Impact of Social Media Advertising and e-WOM to Online Purchase

Intention of iPhone Product

PROPOSAL

Submitted by:

Ivan Caesar Utama

1710522053

Proposal is submitted to fulfil the requirements for a bachelor degree in

Management Department – Faculty of Economics

BACHELOR DEGREE INTERNATIONAL MANAGEMENT

MANAGEMENT DEPARTMENT

FACULTY OF ECONOMICS AND BUSINESS

ANDALAS UNIVERSITY

PADANG

2023

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Contents

CHAPTER I INTRODUCTION

1.1 Background.........................................................................................
1.2 Problem Formulation.........................................................................
1.3 Research Objective.............................................................................
1.4 Benefit of Research.............................................................................
1.5 Research Scope...................................................................................
1.6 Writing Systematic.............................................................................

CHAPTER II LITERATURE REVIEW

2.1 Social Media Advertising...................................................................

2.2 E-WOM................................................................................................
2.3 Online Purchase Intention.................................................................
2.4 Table of Previous Research................................................................
2.5 Hypothesis Development....................................................................
2.5.1 The impact of social media advertising toward online purchase
intention..........................................................................................
2.5.2 The impact of e-WOM toward online purchase
intention .........................................................................................
2.5.3 The impact of social media toward e-WOM..................................
2.5.4 The impact of e-WOM toward online purchase intention mediated by
social media advertising..................................................................
2.6 Theoretical Framework......................................................................

CHAPTER III RESEARCH METHOD

3.1 Research Design..................................................................................

3.2 Population, Sample and Sampling Techniques................................
3.2.1 Population.......................................................................................
3.2.2 Sample.............................................................................................

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 3.2.3 Sampling Techniques......................................................................
3.3 Types of Data and Variables Measurements....................................
3.3.1 Type of Data...................................................................................
3.3.2 Data Collection Techniques............................................................
3.4 Research Variable and Operational Variables................................
3.4.1 Research Variables..........................................................................
3.4.2 Research Operational......................................................................
3.4.3 Variable Measurements..................................................................
3.5 Data Analysis Technique....................................................................
3.6 Data Analysis Method........................................................................
3.7 Instrumental Testing..........................................................................
3.7.1 Measurement of Outer Model.........................................................
3.8 Reliability Testing...............................................................................
3.8.1 Composite Reliability.....................................................................
3.8.2 Structural Model Test (Inner Model)..............................................
3.8.3 Hypothesis Testing..........................................................................

REFERENCES

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 CHAPTER I
INTRODUCTION

1.1 Background of the Research

The development of internet users in Indonesia is currently growing
rapidly, this can be seen from the continued increase in internet users in Indonesia.
The number of internet users in Indonesia has reached 212.9 million in January
2023. This means that around 77% of Indonesia's population has used the internet.
The number of internet users in January 2023 was 3.85% higher than a year ago.
In January 2022, there were 205 million internet users in Indonesia. The growth in
the number of internet users in Indonesia also has an impact on the increasing
number of internet users accessing social media. The We Are Social report shows
that the number of active social media users in Indonesia is 167 million people in
January 2023. This number is equivalent to 60.4% of the population in the
country. Social media is currently inseparable from everyday life. Everyone, from
teenagers to the elderly, are well acquainted with how to use social media.
Indonesians spend an average of 3 to 4 hours playing social media such as
Facebook, Instagram, Youtube, Whatsapp, Line, Twitter, and others. Almost all
access to social media is done via mobile phones.

Social media is a tool that brands and retailers can leverage to engage and
influence their customers. (Mersey et al, 2010) noted that social media provides
opportunities for businesses to participate and interact with potential consumers,
encourage increased familiarity with consumers, and build relationships with
potential consumers. (Colliander and Dahlen, 2011). Social media advertising is
the activities of present day consumer are found on internet searching and
browsing for required products. Social media platforms represent a new place
where people, organizations, and even governments can interact commercially,
socially, politically, and educationally with each other and exchange information,
thoughts, products, and services. As a result, organizations around the world are
starting to think about how using these platforms can help attract customers and
build profitable marketing relationships with those customers. There are various

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marketing practices that companies can implement through social media platforms
(i.e. advertising, e-WOM, customer relationship management and branding).
However, a significant interest in social media marketing is in terms of
advertising from the perspective of researchers and practitioners. Social media
advertising can help companies achieve many marketing goals, such as creating
customer awareness, building customer knowledge, shaping customer perceptions,
and motivating customers to actually buy products (Alalwan et al., 2017). Social
media advertising is a form of internet advertising, but because they are Web 2.0,
customers may have a different perception and experience of interacting with
social media advertising. This is also due to the nature of social media advertising
as they empower customers to have more engagement (i.e. liking, re-sharing,
commenting, posting and learning) with targeted ads (Laroche, Habibi, &
Richard, 2013; Tuten and Sulaiman, 2017) , one of the main purposes of using
social media for promotion and communication is to shape consumer decision-
making processes.

