the influences of product quality, price, brand, …
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i
THE INFLUENCES OF PRODUCT QUALITY, PRICE, BRAND, AND
PLACE TOWARD CUSTOMER BUYING DECISION
ON NESTLE PURE LIFE BOTTLED DRINKING WATER PRODUCT
IN JAKARTA
By
Devin Halim Pramana
014 2011 00099
A Skripsi presented to the
Faculty of Business President University
in partial fulfillment of the requirements for
Bachelor Degree in Management
May 2017
ii
PANEL OF EXAMINERS APPROVAL SHEET
The Panel of Examiners declares that the skripsi entitled: “The
Influences Of Product Quality, Price, Brand, And Place Toward
Customer Buying Decision On Nestle Pure Life Bottled Drinking
Water Product In Jakarta” that was submitted by Devin Halim
Pramana majoring in International Business from the Faculty of
Business was assessed and approved to have passed the Oral
Examination on May 17th, 2017.
Dr. Dra. Genoveva, M.M.
Chair - Panel of Examiners
Ono Supriadi, Ph.D
Examiner I
Siska Purnama Manurung, S.Kom., MM.
Examiner II
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SKRIPSI ADVISOR RECOMMENDATION LETTER
This skripsi entitled “The Influences Of Product Quality, Price,
Brand, And Place Toward Customer Buying Decision On Nestle
Pure Life Bottled Drinking Water Product In Jakarta” prepared
and submitted by Devin Halim Pramana in partial fulfillment of the
requirements for the degree of Bachelor in the Faculty of Business has
been reviewed and found to have satisfied the requirements for a
skripsi fit to be examined. I therefore recommend this skripsi for Oral
Defense.
Cikarang, Indonesia, May 10th
2017
Acknowledged by Recommended by
Dr. Dra. Genoveva, M.M. Dr. Dra. Genoveva,
M.M.
Head of Management Study Program Thesis Adviser
iv
DECLARATION OF ORIGINALITY
I declare that this skripsi, entitled “The Influences Of Product
Quality, Price, Brand, And Place Toward Customer Buying
Decision On Nestle Pure Life Bottled Drinking Water Product In
Jakarta” is to the best of my knowledge and belief, an original piece
of work that has not been submitted, either in whole or in part, to
another university to obtain a degree.
Cikarang, Indonesia, May 10th
2017
Devin Halim Pramana
v
ABSTRACT
The objectives of this research are to observe the influence of Product
Quality, Price, Brand, and Place toward Customer Buying Decision
on Nestle Pure Life bottled drinking water product in Jakarta. The
researcher used survey method on consumers that work or live in
Jakarta with age of 17 years old or above. There are 133 respondents
who contributed in this investigation. After that, all data are analyzed
with Structural Equation Model (SEM) using WarpPls software. The
results are positive and significant for Product Quality, Price and
Brand, but positive and insignificant for Place in their influence
toward customer buying decision. The result shows that
simultaneously, the variables also have positive and significant
influence toward customer buying decision. The result also shows that
partially, Brand has the most influence towards customer buying
decision out of the four tested independent variables.
Keywords: product quality, price, brand, place and customer buying decision.
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ACKNOWLEDGEMENT
First, I would like to express my gratitude and thank President
University to study in international environment and pursue my
Bachelor Degree. I also would like to express my gratitude to people
that always support me. They are as follow:
1. Dr. Dra. Genoveva, M.M. as my thesis advisor who always
kindly give me encouragement and knowledge until I finish the
thesis.
2. Dad, Mom, Vincent, Olivia, and Ivan who I can depend on every
single situation
3. To my best friends in university who has made my campus life
very colorful and fun: Hamonangan Williamson Sitorus, Stephen
Lim, Cohen William Nainggolan, Mutiara Rustani, Arga Riendi
Syauqi, Rio Fauzan, Yogeeson, Luqman Nur Hakim.
4. Thank you for all lecturers that teach me from the first semester
until last semester.
Cikarang, Indonesia, May 10th
2017
Devin Halim Pramana
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TABLE OF CONTENTS
PANEL OF EXAMINERS APPROVAL SHEET ................................ i
SKRIPSI ADVISER RECOMMENDATION LETTER ......................ii
DECLARATION OF ORIGINALITY ............................................... iii
ABSTRACT ......................................................................................... iv
ACKNOWLEDGEMENT .................................................................... v
TABLE OF CONTENTS ..................................................................... vi
CHAPTER I - INTRODUCTION ........................................................ 1
1.1 Background of the Study .............................................................................. 1
1.2 Problem Identification .................................................................................. 3
1.3 Statement of Problem ................................................................................... 5
1.4 Research Objectives ..................................................................................... 6
1.5 Significance of Study ................................................................................... 6
1.6 Research Scope and Limitation .................................................................... 7
CHAPTER II –REVIEW OF LITERATURE ...................................... 8
2.1 Marketing Mix .............................................................................................. 8
2.2 Product Quality ............................................................................................ 8
2.3 Brand ............................................................................................................ 9
2.4 Price ............................................................................................................ 10
2.4.1 Price Perception ................................................................................. 11
2.5 Place ........................................................................................................... 11
2.6 Customer Buying Decision ........................................................................ 12
CHAPTER III – RESEARCH METHODOLOGY ............................ 14
3.1 Research Method ........................................................................................ 14
3.2 Theoretical Framework .............................................................................. 14
3.3 Hypothesis Development .......................................................................... 15
3.3.1 Product Quality and Customer Buying Decision .............................. 15
3.3.2 Price and Customer Buying Decision ............................................... 16
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3.3.3 Brand and Customer Buying Decision .............................................. 17
3.3.4 Place and Customer Buying Decision ............................................... 17
3.3.5 Simultaneously and Customer Buying Decision ................................ 18
3.4 Operational Definition of Variables ........................................................... 19
3.3 Research Instrument ................................................................................... 20
3.2 Population and Sampling Design ............................................................... 21
CHAPTER IV – DATA ANALYSIS & DISCUSSION .................... 23
4.1 Respondents Profile .................................................................................... 23
4.2 Validity and Reliability Test ..................................................................... 25
4.3 Outer Model .............................................................................................. 27
4.3.1 Determinant Coefficient (R-square) ................................................. 27
4.3.2 Relevance (Q-square) ....................................................................... 28
4.3.3 Goodness of Fit ................................................................................ 29
4.4 Descriptive Analysis ................................................................................. 30
4.5 Effect Size ................................................................................................. 31
4.6 Test of Hypotheses .................................................................................... 32
4.7 Discussion .................................................................................................. 35
CHAPTER V – CONCLUSIONS ..................................................... 38
5.1 Conclusions ................................................................................................ 38
5.2 Recommendation ........................................................................................ 41
REFERENCES .................................................................................... 42
APPENDICES .................................................................................... 45
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CHAPTER I
INTRODUCTION
1.1 Background of the Study
Consuming water is not only a daily living requirement but can also help treats a
large number of body disorders including problems connected with the liver,
intestine and digestive system as quoted from the research of Albertini (2007)
on the effects of drinking mineral waters to health. There are variations of
drinking water such as well water, distilled water, mineral water, or spring
water. Since the introduction of bottled water product in Indonesia in the 1970s
by Tirto Utomo, the founder of Aqua bottled drinking water brand who is also
the pioneer and current market leader of bottled water industry in Indonesia,
consumption of drinking water has become much more practical as the
traditional need to prepare the water by boiling it first slowly shifted to a ready
to drink bottled water (Ma’ruf, 2009).
