Asia-Pacific Management and Business Application

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Asia-Pacific Management and Business

Application

Asia-Pacific Management and Busine internationally leading research acros articles that challenge the affect of glo empirical and theoretical investigations, and major management topics, while still being a

From time to time APMBA articles are character methodological approaches, which lead to c

Josua Tarigan, Gabriele Nia Ferdian, Saarce Elsye Hatane, D

Pacific Management and Business

usiness Application journal (APMBA) is a scholarly journal, publ search across all areas of management. APMBA continuously seek

fect of globalization through business world through critically infor investigations, and present the latest thinking and innovative research

while still being accessible and interesting to non-specialists.

articles are characterized by their intellectual curiosity and diverse , which lead to contributions that impact significantly on manageme y and practice. We welcome interdisciplinary research that synthes

esent new discovery on contemporary challenges in the broad domain w management.

2010

have been published.

Talent Management and Financial Performance: Does Organization Learning Mediate That

an, Gabriele Nia Ferdian, Saarce Elsye Hatane, Diah Dharmayanti

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Customer Satısfactıon (Publıc Satısfactıon) on Servıces in Admınıstratıve Vıllage Offıce

Muhartini Salim, Syamsul Bachri, Muhammad Rahman Febliansa

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pp. 17-30

Free Trade Intervention: Political-Economic Intervention on Global Business Environment

Cecillia Satryo

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pp. 31-44

The Role of Human Resource in Laweyan Batik Industry, Surakarta

Edi Kurniadi, Sarwono Sarwono, Asri Laksmi Riani

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Editorial Team

Editor-in-Chief

1. Dodi Wirawan Irawanto, Department of Management Faculty of Economics and Business, Brawijaya University, Indonesia, Indonesia

Editorial Board

1. Dr Phil Lionel Ramsey, Massey University, New Zealand, New Zealand 2. James C Ryan, Sharjah University, Uni Arab Emirates, United Arab Emirates 3. Fumio Itoh, Aoyama Gakuin University, Japan, Japan

4. Djumilah Zain Hadiwidjojo, University of Brawijaya, Indonesia, Indonesia

5. Pawan K Dhiman, Sant Longowal Institute of Engineering&Technology, India, India 6. Candra Fajri Ananda, University of Brawijaya, Indonesia, Indonesia

7. Roberto Martin Nolan Galang, Ateneo de Manila University, Phillipines, Philippines 8. Christopher Selvarajah, Swinburne University, Australia, Australia

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Journal of Management and Marketing Review

Journal homepage: www.gatrenterprise.com/GATRJournals/index.html

J. Mgt. Mkt. Review 3 (3) 119 – 128 (2018)

Store Brand Familiarity as a Moderating Variable on the Effect of

Personal Involvement on Store Brand Buying Intention

Muhartini Salim,

1

_Praningrum

2

1,2 _{University of Bengkulu, Indonesia}

ABSTRACT

Objective – This study aims to examine the influence of personal involvement and store brand familiarity on store brand buying intentions at a store named Indomaret in Bengkulu City. This study also examines how store brand familiarity, as a moderating variable, influences personal involvement of store brand purchases.

Methodology/Technique –The data in this study is obtained from a questionnaire distributed to 200 respondents who shop for store brand products at Indomaret in Bengkulu City. The method of analysis used is the SmartPLS 2.0 as a statistical technique was used to identify the variables studied.

Findings – The results clearly show that personal involvement and store brand familiarity both have a partial effect on store brand buying intention. Further, store brand familiarity does not have a moderating effect on personal involvement in store brand buying intention.

Novelty – The findings of this study are the first to identify store brand familiarity as moderating variable in the study of the influence of personal involvement on store brand buying intention.

Type of Paper: Empirical.

Keywords:Personal Involvement; Store Brand Familiarity; Store Brand Buying Intention.

