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Background of study

Business competition nowadays getting tighter, where mobilization rate getting higher
followed by the technology growing rapidly. With 248 million of inhabitants, 39
million is internet users and 5 million is digital buyers. Not really big amount, but it
has been much increase since 2013 and it has the potential to grow 25 to 57 percent a
year through 20171.
This condition demand people in business to be more careful in doing marketing
strategy in order to maintain their business. It needs an innovative and fresh marketing
strategy to increase the marketing and selling and be ready to compete in market. One
of marketing strategy that is evolving is through media online, specifically website.
Website is very expand nowadays, many businesses make their own website and
through website the information spread over faster, wider and easy to access with an
affordable cost.
Almost all new businesses either big or small doing marketing activity through online.
Activity to advertise the product through internet called as e-marketing. Doing
business activity through internet can decrease the cost and time because the activity
can be done within 24 hours and 7 days, wherever and whenever as long the connection
is available.

Figure 1.1: 70% of Indonesian online users intend to make an online purchase2
By looking Indonesia market, and Jakarta as the biggest market also a capital city Top3
Media looks opportunity in Indonesia, Top3 Media Singapore expand their business to
Indonesia by open the 360 degree branding and digital marketing communication
partner in Jakarta, known as Top3 Media Indonesia and also Grab! Indonesia for design
expert. Top3 Media is a full-service marketing agency working alongside companies
and business in Singapore to help them grow globally through a strong online presence
and precise control over the digital space. Headquartered in Singapore with a presence
in Australia, Indonesia, Vietnam and China. Top3 Media is SAP Partner, Google
Partner, Oracle Partner and IBM Business Partner.
The services Top3 Media Indonesia provides are: Branding, Copy writing, website
design and development, e-commerce design and development, mobile apps design

and development, social media management, SEO (Search engine optimization), SEM
(Search Engine Marketing) and GDN (Google display network).

1.1 Problem Identification

Jakarta is the country's economic, cultural and political center. It is the most populous
city in Indonesia and in Southeast Asia, and is the tenth-largest city in the world.
Jakarta as the capital city of Indonesia, it has own magnetism to make people from
every region in Indonesia to come to Jakarta with the thought to make their life better.
Jakarta has 50.306 registered company, many business goes online also more than 20
big e-commerce based in Jakarta, such as: Lazada, tokopedia, zalora,,
traveloka, rajakamar, kaskus, olx, Rakuten and many more but still many people and
other business still dont understand about what is online business which is give more
benefit to the business. Many people refuse to make their business goes online when
people in marketing agency sees that the market for online business is getting larger.
Despite that digital marketing holds many great possibilities not all business segments
utilize them to its maximum (Kumar & Mirchandani, 2012). The business-to-business
(B2B) marketers have difficulties to fully utilize digital marketing as a marketing tool
(Swani, Brown & Milne, 2014). Business-to-customer (B2C) marketers are on the
other hand relatively well equipped for the challenge and have long experience from
marketing through digital (Swani, Brown & Milne, 2014; Kumar & Mirchandani,
2012). Even if most studies have found utility in using relationship-oriented digital
marketing to improve the selling process, communication and improvements of brand
awareness have mainly existed in B2C contexts (Moore & Raymond, 2013; Mangold
& Faulds 2009; Vernuccio, 2014).
It is of great importance that B2B companies understand digital marketing and learn
what possible effects that the usage of these could have (Krkkinen, Jussila &
Visnen, 2013). While there is a general understanding how digital marketing can
affect the direct relationship between business and customers there is a lack of research

on the impact that these types of applications can have on a firms competitiveness in
a B2B context. An efficient digital marketing strategy can lead to a strong demand
generation all over the world and in the long term perspective be decisive for a firms
ability to compete (Coughlan, Anderson, Stern & El-Ansary, 2006).

