THE IMPACT OF BRAND EQUITY ON CUSTOMER PURCHASE DECISION IN CHOOSING TELECOMMUNICATION PROVIDER IN PADANG (CASE : SIMPATI AND XL)

Yomi, Dwita Aprilia (2015) THE IMPACT OF BRAND EQUITY ON CUSTOMER PURCHASE DECISION IN CHOOSING TELECOMMUNICATION PROVIDER IN PADANG (CASE : SIMPATI AND XL). Masters thesis, UPT. Perpustakaan Unand.

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Abstract

Research Background The development of technology makes the need to obtain information quickly and compliance with the quality of an effective and efficient interaction in communication becomes a necessity for today's society. Where this needs into demands that must be met by the perpetrators business in the field of telecommunications. Changes in mobile communication technologies are so fast and difficult to predict. The development will demand very rapidly in the telecommunications business and business information makes it very tempting to capitalize to the maximum. Nowadays, competitions in telecommunication providers are very tight, so any company or telecommunication providers are competing to win the competition. One advantage over the competition is the increasing number of customers who use any card issued by the telecommunication provider companies, assuming the old customers do not switch to another cellular card. Indonesia is one of the countries with the highest number of mobile phone users in the world. How not, the number of mobile phone users in Indonesia reached 270 million, exceeding the total population in Indonesia, which is only 253 million in 2014. So it is not surprising that Indonesia is a field that is very lucrative telecommunication provider business. In Indonesia, there are many companies that provide the telecommunication provider. Here is the data about the company that issued the telecommunication provider services, namely: Table 1.1 Telecommunication Provider Company No Company Product 1 PT Telkomsel Halo (post paid) Simpati (Prepaid) AS (Prepaid) Loop (Prepaid) 2 PT Indosat Tbk Mentari (prepaid) IM3 (prepaid) Matrix (post paid) StarOne (prepaid and Postpaid) 3 PT XL Axiata Tbk XL prepaid XL post paid 4 PT Axis Telecom Indonesia Axis prepaid Axis post paid 5 PT Hutchison CP Telecommunication (HCPT) Tri prepaid Tri post paid 6 PT Smartfren Telecom Tbk Smartfren prepaid Smartfren post paid 7 PT Bakrie Telecom Esia prepaid Esia post paid 8 PT Telkom Flexi prepaid Flexi post paid Sources : Daftarperusahaan.com, 2015 To build and maintain a brand in global competition is not an easy job. Process that must be followed to raise a brand often spent a long time, but it needs effort and considerable expense. If effort to build a brand is successful, will give a great influence on the future of the product it self. Telkomsel, XL and Indosat are the three largest telecommunication providers in Indonesia. The following data is the number of three largest telecommunication provider users in Indonesia in 2014. Table 1.2 Number of Three Largest Telecommunication Provider Users in Indonesia at 2014 Mobile operator Total users in first quarterly (Q1) *million Total users in third quarterly (Q3) *million Simpati 132.7 139.2 XL 62.9 58.3 IM3 59.7 54.3 Sources : Techinasia, 2014 Based on the table 1.2 above, Simpati as the largest telecommunication provider in Indonesia. The company reported an increase in the number of users significantly. In Q1 total users reported reaching 132.7 million users, while in Q3 totaled 139.2 million users. In terms of data subscribers, Telkomsel users reached 63.5 million with an increase in data traffic reached 146.1 percent. In addition, Telkomsel also has 34.5 million smart phone users. While XL Axiata as the second largest telecommunication provider apparently decreased. In Q1 XL Axiata reported total reached 62.9 million, while in Q3 reported to reach 58.3 million. This is certainly an impact on the amount of XL data subscribers. In Q1 number of data subscribers XL reported reached 32.2 million, while in Q3 decreased to 31.2 million subscribers. Despite the decreased number of data subscribers, the company claims to have increased as much as 136 percent of data traffic over the same period last year. In addition, XL Axiata claims to have 14.6 million smart phone users. Furthermore, Indosat as the third largest telecommunication provider also decreased significantly. Indosat has 59.7 million subscribers in Q1, while according IndoTelko this company reduced the number of subscribers to 54.3 million in Q3. However Indosat claimed to have a significant increase in data traffic with a total of 55.467 terabytes, compared with the same period last year, which reached 17.646 terabytes (Techinisia, 2014). Similar with three largest telecommunication providers in indonesia, Simpati, XL and IM3 also three largest telecommunication providers in Padang (Padang-Today.com, 2015). Telkomsel as the company of Simpati has 310.000 users than XL Axiata as the company of XL has 40.000 users (Minangkabau.com, 2015) Today, one of the most popular and most important marketing concepts is brand equity. There are a number of reasons for its popularity but its strategic role in the gaining competitive advantage is one of the most important researches. An appropriate metric, for the evaluation of long run impact of the marketing decisions can be acquired by measuring brand equity correctly and objectively (Simon and Sullivan, 1993). To be successful, a firm should retain its current customers and make them loyal to their brands (Dekimpe et al., 1997: 405). More buying, paying premium prices and providing new referrals through positive word of mouth, loyal customers build businesses (Ganesh et al., 2000: 65). For this reason, knowing how consumers assess a brand is important. Therefore, we