Electronic Word of Mouth (e-WOM) is a social media platform that

functions as a communication process from individual to individual or group to
individual with the aim of providing recommendations for a product or service
that aims to provide personal information (Kotler & Keller, 2012). The rapid
development of the internet and information has made consumers have space to be
able to express and obtain information on various available platforms and easily
disseminate it throughout the world. The existence of the internet caused a shift
from traditional word of mouth to electronic word of mouth. E-WOM not only
provides facilities for giving opinions about products, but also becomes a
marketing tool and channel for companies (Chan & Ngai, 2011). Consumers tend
to trust recommendations from people who have directly tried the product they
want to buy compared to advertisements (Brown et al, 2005). Communication in
eWOM can be in the form of positive, neutral or negative statements from
potential, actual and former consumers regarding products, services, brands or
companies that are available to many people and institutions via the internet
(Henning-Thurau et al 2004). Electronic word of mouth has higher credibility,

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understanding and relevance to consumers than commercial information sources
issued directly by companies in online media (Bickart and Schindler, 2001). e-
WOM is considered as one of the most useful information sources by consumers
as it consists of peer opinions and experiences instead of company-generated
information. The Internet has facilitated e-WOM communication between
customers through a variety of platforms (See Table 1) (Cheung and Thadani
2012). However, there is one major difference between social media and other
eWOM platforms; social media allows Internet users to communicate with people
who they already know, while other platforms enable users to communicate
anonymously. Therefore, consumers are increasingly turning to social media
websites for knowledge acquisition about unfamiliar brands. Furthermore, eWOM
on social media has been found influential on consumers' purchase intentions by
previous researchers. On the other hand, other eWOM platforms, consumer
review websites, discussion forums, blogs, have also been found influential on
consumers' purchase intentions.

Purchase intention is the tendency of consumers to take actions related to

purchases as measured by the level of probability that consumers make purchases
(Assael 1998). In the case of the widespread use of social media, various groups
who want to buy a product take advantage of e-WOM to get good product
recommendations, one of the most popular and much-loved products is Apple's
product, the iPhone. The iPhone is a smartphone released by Apple in 2007 which
is considered a smartphone that changed the design from the appearance of
smartphones in general to today. Overall, Apple presents a touch screen feature or
what is called "multi touch" on the iPhone smartphone. The touch screen at that
time was the latest innovation created by Apple in the form of a cell phone. This
makes the iPhone considered a revolution of a communication tool that has
multifunctions like a small computer that makes it easy for the wearer. The iPhone
continues to grow until now it has launched up to the 14th series which always
gets hearts in various circles around the world with sales at the end of 2022 of
more than 150 million units sold. (Source: Statista) according to the UBS report,
the global iPhone sell-through rate fell by 11 percent in January 2023 compared to

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 January 2022. However, this percentage is somewhat improved when compared to
the December 2022 period, where iPhone sales fell by 18 percent, it is suspected
there is a problem related to purchase intention which causes a decrease in interest
in buying an iPhone smartphone.

According to researchers, there are at least 2 factors that contribute to a

decrease in purchase intention for the iPhone. First, the iPhone is considered to
lack innovation so it doesn't satisfy user expectations. In fact, the price is more
expensive. In addition, the intense competition from HP manufacturers, which
makes Android vendors vying to present high-end specifications, is also seen as
the reason why the iPhone is labeled as unsatisfactory. This makes the company
will get positive and negative impacts, if the company gets positive reviews by
customers in online media, the company will get promotions without having to
pay a lot of money to be able to influence consumer interest in their products or
services. But if a company gets negative reviews or reviews that are not very
satisfying to consumers, then consumers will give a bad review of a company's
products or services, even to the point of not recommending products or services
from that company to other consumers. Therefore, based on the background that
we have discussed and based on the existing circumstances, the researcher is
interested in conducting further research on social media advertising, e-WOM,
purchasing intentions of iPhone products. Because of that, on this author takes the
title: "Impact of Social Media Advertising and e-WOM to Online Purchase
Intention of iPhone Product"

1.2 Problem Statement

The problem can be based on explanations on the background such as:

1. How does the impact of social media advertising toward online purchase
intention of iPhone product?
2. How does the impact of e-wom toward online purchase intention of iPhone
product?
3. How does the impact of social media advertising toward e-wom?

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 4. How does the impact of e-wom toward online purchase intention mediated by
social media advertising?
1.3 Objective of the Research
The research hopefully used to answer the question about:
1. To analysis the impact of social media advertising toward online purchase
intention of iPhone product
2. To analysis the impact of e-wom toward online purchase intention of iPhone
product
3. To analysis the impact of social media advertising toward e-wom
4. To analysis the impact of of e-wom toward online purchase intention
mediated by social media advertising?
1.4 Contribution of the Research
From this research, researcher try to give contribution for the parties namely:
1. For the academic
This research expected can increase further understanding about the
relation of advertising social media and e-wom toward online purchase
intention, and also can be references for further research in digital marketing.
2. For the brand
The result of this research hopefully can be an insight for brand in order to
increasing the marketing campaign on social media advertising and also can
be an insight for their e-wom through social media marketing.
1.5 Scope of the Research
The researcher will the social media users who live in the city of padang,
where they follow developments and information about the iPhone on their
social media accounts. The research will focus on three social media variables:
advertising, e-wom, and customer intention of online purchases.
1.6 Outline of the Research

Chapter I: Introduction

This first chapter will be elaborate the background condition digital

marketing and the opportunities. Than, focus about how impact of social media

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 advertising and e-wom to online purchase intention of iPhone product. Other
than, there are problem statement, purpose of the research, benefit of the
research, scope of the research, and will be closed with the outline of the
research.

