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THE EFFECT OF PRODUCT FEATURE, PRICE, BRAND NAME, SOCIAL INFLUENCE AND AFTER-SALES SERVICE TOWARD CUSTOMER PURCHASE DECISION OF SMARTPHONE IN SURAKARTA Submitted a Partial Fulfillment of the Requirements for Getting Bachelor Degree of Management Economic in Economic and Business Faculty By: RAKOTOARIZAKA NANDRIANINA LOUIS PIERRE B10A163013 MANAGEMENT DOUBLE DEGREE FACULTY OF ECONOMICS AND BUSINESS UNIVERSITAS MUHAMMADIYAH SURAKARTA 2020

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Page 1: THE EFFECT OF PRODUCT FEATURE, PRICE, BRAND NAME, …

THE EFFECT OF PRODUCT FEATURE, PRICE, BRAND

NAME, SOCIAL INFLUENCE AND AFTER-SALES SERVICE

TOWARD CUSTOMER PURCHASE DECISION OF

SMARTPHONE IN SURAKARTA

Submitted a Partial Fulfillment of the Requirements for Getting

Bachelor Degree of Management Economic in Economic and Business

Faculty

By:

RAKOTOARIZAKA NANDRIANINA LOUIS PIERRE

B10A163013

MANAGEMENT DOUBLE DEGREE

FACULTY OF ECONOMICS AND BUSINESS

UNIVERSITAS MUHAMMADIYAH SURAKARTA

2020

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THE EFFECT OF PRODUCT FEATURE, PRICE, BRAND NAME,

SOCIAL INFLUENCE AND AFTER-SALES SERVICE TOWARD

CUSTOMER PURCHASE DECISION OF SMARTPHONE IN

SURAKARTA

Abstrak

Tujuan dari penelitian ini adalah untuk menganalisis pengaruh fitur produk, harga,

nama merek, pengaruh sosial dan layanan purna jual terhadap keputusan pembelian

pelanggan di Indonesia. Penelitian ini juga bertujuan untuk mengidentifikasi

bagaimana orang-orang dari berbagai latar belakang yang berbeda mempengaruhi

keputusan pembelian konsumen smartphone di Surakarta dan hubungannya dengan

fitur produk, nama merek, harga, pengaruh sosial, dan purna jual. Data

dikumpulkan dengan menggunakan survei berbasis kuesioner yang terdiri dari 30

pertanyaan dan didistribusikan kepada 125 responden termasuk semua pengguna

smartphone di Indonesia, yang diperoleh dari metode convenience sampling.

Metode kuantitatif digunakan untuk menjelaskan data yang diperoleh dari

kuesioner. Model yang digunakan diadaptasi dari Lay-Yee et al. (2013) dan

(Norazah, 2013) untuk menguji pengaruh masing-masing dari lima faktor pada

keputusan pembelian smartphone. Temuan menunjukkan bahwa kualitas produk,

nama merek, dan layanan purna jual memiliki pengaruh yang signifikan terhadap

keputusan pembelian, sedangkan harga dan pengaruh sosial tidak signifikan

terhadap keputusan pembelian. Akhirnya, manajer dapat meningkatkan

pengambilan keputusan pembelian pelanggan mereka melalui fitur produk, merek,

dan layanan purna jual untuk menghasilkan lebih banyak keuntungan.

Kata kunci: fitur produk, harga, nama merek, pengaruh sosial, layanan purna jual,

keputusan pembelian, smartphone, Indonesia

Abstract

The purpose of this study is to analyze the effect of product features, price, brand

name, social influence and after-sales service toward customer purchase decisions

in Indonesia. This study also aims to identify how people of different backgrounds

affect the consumer purchase decisions of smartphones in Surakarta and its relation

with product features, brand name, price, social influence, and after-sales. Data

were collected using a questionnaire-based survey consisting of 30 questions and

distributed to 125 respondents including all smartphone users in Indonesia, which

were obtained from convenience sampling methods. Quantitative methods were

utilized to interpret the data obtained from questionnaires. We Adapted Lay-Yee et

al. (2013) and (Norazah, 2013) model in order to examine the influence of each of

the five factors on a smartphone purchase decision. The findings showed that

product quality, brand name, and after-sales service have a significant effect on

purchasing decision, whereas price and social influence is insignificant toward

purchasing decision. Finally, managers can improve their customer purchase

decision making through product features, brand, and after-sales service to generate

more profits.

