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The Influence of Product Quality, Price and Brand Image on Customer Loyalty of MSME Sindsi in
Surabaya
Muyes Sarah, Qausya Faviandhani
Departmen of Management, Narotama University Jl. Arief Rachman Hakim, No.51, 60117, Surabaya, Indonesia
muyessarah18@gmail.com, qausya@gmail.com
Abstract
Customer loyalty is an important key to maintaining the company's position in the market as well creating efficiency and effectiveness of the company because if the company cannot build customer loyalty most likely the company has to spend more and more effort to find new customers. Products that have a strong brand image, every time there is a brand that success certainly contains a quality product but not all quality products have successful brand. The research objective is to analyze the positive and significant influences simultaneously product quality, price and brand image on SINDSI customer loyalty in Surabaya. This research using quantitative methods. In this study, the subject of research is the customer SINDSI. The sample in this study is probability sampling; the technique used is simple random sampling. The researcher provided a google form link for filling out the questionnaire. Product quality, Price, and Brand Image on Customer Loyalty Based on the results of hypothesis testing simultaneously (TEST F) of the independent (free) variables, namely product quality, price, brand image respectively simultaneous effect on the viable dependent (bound) customer loyalty. It can be said that product quality has a significant effect on customer loyalty of SINDSI SMEs in Surabaya.
Variables of product quality (X1), price (X2), and brand image (X3) have a simultaneous effect on Customer Loyalty (Y) with a significant value less than 0.05, which is 0.000.
Keyword:
Brand Image, Customer Loyalty, Price, Product Quality.
1. Introduction
The Beverage Business is one of the most promising businesses in today's era. Many people are hunting for herbal drinks. Especially in the current era of digital media in the form of social media continues to grow and can be used for sales at this time. One of the businesses sought after by the public is herbal drinks with attractive packaging. Herbal drinks are currently drinks made from natural ingredients that are beneficial to the body;
herbal drinks also have properties that are beneficial for curing diseases.
Developments in the era of globalization are very dependent on the economic sector as a measure of success carried out by the government. The people's progress in national development, especially in economic development, is the struggle of Micro, Small and Medium Enterprises, MSMEs. The position of MSMEs in the national economy has a crucial and strategic role. This requirement is very possible because the existence of MSMEs is quite dominated by the Indonesian economy.
MSMEs after the economic crisis continued to increase from year to year. This also illustrates that MSMEs are able to survive in the midst of an economic crisis. MSMEs are also proven to absorb a larger workforce in the national economy. With so many workers absorbed, the MSME sector is able to increase people's income. Thus, MSMEs are considered to have a strategic role in reducing unemployment and poverty.
For the contribution and progress of MSMEs, it is important for the government to continue to support MSMEs through strengthening so that their work becomes a pillar in building the nation's economy to run optimally.
The development of culinary drinks in Surabaya is growing rapidly. This can be seen from the many UMKM culinary spots in Surabaya. As is the case with herbal drinks in the city of Surabaya today. Marketing is also the spearhead for every MSME to get consumers in a competition. Marketing is a process for building, communicating and creating something of value that can benefit customers in order to achieve MSME goals.
One of the goals of SMEs is to gain customer loyalty.
SINDSI is one of the MSMEs in the city of Surabaya which is engaged in the beverage sector. In the production process, the ingredients used are quality spices. SINDSI's MSMEs have survived to this day because of their loyal customers. Loyal here can be interpreted as the customer will make a repeat purchase, the customer will recommend it to other people and the customer does not purchase similar products from other brands. Loyalty is needed by companies to survive, without loyal customers; MSMEs fail to get stable income.
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Customer loyalty is a customer's commitment to repurchase a preferred product or service even though situational influences and marketing efforts have the potential to cause switching customer behavior. Customer loyalty is an important key to maintaining the company's position in the market and creating efficiency and effectiveness of the company because if the company cannot build customer loyalty it is likely large companies have to spend more and more effort to find new customers.
Customer loyalty is created from several factors. Price, product quality, and brand image are thought to affect customer loyalty. A product will be accepted by customers and can survive in market competition, which is a product that gives satisfaction and at the same time gives an impression of the product. One of the factors that can attract the attention of customers who will make purchases so that they become loyal to a product, namely the company must know the quality of the product it has. Product quality is the ability of a product to carry out its functions which include reliability, durability, accuracy, ease of operation and product repair as well as other valuable attributes (Kotler et al., 2013).