1.3 Problem Identification

1. Is there any partial significant influence of Website design and development
toward businesses in Jakarta?
2. Is there any partial significant influence of E-commerce design and
development toward businesses in Jakarta?
3. Is there any partial significant influence of Mobile Apps design and
development toward businesses in Jakarta?
4. Is there any partial significant influence of SEO, SEM and GDN toward
businesses in Jakarta?
5. Is there any partial significant influence of Social Media Management toward
businesses in Jakarta?
6. Is there any partial significant influence of Digital Marketing Strategy toward
businesses in Jakarta?

1.4 Research Objectives

This research will analyze whether Website design and development, E-commerce
design and development, Mobile Apps design and development, SEO, SEM and
GDN, Social Media Management has significant influence toward businesses in
The objectives to conduct this research are:
1. To be able to know if there is partial significant influence of Website design
and development toward businesses in Jakarta
2. To be able to know if there is partial significant influence of E-commerce
design and development toward businesses in Jakarta.
3. To be able to know if there is partial significant influence of Mobile Apps
design and development toward businesses in Jakarta.
4. To be able to know if there is partial significant influence of SEO, SEM and
GDN toward businesses in Jakarta.
5. To be able to know if there is partial significant influence Social Media
Management toward businesses in Jakarta.
6. To be able to know if there is simultaneous significant influence of Digital
Marketing Strategy toward businesses in Jakarta.

1.5 Significant of Study

The significant of the study not merely just to achieve good grades but also to
contribute to theoretical and practical:
1.5.1. Significance study for University
Hopefully this study will help for education needs of student that are
looking for theory about digital marketing strategy. It also can be
guidance and reference for students who will conducts similar research.

1.5.2. Significance study for Company

It will help the company especially Top3 Media Indonesia and Grab!
Indonesia to determine what variable that has the most impacts from
digital marketing strategy to business in Jakarta. So, company can do
an improvement to increase the sales.
1.5.3. Significance study for researcher
By doing this research, researcher is able to implement the theory that
got from class and give more knowledge about digital marketing
strategy. The researcher will able to know the impacts of digital
marketing strategy to business in Jakarta.
1.5.4. Significance study for future researcher
This study is conducted with the expectation that it will be useful for
future researcher. Hopefully it can be a reference for the future
researcher that conducts similar research about digital marketing, and
can be improve by adding other variables that might be related.

1.6 Definition of Terms

Website: an information page available through internet line and can be
accessed by people all around the world with internet connection.
E-commerce: a process of selling and buying products electronically by the
consumer and from business to business with the computer as the transaction
Mobile apps: a software application developed specifically for use on small,
wireless computing devices, such as smartphones and tablets, rather than
desktop or laptop computers.

SEO (Search Engine Optimization): a methodology of strategies, techniques

and tactics used to increase the amount of visitors to a website by obtaining a
high-ranking placement in the search results page of a search engine.
SEM (Search Engine Marketing): a type of Internet marketing associated
with the researching, submitting and positioning of a website within search
engines to achieve maximum visibility and increase your share of paid, usually
called as pay per click.
GDN (Google Display Network): a type of Internet marketing that has been
partnered with Google (display partners), YouTube, and specific Google
properties that display AdWords ads. These ads, which can be in text, image,
video, or rich media format, can be targeted automatically based on themes in
your keyword list, manually (matching specific placements you select), or
based on specific audiences you want to reach.
Social Media: is the collective of online communications channels dedicated
to community-based input, interaction, content-sharing and collaboration.
Websites and applications dedicated to forums, microblogging, social
networking , social bookmarking, social creation, and wikis are among the
different types of social media.
Digital Marketing Strategy: a channel strategy which means that it should