Chapter II: Literature Review

The second chapter of this research will explain all theories that are related
to the research. Theories explanation will be consists of the definition of social
media advertising and e-wom to online purchase intention of iPhone product.
Besides that, this chapter will provide a review of the previous study, hypothesis
development, and theoretical framework that will become a guideline in the data
processing.

Chapter III: Research Method

The third chapter will explain the research design, instrument used in
quantitative, population and sample, data collection technique, variables and
measurement, and the data analysis method used to prove the hypothesis.

Chapter IV: Result and Discussion

The fourth chapter will mention the result and analysis of the research, the
respondent description, and the last is descriptive analysis.

Chapter V: Conclusion and Suggestion

This chapter has the conclusion of the research result, research

implementation, limitedness of research and recommendation.

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 CHAPTER II
LITERATURE REVIEW

2.1 Social Media Advertising

Social media is an interactive computer intermediary technology

that facilitates the creation and sharing of information, knowledge,
thought, occupation, hobbies, interests and other forms of expression
through virtual communities, virtual worlds and online platforms
(Kietzmannel et al. 2011).

Social media is a place for interact and share information with

others. Advertising on social media is an attempt by marketers to share a
product information to consumers through social media, so they can
interact, communicate and promote their products to consumers.
According to Moriansyah (2015) companies use social media to promote
a product, because Many Indonesians use social media. Advertising
through social media is one way for companies to be able to compete
with its competitors. Marketing via social media is a way to promote
company products or services online (Erdoğmuş & Çiçek, 2012).

According to Rafi Saumi Rustian (2012) social media is a place to

socialize each other online so that they can interact with each other even
from afar. Marketing through social media is very effective for marketers
because of its da pat reach customers

Advertising is a medium that communicates a particular product

message or information, generally done for a fee, and aims to invite
consumers. It is expected to influence readers or viewers so that they can
purchase the product. In general, advertising is associated with
promotions to make consumers more interested in buying the desired
product. It is also hoped that the advertising will increase the company's
sales in the future. With the ads, it is hoped that every consumer who sees

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the ads will be interested, and there is the possibility of people telling
others about the advertised product; thereby, it will also expand the ad
network. The more people know the advertisement, the more prosperous
the company will be because they can indirectly be promoted and
popularized so that many people know and are interested in the advertised
product.

According to Kotler and Keller (2016, in Putra & Suryana, 2018),

the objectives of advertising are as follows:

a. Informative advertising.
It is intended to inform the public of products and services,
which aims to create brand awareness so that consumers can
understand more and deeper about the advertised products.
b. Persuasive advertising.
It aims to provide likes, preferences, beliefs, and purchases of
products or services. Some persuasive advertisings are like
comparative advertisings, which explicitly compare the attributes of
two or more brands.
c. Reminder advertising.
It aims to make consumers remember certain products to always
make consumers have the desire to use the product and attract them to
make repeat purchases. In this case, marketers try to get consumers to
remember the ads, so that it appears more quickly in the minds of
consumers.
d. Reinforcement advertising.
It aims to convince consumers that they have made the right
choice and the right decision. For example, in automotive industry
advertisements (especially cars), reinforcement advertising shows
satisfied consumers with their new car's features.

Social media advertising is an advertisement presented to social

media users. Advertisement through social media is believed to be able to

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 present advertisements with content that more relevant. Social media
advertising can increase sales at a cost lower (Jolly, 2018). Indicators
used to measure These variables are message context, communication,
collaboration, and connection (Chris Hauer in Arief & Millianyan).

2.2 e-WOM
According to Harrison & Walker (2001) e-WOM is information
that is shared with people others about how they feel about a product.
Word of mouth is an effective way compared to ordinary
advertisements, because they come directly from trusted people or from
his own close friends. This communication is great for companies
tospeed up sales and can make consumers men make purchases, so it
can benefit the company. Consumers will do by itself and there is no
coercion from the company, if there is coercion from a company it will
make the company's reputation worse.
e-WOM is any statement whether positive or negative made by
potential, actual, or past consumers about a product or company created
for a large number of people or institutions via the Internet (Hennig-
Thurau, 2004 in Prasad, Gupta, and Totala, 2017).
e-WOM is interactions between consumers and other consumers
are electronically related with a product or brand. It has an important
role in communication between consumers that affect the conclusions
and actions that will be taken by consumers (Sharifpour, Sukati, &
Alikhan, 2016). Indicator to measure this variable which includes:
frequency, source, and amount information provided and valence which
includes a positive message (Jalilvand, 2012).
The rapidly growing social media also makes more and more
people technologically literate able to demonstrate their existence.
Media user social media often share stories about daily activities in
personal accounts they. There are also stories about the products they
buy and use so fishing for feedback from their friends or colleagues.

