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CHAPTER I

INTRODUCTION

This chapter outlines the entire framework of this research. It covers the background of the study,
research issue and problems, research objectives, and research outline to be used in this final
academic writing.

1.1 Background of The Study
Modern technology has been developed to the extent that even shopping is made possible over
the internet through online device. The process called “online-shopping” has been introduced and
developed in Indonesia as well, creating a whole new experience in shopping; simple, fast, and
easy.
The number of internet users in Indonesia, which has reached 71.19 million people,
triggers the activities of online shopping (Pitoyo, 2014). Around 57 percent of those internet
users actively involved in online business with growth of about 15 percent each year (Nisaputra,
2013). This growing number triggers the rising of new online shop all over Indonesia, especially
the ones using social media (Facebook, Instagram, Line) as their medium. The use of social
media to facilitate e-commerce is a huge opportunity for potential seller, who has no sufficient
capital, to open an online shop.
E-commerce is growing because Indonesians are finding it increasingly easy to get
online, and the offline stores have not been able to keep up with their demand (Yuniar, 2015)

according to a recent survey by Female Daily Network. its 15 million users have already taken more than 400 million pictures from all over the globe (Instagram 2011) (Hochman & Schwartz. with the huge variety of goods and services. About 40 million women are now online in the country. aside from the ability to shop from the comfort of home. Testimonials and endorsements play a huge role on increasing customers trust level. 2015) Instagram. 2009. women rule.. family and complete strangers. Social proof is a psychological process in which people copy the behavior of others. provides exactly that: a way to snap photos. A well-known person tends to have a great effect on the consumer buying behavior.239). in which women control 65% of purchasing decisions. the country’s largest online forum for women (Yuniar.Still from Yuniar. most e-stores also offer round-the-clock customer care and various payment methods (Yuniar. This social media has become the medium of most online shop in Indonesia. 2015). as they provide photos and captions at Instagram. Yuniar also stated that when it comes to buying things online in Indonesia. Every company tries to establish the brand by using the different sign. the recent fad in mobile photo sharing applications. p. online shops at Instagram usually use endorsement as their primary choice. Although only launched in October 2010. to increase customers’ trust. The increasing number of Instagram based online shop in Indonesia is significant. in an attempt to reflect correct behavior . Testimonials are mostly said to work on the basis of social proof. symbol. tweak their appearance. 2012). it attracts customers to buy the products/services. and attribute in order to create a differentiation with the others among the competitive market (Armstrong et al. and share them on various social networks with friends. therefore.

1 “Do You Have An Instagram Account” Chart Picture 1. YES (38) NO (0) Picture 1. 2014). all of the 38 respondents own an Instagram account.(Valk. The questionnaire was distributed online but personally through SurveyMonkey. This shows that all the respondents are qualified and aware about Instagram as social media. Endorsement is defined as ‘the fact of a famous person appearing in an advertisement saying that they use and like a product’ according to Cambridge Dictionary. An exploratory study had been conducted toward 38 students at UPH Business School in which they were asked to fill questionnaires related to celebrity and endorsement in Instagram. The respondent had been narrowed down to 38 persons qualified. .1 shows that according to the result of the exploratory study questionnaire of 38 students in UPH Business School. The mandatory qualification to fill the questionnaire is whether they have Instagram or not.com.

29 respondents or about 76. MORE THAN 5 TIMES A MONTH (2) LESS THAN 5 TIMES A MONTH (21) NEVER (15) Picture 1. The remaining 9 respondents or 23.2 “Do You Follow Celebrities and/or Famous Person That Have More Than 1000 Followers” Chart Picture 1.3 “Have You Ever Shopped Online in Instagram” Chart Picture 1.26% have shopped online more than .2 shows that according to the result of the exploratory study questionnaire of 38 students in UPH Business School.YES (29) NO (9) Picture 1. 2 respondents or about 5.68% aren’t following celebrities and/or famous person in Instagram.3 shows that according to the result of the exploratory study questionnaire of 38 students in UPH Business School.32% are following celebrities and/or famous person that have more than 1000 followers on Instagram.

Another 21 respondents or about 55. 5 respondents or about 13. 26 respondents or about 55.26% think that an endorsement from celebrity of famous person in Instagram sometimes/occasionally would attract potential customer to buy the product.4 shows that according to the result of the exploratory study questionnaire of 38 students in UPH Business School.47% stated that they never shop online at Instagram until now. The remaining 12 respondents or about 31.16% agree that an endorsement from celebrity or famous person in Instagram would attract potential customer to buy the product. Also. The remaining 15 respondents or about 39. . AGREE (5) OCCASIONALLY (21) NOT AGREE (12) Picture 1.58% disagree that an endorsement from celebrity or famous person in Instagram would attract potential customer to buy the product. but less than 5 times a month.26% have shopped online in Instagram.5 times a month in Instagram.4 “Celebrity or Famous Person’s Endorsement Will Attract You To Buy The Product” Chart Picture 1.