Be informed by research into customer channel behavior and marketplace

activity = intermediaries, publishers and competitors

Based on objectives for future online and offline channel contribution %

Define and communicate the differentials of the channel to encourage

customers to use it,

need to manage channel integration

1.7 Scope and Limitation of Study

In doing this research, researcher had scope and limitation. Where the usage of
scope is to make sure the data that are collected is as what researcher need. The
limitation occurs because of researcher capability.
1.7.1. Scope of study
The scope in this study is Business people with acknowledge in digital
marketing and Top3 Media Indonesia as digital marketing strategy services
providers with the total population which are limited.
1.7.2. Limitation of Study
The limitation that the researcher faces in this study is time limitation,
questionnaire distribution, people who knowledgeable with digital marketing
and unfamiliar method for the researcher. Since researcher has a limited time
to complete the research, researcher needs to have an undivided attention to
make sure the research finished on time. This makes the researcher to only be
able to deliver the questionnaire in center of Jakarta and the client of Top3


2.1 Theoretical Review

Marketing is one of main activity in every aspect of businesses in order to maintain
the continuance of the business, development and to get profit. Marketing was
expanded from market which means a tools or place where people gathering to
sell their product. In abstract description, marketing means an activity, process of
the whole system. According to Kotler and Keller ( 2009, 45) marketing is a
process to plan and execute the concept, price, promotion and idea distribution,
product and services to make satisfied exchange activity, for individual also
organizations goal. Marketing keep expand, until 2004 we can know digital
revolution. Digital Marketing has impacted consumers and businesses alike. Over
the past decade technology and the way it is used has changed drastically. The
Internet, once purely a source of information has become a place where people
meet to share their stories and experiences, a platform for discussion and debate, a
source of entertainment and much more. Furthermore, the Web has several
important marketing aspects that enable companies to boost their performance: 24







micromarketing compatible; integration ready. (Rowley, 2004, p. 26) As a result,

the marketing profession has also changed. A variety of new tools are available
that can build brand awareness, increase brand loyalty and improve the bottom line.
Now more than ever marketers can interact with their consumers, understand what
they want and communicate the benefits of their solutions. Furthermore,
technology provides marketers with an opportunity to add value in ways that were
once unthinkable.

The fact is the Internets influence is growing and it is not a fad that will be
replaced. It is here to stay. It is important to understand how well marketers have
adapted to the digital revolution and why. By understanding the reasons
companies have or have not successfully adapted to a web oriented world,
recommendations can be made as to how businesses can optimize their digital
marketing strategies.

Website Design and Development

By having a website, a business can be seen as professional, since website is
open to everyone, can be accessed by everyone in everywhere and if the design
good, it would be a bonus for the business to increase their conversion rate,
According to Scott states (2010: 6) that the website has created a huge
opportunity to reach niche buyers directly with targeted information that costs
a fraction of what big-budget advertising costs. As such, smaller companies
can even reach their target market via digital marketing without necessitating
huge marketing budgets. They only have to find the best and more suitable
digital marketing tools such as newsletters, social media, online banners, blogs,
and pay-per-click marketing. Only problem is that digital marketing requires
innovation, since it can reach millions of people with well-planned marketing,
or only few. Creative campaigns usually get the most attention and sometimes
even have to be a bit bold and annoy the public.


E-commerce Design and Development

E-commerce is similar to website, but there is only a different is that ecommerce has payment gate away in it. In order to understand business model
of Design with Benefits it is important to define the term e-commerce. It refers
to online transactions: selling goods and services on the Internet, either in one
transaction or over time with an ongoing subscription price. Online retail firms
buy products and resell them online. Physical products are delivered by using

traditional transportation methods and digital products, such as software and

music, can be delivered via the Internet. (Strauss and Frost 2009: 33)

According to Kril (2013) online shopping can be considered to be a subcategory of ecommerce as it strongly refers to business-to-consumer
transactions such as online retail or online auctions. Online shopping has
increased significantly in recent years and therefore many traditional
department stores have expanded to include online sales. Like what Matahari
mall doing now, they are expanding their business to online. In addition, some
new companies have concentrated on selling only through online store.