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This story is eWOM which can have an impact on the company both
positive and negative.
The direction of the message in e-WOM influences how the
response is customers to the product, the more people who agree then
messages will be more persuasive and influential with consumers (Doh
& Hwang, 2009). Apart from the direction of the message, the
credibility of the information source have an important influence on the
effectiveness of E-WOM (López & Sicilia, 2014). Sources of receiving
e-WOM information can be from the media anywhere online such as
web or blog to social media, one of them is YouTube. Social media
makes it easy for people to access information faster than the media
other information (Mulyati et al., 2018). YouTube is one of the media
for spreading e-WOM based motion pictures or videos. Many video
content has been uploaded and some are about product reviews.
YouTube has gone wrong a platform used by consumers to find product
information, therefore it is important for companies to know what
factors are influence consumer purchase intentions on social media
(Yüksel, 2016). There are three indicators according to Bataineh
(2015), including:
a. Credibility the credibility of e-WOM refers to the source of the e-
WOM itself.
The credibility of e-WOM sources is affected byclarity of
information, responses based on sources that are reliable and honest
information conveyed purely from Personal experience is not
influenced by other parties.
b. Quality of e-WOM
Refers to the extent to which information provided by a source
can help answer questions in the minds of consumers, clearly in the
delivery of information and easy to understand. The reference for
the quality of E-WOM is as follows elements in assessing the likely
purchase intention of consumers. The more The quality of the

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 information, the higher the probability consumers will influence and
have an impact on the level of purchase intention.
c. Quantity
When consumers receive a lot of information from individuals
who shared online, the consumer will need a reference to use it
strengthen their self-confidence and reduce the fear of made a
mistake in selecting a product. Number of reviews or Comments on
an online site can be a sign of how valuable it is and the popularity
of the goods or services as well as the ingredients considerations for
consumers thus influencing intentions the purchase.

e-WOM is done from one person to another. Such

communication can in the form of providing information or
recommendations from the experience he got from a company.
According to Mowen & Minor (2002). e-WOM is communication that
carried out by two or more consumers to provide information according
to his own experience. Therefore, the information we get from people
who have experienced the product of a company is much clearer than
information from advertisements. Word of mouth is what companies
are in business for deliver their products to consumers (Word of Mouth
Marketing Association, 2017).

According to Babin et al. (2005) word of mouth has several

indicators as following :

a. Telling: consumers who have felt and know about something the
product will tell others about it.
b. Recommend: consumers who already know about a product, he
would recommend to others.
c. Invite: consumers who have felt the benefits of the products they
bought, he will bring others to buy products that he has already
tasted.
2.3 Online Purchase Intention

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 Purchase intention is a person's desire to make a purchase towards a
product in certain times and conditions (Lu et al., 2014). Purchase
intention is a consumer behavior related to perception and evaluation of a
product, this buying behavior refers to consumer's ability to buy, as well as
the ability to evaluate the product (Hamdani & Maulani, 2018). Purchase
intention is influenced by different factors for each product. These factors
can come from information that consumers get from family, friends, social
groups or social media and other media (Arslan, 2014). Consumers want to
have a product, be it in the near future or maybe in the long term (Sa'ait et
al., 2016).

According to Raharjo & Mulyanto, (2018) Purchase intention is an

activity carried out by consumers in evaluate a product before making a
purchase decision. Marketers need to know consumer buying interest in a
product so that the need future consumers can be predicted with good.
Consumer behavior is always influenced by a number of stimuli emerge
from the consumer's external environment, which is then processed for
adjustment to the personal characteristics of consumers as a motivation
describe consumer interest in the product.

According to Putri and Amalia (2018) the indicators of purchase

intention among others:

a. The intensity of searching for information about the product

When someone is interested or has the intention to buy
something product, then that person will look for information about the
product to convince himself that the choice of product is right. The
more people intend to buy a product, the more often as well as the
intensity of information search for the product.
b. Desire to buy or search for products
Purchase intention is characterized by a person's desire to buy a
product either immediately or in the future depends what is the
condition of the consumer. This desire can represented in various ways,

15
 one of which is search will product. Search for products not only from
the store of origin however can also go online.
c. Have the notion that the product is the most wanted
A person with purchase intention will perceive the product as an
item or service that is most appropriate for him, therefore Among the
existing products, the product of choice is the one most wanted by
consumers, and get more attention compared to other products.

According to Durianto (2013) revealed that buying interest is

the desire to own a product, Purchase intention will arise if a consumer
has been influencedon the quality and quality of a product, information
about the product such as: price, how to buy and the weaknesses and
advantages of the product compared to other brands. Based on the
expert opinion above it can be said that buying interest arises from
within a consumer who influenced by product reviews. Muthohar and
Amin (2013) state buying interest as the tendency of consumers to buy
a brand or take purchase-related actions as measured by level likelihood
that consumers will make a purchase. Opinion of Muthohar and Amin
(2013) above is also in line with Sallam and Wahid (2012) who say that
buying interest can show how big the probability that the individual
will buy the product.

