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Factors Influencing Purchase Intention in the Smartphone Selection Context in

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Conference Paper · May 2019

DOI: 10.1145/3335484.3335525

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 FACTORS INFLUENCING PURCHASE INTENTION IN THE
SMARTPHONE SELECTION CONTEXT IN MILLENNIALS
GENERATION
Haryadi Sarjono Celinsky Brenda Sasmita
Bina Nusantara University Bina Nusantara University
JL K H Syahdan No 9 JL K H Syahdan No 9
Jakarta, Indonesia Jakarta, Indonesia
+62215345830 Jakarta, Indonesia
haryadi_s@binus.edu celinskyb@gmail.com
ABSTRACT
This research was made with the aim to find out how the influence
of Product Features, Price, and Social Influence on Purchase
Intention in the context of choosing an Android based Smartphone
and its impact on Actual Purchase Behavior. This research method
is a quantitative method using Structural Equation Model (SEM)
analysis techniques with the Smart PLS 3.0 program. The
questionnaire was distributed in the Jabodetabek (Indonesia), area
as a research sample, which is the millennial generation at the age
of 18-40 years. The results of this study are that there are
significant effects between the variable Product Features and
variable Price on Purchase Intention and variable Purchase
Intention on variable Actual Purchase Behavior. The Social
Influence variable does not have a significant effect on Purchase
Intention.
Keywords
Product Features, Price, Social Influence, Purchase Intention,
Actual Purchase Behavior, SEM, Millennial.
1. INTRODUCTION
Many industries type in Indonesia, are very helpful in economic
growth in Indonesia in the form of foreign investment and
domestic investment. The electronics industry is ranked eight out
of many industries that is quite influential on economic growth
based on BKPM, 2015. Technology is developing very rapidly as
time goes by. Smart phones are phones with very sophisticated
features that include a powerful CPU, storage space, RAM,
network cards, large screens similar to personal computers [1].
The smart phones is a higher improvement in technology of the
existing cell phone which could only be used to make calls, send
text messages and may support constrained browsing quoted by
[2] [3]. Nowadays, consumers tend to shift their preferences from
a basic cell phone to a smart phone and this is obviously the major
reason why mobile phone manufacturers move their production
towards smart phones, Chow [3].
As of 2017, the smart phone users reached 2.3 billion or 33% of
world population. For this reason, the manufacture present and
offer new features such as finger and face detection, wider touch
screen, high resolution camera, big storage, more powerful rand &
cup, etc [1]. Smartphone users certainly come from various
generations including the millennial generation. Two unique
elements in the generation of millennial relate to cellular
technology and social network relationships. Millennial are
described as the first 'high-tech generation' [4]. They are digital
1
Bambang Leo Handoko
Bina Nusantara University
JL K H Syahdan No 9
Jakarta, Indonesia
Jakarta, Indonesia
bambang.handoko@binus.edu
natives [5] and enthusiastic about technological advances in the
journal [4]. Purchase intention is a kind of decision-making that
studies the reason to buy a particular brand by consumers [6]. [7]
also define that purchase intention is a behavior tendency of
customer who is intended to purchase a product [1]. Some
researchers define purchase intention as a predetermined decision
to behave in a continuous certain manner in the near future [8]. In
addition, some studies found that a positive correlation exists
between consumers purchase intentions and their actual buying
behavior [9] in the journal [10].
2. LITERATURE REVIEW
2.1 Product Features
Product features is a special characteristics or additional
idiosyncrasy in the form of complement characteristics, for
example equipment of interior and exterior. Examples of
dimensions features is products have different newest
technological individuality with other brands, having additional
function which is not owned by other brands, and have
specification more compared of other brand [11]. A feature is an
attribute of a product that meet the satisfaction level of
consumer’s needs and want through the owing of the product,
usage, and utilization for a product [12] in journal [3]. [13]
categorized into two different features of products which are
hardware (Larger touch screen, creative design, high resolution
camera, high performance Ram & CPU, etc.) and software
(Android, iOS, Microsoft, Symbian for smartphone). When
consumers make purchase, they always want more features than
one from product in order to meet their different needs [1].
2.2 Price
According to [14], prices can determine where consumers will
trade with a product. Smith and Carsky also stated that prices will
always be the main factor considered by consumers before
making a purchasing decision [3]. Prices can be said is the most
influential factor affecting the purchase of a new smartphone,
[15]. [15] founds that the level of price positively affect
behavioral intentions majorly due to the fact that price establishes
an image of the brand (product) in the eyes of the consumers.
Therefore, it can be assumed that there is a positive relationship
between Smartphone prices and buying behavior in journals [3].
In a narrow sense, price is the amount of money charged for a
product or service, or the amount of value that a customer
exchanges as an advantage to owning or using a product or
service. Price is one of the most flexible marketing mix elements.
At the same time, prices are also the number one problem for
many marketing executives, and many companies don't handle
prices well. Most importantly, as a value proposition for the entire
company, prices have a major role in creating customer value and
building relationships with consumers [12].
2.3 Social Influence
According to [16] social influence is an understanding of changes
in feelings, attitudes, thoughts, behaviors, intentional or
unintentionally influenced by others. According to [12], consumer