Mobile Apps
A mobile application (or mobile app) is a program, embedded into a mobile
device that performs a specific purpose. They are distributed through software
platforms called Application Store, such as the Apple App Store, Google Play,
Windows Phone Store. According to Buyens ( 2001 ), mobile apps came from
word of application and mobile. Application means applying, and application
is a program that ready to use, which was created to do a function for the user
or another application. While mobile can be meant as flexible and can be
moved. So that the mobile application is a nick name for the application
running in mobile devices. By using mobile application, users can do many
activity, means mobile apps very helpful. No wonder, nowadays, businesses
moving to here. For example is traditional Ojek moves to GoJek, GrabBike,
etc. GPS application moves to Google Maps and Waze, Books turns to be
Scribd Apps, ATM machine and Banking activity turn to M-Banking, and
many more.



SEO ( Search Engine Optimization )

This is a process that aims to enhance the websites listing in search
engine results. SEO is done by improving the websites search
engine friendliness. In other words, phrases on the site, blog, or
other online content are found by the search engines. SEO is often
outsourced. (Damian 2011: 273; Scott 2012: 298)
There are wide variety of marketing tools for companies to use.
That is why every company or businesses should evaluate their
goals and their target customer in order to choose the best tools for
their purposes. This applies to traditional marketing as well as
digital marketing, since the purpose of marketing in general is to
reach the target market.

SEM ( Search Engine Marketing )

SEM called as pay per click, this is also known as sponsored search
or paid search. PPC marketing offers to the potential for marketers
to bid for placement in the paid listings search results by choosing
relevant search terms for their business. Companies pay the
amount of their bid only when consumer clicks on their listing.
Undoubtedly, the most well-known PPC tool is Google AdWords,
and Google Analytics for monitoring the results, but Yahoo and
Microsoft are also offering the same tools. (Damian 2012: 273)
Through these tools it is possible to increase website visibility and
evaluate its effectiveness. AdWords is a service to create PPC
campaigns by setting relevant keywords. It allows the user to add,
delete, and manage bids. Google Analytics is a tool designed to
evaluate a companys performance in Google searches, clicks on

the website, how users entered the website, and customer

acquisition. These two tools have evolved as a unified tool. (Ramos
and Cotta 2009: 48, 180-182)

GDN ( Google Display Network )

This can be, for example, in the form of banner ads on websites or
in emails. For marketers this is a visible way to create brand
awareness but it does not necessarily translate into direct clicks.
Targeted product recommendations based on users clicks are also
a rapidly growing means of advertising which may increase
product awareness and trigger purchase action. (Blanding 2013;
Damian 2011:267; Court 2009)


Social Media Campaign

This chapter goes over the social media aspect in digital marketing, and
identifies its possibilities for the company. The general definition of social
media according to Kaplan and Haenlein (2010:61), is that, social media is a
group of Internet-based applications that build on the ideological and
technological foundations of Web 2.0, and that allow the creation and
exchange of User Generated Content, and it really helps to spread the
information. No wonder many business using this opportunity to spread the
information through it. Some of the most well-known examples of social
media which mostly used by people in Jakarta to penetrate the market and
make their brand being known by public are Facebook, Twitter, YouTube,
Instagram, and Pinterest. According to Nielsens study (2013) consumers
spend more time on social networks than on any other category of website.
Approximately 20 percent of their total time online was used on a personal
computer (PC) and 30 percent of total time online on a mobile device. Other
devices such as tablets, game consoles, handheld music players and e-readers

also increased in popularity for accessing social media. In addition, Nielsens

(2012:7) survey indicated that social media is not solely connected from home,
but for example, more than half of people aged 25-34 use social networking
in the office. It also revealed that social media has fundamentally changed the
consumer decision journey. In other words, the days when companies could
tightly control brand messaging and progress consumers along a linear
purchase funnel have ended. Consumer decisions and behaviors are
increasingly driven by the opinions, tastes and preferences of an exponentially
larger, global pool of friends, peers and influencers. It came up that 70 percent
of the social media users hear others experiences online, 65 percent learn
about brands, products and services, 53 percent compliment brands, 50
percent express concerns and complains about brands and services, and 47
percent of them share monetary incentives. (Nielsen 2012:11) Ryan and Jones
state in their book (2011: 14) that the shift towards social media is perhaps the
most significant recent development in online marketing. It can be seen that
social media represents a great opportunity for companies and brands to gain
positive favor with consumers.