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Keywords: product feature, price, brand name, social influence, after-sales

service, purchase decision, smartphone, Indonesia

1. INTRODUCTION

The evolution of telecommunication in Indonesia has been experiencing a rapid

growth since the past five years. Smartphones have been of one the fastest growing

technologies and necessities in Indonesia. In the beginning, the use of mobile

phones were only by certain people who had the ability to buy it, considering at that

time the price of mobile phones were still very expensive. But now, people can

easily have access to cellphones and that is a familiar sight. Smartphones were

introduced in Indonesia a decade ago, and it is turned out to be extremely prominent

among the youthful age.

The recent trends in smartphones premium models have fallen quickly into

revolutionary. The pace of innovation in smartphone have changed the consumer

behavior when buying a smartphone because the numerous smartphone series being

released in a quarter and the development of bigger screens, faster processor release

as well as improved camera.

The emergence of people's behavior makes the demand for smartphones

increased rapidly. The increasing demand to meet the society’s needs for

smartphone attracts the interest of companies in Indonesia as well as foreign

companies to race to satisfy consumer demand. Therefore, each company will

compete competitively in terms of creating and offering various types of new

products with different innovations (Kotler & Keller, 2009).

According to Statista Research Department, 47% percent of Indonesia’s

smartphone users will be expected to increase by the end of 2019. Based on the

report of e-Marketer, active smartphone users in Indonesia is growing from 55

million people from 2015 to 100 Million people in 2018. With that number,

Indonesia has become the fourth largest active smartphone user in the world after

China, India and the United States. Current smartphone users in Indonesia are

dominated by the age of production known as millennial generation (15-35 years)

(kompas.id, 2018)

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1.1 Consumer Behavior

A consumer is a person who identifies a need or desire, makes a purchase, and then

disposes of the product during the three stages of the consumption process. In many

cases, however, different people play a role in this sequence of events. (Solomon,

2017: 28).

According to Solomon, (2017: 29) consumer behavior is the study of the

process involved when individual or group select, purchase, use, or dispose of

products, services, ideas, or experiences to satisfy needs and desires. The consumers

take many forms, ranging from an 8-year-old child who begs her mother for a doll to

an executive in a large corporation who helps to decide on a multimillion-dollar

computer system.

The purchaser and user of a product might not be the same person, as when a

parent picks out clothes for a teenager. In other cases, another person may act as an

influencer when he or she recommends certain products without actually buying or

using them. Finally, consumers may take the form of organizations or group. One or

some person may select products that many will use, as when a purchasing agent orders

a company’s office supplies (Solomon, 2017: 28)

1.2 Product Feature

Features are product characteristics that deliver benefits; we buy products for their

benefits. Stated another way that features are product characteristics such size, color,

functionality, design and so forth. (Mokhlis, 2012).

H1: Product features have influence on consumer’s purchase decision

1.3 Price

Price is the quantity of money that a consumer is willing to exchange for a service or

product (Kotler & Armstrong, 2010). Others have found that price and after sales

customer service plays an important role in consumer satisfaction; but the price of the

device creates more impact than other factors (Hanif et al., 2010).

H2: Product price has significant influence on consumer smartphone purchase

decision.

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1.4 Brand Name

According to Cornelis (2010), brand name is an exclusive and is to indicate product

itself to the market. Besides according to the Khasawneh and Hasouneh, 2010, they

defined the brand as “name, term, symbol, or design, or a combination of them

intended to identify the goods and services of one seller or group of sellers and to

differentiate them from those of competition”.

H3: Brand name has significant impact on consumer purchase decision.

1.5 Social Influence

Social influence is referring to as social pressure on consumer from those that important

to them such as peer group (Ibrahim et al., 2013), cultural value (Lay-Yee et al., 2013),

friends and family (Rajagopal, 2010) persuasion conformity (Mothar et al., 2013), friend

on social media (Nguyen Dang, 2013), norms (Vahabzadeh et al., 2014). Social

influence is one of the major potential that emerges as people tend to understand, relate

to each other and being themselves.

H4. Social influence has significant positive influence on consumer smartphone

purchase decision

1.6 After-Sales service

According to Gaiardelli et al., (2007), after-sales service for manufactured goods include

a set of activities that happen after the product is purchased, committed to support

customers in the usage and disposal of goods. In other words, the term of after-sale

service refers to the services that are delivered to the customers after the products/goods

have been purchased (Sigala et al., 2008)

H5: After sales services has significant impact on consumers’ decision to acquire

mobile phones.

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1.7 Conceptual Frameworks

The conceptual framework explains the effect of product feature, price, brand name,

social influence and after-sales service toward customer purchase decision on

smartphone. The model is adapted from from previous study of Lay-Yee et al.