behavior is influenced by people around them. Global Digital
Report in 2017, social media users reached 2.9 billion and 51.4%
of this provided information in the form of digital video, text,
images using smart phones on social media. In addition, the
growth of information dissemination was more than 25%
compared to the previous year [1]. Social influence occurs when
someone's emotions, opinions, or behavior are influenced by
others. According to [17], social influences include the influence
of the media, parents, and peers. In general, peers are the main
influence followed by the media and parents [3].
2.4 Purchase Intention
Purchase intention is part of the consuming behavior component.
According to [18], purchase intention is the stage of respondents'
tendency to act before buying decisions are actually carried out
[19]. Purchase intention is related to the tendency of consumers to
take actual purchase actions and express the desire of consumers
to make purchases of goods and their assessment of alternative
options based on preference, experience and external factors, [20].
[12] also defines purchase intention as a measure of general
effectiveness and is used to anticipate behavioral response [1].
Purchase Intention relates to the tendency of consumers to take
actual action of purchase. According to [21], purchase intetion can
be identified through the following indicators: [19].
• Transactional intention: the tendency of someone to buy a
product
• Referential intention: a person's tendency to refer products to
others
• Preferential intention: interest that describes the behavior of
someone who has a primary preference for the product
• Explorative intention: an interest that describes the behavior of
someone who is always looking for information about the
products they are interested in and seeking information to
support the positive traits of the product.
2.5 Actual Purchase Behavior
Theory of Planned Behavior (TPB) is divided by three kinds of
considerations which are behavioral beliefs: beliefs about the
likely of the behavior, normative beliefs: beliefs about other
people's expectations to perform particular behavior, and control
beliefs: beliefs about perceived factors which can facilitate or
impede performance of the behavior [22]. Some studies have
found a positive correlation between consumer purchase intention
and their actual buying behavior [22]. [23] saw that buying
intention was the originator of direct behavior. Therefore, [24]
define actual purchase behavior as individual readiness and
willingness to buy certain products or services [10]
2.6 Millennial
According to [5], the generation of Millennial is a generation born
in 1978-2000. From all aspects, Millennial generation according
to [25] is a generation that highly values diversity, prefers to
cooperate rather than take orders, and is very pragmatic when
solving problems. [26]. During millennial formative years three
societal support system necessary for young people were strong
2
(family, religion and government programs). So this generation
feels empowered and wants to make change for the better. Early
in their lives, Millennial demonstrated concern for others, the
environment and about global conditions. [27]. Here are some the
characteristics of the millennial generation according to Fishman,
2016:
• Millennial expect companies to understand their real life needs
• Millennial want a profession with a purpose
• Millennial were the first generation since 1943 to see themselves
as part of a group not just as individuals
• Millennial need instant feedback and praise, now and especially
as they aged
• Millennial are the first generation to be raised in the digital
world.
3. MATERIAL AND METHODS
This framework is based on references from the previous journal.
Independent variables consist of Product Features, Price, and
Social Influence. Whereas for the dependent variable consists of
purchase intention variables and actual purchase behavior. Here is
the theoretical framework.
Product
Features
Purchase Actual
Price
Intention Purchase
Behavior
Social
Influence
ures
Figure 1. Theoretical Framework
Hypothesis:
H1: There is a significant effect between Product Features to
Purchase Intention in the context of the selection of Android-
based smart phones in the millennial generation in
Jabodetabek, Indonesia.
H2: There is a significant effect between price to Purchase
Intention in the context of the selection of Android-based
smart phones in the millennial generation in Jabodetabek,
Indonesia.
H3: There is a significant effect between Social Influence to
Purchase Intention in the context of the selection of Android-
based smart phones in the millennial generation in
Jabodetabek, Indonesia.
H4: There is a significant effect between Purchase Intention to
Actual Purchase Behavior in the context of the selection of
Android-based smart phones in the millennial generation in
Jabodetabek, Indonesia.
This research uses quantitative methods by distributing
questionnaires to respondents. The researcher distributed the
questionnaire using a cross sectional method, which is the data
collected once [28]. Respondents used by researchers have the
following characteristic which is millennial generation (18-40
years) who use Android based smart phones in Jabodetabek.
Because this is market research, the minimum number of
respondents used is 200 respondents as a requirement from Bina
Nusantara University, Indonesia. The design of the research
conducted an associative research because the purpose of this
study is to investigate how it effect between variable and another.
The technique used to analyze data is the Structural Equation
Model (SEM). The purpose of SEM is to examine the relationship
between latent variables and manifest variables [29]. There are
two types of SEM methods, namely: Covariance Based SEM and
Variance Based SEM (PLS-SEM) [30]. The researcher used the
PLS-SEM method using Smart PLS 3.0 program.
There are 3 criteria for assessing the measurement model (outer
model) if using Smart PLS 3.0, which is: Convergent and
Discriminant Validity, Composite Reliability and AVE .The rule
of thumb that is usually used to assess convergent and
discriminant validity is that the outer loading value must be more
than 0.7 [30]