JEL Classification: M30. M31. M39

_______________________________________________________________________________________

1. Introduction

Retailers fix the growth of Indonesia's retail business to 12%. According to data from Aprindoin (2016), the retail sector is expected to grow at a rate of 10%, much higher than the rate of 8% achieved in 2015. The Indonesian Retail Entrepreneurs Association (Aprindo) estimates that the value of modern retail sales in Indonesia in 2016 will reach 200 trillion. When combined with processed foods and beverages, the overall total will reach 1,630 trillion (https://www Minimarketrak.com, accessed on February 28th, 2018).

_____________________________

*

Paper Info: Revised: June 15, 2018 Accepted: September 29, 2018 *

Corresponding author:

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Muhartini Salim,1_Praningrum2

120 J. Mgt. Mkt. Review 3 (3) 119 – 128 (2018)

Nowadays, people prefer retail outlets for the various facilities offered and excellent customer service, which brings about a sense of happiness when shopping. The high demand for retail products or store brands necessarily has an impact on the marketing strategies implemented by large businesses. Private label brands, also commonly referred to as "own brands" or "store brands," consist of merchandise produced and sold by retailers or certain retail stores (Kumar and Steenkamp, 2007).

Fishbein and Ajzen (1975) state that consumer buying intentions refer to a consumers’ willingness or

desire to buy or not to buy a product. According to Kotler (2000), buying intention can be defined as

“consumer behavior [that] occurs when a consumer is stimulated by external factors and come to a

purchasing decision based on their personal characteristics and decision making processes”. According to

Kotler and Keller (2009), consumer interest in buying a product is typically based on the brand available. Park and Lennon (2009) state that buying intentions can be strengthened if a product with a familiar brand poses less risk for consumers as a result of previous positive experiences with the brand. Brand familiarity has a significant influence on buying intention (Hart and Dewsnap, 2001). Alba and Hutcinson (1987) describe familiarity as the number of products or brands that have been used by a consumer both directly and indirectly through advertising, interactions with the seller, word of mouth communication, experimentation and consumption.

Kinley, T. R., Josiam. and Lockett (2010) argue that one of the most important factors affecting customer behavior is involvement. Involvement refers to feelings of interest, attention and enthusiasm towards categories and product brands (Zaichkowsky, 1985). According to Celsi and Olson, (1988) the level of consumer involvement relates to personal relevance or importance towards an object. Personal involvement is considered as a motivational variable that varies according to the subject, and influences consumer behavior (Zaichkowsky 1985; Laurent and Kapferer, 1985). Further, the research of Miquel et al (2002)

suggests that personal involvement has an effect on a consumer’s decision to purchase store brand products.

Indomaret produces store brand products with the brand label “Indomaret”, referring to its retail company

name. Indomaret now has over 12,800 outlets throughout Indonesia, with 14 located in Bengkulu City (http://indomaret.co.id, accessed on February 26, 2018). Some of the store brand products that are easily found in Indomaret in Bengkulu City include rice, sugar, car shampoo, snacks, fabric softener, towels and others. Indomaret now produces more than 20 store brand products (http://indomaret.co.id, accessed on February 26, 2018).

The first aim of this research is to determine the influence of personal involvement and store brand familiarity on the intention of consumers to purchase store brand products at Indomaret outlets in Bengkulu City. Secondly, due to a lack of research related to store brand familiarity as a moderating variable, this research also aims to analyze whether store brand familiarity influences personal involvement on buying intentions of Indomaret store brand products in Bengkulu City.

This study refers to the theory of Fishbein and Ajzen (1975) and Gollwitzer (1993) concerning the role that behavior plays on intentions. Intention is the form of actual behavior while behavior is the action of buying. The intention of buying is a willingness or desire of an individual to purchase or not purchase a product. The intention of buying a store brand product is influenced by personal involvement (Kinley et al, 2010; Celsi and Olson, 1988; Zaichkowsky, 1985; Laurent and Kapferer, 1985) and store brand familiarity (Hart and Dewsnap, 2001; Park and Lennon, 2009).

This research will contribute to the development of Indomaret retail outlets in Bengkulu City. The improvement of sales in Indomaret outlets will stimulate employment in Bengkulu City among other things.