2.2 Theoretical Framework






Mobile Apps




Social Media

Business in


2.1 Hypothesis
In this research, researcher would like to know whether website, ecommerce, mobile apps, SEO-SEM-GDN, and Social media campaign as digital
marketing strategy have significant influence toward businesses in Jakarta. The
hypotheses are as follow:

There is no any partial significant influence of website toward businesses

in Jakarta


There is a partial significant influence of website toward businesses in



There is no any partial significant influence of e-commerce toward

businesses in Jakarta


There is no any partial significant influence of e-commerce toward

businesses in Jakarta


There is no any partial significant influence of mobile apps toward

businesses in Jakarta


There is no any partial significant influence of mobile apps toward

businesses in Jakarta


There is no any partial significant influence of SEO-SEM-GDN toward

businesses in Jakarta


There is no any partial significant influence of SEO-SEM-GDN toward

businesses in Jakarta


There is no any partial significant influence of social media campaign

toward businesses in Jakarta


There is no any partial significant influence of social media campaign

toward businesses in Jakarta


There is no any simultaneous influence of website, e-commerce, mobile

apps, SEO-SEM-GDN, and Social media campaign toward businesses in


There is no any simultaneous influence of website, e-commerce, mobile

apps, SEO-SEM-GDN, and Social media campaign toward businesses in


3.1 Research Design

There are two methods in doing scientific research those are qualitative
and quantitative research. The differences between qualitative and quantitative
research are the type of data, research process, instrument in collecting data
and the purpose of research. Quantitative method involves smaller numbers of
respondents, Utilizes open-ended questionnaires or protocols, Best used to
answer how and why questions. (, 2013).
Quantitative observations are made using scientific tools and
measurements. The results can be measured or counted, and any other person
trying to quantitatively assess the same situation should end up with the same
results. In Quantitative method pieces of information that can be counted
mathematically, itusually gathered by surveys from large numbers of
respondents selected randomly and it is analyzed using statistical methods Best
used to answer what, when and who questions (,2013).
The researcher use quantitative method in conducting research.
Multiple Regressions analysis is an extension of simple linear
regression. It is used when we want to predict the value of a variable based on
the value of two or more other variables. The variable to be predicted is called
the dependent variable (or sometimes, the outcome, target or criterion
variable). The variables that used to predict the value of the dependent variable

are called the independent variables (or sometimes, the predictor, explanatory
or regressor variables) (, 2013).
Therefore, this study uses the quantitative method with Factor Analysis
and Multiple regressions Analysis to answer the research questions.


Research Framework
The main topic of this research is the influence of digital marketing
towards businesses in Jakarta Study Case of Top3 Media. As described in
Chapter 2, in doing business digital marketing such as website, e-commerce,
SEO, SEM, GDN, mobile apps, and social media campaign really influence the
business in Jakarta nowadays. This research specifically investigates the
influence of digital marketing towards businesses in Jakarta. After collecting
the data, the researcher directly proceeded to the problem identification. From
the data obtained business Jakarta from 2012. This encouraged the researchers
curiosity to find out whether digital marketing strategy is the choice of doing
business in Jakarta or not after knowing the data. After reading some
supporting passages from journals and articles, it could be identified that
website, e-commerce, SEO, SEM, GDN, mobile apps, and social media
campaign really influence the business in Jakarta nowadays. Furthermore, the
problem statement was constructed as the basic view of the topic. To support
the problem statement, theories and opinions are explored. All those findings
are expressed in Chapter 2 of Literature Review. This then brings benefits to
the construction of the questionnaires.
Questionnaires were checked for validity and reliability test. Pearson
correlation matrix used to measure the validity and Cronbach Alpha used to
measure the reliability of the questionnaire. Pearson correlation matrix will
indicate the direction, strength, and significance of the bivariate relationships
among all the variables that were measured at an interval or ratio level (Sekaran