need to determine brand equity influences on consumer purchase decision. Brand equity refers to the incremental utility or value added to a product from its brand name. It is often believed to contribute to a company‟s long-term profitability (Jalilvand et al, 2011). Brand equity has been deemed as primary capital for many industries. Strong brands can increase customers trust in the produced or service purchased and enabling them to better visualize and understand intangible factors. There are 4 variables of brand equity: brand awareness, perceived quality, brand association and brand loyalty. Brand awareness is the ability of potential user to recall and recognize that a certain brand is a member of certain product category (Aaker, 1991). Perceived quality is the perception of a customer about the overall quality of a service or product with respect to its intended purpose, relative to its alternatives (Zeithmal, 1988). Brand association is anything which is linked in memory to a brand (Aaker, 1991). Brand loyalty is the likelihood of a customer to switch over to another brand, especially, when the other brand is different in product features or price (Aaker, 1991). Customer purchase decision process can sometimes be a complex process and consumers can rely on the information about specific products and brands and their consumer experience gathered to reach purchase decision (Jiang & Rosenbloom, 2005). Operational definition of the purchase decision can be defined that every consumer has five stages of decision making, especially in complex decision situations: recognizing the problem, research to gather information, evaluate options, and make decisions about purchases, behavior after purchase. Purchasing process is started much before the actual time of purchase and its consequences continue until long time after the purchase. Now, there are two top brand telecommunication providers that dominate the market. There are Simpati from PT Telkomsel and XL from PT XL Axiata Tbk. Both of these telecommunication providers compete to gain wider market share. This is done with a wider range of signal and provides eased in usage of that telecommunication providers. When we look from the brand awareness two brands of telecommunication provider has been attached in the mind of customers. Simpati is telecommunication provider which is first dominates the market share. In this case, Simpati as market leader of telecommunication provider while, XL as market challenger. However, challenge for XL is always keeping brand awareness in the minds of consumer remains high. While, for Simpati the brand awareness in the minds of consumer is already high. Simpati is identically with the red colour while XL is identically with blue colour. Nowadays, there are many advertisings of telecommunication provider, do not miss to Simpati and XL that provide and introduce their new features. With advertising that more creative and interesting, so that telecommunication provider success gain the customer to use that provider. To use the advantages and disadvantages of each telecommunication provider is a decisive point in the get or lose the loyalty in the society. To assess the advantages of a telecommunication provider used benchmark in the same average includes tariffs and advanced features and benefits obtained in accordance. On the element of brand association, which are on the images of the brands. If we measure it based on the price of both telecommunication provider, the price of Simpati is higher than XL because it related with quality that offer by the both of telecommunication provider where Simpati give higher quality product and services rather than XL. For the customer, both of these telecommunication providers are easy to find. Another brand association for customer is Simpati created high class product for customers rather than XL. On the element of the perceived quality it is related with customer perception with quality or performance of the products. The quality and performance of Simpati is higher than XL because of the innovation and dynamic and also prioritizes service quality. One of superiority of Simpati is quality and wide range of signal that can reach the areas around Indonesia. For maximize the quality and performance of both telecommunication, they created their service centre. Simpati has service centre named Graphari Telkomsel where in Padang city that located in Khatib Sulaiman Street while XL centre that located in A.yani Street. While on the element of brand loyalty will be seen how the two brands of this telecommunication provider retain their customer. In this competition occurs bet of tight loyalty which Simpati try hard to maintain their customer loyalty while XL fight to get the loyalty. Therefore, brand loyalty must be properly managed in order to enhance customer value. In the table of 1.2 we can see that the users of Simpati are increase while the users of XL are decrease. That could happen because of the switching of the customer that prefers use the telecommunication provider that give the higher quality and the performance. This research was exam the impact of brand equity on customer purchase decision of Simpati and XL telecommunication provider in Padang. The variables of brand equity are: brand awareness, brand association, perceived quality, and brand loyalty, and with this research can give the useful input for the PT Telkomsel and PT XL Axiata Tbk. Based on the description of the background that have been outlined above, researcher interested in conducting research with the heading “The Impact of Brand Equity on Customer Purchase Decision in Choosing Telecommunication Provider in Padang (Case Study : Simpati and XL)”

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