Table 2. Convergent and Discriminant Validity

4. RESULT AND DISCUSSIONS
Respondent information: Demographic information reveals
Actual Purchase
respondents' statistics including gender, age, occupation, domicile, Validity
Behavior
and monthly income. Male respondents had bigger percentage of
58% of female presentations. Compared with age, respondents AP1 0,980 Valid
aged 18-24 years took 80% of the total respondents and 61% had AP2 0,982 Valid
jobs as students. 37% of respondents have income of less than 2 Price Validity
million IDR. Here's detailed demographic information: P1 0,771 Valid
Table 1. Respondent Demographics P2 0,771 Valid
P3 0,800 Valid
Male 58% P4 0,834 Valid
Gender Product Features Validity
Female 42%
18-24 years old 80% PF1 0,951 Valid
Age 25-30 years old 13% PF2 0,907 Valid
31-40 years old 7% PF3 0,977 Valid
Student 61% PF4 0,943 Valid
Worker 30% Purchase Intention Validity
Occupation PI1 0,806 Valid
Entrepreneur 7%
Housewife 2% PI2 0,949 Valid
< IDR 2.000.000 37% PI3 0,938 Valid
IDR 2.000.000 – IDR 5.000.000 37% Social Influence Validity
Monthly income IDR 5.000.000 – IDR 21% SI1 0,964 Valid
10.000.000 SI2 0,986 Valid
>Rp 10.000.000 5% SI3 0,969 Valid
Jakarta 49%
Bogor 6% In PLS-SEM using the Smart PLS 3.0 program, to measure the
Domicile Depok 5% reliability of a construct can be done in two ways, namely with
Tangerang 34% Cronbach's Alpha and Composite Reliability. But it is better to
Bekasi 6% look at the value of Composite Reliability because the use of
Using an Cronbach's Alpha in testing construct reliability gives a lower
Android-based Yes 100% value. A construct conducted as reliable when the Composite
smart phone Reliability value is greater than 0.7. [30]

Path Diagram Table 3.Composite Reliability

Before the validity and reliability testing, the formation of a
research path diagram is done so that the path chart can be seen Cronbrach’ Composite
Construct Reliability
properly. s Alpha Reliability
Product Features(X1) 0,960 0,971 Reliable
Price (X2) 0,805 0,872 Reliable
Social Influence (X3) 0,972 0,982 Reliable
Purchase Intention (Y) 0,880 0,927 Reliable
Actual Purchase
0,961 0,981 Reliable
Behavior(Z)

Average Variance Extracted (AVE)

Research result can be accepted if the AVE value is greater than
0.5 [30].