In regards to bottled drinking water industry in Indonesia, it could be
considered as a very lucrative industry as seen from the following figures of
retail market size of Indonesia in terms of value which reached tens of trillions
rupiah. The market size represented below is based on sales through all retail
channels (off trade) including direct to consumers (Mintel, 2014).
The two following figures show the statistic data in terms of value in local
currency which is Rupiah or also known as IDR. Figure 1.1 shows the total value
of yearly sales of bottled water product in the retail category, figure 1.2 shows
the rate in which the value increase or decrease year on year as represented in
yearly period (Mintel, 2014).
Figure 1.1 Value in Local Currency – Value
Source: Mintel Market Data Report (2014)
18,77 24,94 30,42 34,42 39,18
45,78 54,13
63,1 73,9
86,3 100,2
117,5
0
20
40
60
80
100
120
140
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
trill
ion
ID
R
VALUE IN LOCAL CURRENCY - VALUE
Value (forecast from 2014)
x
Figure 1.2 Value in Local Currency – Growth
Source: Mintel Market Data Report (2014)
These two charts show the yearly historical figure of total sales in IDR and its
growth rate between 2007 and 2013 then show the forecasted figure from 2014
to 2018. It can be seen that from the historical value alone, the industry of
bottled water product in Indonesia has almost tripled its value from nearly IDR
19 trillion to around IDR 54 trillion on the span of 6 years between 2007 – 2013
(Mintel, 2014). Although the year on year growth rate declined from 32.9% in
2008 to an average of around 16% in the following years, the Compound Annual
Growth Rate (CAGR) or also known as mean annual growth rate between 2009 –
2013 still amounted to 15.5% and is salso followed with a forecasted CAGR of
16.8% by 2018, this shows that the industry had a healthy and lucrative growth
(Mintel, 2014).
Most Indonesians buy bottled water to drink at home on a daily basis so per
capita consumption is high for the region (Mintel 2014). Increased public
awareness of the need for clean water and a growing population will ensure
continued strong market growth in the future (Mintel 2014).
1.2 Problem Identification
There are many bottled drinking water brands in Indonesia. With the ever
increasing consumption of bottled water product in Indonesia, many small
brands (example: Jonasa, a local brand in Cipinang area of East Jakarta) which
offer a much cheaper price and home to home delivery services appeared all
around Indonesia which is categorized as own label and other brand. The study
will focus on a product of PT Akasha Wira International Tbk (AWI), the
manufacturer and distributor of Nestle Pure Life (NPL) bottled water product, a
world-renown brand from the global company Nestle, which has just entered
the Indonesian market in 2005. Being just around a decade since its entry,
which is considerably young compared to the current market leader, Aqua-
32,9
22
13,1 13,8 16,8
18,2 16,6 17,1 16,8 16,1 17,3
0
5
10
15
20
25
30
35
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
%
VALUE IN LOCAL CURRENCY - GROWTH
Value growth (forecast from 2014)
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Danone brand, which is the pioneer of the industry in Indonesia and has been
active for over four decades (Ma’ruf, 2009), NPL has managed to secure a
portion of market share in Indonesia as shown in the tables below. The
following table 1.1 shows the top brands with most market share in Indonesia
as stated by Mintel Market Data Report in 2014.
Table 1.1 Market Share by Volume and Value
Manufacturers Brand By Volume
(%) By Value (%)
2012 2013 2012 2013
Aqua Group (Groupe Danone S.A.) Aqua 43 41.5 43 41.7
PT Indofood Sukses Makmur Tbk Club 14 13.2 13.6 12.7
PT Sinar Sosro Prim-a 8 7.5 7.7 7.2
PT Akasha Wira International Tbk NPL 6.9 6.5 6.3 5.9
2 Tang Group Of Companies 2 Tang 3.2 3.0 2.9 2.8
PT Sariguna Primatirta Cleo 1.1 1.0 1.6 1.5
Own Label various 15 18 14.7 17.6
Others various 8.8 9.3 10.2 10.6
Source: Mintel Market Data Report (2014)
NPL is considered to be a high quality product which has passed strict
requirement tests from the global company Nestle before being allowed to be
sold in the market. As seen on table 1.1 above, there were a decrease of market
share for major brands in Indonesia which include the target of our study, PT.
Akasha Wira International Tbk. as the manufacturer of Nestle Pure Life brand,
while the local smaller brands were getting an increase in market share. The
decrease in market share for major market players varies from 0.1% to 1.5%
while the own label and others categories were having an increase of 0.4% to
3% in either volume or value category.
Despite having superior product quality standards and a more trustworthy and
world-renown brand which boast the name of Nestle global company on its
label, NPL was struggling and even losing market share against the own labels
and other smaller brands in Indonesia. This gives birth to the question of
whether the purchasing trend of bottled drinking water product in Indonesia
shifted to a cheaper and more available small and local brands while viewing
product quality and brand image factors as less important.
The study helps determine such influences by performing an analysis of Product
Quality, Price, Brand Image and Place toward customer buying decision on
Nestle Pure Life bottled water product in Jakarta (Case study of Nestle Pure Life
bottled drinking water product of PT. Akasha Wira International Tbk.).
1.3 Statement of Problem
This study aims to answer the research problem and use the following research
questions:
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1. Is there any significant influence of product quality towards customer buying
decision?
2. Is there any significant influence of price towards customer buying decision?
3. Is there any significant influence of brand towards customer buying decision?
4. Is there any significant influence of place towards customer buying decision?
5. Is there any simultaneously significant influence of product quality, price, brand
image and place toward customer buying decision?
1.4 Research Objectives
The objectives of this research are as the following:
1. To find out if there is any significant influence of product quality towards
customer buying decision.
2. To find out if there is any significant influence of price towards customer buying
decision.
3. To find out if there is any significant influence of brand towards customer
buying decision.
4. To find out if there is any significant influence of place towards customer buying
decision.
5. To find out if there is any simultaneously significant influence of product quality,
price, brand image and place toward customer buying decision.
1.5 Significance of Study
This research is finding the relationship of Product Quality, Price, Brand, and
Place toward Customer Buying Decision on the Nestle Pure Life bottled drinking
water product in Jakarta and help determine which of the factors has the most
influence. So the significance of this research are as follows:
1. Academic
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This research is expected to be useful for academics in developing theories of
marketing strategies regarding the factors mentioned above and customer
buying decision, especially on bottled drinking water industry.
2. Companies
This research provides benefit and reference to companies or manufacturers in
bottled water industry in understanding the factors that influence customer
buying decision and may serve as a guide and insight for further improving their
business strategies in Jakarta region.
1.6 Research Scope and Limitation
This research focuses on bottled drinking water consumers of Nestle Pure Life
(NPL) brand in Jakarta. This research focuses on customer with age 17 years old
and above which also has tried NPL product and live or work in Jakarta area.