In addition to product quality to be able to attract customer loyalty, price must also be influenced, which is one of the most important elements in determining a company's market share and profits. Price is the only element of the marketing mix that causes income or income for the company. Besides that, price is an element of the marketing mix that is flexible, can be changed quickly and price is the value of money that must be paid by the customer to the seller for the goods or services he buys. (Tjiptono et al., 2016) explains that price is the only marketing element that brings income or income to the company.
Brand is one of the important factors that affect customer loyalty. Customers tend to trust products from well-known brands that are already on the market. Products that have a strong brand image, every successful brand must contain a quality product but not all quality products have a successful brand.
Brand is what customers think and feel when they hear or see a brand name. Likewise, the positive relationship between brand image and customer engagement is one of the key factors of good relationship success which will create a lasting relationship between the two parties making the exchange ie with the product or with the customer.
Customers will decide to buy herbal drinks in terms of product quality, price and brand image. This product is a herbal drink that is often consumed by the public because it is affordable, easy to obtain and has a long-term expiry date. The discussion discussed by the author has an interest in carrying out deeper investigations regarding "The Influence of Product Quality, Price and Brand Image on Customer Loyalty of Umkm SINDSI in Surabaya"
The objectives of conducting this research are:
1. To analyze the positive and significant influence of product quality on customer loyalty at SINDSI in Surabaya
2. To analyze the positive and significant effect of product prices on customer loyalty at SINDSI in Surabaya 3. To analyze the positive and significant influence of brand image on customer loyalty at SINDSI in
Surabaya
4. To analyze the simultaneous positive and significant influence of product quality, price and brand image on customer loyalty at SINDSI in Surabaya
2. Overview of Theories and Hypotheses 2.1. Product Quality
Product quality is something that needs to get the main attention of a company, considering that quality is closely related to consumer decision issues which are the goal of marketing activities carried out by a company.
In essence, the customer is the final judge of quality, so the main priority of quality assurance is the consumer's assessment of the company.
The product is the first sight for consumers in buying because it is certain that consumers will like an item that is interesting and useful. Consumers will also favor products that offer the best in quality, performance, and innovative features. A quality product is a product that is able to provide results that are more than expected.
2.1.1. Product Quality Theory
According to Kasmir, (2016), product quality is something that can be offered to the market to get attention for purchase, use or consumption that can fulfill wants and needs. Products can also be defined as a series of tangible and intangible attributes, including functional, social, and psychological benefits or utilities (Tjiptono et al., 2016).
According to Kotler & Amstrona, (2008) product quality is the ability of a product to perform its functions, including overall durability, reliability, accuracy, ease of operation and product repair as well as other product attributes.
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2.1.2. Product Quality Indicators
Product quality indicators according to Mullins Jhon W et al., (2005), namely:
1. Conformance with specifications (conformance to specification), namely the extent to which the basic operating characteristics of a product meet certain specifications from consumers or no defects are found in the product.
2. Features are product characteristics designed to enhance product functions or increase consumer interest in the product.
3. Quality impression (perceived quality) is the result of the use of measurements that are carried out indirectly because there is a possibility that consumers do not understand or lack information on products obtained from prices, brands, advertising, reputation and country of origin.
2.2. Prices
Price is one element of the marketing mix. According to Peter & Olson, (2013) price is the only element of the marketing mix that forms sales revenue, while the other elements are only porto elements. Although pricing is an important issue, there are still many companies that are imperfect in handling pricing companies.
Meanwhile, according to Kotler & Amstrona, (2008) price is the amount of money paid for goods and services, or the amount of value that consumers exchange in order to get benefits from owning or using goods or services. Price is the main determinant of demand. Based on the law of demand (the law of demand), the size of the price affects the quality of the product that consumers buy. The more expensive the price, the less the number of requests for the product in question and vice versa.
2.2.1. Price Theory
Prices are directly related to revenue and profit. Price is the only element of the marketing mix that generates income for the company, which in turn affects the size of the profit and market share obtained.
According to Tjiptono et al., (2016), price is defined as the value of a measure of a product or service expressed in rupiah. Value is the ratio or comparison between perceptions of benefits and costs incurred to obtain products or services. The total customer benefit or value includes product value, service value and image value. The term good value does not mean a product that is cheap, but rather reflects a certain product that has the type and amount of potential benefits (such as quality, image and convenience) that consumers expect at a certain price level.
According to Kotler & Amstrona, (2008) the definition of self-price is the amount of money charged to the product. This means that price is the value that must be paid by consumers to own or benefit from a product or service.