and Bougie, 2010, pp.321). Cronbach Alpha is a reliability coefficient that

shows how well the items in a set are positively correlated to one another
(Sekaran and Bougie, 2010, pp.324).
Before being spread, the questionnaires went through the stage of
Tryout. Ten different people were selected and gathered by the researcher to
examine whether the statements in the questionnaires were clear enough to
understand. This stage is also intended to revise some statements, so that every
respondent will have the same perception towards them. After some reviews
and proof readings, the questionnaires were finally spread to 20 respondents
whose characteristics have been provided in one of the explanations below.
In this research, SPSS was utilized to analyze the data. Finally, the
points of conclusion and recommendation are drafted. All steps conducted by
the researcher from problem identification to the result accomplishment are
reflected in the following figure of research framework.

3.3Research Instrument
Research Instrument is the tool that used to answer the research
questions that stated in the previous chapter. The Researcher intention is to
gather the information from as much various sources. Data can be obtained
from primary or secondary data, Primary data refers to information obtained
first-hand by the researcher on the variables of interest for specific purpose of
the study and secondary data refer to information gathered from sources that
already exist (Sekaran, Bougie, 2010).

In order to fulfill the validity of this research, the researcher use both
primary and secondary data as shown in the figure 3.2 below:










Figure 3.2: Data Collection Method

(Source: self-constructed)


Primary Data
Primary data is the specific information collected by the person

who is doing the research. It can be obtained through clinical trials, case
studies, true experiments and randomized controlled studies. This
information can be analyzed by other experts who may decide to test
the validity of the data by repeating the same experiments (,
Primary data in this research of The influence of digital
marketing strategy towards businesses in Jakarta study case of Top3
Media is obtained directly from the questionnaires that used for
survey. Questionnaires are a technique of data collection done by giving
series of written statements that are consists of research variables.
These questionnaires will be spread to the numbers of samples.


Secondary Data
Secondary data is information gathered for purposes other than

the completion of a research project and Secondary data is also used to

gain initial insight into the research problem (, 2013).
Secondary data is the data that have been already collected by and
readily available from other sources. Such data are cheaper and more
quickly obtainable than the primary data and also may be available








(, 2013).
Secondary data on this research is the literature studies. A
literature studies is a technique of data collection based on information
gathered from books and journals related to the research discussion.
Data collected by learning and selecting from previous literature
studies, books, journals and related websites.

3.4 Sampling Design

Sampling Design is part of statistical methodology that related in taking
a portion of the population. If a sampling is done correctly, statistical analysis
can be used to generalize a whole population. There are two major types of
sampling design: probability and nonprobability sampling. In probability
sampling, the elements in the population have some known non-zero chance or
probability of being selected as sample subjects. In non-probability sampling,
the elements do not have a known or predetermined chance of being selected
as subjects (Sekaran, Bougie, 2010).


Population is all elements, individuals, or units that meet the

selectioncriteria for a group to be studied (,

2013). The Population refers to the entire group of people, events, or
things of interest that the researcher wishes to investigate (Sekaran,
Bougie, 2010, pp. 262). In this study, research population is focused on
business in Jakarta with implementation in Digital Marketing Strategy

Sample is a subset of population (Sekaran, Bougie, 2010, pp.

263). Sample on this research will be used to investigate the research

problems. This Research will use the probability sampling. Unrestricted
sampling design in Probability sampling is more commonly known as
simple random sampling; every element in the population has a
known equal chance of being selected as a subject.
n = 20
Thus, researcher takes 20 samples in this research by using the
method of simple random sampling. Questionnaires then are distributed
to 20 business people in Jakarta

3.5 Statistical Treatment

There are 3 (three) statistical tools used in this study, which are Likert
Scale, Weighted Mean, and Standard Deviation.