This research has gathered the opinion and assessment from consumers of
bottled water product by distributing questionnaire on the period of 1 month
between March 25th 2017 and April 25th 2017. The questionnaire is about NPL
product which purpose was to evaluate whether the tested factors have
positive influence on customer buying decision on said product. The tested
factors used in the questionnaire only includes Product Quality, Price, Brand,
Place, and Customer Buying Decision. Other commonly used marketing mix
factors such as Promotion, Discount Pricing, Consumer Behavior, and Customer
Service are not part of this research’s scope and limitation.
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CHAPTER II
REVIEW OF LITERATURE
2.1 Marketing Mix
Philip Kotler defined Marketing Mix as “the set of controllable variables that the
firm can use to influence the buyer’s response.” In the other words, it could be
the core of the company’s marketing strategy (Jain, 2009). In addition, the
buying response is assumed to be the buying decision that is influenced by the
marketing mix.
2.2 Product Quality
According to Eze, Tan, & Yeo (2012), most consumers are more concerned
about product quality, and would be willing to pay more for a higher product
quality. This theory contradicts with the problem identified of this study where
consumers seem to prefer a cheaper and a more available bottled drinking
water product, whether because this theory doesn’t apply on some specific
products or industries (in this case bottled drinking water product) or because
the consumption trend of Indonesian consumers are really changing. Then in
another theory by Kotler et al (2015), although poor quality product means
negative impact to company image, companies doesn’t necessarily need to
strive for the highest level product quality. This new theory goes in alignment
with the current situation shown in the identified problem, showing that
perhaps there really is a change in purchasing decision trend.
Tjiptono (2007) stated that product quality can be seen through eight
dimensions as listed in Figure 2.2 below.
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Figure 2.1 Product Quality Dimension
Source: Tjiptono (2007)
These eight dimensions help determine the quality of a product. For example, in
durability dimension, consumers wear their sportswear for heavy work and
some for leisure and sports as they need a lot of movement, in this case,
durability is an important consideration in purchasing sportswear.
2.3 Brand
Brand is a term, sign, name, symbol, design, or the combination of these that
show or represent the seller’s identity (Kotler and Armstrong, 2010). Marketers
should realize that the more customers equate quality with their brands, the
more they will buy. Consumers simply do not purchase brands that they either
do not recognize or do not trust, no matter how much promotional activity is
put behind them (Engle, 2009). Brand has always been the focus of many
consumers in making purchase decision. They tend to go for top and verified
brands more than products with lower brand image because they perceive that
products with top brand image have better quality (Eze, Tan, & Yeo, 2012).
These theories support the possibility of good brand image into having positive
influence towards customer buying decision.
Product Quality
Dimensions
Reliability
Perceived Quality
Conformance
Service Ability
Durability
Aesthetic
Performance
Feature
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2.4 Price
Price is the amount of money charged for product or service, or the sum of the
values that consumers exchange for the benefits of having or using the product
or service (Kotler and Armstrong, 2010). In short, it may be said that price is
something that is delivered in exchange for goods or services. Price is probably
the most important consideration for the average consumer.
According to Dinawan (2010), price perceptions which influence purchasing
decisions can be seen from:
1. Comparative price with other products
2. Compliance with the price of the product quality
3. Affordability Price
Price functions in educating consumers about the product factors, such as
quality. This is particularly useful situations where buyers have difficulties to
assess the product and benefit factors objectively.
2.4.1 Price Perception
Customers are willing to pay premium even if the price has increased because
the perceived risk is high and they prefer to pay a higher price to avoid the risk
of any change. It is very important for the firm to retain consumers who are
willing to pay higher price for their favorite brand, thus purchase is not only
based on low price (Levy and Weitz, 2012). This theory truly challenge and
contradict the identified problem and can be a good basis for this research.
2.5 Place (Distribution System / Location)
Place or distribution system concerns with making the products or services
available anytime and anywhere the customers want them (Lamb, McDaniel,
and Hai, 2012). Customers tend to buy goods and services at the approachable
yet prominent to provide higher satisfaction (Kapoor, et al., 2011). Place
encompasses the tools or media which relate to making products and services
available to customers, including the channel length, types and market coverage
for the services (Withey and Lancaster, 2007).
These theories emphasis that the closer and the more available the distribution
channels are to the customer, the more efficient and the more probable it is for
customers to buy their product or services. This is in line with one of the
hypotheses where according to the statistic, consumers of bottled drinking
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water product in Indonesia nowadays seemed to prefer product availability
compared to brand and product quality.
2.6 Customer Buying Decision
Customer buying decision (or customer purchase decision) is a series of choices
made by consumer before making a purchase. According to Chaipradermsak
(2007), customer buying decision is defined as the decisions made about
purchasing either products or services. The following figure shows the buying
decision process covers five stages:
Figure 2.2 Buying Decision Process
Source: Pride and Ferrell (2010)
1. Problem recognition
This happens when consumers realize that there are some differences between
their actual state and their desired state.
2. Information Source
This is the stage when consumers are searching for more knowledge in order to
solve the recognized problem.
3. Alternative Evaluation
Consumers will evaluate the available alternatives to overcome the problems
that they face. The consumers make a final judgment through comparing the
alternatives.
4. Purchase Decision
After the consumers evaluate the strategic alternatives, consumers will make
buying decisions.
5. Post-Purchase Evaluation
After purchasing the product, the consumers will evaluate whether the product
is in accordance with the expectations or not. In this case there is satisfaction
and consumer dissatisfaction.
Problem Recognition
Information Search
Alternatives Evaluation
Purchase Decision
Post Purchase Evaluation
xviii
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CHAPTER III
RESEARCH METHODOLOGY
3.1 Research Method
In this research, the researcher chooses quantitative method since this research
focuses on analyzing the effect of Product Quality, Price, Distribution, and Brand
on customer buying decision.
According to Sugiyono (2011), quantitative research is used to analyze the
population or a particular sample using a data collection instrument, then
proceed to quantitative data analysis or statistics in order to test the
hypotheses that have been established. Quantitative method can also be
defined as a research method that try to quantify the data and apply statistical
steps to analyze data (Malhotra, 2007).
In testing the research hypotheses, the researcher used a Structural Equation
Modeling (SEM) with Partial Least Squares (PLS) approach. The consideration for
using SEM to test the hypotheses is because SEM is suitable to analyze the
variables which are being hypothesized. The researcher uses WarpPLS software
version 4.0.
3.2 Theoretical Framework
This research uses four variables in which Product Quality (X1), Price (X2), Brand
(X3), and Place (X4) as independent variables and Customer Buying Decision (Y)
as dependent variable. Illustrated below is the process of Product Quality, Price,
Brand Image, and Place as the factors that influence the Customer Buying
Decision of Nestle Pure Life bottled drinking water product of PT. Akasha Wira
International Tbk.
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Figure 2.3 Research Model
Source: Constructed by Researcher (2017)
3.3 Hypotheses Developments
3.3.1 Product Quality and Customer Buying Decision
Product Quality shows how good the product itself to the consumer. It may vary
from the content, the packaging, the feature, and the durability. Good product
quality should bring more satisfaction to the consumers, thus it should have
influence to Customer Buying Decision. Kurniawati (2015) showed from their
research that Product Quality has a positive and significant influence on
Customer Buying Decision. Research by Yusup (2013) also showed that Product
Quality has a positive and significant influence towards purchasing decision.