Online shopping is the process by which a consumer buys

products or services via the internet (Wikipedia, 2012). one process
Consumers use internet media to make a purchaseproduct or service
begins with the emergence of consumer awareness information or
products that can be obtained from the internet. Applying the concept of
perceived usefulness and perceived ease of use In the context of online
shopping, "usefulness" is how effective online is shopping helps
consumers complete their tasks, and "ease of use" is how easy it is to
use the internet as a shopping medium (Monsuwe et al., 2004).
According to Barkhi and Wallace (2007), apart from price low, wide

16
 variety of products and brands, as well as low costs for searching for
information may contribute to consumer perceptions to online
shopping, as opposed to buying from a traditional store. When
consumers feel that making purchases from virtual stores is easier
understood and done, they usually continue to interact with the site the
same (Barkhi and Wallace, 2007). Consumers who transact with Online
shop implies that ease of use is not directly affect consumer intention to
shop online, and effect indirectly this is through "usefulness."

At research by (Alalwan, 2018) about the impact of social

media advertising toward purchase intention, there are several factors
that significantly influence purchase intention which are:

a. Interactivity are the most significant factor toward consumer

intention, this caused by function and exceptional experience in
following and interacting with content in social media.
b. Informativeness, this was second strongest factor that affect purchase
intention. Social media platform that has more information which
consumers looking for.
c. Performance expectancy, that leads to the usefulness of the product
and the result found that.
d. Hedonic motivation, this mean audience want an ads more
innovative, informative, and high novelty.
2.4 Table of Previous Research

Several previous researchers have conducted research with the same

discussion. Therefore, researchers must study previous research so that they
can provide references for researchers who carry out this research.

No Researcher/ Title The objectives of Result of the Similarity on

Year the research research research

1 Sana Javed “Exploring the This study aimed The stated They use
(2019) Influences of at analysis of the social media
Social Media impact of Social assumptions that advertising, e-
SMA has a

17
 Advertising of media advertising significant and wom and
Purchase in creating the positive online
Intention on positive e-WOM relationship with purchase
Purchase of fast food both electronic intention.
Intention: A Test purchase
word of
of Electronic intentions for
Word of Mouth as consumers in mouth and
a Mediator in Pakistan purchases
Pakistan ” intention. Future
research
implications of the
study increase the
ability to manage
electronic word of
mouth of the fast
food brands
successfully with
right content and
generating
positive attitudes to
affect the purchase
intentions of the
consumers of fast
food in Pakistan.
So that,
electronic word of
mouth content can
create information
on social media
that can influence
purchase
intentions of fast
food consumers.
2 Devkant Kala & “Impact of Elaborate the  Electronic word of This research
Chaubey (2018) Electronic Word connection mouth has examine
of Mouth on between e-wom significant impact of
Brand Image and of a brand image influence on brand between e-
Purchase and purchase image in lifestyle wom toward
Intention towards intention of purchase

18
 Lifestyle Products buying that brand products in India intention
in India”  Electronic Word of
Mouth does not
have a significant
effect on pirchase
intention for
lifestyle products in
India.
 Brand image has a
significant
influence on
purchase intention
on lifestyle
products in India

3 Alalwan (2018) “Investigating the This research There is positive This research
impact of social examines to significant relation examines the
media advertising identify and test between social media relation about
features on the primary ads and purchase social media
customer factors related to intention that is ads with
purchase social media identified by six consumer
intention” advertising that main factors purchase
could predict intention
purchase
intention”

4 Alrwashdeh et “The effect of This research e-WOM has a This research

al. (2019) electronic word of examines to significant examines the
mouth identify The influence on relation about
communication effect of purchase intention electronic
on purchase electronic word of e-WOM has a word of mouth
intention and mouth positive direct communicatio
brand image: An communication effect on brand n toward
applicant on purchase image 3. Product purchase
smartphone intention and type strengthness intention and
brands in Nort brand image the positive brand image
Cyprus” relationship
between e-WOM
and purchase
intention
e-WOM has
significant effect
on purchase
intention through

19
 brand image Brand
image does not
considerably
influence purchase
intention

5 Ansari et al., “Impact of Brand This research Based on the They use
(2019) Awareness and aims to knowing research brand brand
Social Media the influence of awareness has weak awareness and
Content brand awareness significant and social social media
Marketing on and content media marketing has marketing as
Consumer marketing toward positive significant influencer
Purchase purchase decision influence toward
Decision” purchase decision

6 Riswandi (2016) “Influence of This research Electronic word of They use e-

electronic word of aims to carryout mouth has a wom toward
mouth (E-WOM) pengaruh e-wom positive and purchase
toward purchase terhadap purchase significant effect intention
intention on intention pada on purchase
iPhone smartphone intention
smartphone iPhone dengan Electronic word of
dengan brand of brand image mouth has a
image as a sebagai variabel positive and
mediating mediasi significant effect
variable” on brand image
Brand image has a
positive and
significant effect
on purchase
intention
Brand image has a
significant and
positive effect on
mediating e-wom
on purchase
intention

7 Larasati (2022) “The effect of This research hedonic motivation This research
advertising on aims to knowing mediates the effect of examines the
social media and the effect of social media relation about
celebrity advertising on advertising and social media
endorsment on the social media and celebrity advertising
purchase intention celebrity endorsement on and purchase
to buy McD endorsment on the purchase intention

20
 products mediated purchase intention partially and intention
by utilitarian to buy brand utilitarian motivation
motivation” mediates the effect of
social media
advertising and
celebrity
endorsement on
purchase intention
partially

2.5 Hypothesis Development

Based on previous research, purchase intention related to the social
media advertising and e-WOM, various hypotheses emerged for this research.