(2013) and (Norazah, 2013) which consisting of five independent variables:

Figure 1 Research Framework

Product

feature (X1)

Price (X2)

Brand Name

(X3)

Social

Influence (X4)

After-sales

service (X5)

Purchase

Decision (Y)

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2. METHOD

This research uses quantitative design method to test a theory which use relation from

each variable (Sekaran & Bougie, 2011), study that include in hypothesis test usually

explain about characteristic of certain relation, or explain differences each community

or individuals, two or more factor in one situation.

The type of this study is exploratory research which name merely aims to explore

specific aspects of the research area. Exploratory research does not aim to provide final

and conclusive answers to research questions. This research is conducted in Surakarta

areas. The population of this study are people who already have smartphone or they

willing to buy new or secondary smartphone.

The research sample is 125 respondents, consist of 67 females (53.6%) and 58

males (46.4%). The sampling method used in this study is non-probability sampling

that each population do not have any chance to fill same questionnaire. With using

convenience sampling technique and the subject were selected because of the

convenient accessibility and proximity of the researcher. This research is using primary

data as data resources through online questionnaire to fill in and physical questionnaire.

3. FINDINGS AND ANALYSIST

3.1 Findings

Demographic questions of the designed survey questionnaire of this study were asking

the respondents’ age, gender, level of education, their income and the smartphone

brands. The frequency and percentage of demographic distribution of 125 respondents

are presented in Table 1.

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Table.1 Demographic Distribution

Items Frequency Percentage

Gender

Male 58 46.4

Female 67 53.6

Age

17 5 4.0

18 11 8.8

19 18 14.4

20 21 16.8

21 29 23.2

22 21 16.8

23 14 11.2

24 4 3.2

25 2 1.6

Level of education

Senior High School 5 4.0

Diploma 2 1.6

Graduate program 93 74.4

Postgraduate

program(Master, Ph.D)

19 15.2

Occupation 6 4.8

Level of income

<1 million 28 22.4

1million - 1.5 million 56 44.8

1.5million – 2million 27 21.6

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2.1million – 2.5 million 10 8.0

>2.5 million 14 3.2

Smartphone brand

Vivo 14 11.2

Oppo 19 15.2

Xiaomi 20 16.0

Apple 34 27.2

Huawei 5 4.0

Honor 3 2.4

Asus 7 5.6

Samsung 20 16.0

Other 3 2.4

Total : 125

To measure the validity, researcher used Confirmatory Factor Analysis (CFA) as

analysis technique and Cronbach Alpha statistical test (α) as reliability test

measurement tool. An indicator is declared valid when the loading value is 0.5 or more

(Hair et al., 2014)

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Table.2 Factor analysis

Components

Brand

name

After

sales

service

Product

features

Purchase

decision

Social

influence Price

Camera specification ,535

Connectivity ,615

Internal storage ,742

Product form ,695

High priced product ,526

Low priced product ,640

Product price ,803

Brand recognition ,787

Brand reliability ,774

Brand loyalty ,743

Brand name decision ,767

Environmental

influence ,722

Feature comparison ,747

Persuasion ,748

Reliable

guarantee/warranty ,552

Guarantee claim ,604

Customers’

complaints ,742

Effective response

for customers’

complaints

,759

Product information

search ,750

Suggestion ,734

Brand consideration ,767

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The results of descriptive analysis and reliability test are presented in Table 3.

Based Sekaran, (2006), the Cronbach Alpha value > 0.60 indicate that the

measurement items are a good items to measure a construct. The means for the

variables range from 3.49 to 4.50

Table.3 Descriptive analysis and reliability test

Variable Mean S.D. No. of items Cronbach’s alpha

Product

feature

4.46 0.546 5 0.666

Price 3.49 1.037 5 0.688

Brand name 4.47 0.655 5 0.624

Social

influence

4.01 1.066 5 0.662

After-sales

service

4.50

0.518

5

0.653

Purchase

decision

4.30 0.687 5 0.638

3.2 Data Analyst

Table 4 represents the coefficient regression model for the analysis presented in this

study. From the coefficient regression table, customers’ purchase decision of

smartphones can be explained by product feature, price, brand name, social influence

and after-sales service. it can be argued that 45.4 percent of variation in smartphone

purchase decision explained with product features, price, brand name, social influence

and after-sales service and the other 54.6 percent can be explained by other variables

that the researcher did not cite in this research.