Hariz (2014) in their research showed that Product Quality also has an influence
on purchase decision. Kombenjamas & Lertrattananon (2011) in their research
showed that Product Quality did influence buying decision. Sata (2013) proved
in their research that Product Quality was among the most influential factor
between several other marketing mix items that affect purchasing decision.
Therefore, it can be argued that:
Product Quality (X1)
Price (X2)
Brand Image (X3)
Place (X4)
Customer Buying Decision (Y)
H1
H2
H3
H4 H5
Partially
Simultaneously
Independent Variables Dependent Variable
: Impact
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H1: There is a positive influence of Product Quality towards customers buying
decision.
3.3.2 Price and Customer Buying Decision
Price is the amount of money the customer needed to spend to purchase the
product, thus the level of price of a product should affect the customer
purchasing decision. For example, lower price value could mean lower barrier
for more customer to get the product. Kurniawati (2015) in their research
showed that Price does have a positive but not significant influence on
Customer Buying Decision. Research by Yusup (2013) also showed that Price has
a positive and significant influence towards purchasing decision. Hariz (2014) in
their research also proved that Price also has an influence on purchase decision.
Zulfikar (2011) in his research also proved that Price did have a positive and
significant influence on purchasing decision. Therefore, it can be argued that:
H2: There is a positive influence of Price towards customers buying decision.
3.3.3 Brand and Customer Buying Decision
Brand or Brand Image affects the customer perception toward the product
itself. Good Brand Image should improve the chance for customer into buying
the product. Kurniawati (2015) in their research ‘The Influence of Product
Quality, Brand Name, Promotion, And Price Toward Customer Buying Decision
on Five Top Imported Sport Shoe In Bekasi’ showed that Brand has a positive
and significant influence on Customer Buying Decision. Hariz (2014) also
showed that Brand Image also has an influence on purchase decision. Akbar
(2012) in his research also proved that Brand Image did have positive influence
on purchasing decision. Therefore, it can be argued that:
H3: There is a positive influence of Brand towards customers buying decision.
3.3.4 Place and Customer Buying Decision
Factor of Place or Distribution System affects how easy or convenient it is for
customers to reach and find the product while also covering the availability of
the product in shops. According to Lolo (2011) on his research ‘The influence of
Marketing Mix towards customer decision-making to saving on PT. Bank
Mandiri Makassar’, the marketing factor of Place has a significant influence
towards customer buying decision. Another research that found influence of
Place to customer buying decision was made by Fadhillah (2013) with a research
title of ‘The Analyze of product, price, promotion, and distribution towards
customer buying decision’. Pungnirund (2013) in their research ‘The Influences
of Marketing Mix on Customer Purchasing Behavior at Chatuchak Plaza Market’
also proved that the factor of Place does have influence on purchasing decision.
Therefore, it can be argued that:
H4: There is a positive influence of Place towards customers buying decision.
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3.3.5 Simultaneously and customer buying decision
Lastly, the researcher will find out whether there is a positive influence from all
four variables combined simultaneously towards the customer buying decision.
Kurniawati (2015) in their research which has similar variable to this research,
found that there was a simultaneous significant influence on product quality,
brand name, promotion, price, and environment toward customer buying
decision. Wijaya (2015) also found in their research that there was a
simultaneous significant influence on Product, Price, Place, and Promotion
toward Customer Buying Decision. Therefore, it can be argued that:
H5: There is a simultaneous positive influence on Product Quality, Price, Brand,
and Place towards customer buying decision.
3.4 Operational Definition of Variables
The researcher used Likert scale which is able to measure the variable value to
be shown in a form of number so it can be analyzed accurately, efficiently, and
more communicative (Sugiyono, 2011). Likert scale is designed to examine how
strongly subjects agree or disagree with the statements on a five-point scale
(Sekaran and Bougie, 2013), as shown below.
Table 3.1 Likert-Scale Interpretation
Scale Response
1 Strongly Disagree
2 Disagree
3 Neutral
4 Agree
5 Strongly Agree
Source: Sekaran and Bougie (2013)
The following table 3.2 describes what indicators are used as measurement
material on each variable for the questionnaire that were used by the
researcher.
Table 3.2 Operational Definition
No Variable Definition Indicator Scale
1 Product Quality
(X1)
The features and characteristics of a product that can satisfy the consumers’ needs and wants (Kotler and Armstrong, 2010).
The materials are very good
Likert
The designs follow the trend
Has noticeable variant or shape
The content is noticeably better than the competitor
Very comfortable to be used
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2 Price (X2) Price is the amount of money charged for product or service, or the sum of the values that consumers exchange for the benefits of having or suing the product or service (Kotler and Armstrong, 2010)
The price is affordable Likert
The price is competitive
The price is worth the quality
The price is worth the advantage
The price represent exclusivity
3 Brand Name (X3)
Brand has always been the focus of many consumers in making purchase decision. They tend to go for top and verified brands more than products with lower brand image because they perceive that products with top brand image have better quality (Eze, Tan, & Yeo, 2012).
Famous brand name Likert
Has a good reputation
Has a characteristic
Always be remembered
Easy to find
4 Place (X4) Place or distribution strategy concerns with making the products or services available anytime and anywhere the customers want them (Lamb, et al., 2012)
Distribution Channel Likert
Distribution Channel
Product Coverage
Product Availability
Product Coverage
5 Customer Buying
Decision (Y)
Buying behavior consists of the decision and actions of people involved in buying and using products (Pride, et al., 2011)
The need of the product Likert
Knowledge of the product
Comparison with other similar products
Meet the criteria to be bought
Satisfaction/Post purchase behavior
Source: Cited and adjusted from Kurniawati (2015) and Wijaya (2015)
3.5 Research Instrument
The data were collected directly from the respondents by using online
questionnaires. The questionnaires were distributed electronically specifically
by using web-based questionnaires through docs.google.com. The researcher
used such method because it is very effective and efficient to collect the data,
since the respondents can fill the web-based questionnaires anytime and
anywhere they want to.
The measurement items for each variable that were adopted from previous
researches used English language, so the researcher translated the
xxiv
measurement items into Indonesian language since Indonesian is the native
language in the place where the research was conducted, allowing respondent
to fill the questionnaire in either English or Indonesian language. The researcher
ensured that each item of measurements in Indonesian language has the same
meaning with the items in English.
3.6 Population and Sampling Design
Particularly in this research, the researcher uses questionnaire to obtain data
from consumers of bottled drinking water products in Jakarta area.
In this study, the researcher uses a convenience sampling technique where the
technique refers to the collection of information from the members of the
population who are conveniently available to provide it. Based on this
technique, the researcher concludes that the sample in this research are people
in Jakarta area that have age between 17 to 65 years old and have ever
consumed more than one brand of bottled drinking water product with Nestle
Pure Life product as one of the brands. The researcher takes the samples at that
age range because according to Smith and Anderson (2009), by the age of 17
years, people already reach the phase of physical maturity, idealistic, and start
to have a sense of responsibility. These abilities should allow the samples to
understand the underlying variables of this research which are product quality,
price, brand, and place in answering the questionnaires from the researcher.
The researcher uses the requirement about the minimal sample as stated by
Hair, Black, Babin, & Anderson (2010) in determining the sample size. One
question in questionnaire should be represented by five collected data,
meaning that the researcher should collect at least five respondents for each
question. The total question this research used was 25 questions, so the
minimal respondents that should fill out the questionnaire are 125 respondents.