2.5.1. The impact of social media advertising toward online purchase intention

Consumer behaviour was previously being studied to know the

decision making process while selecting a product and challenges faced
by the consumers to select a product from a number of options that suit
their requirements and best serve their needs. (Furner 2016) suggests that
in product selection situation, the consumers must solve the problem of
optimization being in the realm of uncertainty about the product’s ability
to fulfill their requirements. According to uncertainty reduction theory,
whenever consumers are faced with such situations they tend to minimize
uncertainty and try to gain information about the product or service by
observation or active search through other sources like WOM and amend
their strategies as per the information received. When the customers tend
to entertain themselves by looking for funny quotes or videos on websites
and indulge into shopping for the sake of gaining experience and not for
achievement of some specific purpose it is said to be Hedonic shopping.
Many websites are being made and managed to provide the entertaining
environment to the customers making their experience fast paced, full of
fun and easy to use. On the basis of these reviews, following assumption
is articulated as below:

H1= Social media advertising has e positive in impact on purchase intention

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2.5.2. The impact of e-WOM toward online purchase intention

(Engel, 1969) and (Trusov,2009) discuss that many kinds of

advertising methods can influence consumer behaviour, however, the
strong effect WOM has in shaping decisions of the consumers in
comparison to other kinds of advertisements is evident in both
contemporary and early studies alike. Similar results were obtained in a
research conducted relatively recently by (Trusov,2009) has concluded
that on the basis of the two studies discussed above, WOM is proved to
be the most effective means of spreading information as compared with
any other type of tools used for marketing. (Leskovec,2007) claims that
as WOM has proved itself to be the most trusted information source by
majority of the customers, therefore, it has a major role to play is
shaping consumers’ purchase preferences and intentions. Another
argument supporting this claim states that WOM is so effective that it
can even cause change in the decisions by influencing decision-making
process of customers. (Chevalier and Mayzlin 2006) studied the impact
of E-WoM on sales of books by using consumer reviews posed on the
websites of Barnesandnoble.com and Amazon.com and found that there
is a positive relationship between online reviews and sales of the book.
The results showed the similarity between consumer interests and the
theme of the forum had a direct effect on purchase intention of
consumers Many studies which have been conducted through web
platforms have showed that purchase intentions are influenced by e-
WOM but it is not limited to online shopping only. On the basis of
these reviews, following assumption is articulated as below:

H2= Electronic word of mouth on social media has a positive impact on

purchase intention.

2.5.3. The impact of social media toward e-WOM

22
 e-WOM communication used to take place through various
platforms on internet but it was essentially between the strangers and
thus the reliability of the information was considered very low. (Park et
al.,2007) argues that before social media the consumers were able to
find suggestions and recommendations about the products, but they
used to remain in doubt the credibility of the information and used to
compare number of similar comments to judge the reliability. (Erkan,
2014) explains that the social media websites introduced people
through their own identity and thus enable e-WOM among the
acquaintances as well as the strangers by the method of online reviews.
(Moran and Muzellec, 2014) observe that people are now able to
discuss about the brands, services or products with their known people
more easily and confidently that is why (Knoll and Proksch, 2015) have
regarded social media the most suitable platform form for e-WOM.
This shows that e-WOM communication influences purchase intentions
more on social media as compared with other platforms on internet. On
the basis of these reviews, following assumption is articulated as below:

H3= Social media advertising has a positive impact on electronic word of

mouth.

2.5.4. The impact of e-WOM toward online purchase intention mediated by

social media advertising
The power of social media word of mouth is increasing to a great
extent, as also evident through research. It is surpassing face-to- a strong
(Chen and Li, 2009) and (Chen, 2011) support the above mentioned
stance. They strongly believe that electronic word of mouth
communication is becoming more and more influential. Customers of a
certain brand/product/service share their experiences with other
customer. However, a problem that arises for the marketers is that
customers tend to share their negative experiences more than their
positive experiences with prospective customers.

23
 H4=There is a positive mediation effect of e-WOM on relationship of social
media advertising and purchase intention.

2.6 Theorical Framework

The framework of this research can be seen as follow:

E-WOM

H2 H3

ONLINE
SOCIAL MEDIA
PURCHASE
ADVERTISING H1,H4
INTENTION

H1 : Social media advertising has a positive impact toward the online purchase intention

H2 : Sosial media advertising has a positive impact toward e-WOM

H3 : e-WOM has a positive impact toward online purchase intention

H4 : There is positive mediation impact of e-WOM toward relationship of social media

advertising and online purchase intention

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 CHAPTER III

RESEARCH METHOD

3.1 Research Design

This researches is performed a quantitative method and analyse how the
established and unbiased variables are associated with each other and also
suggests an effective association among one variable and every other one
(Sekaran & Bougie, 2016b). In this study the authors used a quantitative
technique. Quantitative approach is a research method that can be interpreted
as a research method primarily based on the philosophy of positivity, used to
examine a particular populace or sample, accumulating records using studies
instruments, analysing quantitative statistics with the purpose of testing a
predetermined hypothesis. This examine also makes use of library research,
which interests to gather statistics contained in library rooms consisting of:
books, magazines and different writings regarding the discussion of cloth in
accordance with this thesis. This quantitative research bases its type on survey
research, namely quantitative studies using a questionnaire as a research tool.
3.2 Population, Sample and Sampling Technique
1.6.1 Population
Population is a generalization area that consists of items and
subjects that have sure features and characteristics decided via
researchers to be studied and then drawn conclusions. In this case the
population this is the item of research is the users of social media that
live in Padang City and also have bought products or services through
online.