Likert Scale
The Likert scale is designed to examine how strongly subjects
agree or disagree with statements on a five-point scale with the
following anchors (Sekaran, Bougie, 2010):

Figure 3.3: Likert Scale

(Source: Sekaran, Bougie, 2010)
The Questionnaire uses Likert Scale and all statements that
express either a favorable and unfavorable attitude will be scaled
through Strongly Disagree, Disagree, Neither Agree Nor Disagree,
Agree, and Strongly Agree.
The figure of the questionnaire is shown below:


Figure 3.4: Likert Scale Questionnaire
(Source: Self Developed)

1. For Strongly Disagree
2. For Disagree
3. For Neutral
4. For Agree
5. For Strongly Agree
Each of the five responses would have a numerical value which
would be used to measure the attitude under investigation.
Likert Scales have the advantage that they do not expect a
simple yes / no answer from the respondent, but rather allow for degrees
of opinion, and even no opinion at all. Therefore quantitative data is
obtained, which means that the data can be analyzed with relative ease.
The Validity and Reliability testing must be done before the
questionnaire spreads to the respondents. Pre testing is conducted to
check if the statements are proper as research instrument.

Weighted Mean
Arithmetic mean computed by considering relative importance

of each items is called weighted mean. To give due importance to each

item under consideration, numberis called weight to each item in
proportion to its relative importance. Weighted Mean is computed by
using following formula (, 2013):

Which means;

= Weighted Mean of the factors related
W = Corresponding Weight
X = A set of number designated / rate of importance

3.5.3 Standard Deviation

The Standard Deviation is a measure of how spreads out
numbers are. Standard Deviation is used when data is drawn
from a larger set (2013).

The sample standard deviation is used when a sample

of data is analyzed. In this equation:
s = sample standard deviation
N = number of scores in a sample
N-1 = degrees of freedom or Bessel's correction
x = value of a sample
x bar = mean or average of the sample

3.6 Data Analysis

In analyzing the data obtained, the researcher uses two major programs
that are statistic-related. The first program that the researcher uses is Microsoft
Excel. The employment of this program is intended to tabulate the data
obtained from questionnaires distribution. It simplifies the researcher to
analyze the data.
The second program is Statistical Package for Social Science (SPSS).
SPSS is commonly utilized by researchers to quantitatively examine the data
obtained from questionnaires distribution. It has been recognized to be helpful
to investigate statistical data. SPSS in this research was used to analyze
reliability, validity, weighted mean, factor analysis, classic assumption and
multiple linear regression analysis.

3.7 Reliability and Validity


Reliability Test
The first requirement of a good instrument was reliability. The

Reliability test of a measure indicates the extent to which it is without

bias (error free) and hence ensures consistent measurement across the
time and across the various items in the instrument. In other words, the
reliability of a measure is an indication of the stability and consistency
with which the instruments measures the concept and helps to assess
the goodness of measure (Sekaran, Bougie, 2010). Accurate
questionnaire may deflect the right question which is means when the
question is asked for several times, the interpretation would be the same
from one respondent to another.

Measurement of Reliability (Internal-Consistency) in this research will









(, 2013):

k = number of items
r = average correlation between any two items
= reliability of the average or sum
Cronbach's alpha

Internal consistency



0.8 < 0.9


0.7 < 0.8


0.6 < 0.7


0.5 < 0.6


< 0.5


3.7.2 Validity Testing

The purpose of validity testing is to eliminate the proper
question that will answer the research objectives. The Pearson productmoment correlation coefficient (or Pearson correlation coefficient for
short) is a measure of the strength of a linear association between two
variables and is denoted by r. Basically, a Pearson product-moment
correlation attempts to draw a line of best fit through the data of two
variables, and the Pearson correlation coefficient, r, indicates how far
away all these data points are to this line of best fit (how well the data
points fit this new model/line of best fit) ( ,2013).