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CHAPTER IV
DATA ANALYSIS & DISCUSSION
4.1 Respondents Profile
The respondent are consumers of bottled mineral water product in Jakarta area
whose age can already considered an adult, especially those who have tried
Nestle Pure Life bottled drinking water product. The researcher used online
questionnaire (Google Form) to collect the data. This method allows the
questionnaire to be spread without needing the researcher to meet with each
of the respondent directly which can be time consuming and the survey results
is also instantly collected in online database which can be accessed from
anywhere and anytime. The researcher also prepared the questionnaire not
only in English, but also in Indonesian so respondents can fill the questionnaire
in the language they’re comfortable with. The researcher sent the questionnaire
link directly to several people and strictly requested those people to spread the
link only to their colleagues who are living or working in Jakarta area.
In this study, 144 survey results were received by the researcher. Among them,
11 survey results cannot be used because they don’t pass the requirement of
the research samples, which is to be 17 years old and above and has tried
buying and consuming Nestle Pure Life product. The researcher has also
requested in the questionnaire introduction page that the respondents are
willing to answer the survey accurately and don’t feel any pressure, while also
stated that their answer is private and will be used for the objective of this
study. Therefore this survey would avoid and diminish bias.
Table 4.1 Demographic Data
Category Amount (total 133) % of respondents
Gender Male Female
Age Groups 17-25 26-35 36-45 46-55 56-65 >65
92 41
32 74 23
4 0 0
69.17% 30.83%
24.06% 55.64% 17.29%
3.01% 0.00% 0.00%
Source: Survey results (2017)
In this study, the researcher asked the respondents about their profile which
include their gender, age groups, and clarification whether they have ever tried
buying and consuming Nestle Pure Life product themselves. As shown in the
table above, 133 qualified survey results were collected by the researcher. From
those 133 respondents, 69.17% are male and 30.83% are female. The majority
of the respondents were having age between 26-35 years old (55.64%), 24.06%
xxvi
were 17-25 years old, 17.29% were 36-45 years old, and only 3.01% were 46-55
years old while there was no respondent with age above 55 years old.
4.2 Validity and Reliability Test
The researcher tested the convergent and discriminant validity to assess the
construct validity. Convergent validity was assessed by taking two indicators
into consideration which is based on Hair, Black, Babin, & Anderson (2010) such
as factor loadings and Average Variance Extracted (AVE). Also according to
them, loading value that is higher than 0.5 is acceptable and higher than 0.7
should be the ideal one. In another theory by Hair, Hult, Ringle, & M.Sartstedt
(2013), indicators with an even lower range, which is loading value of 0.4 - 0.7
should still be considered to be retained. The researcher should put into
consideration the impact of the deletion of those indicators on AVE and
composite reliability. If by deleting the indicator with loading value between 0.4
– 0.7 can increase AVE and composite reliability above the standard limit which
is to be 0.5 or higher, then the deletion is allowed. On the contrary, when the
deletion of said indicator does not increase AVE and composite reliability above
the standard limit, then it is better to just retain the indicator rather than to
delete it.
By putting such things into consideration, during the analysis the researcher
deleted one item from Location/Place variable because its loading value were
less than 0.4. The researcher also deleted two more items which are one from
Product Quality variable and another one from Location variable to raise the
AVE above the standard limit. In total, there are three out of twenty five items
which were deleted from the analysis.
The analysis was tested again over the data set with 22 items, resulting in the
result shown in Table 4.2 below. Among the 22 items, 17 items have factor
loading value greater than the ideal 0.7, while the remaining 5 items have factor
loading value that exceeded the acceptable range of at least 0.5. As for the AVE
results, according to Hair, Black, Babin, & Anderson (2010), the research can be
considered to have adequate convergence when it has an AVE of 0.5 or higher.
The results shown AVE value of 0.530 – 0.691 which exceeded the minimum
standard value of 0.5. In conclusion, all evidences stated above indicated that
the convergent validity of the measurement model had been qualified.
Table 4.2 Validity and Reliability Test
Standardized Loading
Cronbach’s Alpha
Composite Reliability
AVE
Product Quality
0.697 0.816 0.530
Q1 (0.689)
Q2 (0.565)
Q4 (0.805)
Q5 (0.825)
xxvii
Price 0.833 0.883 0.605
P1 (0.859)
P2 (0.778)
P3 (0.632)
P4 (0.798)
P5 (0.802)
Brand 0.840 0.888 0.616
B1 (0.827)
B2 (0.861)
B3 (0.804)
B4 (0.601)
B5 (0.805)
Location/Place 0.773 0.869 0.690
L1 (0.861)
L2 (0.864)
L4 (0.762)
Customer Buying Decision
0.884 0.917 0.691
CBD1 (0.821)
CBD2 (0.633)
CBD3 (0.894)
CBD4 (0.879)
CBD5 (0.898)
* Standardized Loadings are at P<0.01; P=0.11
Source: Survey results (2017)
On table 4.2, the p-value appliances are less than 0.01 (<0.01) which means
each item accomplish the convergent validity’s condition which is p-value must
be less than 0.05.
As for Composite Reliability and Cronbach’s alpha, the criteria is that ideally, the
value must be over 0.70. Although, in implication a value of 0.60 – 0.70 are still
acceptable for clarifying investigation. As shown in the table above, the
Cronbach’s Alpha for Product Quality is 0.697, Price is 0.833, Brand is 0.840,
Location is 0.773, and Customer Buying Decision is 0.884. The composite
reliability for Product Quality is 0.816, Price is 0.883, Brand is 0.888, Location is
0.869, and Customer Buying Decision is 0.917. Therefore all items passed the
condition of reliability.
4.3 Outer Model
4.3.1 Determine Coefficient (R-Square)
Determine Coefficient (R-square) is a test to check how much the independent
variable can describe the variation of dependent variable.
xxviii
Table 4.3 Determinant Coefficient (R-Square)
Quality Price Brand Location Decision
R-Squared 0.749
Source: Survey results (2017)
There is only one R-Square in this investigation, which is Customer Buying
Decision with a result of 0.749. This means Product Quality, Price, Brand, and
Location can describe Customer Buying Decision for 74.9% rate.
4.3.2 Relevance (Q-Square)
Relevance shows an analytical validity or the significance between the predictor
latent variable to the criterion latent variable.
Table 4.4 Relevance (Q-Square)
Quality Price Brand Location Decision
Q-Squared 0.659
Source: Survey results (2017)
According to Sholihin & Ratmono (2013), the Q-Square outcome should be
above zero point (Q-Squared > 0) in the model with predictive relevance. Thus,
as shown in the table above, the Q-square of the item is 0.659, which is above
0. Therefore, the model in this research shows that the predictor latent variable
is relevant with the criterion latent variable.
4.3.3 Goodness of Fit
The purpose of Goodness of Fit is to describe how well a set of observation is.