2.2.2. Price Indicator
Price indicator according to Kotler et al., (2013) namely:
1. Conformity of price with product quality, the price offered is in accordance with the quality of the product obtained.
2. Conformity of price with benefits, the price offered is in accordance with the benefits felt by consumers.
3. Competitive price, the price offered is competitive compared to other products.
2.3. Brand Image
Brand image is a perception that is closely related to brand associations in the memory of customers who support marketing strategies. When customers do not have complete information about a product, they will use brand image as the basis for using the product in making purchasing decisions. When a brand image is able to build product character and provide a value proposition and convey the product's character to customers, it means that the brand has provided more emotional strength than the rational power possessed by the product.
Brand is also a very important attribute, especially in fostering positive perceptions and consumers will believe after assessing the attributes of a brand. Brands are often interpreted in different ways, including logos, legal instruments (ownership rights), companies, images and so on. Brand image too is a representation of the overall perception of the brand and is formed from information and past experience of the brand. Brand image is related to attitudes in the form of beliefs and preferences for a brand. Consumers who have a positive image of a brand will be more likely to do so purchase. Based on the opinions that have been submitted, it can be concluded that brand image can be positive or negative, depending on one's perception of the brand.
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2.3.1. Brand Image Theory
A brand is a name on a product, in addition to a name on a product; a brand is also a tool for the characteristics and attractiveness of a product. According to Kotler, P. & Keller, (2012) a brand is a name, term, sign, symbol, design or a combination of these elements, which is intended to identify the goods and services of one or a group of sellers and to differentiate them from competitors.
(Henry Simamora, 2008) said the image is a perception that is relatively consistent in the long term. So that it is not easy to form an image, once an image is formed it will be difficult to change it. The image that is formed must be clear and have advantages when compared to its competitors, when the differences and advantages of the brand are compared to other brands.
2.3.2. Brand Image Indicator
According to Rangkuti, (2009) indicators of brand image are as follows:
1. Recognition (socialization), is the level of consumers knowing a brand, which can be recognized both from the shape, logo, and other attributes that distinguish it from competitors' products.
2. Reputation (Reputation), is the reputation of the brand among the public. A brand that is liked by consumers will be easier to sell and a product that is perceived as having high quality will have a good reputation.
3. Affinity (attraction) , is the emotional relationship that arises between brands and consumers. This can be observed from the price, consumer satisfaction.
2.4. Customer Loyalty
Customer loyalty in product marketing is not in doubt. Loyalty is a behavior that is expected of a product or service, which includes the possibility of further repurchasing or changing service agreements or vice versa how likely customers are to switch to other brands or other service providers. Customer loyalty is a deeply held customer commitment to re-subscribe or re-purchase a product or service consistently in the future.
Customer loyalty to a product or service offered by a company, which is reflected in the customer's habit of buying goods or services on an ongoing basis, must always be considered by the company or producer.
Customer loyalty can provide high value to customer care initiatives, i.e. it is easier and cheaper to retain key customers, than to attract new customers whose loyalty has not been proven.
2.4.1. Brand Image Theory
Loyalty in general can be interpreted as a person's loyalty to a product, both certain goods and services.
Customers who are loyal to a particular brand tend to be associated with that brand and will buy the same product again even though there are many other alternatives available (Tjiptono et al., 2016) .
(Kotler, 2005) also says that customer loyalty is a repeat purchase made by a customer because of a commitment to a brand or company. In addition, customer loyalty is also a customer commitment to a brand, company (store), supplier based on the attitude very positive and reflected in consistent repeat purchases.
2.4.2. Brand Image Indicator
Loyalty indicators according to Sangadji & Mamang, (2013) , namely:
1. Say positive things about the company to others.
2. Recommend the company to others.
3. Consider that the company is the first choice when purchasing a product or service.
4. Do more business or purchases with the company in the next few years.
2.5. Thinking Framework
2.5.1. Relationship between Product Quality and Customer Loyalty
The results of this study are in line with research conducted by Agustin, (2018) who said in her research results that product quality has a significant effect on customer loyalty. With good product quality, it will maintain and increase customer loyalty.
H1: product quality partially has a significant effect on customer loyalty.
2.5.2. Relationship between Price and Customer Loyalty
The results of this study are in line with research conducted by Hartono & Purba, (2022) stating that price has a positive and significant effect on customer loyalty at Sugar Café Batam. The more affordable the price offered by the seller, the consumer will be the choice to decide to buy the product.
H2: Price partially has a significant effect on customer loyalty.