2. Literature Review

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121 J. Mgt. Mkt. Review 3 (3) 119 – 128 (2018)

including: if consumers have the intention to purchase and are willing to purchase a product, if consumers will recommend products to their relatives, if consumers will buy different products of the same brand, and if consumers will re-purchase the same product.

The development of brand store products in retail companies, with quality and benefits that are not inferior to the national brand products but cheaper in price, causes consumers to be more involved in the selection of products; this is known as personal involvement. Most definitions either directly or indirectly imply that "involvement" relates to an individual, usually in some assessments of an individual's interest or concern

(Antil, 1984). Personal involvement is considered as a motivational variable that varies according to the subject, and

which has an influence on consumer behavior (Zaichkowsky, 1985; Laurent and Kapferer, 1985). Research by Celsi and Olson's (1988) suggests that personal involvement can affect consumer attitudes and motivate consumers in their purchases. Gendel-Guterman (2013) further state that personal involvement in shopping activities has an influence on product selection and affects consumer intentions to buy certain products. According to Peter and Olson (1987), and Laurent and Kapferer (1985), individual involvement indicators include: mistakes in buying that cause risks, quality differences in similar products, different product prices in different stores, new product trials, expiry dates of products, choosing the cheapest price, buying based on budget, waiting for a discount, making a shopping list, using quality better brands, products that portray personality, more attractive packaging, and better quality products.

This study argues that personal involvement has an effect on buying intentions. The hypotheses used in this study are discussed below.

H1: Personal involvement has an effect on store brand buying intention

When comparing two products of different brands, product familiarity may cause consumers to be less considerate of risks associated with those products, particularly where consumers have had previous positive experiences with a certain brand (Park and Lennon, 2009). Hart and Dewsnap (2001) argue that brand familiarity has a significant influence on buying intentions. Further, in a study conducted by Kent and Allen (1994), it was found that store brand familiarity can be identified through several indicators such as: where consumers have prior experience with the product, consumers have knowledge about the product, and consumers are familiar with the product. There is a significant and direct correlation between store brand familiarity and store brand buying intentions (Guterman and Levy 2013). This research argues that store brand familiarity affects the buying intention of store brands.

H2: Store brand familiarity influences store brand buying intention

Store brand familiarity in this study acts as both an independent and moderating variable. No previous research has studied the effect of store brand familiarity as a moderating independent variable (personal involvement) on a dependent variable (buying intention). This research argues that store brand familiarity as a moderating variable influences personal involvement on store brand buying intentions.

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122 J. Mgt. Mkt. Review 3 (3) 119 – 128 (2018)

Based on previous theories, the framework of this research is displayed in Figure 1:

H2

H3

H1

The influence of the independent variable on the dependent variable

The influence of the moderating variable of the independent variable on the dependent variable

3. Methodology 3.1 Types of Research

This is a survey research with the information collected from the respondents through a questionnaire. According to Zikmund and William (2002), survey research refers to a technique in which information is gathered from a sample of people using a questionnaire or interview.

3.2 Sampling Method

The study population included consumers who shop for Indomaret store brand products at Indomaret stores in Bengkulu City. The respondents were sorted using Judgmental Sampling as part of the non-probability sampling, in which people are selected based on the purpose of the research. Hair, Anderson, Tatham and Blak (1998) believe that a study using SEM requires a representative sample in multivariate data analysis research of between 5 to 10, multiplied by the number of indicators, or otherwise a minimum of 100 samples.

In this study, 200 questionnaires were developed, with 20 indicators (indicators of this study 20) multiplied by 10. The questionnaires were given to consumers who have purchased Indomaret store brand products in Indomaret stores in Bengkulu City, Indonesia between January 2018 to February 2018.