Table 4.5 Goodness of Fit
Average Path Coefficient (APC) = 0.275, P<0.001 Average R-squared (ARS) = 0.749, P<0.001 Average block VIF (AVIF) = 2.756, acceptable if <= 5, ideally <= 3.3
Source: Survey results (2017)
To measure Goodness of Fit, there are three indicators which are Average Path
Coefficient (APC), Average R-Squared (ARS), and Average Variance Inflation
Factor (AVIF). In reference to Sohlihin & Ratmono (2013), the p-value of APC
and ARS should be below 0.05 to be considered significant. Meanwhile, the
value of AVIF should be 5.00 and below while ideally, it should be 3.3 and
below.
In accordance to the data shown in the table above, the p-value of APC and ARS
are both under 0.001, which means they pass the condition. As for the value of
AVIF, it is 2.756 in this research and is considered to be on the range of ideal
value. In summary, this examination is considered a good of fit.
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4.4 Descriptive Analysis Table 4.6 Descriptive Analysis
Mean SD Q P B L CBD
Q 3.829 0.730 (0.728)
P 4.075 0.821 0.473 (0.778)
B 4.153 0.862 0.443 0.738 (0.785)
L 3.895 0.862 0.190 0.633 0.752 (0.830)
CBD 3.686 0.833 0.550* 0.735* 0.721* 0.508** (0.831)
*Significant at p < 0.01 **Insignificant with p = 0.11
Source: Survey results (2017)
The table above shows the descriptive statistic of the research. The mean values
for the Customer Buying Decision correlated (Product Quality, Price, Brand, and
Place) are around midpoint (2.5) of the measure. The mean value for Product
Quality (Q) is 3.829, which is higher than the midpoint. The mean value for Price
(P) is 4.075, which is higher than the midpoint. The mean value for Brand (B) is
4.153, which is higher than the midpoint. The mean value for Place (L) is 3.895,
which is higher than the midpoint. And lastly, the mean value for Customer
Buying Decision (CBD) is 3.686.
The results shown in the table above indicates that Product Quality is positively
related to Customer Buying Decision (r = 0.550, p < 0.01), Price is also positively
related to Customer Buying Decision (r = 0.735, p < 0.01), Brand is also positively
related to Customer Buying Decision (r = 0.721, p < 0.01), and Place is also
positively related to Customer Buying Decision (r = 0.508, p = 0.11). Of the four
latent variables, only Product Quality, Price, and Brand were found to be
significantly related (p < 0.01) while Place is found to be insignificant (p = 0.11).
4.5 Effect Size The researcher performed the test of effect size in order to measure the
contribution of each predictor latent variable to the criterion latent variable.
According to Sholihin & Ratmono (2013), there are three categories of effect
size, which are: Weak (0.02), Medium (0.15), and Strong (0.35).
Table 4.7 Effect Size
Quality Price Brand Location Decision
Quality
Price
Brand
Location
Decision 0.135* 0.266** 0.304** 0.044*
*Weak **Medium ***Strong
xxx
Source: Survey results (2017)
As shown in table 4.3 above, the value of effect size for the impact of Brand to
Customer Buying Decision is highest among the others with a value of 0.304. It
is categorized as Medium effect size, meaning that Brand has a medium role of
practical perspective in influencing Customer Buying Decision while being
followed closely by Price with a value of 0.266. The result also revealed that the
impact of predictor latent variable to criterion latent variable is Medium (in
average).
4.6 Test of Hypotheses A series of tests have been performed to reach the appropriate results which
can be seen in the following figure 4.1.
Figure 4.1 Result Model
Source: WarpPLS 4.0 analysis on the research data (2017)
The figure above shows that Product Quality, Price, and Brand have significant
positive influences to Customer Buying Decision with p<0.01 while Location has
insignificant positive influence to Customer Buying Decision with p=0.11.
H1: There is a positive influence of Product Quality towards customers buying
decision.
xxxi
As shown in the figure above, Product Quality has a significant and positive
influence towards Customer Buying Decision with β = 0.24 and p-value <0.01
which supports the statement in H1. This means the product quality factor of
Nestle Pure Life bottled water product does have a significant influence on
customers in making their purchase decision. This result is consistent with some
of the previous researches stated in the theoretical framework section that
proved Product Quality does have a positive influence towards Customer Buying
Decision. In this case, it’s proven that product quality feature of NPL such as
plastic bottle packaging’s durability, design, and water content do influence
customer’s buying decision.
H2: There is a positive influence of Price towards customers buying decision
As shown in the figure above, Price also has a significant and positive influence
towards Customer Buying Decision with β = 0.36 and p-value <0.01 which
supports the statement in H2. This means the price factor of Nestle Pure Life
bottled water product does have a significant influence on customers in making
their purchase decision. This result is consistent with some of the previous
researches stated in the theoretical framework section that stated Price does
have a positive influence towards Customer Buying Decision. In this case, it’s
proven that the price feature of NPL such as affordability, competitiveness,
worth the quality, worth the advantage, representing exclusivity do influence
customer’s buying decision.
H3: There is a positive influence of Brand towards customers buying decision
As shown in the figure above, Brand also has a significant and positive influence
towards Customer Buying Decision with β = 0.42 and p-value <0.01 which
supports the statement in H3. This means the brand factor of Nestle Pure Life
bottled water product does have a significant influence on customers in making
their purchase decision. This result is consistent with some of the previous
researches stated in the theoretical framework section that stated Brand does
have a positive influence towards Customer Buying Decision. In this case, it’s
proven that the brand factors of NPL such as being a famous brand, having good
reputation, has a distinct characteristic, can easily come to mind or
remembered, and is easy to find do influence customer’s buying decision.
H4: There is a positive influence of Place towards customers buying decision
As shown in the figure above, different with the previous three variables, Place
has a positive yet insignificant influence towards Customer Buying Decision with
β = 0.09 and p-value = 0.01 which still supports the statement in H4. This means
the place factor of Nestle Pure Life bottled water product does have a positive
influence, although insignificant, on customers in making their purchase
decision. This result is consistent with some of the previous researches stated in
the theoretical framework section that stated Place does have a positive
influence towards Customer Buying Decision. In this case, it’s proven that the
place factors of NPL such as market coverage, the distribution channel, and
product availability do somewhat influence customer’s buying decision.
xxxii
H5: There is a simultaneous positive influence on Product Quality, Price, Brand,
and Place toward customers buying decision
As shown in the figure above, All 4 factors simultaneously also has a significant
and positive influence towards Customer Buying Decision with β = 0.78 and p-
value <0.01 which supports the statement in H5. This means the simultaneous
factor altogether does have a significant influence on customers in making their
purchase decision. This result is consistent with some of the previous
researches stated in the theoretical framework section that stated
simultaneously the variables which include Product Quality, Price, Brand, and
Place does have a positive influence towards Customer Buying Decision.
4.7 Discussions The research analyzed the effect of Product Quality, Price, Brand, and Place
towards Customer Buying Decision on Nestle Pure Life bottled drinking water
product. From the results of the research, it shows that the independent
variables do have positive influence towards the dependent variable, which is
Customer Buying Decision. Among those independent variables, the influence of
Product Quality, Price, and Brand is considered as a significant influence
whereas the influence of Place is considered as insignificant. These results are
consistent with the relevant previous researches that were mentioned in
theoretical framework. All the previous researches stated that there were
positive influences between Product Quality, Price, Brand, and Place on
Customer Buying Decision, both partially and simultaneously.