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2.5.3. Relationship between Brand Image and Customer Loyalty
The results of this study are in line with research conducted by Erdipriwiranti et al., (2019) that a brand is a name, term, sign, symbol or combination thereof which has the aim of being a characteristic and differentiator of the origin of competing products. A powerful brand can be seen as originating recognition of a brand by citizens, positive perceptions from the market and high consumer loyalty to the brand.
H3: Brand image partially has a significant effect on customer loyalty.
2.5.4. Relationship between Product Quality, Price and Brand Image on Customer Loyalty
The results of the study show that Product Quality, Price and Brand Image are simultaneously on Customer Loyalty of Umkm SINDSI in Surabaya.H4: Product Quality, Price and Brand Image partially influence customer loyalty simultaneously
Figure 1. Relationship between Product Quality, Price and Brand Image on Customer Loyalty
2.6. Hypothesis
The hypothesis in this study:
H1 : Product quality has a positive and significant effect on customer loyalty.
H2 : Price has a positive and significant effect on customer loyalty.
H3 : Brand Imagepositive and significant effect on customer loyalty.
H4 : Product Quality, Price, and Brand Image have a positive and significant effect on customer loyalty.
3. Method
3.1. Population and Sample
Population is an area consisting of objects or subjects with a certain number and characteristics determined by the research subject to draw conclusions. The populations in this study are customers who consume SINDSI products in the city of Surabaya. The sampling method in this study isprobality sampling, the technique used issimple random sampling. The sample criteria in this study are customers who consume SINDSI products in the city of Surabaya. Researchers provide linksgoogle form for filling out the questionnaire.
3.1.1. Data Collection Techniques
Data collection techniques for this study using a Likert scale. Likert scale is a scale used to measure perceptions, attitudes or opinions of a person or group regarding an event or social phenomenon.
3.1.2. Data analysis technique
The data analysis that the researchers used in this study used quantitative analysis. The data analysis technique used in this research is using multiple linear regression analysis (Statistical Package For Social Sciences). SPSS is software that functions to analyze data, perform statistical calculations both for parametric and non-parametric statistics on a Windows basis.
4. Discussion and Results
The data analysis method used is quantitative data analysis, using the 2023 SPSS application with several tests, namely the T test, F test and Determination test.
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4.1. Tabel Uji T
1. When tcount> ttableor a significant level <0.05, the independent variable partially affects the dependent variable.
2. When tcount< ttableor a significant level > 0.05, the independent variable partially has no effect on the dependent variable.
Table 1. Hasil Uji T (Parsial) Coefficientsa
Type Unstandardized
Coefficients
Standardized Coefficients
T Sig.
B Std. Error Beta
1
(Constant) 3.049 1.940 1.572 .119
product quality .174 .075 .184 2.329 .022
Price .447 .101 .472 4.436 .000
Brand Image .229 .108 .230 2.122 .036
a. Dependent Variable: Loyalitas_pelanggan b. Sumber : Data Output SPSS (2019)
Based on table 4.14 above it is known that the value of tcountthe product quality variable (X1) is 2.329, the price variable (X2) is 4.436 and the brand image variable (X3) is 2.122.
4.1.1. Testing the effect of product quality on customer loyalty
The test results obtained t value calculated for the product quality variable on customer loyalty shows the value of tcount= 2.329 > from ttable1.985 with a significance of 0.022 <0.05 which means it is significant. Thus partially product quality has a positive and significant effect on customer loyalty.
4.1.2. Testing the effect of price on customer loyalty
The test results show that the t value for the price variable on customer loyalty shows the value of tcount= 4.436 > from ttable1.985 with a significance of 0.000 <0.05 which means it is significant. Thus partially the price has a positive and significant effect on customer loyalty.
4.1.3. Testing the effect of brand image on customer loyalty
The test results obtained the value of t calculated for the brand image variable on customer loyalty indicating the value of tcount= 2.122 > from ttable1.985 with a significance of 0.036 <0.05 which means it is significant. Thus, partially, brand image has a positive and significant effect on customer loyalty.
4.2. Uji F.
1. When Fcount> Ftableor a significant level <0.05, the independent variable simultaneously influences the dependent variable.
2. When Fcount< Ftableor a significant level > 0.05, the independent variables simultaneously have no effect on the dependent variable.
Table 2. Hasil Uji F (Simultan) ANOVAa
Model Sum of Squares Df Mean Square F Sig.