3.3 Validity and Reliability 3.3.1 Validity Test

This study uses convergent validity; a convergent validity test in the PLS with reflective indicators is assessed by the factor loading (correlation between scores item / component score with the construct score) of indicators that measure the construct. A factor loading value greater than +/- 0.30 indicates that it complies with the minimum level, whereas a loading factor value of +/- 0.40 is considered better and in accordance with the rules of thumb used by the researchers. A loading factor of >0.50 is considered significant (Hair et al, 1998).

The rule of thumb used by Chin (1998) for convergent validity is the outer loading of >0.7, Communality of >0.5, and Average Variance Extracted (AVE) of > 0.5. Personal Involvement, Store Brand Familiarity and

Store Brand

Familiarity

Store Brand

Buying Intention

Personal

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123 J. Mgt. Mkt. Review 3 (3) 119 – 128 (2018)

Store Brand Buying Intention have a factor loading value of more than 0.7, as is seen in Table 1. The value of the AVE and Communality of more than 0.5 is also seen in Table 1. Based on Chin (1998), it could be concluded that all of the indicators are valid.

Table 1. Summary Table of Validity Test Result

Variables Indicators Loading AVE Communality

Personal Involvement

Source: The data was processed (2018)

3.3.2 Reliability Test

The reliability test in PLS uses 2 methods: the Cronbach's alpha and composite reliability. The composite reliability alpha value should be greater than 0.7, although a value of 0.6 is acceptable (Hair et al., 1998). The Cronbach alpha values and composite reliability values for each of the variables in this study are above 0.7,

as is seen in Table 2. It can therefore be concluded that the instrument used in this study is reliable.

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124 J. Mgt. Mkt. Review 3 (3) 119 – 128 (2018)

Variables Cronbach Alpha Composite Reliability

Personal Involvement 0.928 0.938

Store Brand Familiarity 0.828 0.894

Store Brand Buying Intention 0.902 0.718

3.4 Method of Analysis

The data was analyzed using inferential statistical analysis.

3.4.1 Inferential Statistical Analysis

The inferential statistical analysis used in this research was Structural Equation Modeling (structural equation model), hereinafter referred as SEM, which was operated through the Partial Least Squares (PLS) system, SmartPLS 2.0. According to Hair et al. (1998), SEM allows for an analysis of the series of connections simultaneously to provide statistical efficiency. Moderation shows the interaction between the moderating variable and the independent variables (predictors) in influencing the dependent variable. Testing of the effect of the moderation in linear regression can be conducted gradually using the Baron and Kenney (1986) approach, which tests the effect of the independent variable on the dependent variable, followed by the effect of the interaction of the moderating variable.

In testing the hypotheses in this study according to PLS, the value of the coefficient paths or inner model (level of significance) were considered. The scores of paths coefficient, or inner model of a t-statistic value, must be above 1.96 for a two-tailed hypothesis and must be above 1.64 for a one-tailed hypothesis, in testing at alpha 5% and power 80% (Hair et al., 1998).

3.4.2 Data Analysis and Hypotheses Testing

The data gathered in this study has been through validity and reliability testing and was then

analyzed to test the hypotheses through Structural Equation Modeling (SEM) which is operated by the method of Partial Least Squares (PLS) or SmartPLS 2.0. The results of the data processing by SmartPLS20 are shown in Figure 2.

Hypothesis 1: Personal Involvement has an effect on store brand buying intention

The results of this research show that the value of the beta coefficient is 0.185, the t value is 2.537 and the t value is >1.96 (two-sided hypothesis), which indicates that personal involvement has an effect on buying intention of store brands. This means that consumers displaying personal involvement characteristics are more likely to purchase store brand products.

Hypothesis 2: Store brand familiarity influences buying intentions of store brands

The results of this research show that the value of the beta coefficient is 0.517, the t value is 6.173 and the t value >1.96 (two-sided hypothesis), which indicates that store brand familiarity influences buying intentions of store brands. This means that if store brand familiarity is increased, then it will increase the buying intention of store brands.

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Muhartini Salim,1_Praningrum2 indicates that store brand familiarity does not moderate (strengthen) the influence of personal involvement on the buying intentions of store brands.