1.6.2 Sample
The pattern is a part of the quantity and traits possessed through
the population. The sample in this study is consumers are female and
male user who have bought products (goods or services) through all of
social media. The sampling approach is assessed as non-probability

25
 sampling with purposive sampling or sampling based on positive traits
which include:

a) Respondents have a social media account.

b) Respondents once made an online purchase at least once
c) Time of purchase that has been made by way of respondents at
least the final 10 months.
d) Respondents are consumers who that already working or
unemployment, and students.
1.6.3 Sampling Technique
Sampling techniques is techniques to restore sample data
(Sekaran & Bougie, 2016). Nonprobability sampling was used in this
research, where the elements in the population does not have any
probabilities when choosing the subjects (Sekaran & Bougie, 2016). In
order to provide better information, the purposive sampling technique
was applied in this research within the nonprobability sampling.
Purposive sampling can be interpreted as finding the specified types of
people who can provide the researcher the information that they seek,
due to the possibility of information only available from that certain
respondent, or due to the criteria that were set by the researcher
(Sekaran & Bougie, 2016). This research is users of social media where
it’s respondent that match with the criteria.
3.3 Types of Data and Data Collection Techniques
This research will use primary data. Primary data is collected first ‐hand
for subsequent analysis to find solutions to the problem researched (Sekaran &
Bougie, 2016). The primary data gathering through the questionnaire field be
surveyed to get the information, the questionnaire is reformulated written set of
questions to which the respondent records the answers, usually within rather
closely delineated alternatives (Sekaran & Bougie, 2016). Thus, the data will
be administered to customers who have purchase any goods or services that
live in Padang City as a respondent and it was collected by using sheets that

26
 contains the questionnaire that was filled by the customers manually or through
online platform in Google forms.

3.4 Research Variable and Operational Variables

3.4.1 Research Variable
(Sekaran & Bougie, 2016) states that a variable is anything that
can take on differing or varying values. This research conducting three
variables such as social media marketing, brand awareness, and online
purchase intention.
a. Independent Variable
Independent variable is the variable that influences the
dependent variable in either a positive or negative way, the
variance in the dependent variable is accounted for by the
independent variable (Sekaran & Bougie, 2016). Thus, the
independent variable is the variable that is not influenced by any
variable but is the one who will influence the dependent variable in
the framework. In this research there is one independent variable
that is Social Media Advertising (X1)
b. Mediating Variable
The mediating or intervening variable is the variable that has a
strong contingent effect on the independent variable–dependent
variable relationship. Thus, the existent of a third variable (the
moderating variable) modifies the original relationship between the
independent and the dependent variables (Sekaran & Bougie,
2016). The mediating variable in this research is Brand Awareness.
c. Dependent Variable
The dependent variable is the variable of primary interest of the
research, a variable to investigate as viable factor. The researcher’s
goal is to understand and describe the dependent variable, or to
explain its variability, or predict it whether it is influenced by the
independent variable positively or negatively (Sekaran & Bougie,

27
 2016). Online Purchase Intention (Y1) is the dependent variable in
this study.

1.6.4 Operational Variable

No Variable Definition Dimensions Indicators Scale Resource

1 Social Media “Defined social  Performance  Relevance Likert (Alalwan,

Advertising media advertising expentancy  Importance 2018)
as “a general  Hedonic  Means a lot
term capturing all motivation  Fit to
forms of  Perceived interest
advertising- relevance  fit with
whether explicit  Habit preferences
(e.g., banner  Informativeness  Good
advertising and source of
commercial product
videos) or information
implicit (e.g., fan and supplies
pages or firm-  Provides
related“tweets”)- timely
that are delivered information
through social  Up-to-date
networking information
sites.”(Rahman & source
Rashid, 2018)”  Convenient
source of
product
information
 Provides
complete
product
information

28
2 Brand “Brand  Brand  Feeling Likert (Foroudi,
Awareness awareness refers familiarity familiar 2019)
to whether  Brand with
consumers can recognisability products
recall or  Easy to
recognize a remember
brand, or simply  Well-known
whether or not brand
consumers know  Brand is
about a brand. recognizabl
(Kotler & Keller, e
2016)”  Brand
influences
the decision
3 Online “Online purchase  Customer  Willing to Likert (Alalwan,
Purchase intention defined purchase buy a 2018)
Intention as customers’ intention. product
willingness to  Likelihood
buy a services or to buy a
products thru product or
internet stores. services
(Kamalul Ariffin  Desiring to
et al., 2018)” buy a
product
 Planning to
purchase a
product

Operational Variables

29
3.4.3 Variable Measurements
In measuring all of the three variables, this study conducted five point
of Likert Scale. Ranging from:

a. Strongly disagree = 1
b. Disagree = 2
c. Neutral = 3
d. Agree = 4
e. Strongly agree = 5