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Table.4 Coefficient regression

a. Predictors: (Constant), After-Sales Service, Brand Name, Price, Product Feature,

Social Influence

The results of data analysis that has been done with the SPSS statistical

application shown in table 5 obtained the value of F arithmetic of 21.652. It can be

examined that F - test sig. less than 0.05 indicating the model presented in this study is

an appropriate model. The regression model has a value of F- arithmetic greater than

the value of F-table (21,652 > 2,31). When viewed from the significance value, the

significance value is less than 0.05 which means that the research variables can be

accepted or product features, price, brand name, social influence and after-sales service

are appropriate variables toward the customer purchase decision.

Model R R Square

Adjusted

R Square

Std. Error

of the

Estimate Durbin-Watson

1 ,690(a) ,476 ,454 2,170 1,891

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Table.5 Anova

Model

Sum of

Squares df

Mean

Square F Sig.

1 Regression 509,713 5 101,943 21,652 ,000(a)

Residual 560,287 119 4,08

Total 1070,000 124

Table.6 Multiple regression linear

Based on the results, Hypothesis 2 and 4 are rejected because the P-value is .979 and

.342 for the relationship between price, social influence and customer purchase

decision of smartphone. Besides, there is a significant and positive relationship

between product feature and customer’s purchase decision of smartphone (P-value

=.045). Brand name shows a strong significant effect on purchase decision (P-value

Mode

l

Unstandardized

Coefficients

Standardized

Coefficients t Sig.

B

Std.

Error Beta B

Std.

Error

1 (Constant) 3,136 2,396 1,309 ,193

Product Feature ,199 ,099 ,177 2,022 ,045

Price ,003 ,103 ,002 ,026 ,979

Brand Name ,337 ,080 ,368 4,224 ,000

Social Influence ,067 ,070 ,110 ,954 ,342

After-Sales Service ,253 ,099 ,221 2,555 ,012

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=.000). Finally, after-sales services have a significant and positive relationship toward

customer purchase decision of smartphone P-value =.012)

The table of multiple regression linear equation can be structured as follow:

Purchase decision = 3.136 + 0.199 product feature + 0.003 price + 0.337

brand name + 0.067 social influence + 0.253 after-sales service + e

3.3 Discussion

This research was conducted to discuss the influence of product feature, price, brand

name, social influence and after-sales service that affected the consumer purchase

decision of smartphone brand among people living in Surakarta city. Product feature,

price, brand name, social influence and after-sales service simultaneously have a

positive influence on purchase decision.

3.3.1 The Influence of the Product Feature On Purchase Decision

The product feature variable has a positive significance effect on purchase decision.

The regression coefficient indicates that the product feature variable has a positive

effect on purchase decision. Product features can be defined as the attributes of a

product that can satisfy consumers’ preferences through having the product, using and

applying the product (Kotler et al., 2007). From this definition, it can be explained that

features make one product unique and distinguish itself from other product of

competitors.

In this study, the feature of smartphone that the respondents almost agree to all

items was the camera mega pixel, the shape or size of the smartphone, the connectivity

4G/5G and its audio capability. These features had an effect on the consumer purchase

decision. The respondents have changed smartphone a lot before so they knew which

smartphone brand have better camera or which feature must they take into account

before purchasing. These findings confirmed the previous research conducted by (Ding

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et al.2011) and (Suki,2013) that product feature, brand and social influence have

significant influence on purchase decisions.

3.3.2 The Influence of Product Price On Purchase Decision

The product price has a negative and significant effect on purchase decision. The

regression coefficient indicates that the price variable has a negative effect on purchase

decision. According to Sulistyari & Yoestini, (2012), price is an important variable in

marketing, where price can influence consumer in making decision to purchase a

product. Thus, customers buying decision will be mainly based on the perceived price

of a certain products whether it is expensive or come with a reasonable price, they will

likely evaluate the price with the quality then if the quality matches the customer’s

perception on the price, then they will make purchasing.

In this study, price variable did not have any effect on purchase decision as

customers buying decision is mainly based on the price that has set. Anywhere in the

world, price is the most important factor for the customers to purchase goods/services,

it can heavily influence or change a customer behavior whether it comes with an

affordable or expensive price. However, in this case the Indonesian society do not

merely rely on the pricing factors of a product but tend to search for more information

on a product such as its feature, brand image or other factors. Unlike previous

researches like (Djatmiko et al,2016) conducted in Malaysia and (Swani and Yoo,2010)

which both mentioned that price has the most significant influence on consumer

purchase decision on smartphone and other product.