Figure 2. Summary of Structural Model Output

4. Results and Discussion

This discussion is focused on the testing of the hypotheses presented in this research.

4.1 The Influence of Personal Involvement on Buying Intentions of Store Brands

This research proposes the hypothesis that personal involvement influences the buying intentions of store brands. The results of this research indicate that personal involvement affects buying intentions of store brands. The result of this research is consistent with the study of Miquel et al (2002), Jo, Shin and Kim (2016) and Guterman et al (2013).

According to Schiffman and Kanuk (2004), one factor that affects consumer purchases is marketing practices and the price of products. The research of Shu and Pham (2015) indicates that the price of a product has effect on buying intentions of consumers. Therefore, when consumers choose the cheapest priced product, this is an indicator of personal involvement (Peter and Olson, 1987; Laurent and Kapferer, 1985). The price of store brand products in Indomaret stores in Bengkulu City are more expensive compared to the price of products in other outlets with of similar quality and style. Some studies have found that perceptions

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126 J. Mgt. Mkt. Review 3 (3) 119 – 128 (2018)

of unfair prices have a negative impact on consumer buying intentions (Campbell, 1999; Suter and Hardesty, 2005). To ensure the sustainability of Indomaret outlets in Bengkulu City, it is therefore important to pay more attention to the price point of their products, particularly their store brand products.

4.2 The Influence of Store Brand Familiarity on the Buying Intentions of Store Brands

This research hypothesizes that store brand familiarity has an effect on buying intentions of store brands. The results show that store brand familiarity has an influence on the buying intentions of store brands. These findings are consistent with research by Dursun, Kabaday, Ebon and Sezen (2001). Baker et al. (1986) also found that familiarity with a product or brand has an important effect on brand selection, by generating a positive perception of the brand, which motivates consumers to re-purchase products from that brand.

Therefore, Indomaret should focus on increasing its promotional activities, adding a clear description of each product, so that consumers are aware of the features of their store brand products.

4.3 Store Brand Familiarity as a Moderator on the Influences of Personal Involvement on Buying Intentions of Store Brands

This research hypothesizes that store brand familiarity has a moderating influence on personal involvement on buying intentions of store brands. The results of this research indicates a t value of 0.066, t value <1.96 (two-sided hypothesis), indicates that store brand familiarity does not moderate (strengthen) personal involvement of buying intentions on store brands. Therefore, the more familiar a store brand product is to consumers, the less personal involvement they will have in their decision to purchase (Sharyn and Rebekah, 2001).

There is a lack of previous research regarding store brand familiarity as a moderating influence on personal involvement on buying intentions of store brands. Therefore, it can be concluded that even though store brand products may be familiar among consumers, the personal involvement of consumers still has an affects on the buying intentions of store brands.

5. Conclusions and Recommendations

The phenomenon of consumer involvement primarily refers to the process of consumers checking different prices of similar products in difference outlets (Ashokkumar and Gopal, 2009). Personal involvement influences the buying intentions of Indomaret store brand products in Indomaret outlets Bengkulu City. This means that the buying intention of consumers can be increased by offering more competitive prices, and this, Indomaret may choose to reduce their prices to actively compete within the market.

Store brand familiarity has an influence on buying intentions of Indomaret store brand products in Indomaret outlets in Bengkulu City. This shows that consumer buying intentions can be increased by increasing consumer awareness of and familiarity with store brand products, thus Indomaret outlets in Bengkulu City should increase their promotional and marketing campaigns (Dick, Jain and Richardson, 1995).

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127 J. Mgt. Mkt. Review 3 (3) 119 – 128 (2018)

Future research in this area may aim to examine other national brand products sold in Indomaret outlets in Bengkulu City. Such research may also implement 2 independent variables, namely personal involvement and brand familiarity, while the dependent variable may be the buying intentions of national brand products in Indomaret outlets in Bengkulu City. The moderating variable may be national brand familiarity. It is also necessary to add moderation variables such as gender and income in any future studies.

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