YES (19) NO (19) Picture 1. This study aims to investigate how Instagram celebrity’s endorsement could positively affect customer buying behavior in Indonesia by replicating the model developed by Chin-Lung Hsu. The remaining 19 respondents or exactly 50% have never bought a product after seeing an endorsement from celebrity or famous person in Instagram. although more than 50% of the respondents agree that celebrity endorsement has effects on customer buying intention. 19 respondents or exactly 50% have ever bought a product after seeing an endorsement from celebrity or famous person in Instagram. since it would allow them to tap a young population that is tech savvy and increasingly affluent. there is still only 50% of the respondents who ever shop online. .5 shows that according to the result of the exploratory study questionnaire of 38 students in UPH Business School. KALO ENDORSEMENT GA ADA EFEK KENAPA DI TELITI? HARUS DI TEST PAKE From the exploratory study above. (INI HARUS DI UBAH. This study is conducted due to large Getting more customers to put faith in online purchasing is something e-commerce companies (including online shops) hope to do.5 “You Ever Buy A Product After Seeing An Endorsement From Celebrity Or Famous Person In Instagram” Chart Picture 1.

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Does perceived usefulness of celebrity recommendation positively affect Instagram users 3. the issue in this study is how celebrity endorsement will positively affect customer buying behavior in Indonesia using Instagram as the media. intention to shop online? Does trust positively affect Instagram users perceived usefulness? Does trust positively affect Instagram users attitudes toward online shopping intentions? Does trust positively affect Instagram users intention to shop online? Does Instagram users attitude toward shopping online positively affects their intentions to shop online? 7.1. 5. 4. Does perceived usefulness of celebrity recommendation positively affect Instagram users attitude toward online shopping? 2.2 Research Issue and Problem Taking into account the above mentioned background. Does celebrity reputation (followers) affect the relationship proposed? . Several questions are addressed following to research issue: 1. 6.

To determine how trust positively affects Instagram users intention to shop online. 5. 2. Thus the objectives of this research are. and endorsement. and correct limitations. The replication study used for extending its generalizability. The researcher prefers using a replication study. 6. 4. To determine how trust positively affects Instagram users attitudes toward online shopping intentions. 7. To determine how perceived usefulness of celebrity recommendation positively affects Instagram users intention to shop online 3. 2009): 1. which is a deliberate repetition of previous research procedures in a clinical setting purposed for strengthen the evidence of previous research finding. This research is only sourced its research model from Chin-Lung Hsu and also adopted in Indonesia environment.3 Research Objectives The purpose of this research is to investigate how celebrity’s endorsement could affect Indonesian buying intention on online shop in Instagram. The replication and modification are being used due to several reasons followings (Hani. . with a modified model. To determine how perceived usefulness of celebrity recommendation positively affects Instagram users attitude toward online shopping. The replication study is a rigor as the original study. especially consumer behavior. To determine how celebrity reputation (followers) affects the relationship proposed. 2. as follows: 1. resulted in a favor of a completely different result. The existing literature and policies are highly relevant to the literature and policies in the research study.1. To determine how trust positively affects Instagram users perceived usefulness. 4. To determine how Instagram users attitude toward shopping online positively affects their intentions to shop online. The original research question is important and highly related to the study of marketing. trust. 3.

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1. The results discussions are also presented at the end of this chapter. It will also state the systematic writing outline of the consecutive chapters. measurement scale. . the propositions will also be included and the research model is presented at the end of this chapter. explanation of the purpose of the study. unit of analysis. formulation of research issue and problem. Chapter IV Results and Discussion This chapter consists of the results of pretest and actual research of the linkages among variables that are being studied. Chapter II Theoretical Foundation In this chapter. research object. theoretical foundations of general and specific variables in the study and the relationship between the variables will be elaborated in support of the study and to solve the problem formulated in chapter I. conceptual and operational definitions up-to-collecting-data technique. All of these results are derived from statistical examinations performed with the data collected. Chapter III Research Method This chapter will explain the research method starting from the initial process of the research: type of research. variable measurement.4 Research Outline Chapter I Introduction The first chapter will discuss the research study background.

Chapter V Conclusions. Implications. and the limitations of the study and recommendations for the future research. . managerial implications. and Recommendations for Future Research The last chapter consists of the conclusions.

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