Table 4. Average Variance Extracted (AVE)

Construct AVE value
Product Features (X1) 0,893
Price (X2) 0,631
Figure 2. Path Chart in the SmartPLS 3.0 program
Social Influence (X3) 0,947
Purchase Intention (Y) 0,810
Validity and Reliability Analysis
Actual Purchase Behavior(Z) 0,962

3
 c. There is no significant effect between Social Influence on
Significance Test Purchase Intention of 0.040 or 4%. It can be said that Social
Significant test in the SEM model with PLS aims to determine the Influence has little effect on Purchase Intention in the context
effect of exogenous variables on endogenous. This test is carried of the selection of Android-based smart phones in the
out by bootstrapping process with the help of Smart PLS 3.0. The millennial in Jabodetabek.
following summarizes the large value of the effect of exogenous d. There is a significant effect between Purchase Intention to
variables on endogenous variables. Actual Purchase Behavior by 27.7%. It can be said that Price
has a quite big effect on Purchase Intention in the context of the
Table 5. Significance Test selection of Android-based smart phones in millennial in
Direct Jabodetabek
Path T statistic T value Sig
Effect
The following are suggestions from researchers based on the
Product Features
7.535 1.96 0.450 Sig results of research tests that might be useful for industry and
Purchase Intention
subsequent research:
Price Purchase
9.266 1.96 0.537 Sig 5.1 For the smart phone industry
Intention
Social Influence Based on the results, when discussing Purchase Intention, the
Not
Purchase 1.364 1.96 0.040 smart phone industry should focus on increasing the consistency
Sig and competence of the Price variable and the Product Features
Intention
Purchase Intention variable. In this study, Price and Product Features variables are
Actual Purchase 5.035 1.96 0.277 Sig the variables that have the greatest effect. This variable can be
Behavior increased through indicators of the variable itself. On the other
hand the Social Influence variable has the smallest effect. The
Studies analyzing the results of this research using Smart PLS can smart phone industry must also pay attention to the indicators of
answer hypotheses and are stated below: the Social Influence variable. To improve Price variable
H1: Product Features has a significant influence to Purchase competencies, industries should give discounts or price
Intention with significance value shown is 7.535 and direct promotions. Second, the industry should also set smart phone
effect value is shown 0.450 or 45% prices according to the average price in the community. Third, the
H2: Price have a significant influence to Purchase Intention with industry should try its best to make the price distribution evenly
significance value shown is 9.266 and direct effect value is distributed in every location of smart phone sales. To improve the
shown 0.537 or 53.7% competence of the Social Influence variable, industries should
H3: Social Influence has a non-significant effect to Purchase focus more on media such as advertising on TV, magazines,
Intention with significance value shown is 1.364 and direct digital marketing, and other media facilities. The goal is for smart
effect value is shown 0.040 or 4% phones to be better known from all ages and social environments.
H4: Purchase Intention has a significant influence to Actual To increase the influence of Social Influence according to [31],
Purchase Behaviour with significance value shown is 5.035 the smart phone industry should develop in community relations.
and direct effect value is shown 0.277 or 27.7% By making an event that can help people in large numbers, hoping
The results of the effect test based on the hypothesis can be that with the event, the community feels helped and made easier
concluded as: Product features and Price has a significant effect to and awareness about these products can be increased which is
Purchase Intention (PF  PI) (P  PI). Social Influence do not formed through Word of Mouth.
significantly affect Purchase Intention (SI  PI). And Purchase 5.2 For the next research
Intention has a significant effect on Actual Purchase Behaviour For the next research, the understanding of the smart phone
(PI AP). This means that consumers in Jabodetabek are more industry can be expanded by adding more variables and indicators
concerned with price and product features in the context of that affect Purchase Intention which can also affect Actual
choosing an Android-based smart phone. Purchase Behavior. By widening the sampling scale or target
location differently with a wider range can also be useful for
5. CONCLUSION researchers in obtaining broader results. In this study, researchers
This study aims to analyze how is the effect of Product Features targeted millennial where other generations have different
(PF), Price (P), and Social Influence (SI) on Purchase Intention characteristics in the use of technology. In addition to Android on
(PI) and its impact on Actual Purchase Behavior (AP) in the smart phones, the next research can also be expanded considering
context of Android-based smart phone selection in millennial in that Android is not the only player in the Operating System in the
Jabodetabek To analyze the effect between variables, this study smart phone industry.
uses the SEM method or the Structural Equation Model. Based on
the results of the analysis, it can be concluded as follows:
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 Authors’ background
Your Name Title* Research Field Personal website

Haryadi Sarjono Assistant Operation research https://scholar.binus.ac.id/D1574/dr-haryadi-sarjono/

professor
Celinsky Brenda Master student Marketing
Sasmita management
Bambang Leo Senior lecture Information http://research.binus.ac.id/researcher/D5271/bambang-
Handoko System Audit leo-handoko/
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