Some years later, he met woman who resembles Maicih figure in his memory. Middle-aged mother wearing traditional dress. Then, it turns out that she could make a crunchy spicy seasoning.(Silvia, Hakim and Erlangga,2012:44)
Maicih is the one of the cassava chips snacks that have distinctive spicy flavor to the customer themselves. Maichi is one of the most famous cassava chips made in Bandung West Java, Indonesia. Maicih is not fried, so that it tastes different. Maichi combined with the elements of spicy, peppery and has a variety of spicy levels. Its level of spiciness ranging from level 3, 5, and 10 (for the chips).There are also another products like Jeblak, and Gurilem. For the product itself, Reza chose spicy flavor for Maicih to give addiction effect, especially for the tounge of Indonesian. Besides, he now still focuses on three variants of this and also the production and taste. Additionally, this product is very good for health, heart function, and detoxification. Because, Maicih spicy flavor of spices and chili do not use any preservatives. (Silvia, Hakim and Erlangga,2012:47)