3.3.3 The Influence of Brand Name On Purchase Decision

According to Kotler & Armstrong, (2010) Brands are more than just names and

symbols. It is also the element of relationship between company and customers. “Brand

names are valuable assets that help correspond quality and suggest precise. This shows

that brand name is something special that has a high value that cannot be copied by

other company as it involves a deep understanding of consumer needs and wants, a

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relationship between company and customers. Brand name can be an identity and

exclusivity that represent the organization. Brand name can be as name, term, symbol

and design to differentiate the organization from the competitors.

In this study, brand name has a positive and significant effect on purchase decision.

This could be caused by reasons as Indonesian people prefer to buy an internationally

recognized and trustworthy brand of smartphone and will only consider buying their

favorite brand of smartphone. This finding confirm previous researches such as (Liew,

2012) (Mudondo, 2014) and (Suki, 2013) that brand name also has a strong influence

on purchase decision of smartphone.

3.3.4 Social Influence Effect On Purchase Decision

Social influence has no effect on purchase decision. The regression coefficient

indicates that the social influence variable has a negative effect on purchase decision.

Social influence related to an individual may cause another person to change his or her

feelings, attitudes, and behavior, intentionally or unintentionally (Rashotte, 2007).

Consumers are dependent on their smartphones when they have high continuous use

and are reluctant to be apart from them (Tian et al., 2009). From these definitions, it

can be concluded that a smartphone user might be influenced by a social group, family

and friends when purchasing a smartphone.

However, in this study the social influence has no influence on purchase decision.

Unlike previous research conducted mostly in Malaysia (Ding et al. 2011); (Suki, 2013)

and (Chew, 2012) stated that social influence has a strong influence on purchase

decision. It was not the case especially in Indonesia as university students are still loyal

with their favorite smartphone brands and prefer the prestige more than being

influenced by other person when it comes to purchase a new smartphone. Also, they

might prioritize the brand equity of a product or looking at the value for money

smartphone according to their budget.

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3.3.5 After Sales Service Have Influence On Purchase Decision

After-sales service has a positive significant effect on purchase decision. The

regression coefficient indicates that the after-sales service variable has a negative effect

on purchase decision. According to Gaiardelli et al., (2007), after-sales service for

manufactured goods include a set of activities that happen after the product is

purchased, committed to support customers in the usage and disposal of goods. In other

words, the term of after-sale service refers to the services that are delivered to the

customers after the products/goods have been purchased (Sigala et al., 2008).

In this study, after-sales service has an influence on purchase decision. It could be

caused by opinions on each respondents. As some respondents might prefer having a

reliable guarantee/warranty from their favorite brand or to purchase a smartphone

based on the easy claim of the guarantee, while some just satisfied with the convenience

of a smartphone brand that provide a complementary call centers for customer

complaints and outstanding after-sales service. This result could be justified by the

previous research such as (Subramanyam and Venkateswarlu, 2012); (Pakola et al.,

2010) and (Sata, 2013) conducted in Ethiopia and even though their degree of

correlation is the least as compared to other factor during these researches, it still has

an influence over consumer purchase decision of smartphone in Indonesia.

4. CONCLUSION

Based on the results of analysis and hypothesis testing on people living in Surakarta

and the discussion above, the conclusion is Product feature has a positive and least

significant effect on purchase decision, Price has a negative and no significant effect

on purchase decision, the brand name has a positive and strong significant effect on

purchase decision, social influence has a negative and no significant effect on purchase

decision and after-sales service has a positive and significant effect on purchase

decision.

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Based on the results of data analysis and the discussions above, the limitations of

the study indicate that the coefficient regression results only show 45.4% factors that

affect customer purchase decision, while there are still 54,6% other factors that the

author did not discuss and mention in this research. Moreover, the sample of this

research is only 125 respondents of people living in Surakarta that have different

background but mostly university students. If the research respondent area is wider,

such as the whole Indonesian archipelago it will make the research’s result more

reflecting toward the customer purchase decision. Finally, this research only used five

independent variables and only one dependent variable.

Based on the result of the study, there are two suggestions that can be taken into

account for further research which is to identify other factors that is actually influencing

the purchase decision of smartphone in Indonesia and in accordance to the Indonesian

context such as the marketing gimmick, convenience and dependency of smartphone

in addition to the factors discussed in this study. Besides, further researchers could use

other methods in analyzing buying decision, for instance through direct interviews and

distributing the questionnaire form with the targeted respondents, so that the answer

obtained from them is more accurate, reliable and honest than using online

questionnaire for which the answer is already available and mostly less reliable and

they just need to check list the answer.

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