The valid data is a representative statement of variables that are ready

to spread to the respondents.
In Pearson Correlations, results are between -1 and 1. A result
of -1 means that there is a perfect negative correlation between the two
values at all, while a result of 1 means that there is a perfect positive
correlation between the two variables. A result of 0, on the other hand,
means that there is no linear relationship between the two variables.
Most research will very rarely get a correlation of 0, -1 or 1. Result
would be somewhere in between. The closer the value of r gets to zero,
the greater the variation the data points are around the line of best fit.
The Quantitative interpretation of the degree of linear
relationship existing is shown in the following range of values.


perfect Positive (negative) correlation

0.91 - 0.99

very high positive (negative) correlation

0.71 - 0.90

high Positive (negative) correlation

0.51 - 0.70




0.31 - 0.50 low positive (negative) correlation
0.01 - 0.30 negligible positive (negative) correlation

no correlation

Correlation r formula:
For any two variables, X and Y, the correlation coefficient between
them is given by the formula:

n = number pair of scores
= sum of the products of pair scores
= sum of x scores
= sum of y scores
= sum of squared x scores
= sum of squared y scores

The first requirement of a good instrument was validity. Thus, the

researcher chooses Pearson Product Moment Correlation by using the
software SPSS 16.0 to fulfill the requirement of the instruments

3.8 Classic Assumption Test

Classical assumption is the statistical requirements that must be met in
multiple linear regression analysis (, 2013). In order to
use multiple regression models, classic assumption test need to implement such
as normality testing, heteroscedascity testing and multicollinearity.

Normality Test used to testthe independent variable(X) and the

dependent variable(Y) onthe resultingregressionequation, whethernormally
distributedornotdistributednormally. Normality Tests performed using the test










residuals(, 2013).






(scatterplot). In amultiple regression equation, it is neededto be testedfor the

sameornotthe varianceofthe residuals oftheobservationswithotherobservations.
If theresidualshave thesame variance, it is calledhomoscedascity. Andif








heteroscedascity(, 2013).Multiple regressions

equation is good if there is noheteroscedasticity.
Analysis of heteroscedasticity assumption SPSS output through the
scatterplot graph between Z prediction (ZPRED) for the independent variable
(X axis = Y outcome prediction), and residual value (SRESID) is the dependent
variable (Y-axis = Y predicted - Y rill).
Multicollinearity test aims to test whether the regression model found
a correlation between the independent variables. Good Regression model







(, 2013). (2013)









multicollinearity occurs when the VIF value is more than 10 and tolerance
values less than 0.1.

3.9 Multiple Regression Analysis

Multiple regression is a statistical tool used to derive the value of a
criterion from several other independent, or predictor, variables. It is the

simultaneous combination of multiple factors to assess how and to what extent

they affect a certain outcome (, 2013).
Multiple regression is a statistical method used to examine the
relationship between one dependent variable Y and one or more independent
variables Xi. The regression parameters or coefficients bi in the regression

equation are estimated using the method of least squares (, 2013):
There are 3 steps in doing Multiple Regression Analysis such as T-test,
F-test and coefficient of determination (R):
T-test for the partial regression coefficientis intended to determinehow farthe
influence ofone variableindependent(perceived quality, brand awareness,





individually inexplainingthe

dependentvariable(purchase decision).
F-Test is also used to determine the influence of perceived quality, brand
awareness, brand associations, brand loyalty together on purchase decision. If
F value > F table, Ho rejected and Ha accepted. Oppositely, if F value < F table,
then Ho accepted and Ha rejected.
The coefficient of determination (R) was essentially measures how much the
ability of the model to explain the variations dependent variable. The
coefficient ofdetermination is between zero and one.