The results show that partially, Brand has the most influence with a β value of
0.42 and Price following closely with β value of 0.36 while Product Quality and
Place only have β value of 0.24 and 0.09 respectively. In terms of effect size,
Brand also came out as the one to have the highest impact value, so it can be
concluded that Brand has the most influence over the factors in this research
which influence Customer Buying Decision on Nestle Pure Life product.
Factor of Place having insignificant influence is likely to be caused by the factor
of market coverage or the sampling design where the respondent is only limited
to the capital city of Indonesia, Jakarta, which is a well-developed city and the
product of Nestle Pure Life is very much available in many places for the
respondent to get. So the perception the respondent of this scope may consider
the Place factor as not truly significant for them.
In another point, Brand having the most influence is expected by the
researcher, knowing that Nestle Pure Life is a world renowned brand, boasting
the name of Nestle global company on its label. The researcher expected that
Brand would most likely be the product’s most influential factor due to the price
competition of bottled drinking water product does not differ much with each
other, while the product quality itself may be obscure in term of the water
content quality for the consumers.
xxxiii
These results, however, do not go in alignment with the problem identified
which showed the possibility of Indonesian consumers, including those residing
or working in Jakarta to have a shifted preference toward cheaper product
(price) and being easier to get (place) instead of product of higher quality and
reputable brand image for the bottled drinking water products. Although for
Nestle Pure Life product itself, the result of this research can still be used as a
reference or basis in determining future marketing strategies of the product
since the result has proven what factors influence the NPL product the most
according to their consumers in Jakarta with age of 17 years old and above.
xxxiv
CHAPTER 5
CONCLUSIONS
5.1 Conclusions This research aimed to test the theoretical model that attempted to describe
how Product Quality, Price, Brand, and Place towards Customer Buying Decision
of Nestle Pure Life bottled drinking water product. The data were collected via
online questionnaire from 144 respondents in Jakarta with age 17 years old and
above, but only 133 survey results were qualified to be used. Five hypotheses
were tested by using Structural Equation Modeling (SEM).
From the research conducted, all hypotheses were supported, which can be
concluded and summarized as follow:
1. Product Quality has a positive and significant influence towards Customer
Buying Decision.
2. Price has a positive and significant influence towards Customer Buying
Decision.
3. Brand has a positive and significant influence towards Customer Buying
Decision.
4. Place has a positive but insignificant influence towards Customer Buying
Decision.
5. Product Quality, Price, Brand, Place simultaneously has positive and
significant influence toward customers buying decision.
This research provides insights which could contribute toward the literature of
marketing factors such as Product Quality, Price, Brand, and Place and their
influence, both partially and simultaneously, on the customer buying decision of
fast moving consumer goods, which in this case, is bottled drinking water
product of Nestle Pure Life brand. The results suggest that by emphasizing on
good brand image, fair price, and decent product quality, Nestle Pure Life
product could significantly influence the consumers into making a purchase
decision on their product. Especially on brand image, since the result shows that
Brand has the most influence, although not by far, out of all four tested factors.
The identified problem that became the background of this study was the
possibility of a shifting customer buying decision trend for bottled drinking
xxxv
water product in Indonesia which seemed to prefer a cheaper price and a more
easily reached product, such as local brand that are being sold in local stores
with cheap prices near consumers’ home, rather than prioritizing higher
product quality and more popular brand as their main buying decision factors.
However, the results of this study show that at least, for NPL brand, the
consumers in Jakarta area still pick Brand as their number consideration for
making the buying decision while the factor of place does not matter much to
them.
Brand has the most influence on customer buying decision is likely because the
type of product a bottled drinking water is. In normal circumstances, an
everyday consumer will not be able to differentiate the taste and water quality
between one brand to another, so what could make the most impact on them
would be either the brand recognition of the product, offered price of the
product, and how easy it is to reach/find the product. In this case, the place
factor does not appear to matter much to the sample respondents who live in a
well-developed city which have convenient stores almost everywhere. As for
price, the respondents do not appear to care very much with the difference in
price since the difference of prices between available brands themselves do not
differ too much with each other. Thus leaving brand image to have the most
impact in influencing the customer into making a purchase decision, because
the finding in this research is that good brand image on bottled drinking water
product represent good water quality and fair price by itself. For example, when
a customer see a variety of bottled drinking water brands in the shop, they can
use the recognize-able brand image to determine whether a certain brand is a
high quality product or whether the price is worth it.
The researcher hopes that this research will help PT. Akasha Wira International
Tbk, the manufacturer of Nestle Pure Life product, in determining a possibly
better marketing strategies. The researcher also hope that this research will
inspire other researchers into researching the same or similar variables in other
known brand of bottled drinking water product, such as Aqua, Cleo, and Club.
Or perhaps, to do research on the same brand, Nestle Pure Life but in the future
or in different area of scope in order to keep the research result of this topic
valid, relevant, and broadened while also help further tackles the identified
problem of this study.
5.2 Recommendations The recommendation from the researcher is as stated below:
1. For future researchers, this research does not provide enough result to
completely tackle the problem identified in general since this research only
study one brand out of many available in Indonesian market and also only
on a very limited scope. So the researcher hope that future researchers will
xxxvi
help conduct more research in this aspect to further broaden the result by
researching other brands, by researching the same brand but with different
kind of influencing variables, or by researching in different scope and
limitation, such as by having sample from people not living in well-
developed city, by determining whether the respondents are Indonesian
citizen or not, and by gathering sample from people of specific age groups.
2. For manufacturers of bottled drinking water product, especially the
manufacturer of Nestle Pure Life product, PT. Akasha Wira International
Tbk, to take into consideration the result of this research as an insight for
developing future marketing strategies of the NPL product.
xxxvii
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xl
APPENDICES List of Figures
Figure 1.1 Value in Local Currency – Value
Figure 1.2 Value in Local Currency – Growth
18,77 24,94 30,42 34,42 39,18
45,78 54,13
63,1 73,9
86,3 100,2
117,5
0
20
40
60
80
100
120
140
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
trill
ion
ID
R
VALUE IN LOCAL CURRENCY - VALUE
Value (forecast from 2014)
32,9
22
13,1 13,8 16,8
18,2 16,6 17,1 16,8 16,1 17,3
0
5
10
15
20
25
30
35
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
%
VALUE IN LOCAL CURRENCY - GROWTH
Value growth (forecast from 2014)
xli
Figure 2.1 Product Quality Dimension
Figure 2.2 Buying Decision Process
Product Quality
Dimensions
Reliability
Perceived Quality
Conformance
Service Ability
Durability
Aesthetic
Performance
Feature
Problem Recognition
Information Search
Alternatives Evaluation
Purchase Decision
Post Purchase Evaluation
xlii
Figure 2.3 Research Model
Figure 4.1 Result Model
List of Tables
Product Quality (X1)
Price (X2)
Brand Image (X3)
Place (X4)
Customer Buying Decision (Y)
H1
H2
H3
H4 H5
Partially
Simultaneously
Independent Variables Dependent Variable
: Impact
xliii
Table 1.1 Market Share by Volume and Value
Manufacturers Brand By Volume
(%) By Value (%)
2012 2013 2012 2013
Aqua Group (Groupe Danone S.A.) Aqua 43 41.5 43 41.7
PT Indofood Sukses Makmur Tbk Club 14 13.2 13.6 12.7
PT Sinar Sosro Prim-a 8 7.5 7.7 7.2
PT Akasha Wira International Tbk NPL 6.9 6.5 6.3 5.9
2 Tang Group Of Companies 2 Tang 3.2 3.0 2.9 2.8
PT Sariguna Primatirta Cleo 1.1 1.0 1.6 1.5
Own Label various 15 18 14.7 17.6
Others various 8.8 9.3 10.2 10.6
Table 3.1 Likert-Scale Interpretation
Scale Response
1 Strongly Disagree
2 Disagree
3 Neutral
4 Agree
5 Strongly Agree
Table 3.2 Operational Definition
No Variable Definition Indicator Scale
1 Product Quality
(X1)
The features and characteristics of a product that can satisfy the consumers’ needs and wants (Kotler and Armstrong, 2010).