30
3.5 Data Analysis Technique
The quantitative data that has been gathered are recorded in Microsoft Excel
and SPSS 16.0 helps to process the descriptive analysis concerning the characteristic
of the respondent, while to process the variable of the study the researcher used
SmartPLS 3.0. The data interpretation are from the SPSS 16.0 and SmartPLS 3.0
which can be used to analyse the findings from the study.
The data analysis technique used to test hypotheses is Partial Least Square
(PLS) path modelling, using the SmartPLS 3.0 program. The advantage of the PLS
method compared to covariance structure analysis such as LISREL, EQS, Mplus or
AMOS, is that PLS does not require large samples and normality assumptions. Thus,
the reason why the researcher feel attracted for choosing the PLS as the main method
is to measure the validity and reliability of the research is due to the research by
(Reinartz et al., 2009) where they stated that PLS should be the method chosen for all
situations when the number of observation or number of samples is lower than 250 and
is higher than 100 sample. And also, actually, in this study researcher will collected
around 120 samples. In addition PLS-SEM can easily handle reflective and formative
measurement models, contracting one item, without causing identification problems
(Hair et al., 2019)
3.6 Data Analysis Method
This research uses Structural Equation Modeling (SEM) using a software tool,
namely Smart-PLS 3.0, because Smart-PLS can be applied to various forms of data, be
it nominal, ratio, ordinal or Likert data. There are two types of SEM: covariance-based
SEM (CB-SEM) and partial least squares SEM (PLS-SEM, also known as PLS path
modeling). CB-SEM is specifically used for confirmation or rejection. Otherwise,
PLS-SEM is mainly used to develop theories in exploratory research. In detail, Smart-
PLS 3.0 might be used to test the speculation via Partial Least Square (PLS). In
comparing covariance assessments along with LISREL, EQS, M-plus, or AMOS,
Smart-PLS may be a very good choice as it would not require a huge sample and
normality assumptions. except that, PLS-SEM can manage reflective and formative
duration models, contracting one item without causing any identity issues (Hair et al.,
2017).

31
 PLS is a structural equation analysis with a variance basis which is
simultaneously able to evaluate the measurement model as well as evaluate the
structural model. This measurement model is used to test the validity and reliability of
research instruments, while the structural model is used to test causality (testing
hypotheses with a reflective model). alternatively, the examination of validity could be
used after the series of information has been finished. hence, SmartPLS 3.0 can be
used to study the validity of the information in this research. The cause at the back of
it's far because Smart-PLS 3.0 can look at the validity of the indicator of each variable
in this studies. moreover, convergent validity and discriminant validity might be used
inside the assessment of this research.
3.7 Instrumental Testing
3.8.1 Measurement of Outer Model
The measurement of outer model can be referred as the model that
describes the relationship that the variable has with its indicators. SmartPLS
uses the method of assumption of the distribution of the parameter therefore
there is no need to test the parameter of the study, but the test will be
conducted by the use of outer modelling order to evaluate the validity and
reliability of the variables and indicators.
Validity testing is used after the data collection had finished. To test the
validity of the data in the research, the researcher chooses the software
SmartPLS3.0 as it can test the validity of the indicator from each of the
variables in the research. There are two types of evaluations that are being used
in this test which are the convergent validity and the discriminant validity.
3.8 Reliability Testing
The reliability of a measure indicates the extent to which it is without bias or
error free and hence ensures consistent measurement across 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 instrument measures the
concept and helps to assess the “goodness” of a measure (Sekaran & Bougie, 2016).
3.8.1 Composite Reliability

32
 The result of the research can be considered as reliable when the
instrument can be used several times to measure the same object and resulted the
same output of data. To test the reliability of the instrument that was used in this
research, the researcher will use the composite reliability test while also using
the Cronbach’s Alpha. According to Sekaran & Bougie (2016), Cronbach’s
alpha is a reliability coefficient that indicates how well the items in a set are
positively correlated to one another. The thumb rule for Cronbach’s alpha is the
reliabilities less than 0.60 which are considered to be poor, those in the 0.70
range, acceptable, and those over 0.80 is indicated as good (Sekaran & Bougie,
2016).
3.8.2 Structural Model Test (Inner Model)
After all of the model testing is done, the next test is the structural model
test where this test will be conducted by looking at the value or R-Square. This
test will be done to all of the latent dependent variable. It is done to see the
influence of independent variable has towards the dependent variable whether it
has a substantive influence or not (Hair, Jr, 2015).
3.8.3 Hypothesis Testing
Hypothesis testing can be seen by looking for the number of T Statistic.
PLS used nonparametric test for determining the level of significant of path
coefficient, where T statistic produced from running bootstrapping algorithm in
SmartPLS that in the end decided whether the hypothesis proposed can be
accepted or not. The hypothesis can be considered accepted if the t-statistic
value is higher than 1.96 (one-tailed) on alpha at 0.05 (Hair, Jr, 2015).
While to test the indirect influence of the independent variable through
mediating variable on the dependent variable is by testing the VAF using the
formula as follow:
Indirect Effect
VAF =
( Indirect Effect + Direct Effect )

33
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