1
Regression 306.644 3 102.215 24.393 .000b
Residual 398.083 95 4.190
Total 704.727 98
a. Dependent Variable: Loyalitas_pelanggan
b. Predictors: (Constant), Image, Brand, Quality, Product, Price c. Source: Data Output
Based on the data table 4.13 above, it is known that Fcount= 24.393 while the value of Ftableobtained at 2.70. Thus Fcount24,393 > Ftable2.70. And a significant value of 0.000 <0.05 so that it can be concluded that product quality (X1), price (X2), and brand image (X3) simultaneously have a positive and significant effect on customer loyalty (Y) for UMKM SINDSI in Surabaya.
4.3. Determination Test
Determination serves to measure the ability of the components of the model to explain the variations in the independent (free) variables that exist. Where is the value of R2closer to 1, the better the ability of the model components to explain variations in the independent variables.
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Table 3. Hasil Uji Koefisien Determinasi Model Summary
Model R R Square Adjusted R
Square
Std. Error of the Estimate
1 .660a .435 .417 2.04703
a. Predictors: (Constant), Citra_merek, Kualitas_Produk, Harga b. sumber : Data Output SPSS (2023)
Based on table 3 above, the coefficient value of R > 0.5 is 0.660. This means that product quality (X1), price (X2), and brand image (X3) variables have a significant effect on customer loyalty (Y).
The Adjusted R Square result is 0.417 which indicates that the variables of product quality (X1), price (X2), brand image (X3), have an effect of 41.7% on customer loyalty (Y). And the remaining 58.3% is influenced by other variables not examined in this study.
4.4. Discussion of Research Results
4.4.1. Testing the Effect of Product Quality on Customer Loyalty
Based on the test results, the value of t is obtainedcountfor the product quality variable on customer loyalty shows the value of tcount= 2.329 of ttable= 1.985 with a significance of 0.022 <0.05 which means it is significant.
Thus the H1 hypothesis in this study is accepted, this indicates that product quality has a positive effect on customer loyalty.
4.4.2. Testing the Effect of Price on Customer Loyalty
Based on the test results, the value of t is obtainedcountfor the price variable on customer loyalty shows the value of tcount= 4.436 of ttable= 1.985 with a significance of 0.000 <0.05 which means it is significant. Thus the H2 hypothesis in this study is accepted, this indicates that price has a positive effect on customer loyalty.
4.4.3. Testing the Effect of Brand Image on Customer Loyalty
Based on the test results, the value of t is obtainedcountfor the brand image variable on customer loyalty shows the value of tcount= 2.122 of ttable= 1.985 with a significance of 0.036 <0.05 which means it is significant.
Thus the H3 hypothesis in this study is accepted, this indicates that price quality has a positive effect on customer loyalty.
4.4.4. Effect of Product Quality, Price, and Brand Image on Customer Loyalty
Based on the results of simultaneous hypothesis testing (F Test) of the independent (independent) variables, namely product quality, price, brand image simultaneously affect the dependent (tied) viable customer loyalty. this is evidenced by the significant value of 0.000 or less than 0.05 and Fcount= 24.393 while the value of Ftableobtained at 2.70. Thus Fcount= 24,393 > Ftable= 2,70.
5. Conclusion
Based on the results of research conducted with the number of respondents used 99 respondents SINDSI customers in Surabaya. Based on the data that has been collected and the testing that has been done, the researcher draws conclusions according to the formulation of the problem as follows:
Product quality (X1) has a partial effect on customer loyalty (Y). Where is the significance value of X1 = 0.022 <0.05. It can be said that product quality has a significant effect on customer loyalty of SINDSI SMEs in Surabaya. Price (X2) has a partial effect on customer loyalty (Y). Where is the significance value of X2 = 0.000
<0.05. It can be said that the price has a significant effect on the customer loyalty of SINDSI SMEs in Surabaya.
Brand image (X3) has a partial effect on customer loyalty (Y). Where is the value significance X1 = 0.036
<0.05. It can be said that brand image has a significant effect on customer loyalty of SINDSI SMEs in Surabaya.
Product quality (X1), Price (X2), and Brand Image (X3) variables simultaneously influence Customer Loyalty (Y) with a significant value less than 0.05, which is 0.000.
5.1. Suggestion
After conducting research, it is hoped that the owner of the SINDSI community in Surabaya will maintain product quality, good prices and improve brand image which forms the basis for building good customer loyalty so that consumers continue to decide to come back and re-purchase the SINDSI product.For future researchers who will conduct research with similar material, you must add other variables to find out what factors might influence product quality, price, brand image.
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