The materials are very good
Likert
The designs follow the trend
Has noticeable variant or shape
The content is noticeably better than the competitor
Very comfortable to be used
2 Price (X2) Price is the amount of money charged for product or service, or the sum of the values that consumers exchange for the benefits of having or suing the product or service (Kotler and Armstrong, 2010)
The price is affordable Likert
The price is competitive
The price is worth the quality
The price is worth the advantage
The price represent exclusivity
3 Brand Name (X3)
Brand has always been the focus of many consumers in making purchase decision. They tend to go for top and
Famous brand name Likert
Has a good reputation
Has a characteristic
Always be remembered
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verified brands more than products with lower brand image because they perceive that products with top brand image have better quality (Eze, Tan, & Yeo, 2012).
Easy to find
4 Place (X4) Place or distribution strategy concerns with making the products or services available anytime and anywhere the customers want them (Lamb, et al., 2012)
Distribution Channel Likert
Distribution Channel
Product Coverage
Product Availability
Product Coverage
5 Customer Buying
Decision (Y)
Buying behavior consists of the decision and actions of people involved in buying and using products (Pride, et al., 2011)
The need of the product Likert
Knowledge of the product
Comparison with other similar products
Meet the criteria to be bought
Satisfaction/Post purchase behavior
Table 4.1 Demographic Data
Category Amount (total 133) % of respondents
Gender Male Female
Age Groups 17-25 26-35 36-45 46-55 56-65 >65
92 41
32 74 23
4 0 0
69.17% 30.83%
24.06% 55.64% 17.29%
3.01% 0.00% 0.00%
Table 4.2 Validity and Reliability Test
Standardized Loading
Cronbach’s Alpha
Composite Reliability
AVE
Product Quality 0.697 0.816 0.530
Q1 (0.689)
Q2 (0.565)
Q4 (0.805)
Q5 (0.825)
Price 0.833 0.883 0.605
P1 (0.859)
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P2 (0.778)
P3 (0.632)
P4 (0.798)
P5 (0.802)
Brand 0.840 0.888 0.616
B1 (0.827)
B2 (0.861)
B3 (0.804)
B4 (0.601)
B5 (0.805)
Location/Place 0.773 0.869 0.690
L1 (0.861)
L2 (0.864)
L4 (0.762)
Customer Buying Decision
0.884 0.917 0.691
CBD1 (0.821)
CBD2 (0.633)
CBD3 (0.894)
CBD4 (0.879)
CBD5 (0.898)
Table 4.3 Determinant Coefficient (R-Square)
Quality Price Brand Location Decision
R-Squared 0.749
Table 4.4 Relevance (Q-Square)
Quality Price Brand Location Decision
Q-Squared 0.659
Table 4.5 Goodness of Fit
Average Path Coefficient (APC) = 0.275, P<0.001 Average R-squared (ARS) = 0.749, P<0.001 Average block VIF (AVIF) = 2.756, acceptable if <= 5, ideally <= 3.3
Table 4.6 Descriptive Analysis
Mean SD Q P B L CBD
Q 3.829 0.730 (0.728)
P 4.075 0.821 0.473 (0.778)
B 4.153 0.862 0.443 0.738 (0.785)
L 3.895 0.862 0.190 0.633 0.752 (0.830)
CBD 3.686 0.833 0.550* 0.735* 0.721* 0.508** (0.831)
*Significant at p < 0.01 **Insignificant with p = 0.11
Table 4.7 Effect Size
Quality Price Brand Location Decision
Quality
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Price
Brand
Location
Decision 0.135* 0.266** 0.304** 0.044*
*Weak **Medium ***Strong
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Questionnaire
INTRODUCTION TO QUESTIONNAIRE
My name is Devin Halim Pramana, a student of President University, majoring in Management with a concentration in International Business. Currently I'm working on the final project, or better known as skripsi. I would like to ask for your help to participate in filling out the questionnaire of my skripsi. This questionnaire was developed in order to know whether Product Quality, Price, Brand Image, and Place influence Customer Buying Decision of Nestle Pure Life bottled drinking water product and which aspect has the most influence. This questionnaire consists of three sections: Section 1 : Respondent Profile Section 2 : Questionnaire Filling Guidance Section 3 : Questionnaire In this questionnaire, I hope that the respondents can answer all questions based on individual opinion. Thank you for your cooperation. Cikarang, April 2017 Devin Halim Pramana
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SECTION 1 - Respondent Profile
Gender o Male o Female
Age
o <17 o 17-25 o 26-35 o 36-45 o 46-55 o 56-65 o >65
Have you ever bought and consumed Nestle Pure Life bottled drinking water product?
o Yes o No
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SECTION 2 - Questionnaire Filling Guidance
This part contains guidance about how to fill out the questionnaire. To fill the questionnaire, the respondents only need to select/click on the answer choice based on their opinion. The answer will be in form of scale as follow: 1 = Strongly Disagree 2 = Disagree 3 = Neutral 4 = Agree 5 = Strongly Agree The product in the questionnaire is Nestle Pure Life bottled drinking water product which will be shortened as NPL for convenience in reading. (Nestle Pure Life = NPL)
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SECTION 3 – Questionnaire
NPL = Nestle Pure Life
Product Quality 1 2 3 4 5
NPL’s plastic bottle packaging has good durability
NPL’s plastic bottle packaging has a nice design
NPL product is easy to be found/spotted from its plastic bottle packaging
NPL’s mineral water content tastes better than other brands
NPL’s mineral water makes me feel healthier compared to other brands
Price 1 2 3 4 5
The price of NPL is affordable
The price of NPL is competitive
The price of NPL is worth the water quality
The price of NPL is worth the brand image
The price of NPL represent exclusivity
Brand 1 2 3 4 5
NPL is a famous brand name
NPL has a good reputation
NPL is easy to be found or spotted from its logo
NPL always come to mind when thinking about bottled drinking water product
NPL can be associated with other popular Nestle product
Place 1 2 3 4 5
NPL can be found in most major retail such as Giant Hypermart or Carrefour
NPL can be found in most small retail such as Indomaret, Alfamart, and 7-eleven
NPL can be found in non-chain local stores
NPL is always available in stores
NPL is available in grocery market
Customer Buying Decision 1 2 3 4 5
I need NPL as my main bottled drinking water product
I am looking for information before buying NPL
After making comparison, I find that NPL is better than the alternative products
After comparing with the alternatives, I am interested to buy NPL
Once I buy a NPL, I will choose NPL again for my next purchase
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