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Received: June 2020 Accepted: June 2020 Published : July 2020

Product Innovation on Purchasing Decisions and Its Impact on

Customer Loyalty: Study of Toyota Calya Car Users
in the cities of Bogor and Bekasi

Dachi Award1*
STIE Indonesian Business Management, Depok, Indonesia

gracedachi122@gmail.com

Abstract
The formulation of the research problem is whether product innovation effects purchase decisions, whether
product innovation and purchase decisions affect customer loyalty. This study aims to examine the effect of product
innovation on the purchase decision of Toyota Calya, and examines the effect of product innovation and purchasing
decisions on customer loyalty. The population is the Toyota Calya's customers in Bogor and Bekasi. The population is
not known with certainty, therefore the sampling technique is carried out by accidental sampling technique in determining
the number of samples. A total of 203 questionnaires were collected. Therefore, the sample in this study was 203
respondents. The data analysis method is Structural Equation Modeling. The results showed a significant influence on
product innovation on purchasing decisions. Product innovation and purchasing decisions also significantly influence
customer loyalty. Purchasing decisions significantly mediate the effect of product innovation on customer loyalty.
Innovations must still be made in order to maintain the loyalty of Toyota Calya car users in Bogor and Bekasi.

Keywords: Product innovation, purchasing decisions, and loyalty

Abstract
The formulation of the research problem is whether product innovation influences purchasing decisions, and
whether product innovation and purchasing decisions influence customer loyalty. This research aims to test and
determine the influence of product innovation on purchasing decisions for the Toyota Calya, and to test the influence
of product innovation and purchasing decisions on customer loyalty. The research population is Toyota Calya brand
car users in the cities of Bogor and Bekasi. The population is not known with certainty, therefore the sampling technique
was carried out using an accidental sampling technique in determining the sample size. There were 203 questionnaires
collected. The data analysis method used is Structural Equation Modeling. The research results show that there is a
significant influence of product innovation on purchasing decisions. Product innovation variables and purchasing
decisions also significantly influence customer loyalty. Purchasing decisions significantly mediate the influence of
product innovation on customer loyalty. Innovation must continue to be carried out to maintain the loyalty of Toyota
Calya car users in the cities of Bogor and Bekasi.

Keywords: Product innovation, purchasing decisions, and loyalty

1. Introduction
Increasingly fierce competition in the business world requires every company to design and implement
various appropriate strategies (Istiyanto, Hendratmoko, & Mutmainah, 2015). The environmental situation is
dynamic and continues to develop, so it is not enough for companies to maintain an attitude of attracting
customers or expanding new businesses. The challenge faced is maintaining customer loyalty (Syafrizal,
Makmur, & Seprini, 2017).

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Based on the data collected, it shows that Toyota Calya car sales are still unable to
compete with other products. In Table 1 the author shows a comparison of sales of Calya,
Avanza and Daihatsu Sigra cars from May 2019 to April 2020.

Table 1Comparison of Sales of Calya, Avanza, Daihatsu Sigra

May 2019 – April 2020

No Month Calya Avanza Daihatsu Sigra

1 May 3,877 7,362 4,957
2 June 3,963 3,543 1,186
3 July 5,167 7,848 3,757
4 August 3,436 8,017 4,371
5 September 6.111 9,476 3,932
6 October 6,034 8,816 5,191
7 November 5,119 6,764 4,429
8 December 4,726 6,674 4,705
9 January 4,579 7,080 3,705
10 February 3,645 7,080 4,363
11 March 3,806 7,085 5,399
12 April 62 277 479
Average sales 3,872 4,210 5,488
Source : www.otosia.com, www.otomotif.tempo.co, www.oto.detik.com, www.gridoto.com

Table 1 also shows that sales of Toyota Calya cars experienced an increase in August
and September 2019, but from November 2019 to April 2020 they continued to decline. On
average, when compared with other brands, Toyota Calya sales are lower than Avanza car
sales. Average Toyota Calya sales are slightly above Daihatsu Sigra sales, but if you look at
the data for the last three months, Daihatsu Sigra sales continue to increase and the number
of sales each month is far above Toyota Cayla sales. In April 2020, car sales in general fell
drastically, this was due to Covid 19 which had reduced people's purchasing power. However,
in the midst of the Covid 19 pandemic, sales of the Daihatsu Sigra were much higher
compared to the Toyota Calya which was only able to sell 62 units, while the Daihatsu Sigra
only sold 479 units.
Product development through innovation carried out by the company can create a
competitive advantage and will attract new customers, while existing customers will remain
(Sumarsih, 2019). Purchasing decisions are consumer actions in an effort to fulfill desires
and needs which is the process of determining attitudes or purchases towards goods and
services. To understand consumer behavior in purchasing requires a process, because it
changes every time (Kadir, Syarifuddin, Rahman, & Andini, 2018). In global competition,
automotive companies must continue to innovate because technology is rapidly developing
in addition to being able to continue to compete with competitors and to meet consumer
needs and tastes (Tandia & Iriani, 2018). Innovation is something that is absolute to achieve
sustainable excellence (Siregar, Suryana, Ahman, & Senen, 2019). Every company has an
interest in the best performance that can be produced by the series of systems that apply
within the organization (Syamsuri & Siregar, 2018; Siregar & Lubis, 2017). Many products
have similar shapes, uses and other features, making it difficult for consumers to differentiate
between these products. Continue product innovation

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carried out by car manufacturers to attract consumers' attention and of course so that consumers
are willing to buy the products they produce (Tumembouw, Mandey, & Loindong, 2019).
Based on the previous description, the research questions in this study are:
1. Does product innovation have a positive and significant effect on purchasing decisions?
2. Does product innovation have a positive and significant effect on loyalty?
3. Do purchasing decisions have a positive and significant effect on loyalty?
4. Do purchasing decisions mediate the effect of product innovation on loyalty?
customer?

Customer Loyalty
Literally loyal can mean loyal, while loyalty can be interpreted as loyalty. Customer loyalty is
a customer's commitment to a brand, store or supplier, based on a very positive attitude and
reflected in consistent repeat purchases (Bulan, 2016). Customer loyalty has an important role
in a company, retaining them means improving performance and maintaining company survival.
This is one of the reasons companies maintain their customers (Saputri, 2019).

The concept of loyal behavior, the emphasis is on repeat purchase behavior of products that
have previously been purchased by customers (Junaedi, 2015). To maintain business continuity,
customer loyalty is very important for companies. Loyal or loyal customers are customers who
are very satisfied with the choice of certain products and services from the company, so they
have the enthusiasm to say positive things about these products and the services they receive
to other people (Tugiso, Haryono, & Minarsih, 2016) .

Buying decision
Purchasing can be interpreted as the act of obtaining goods and services through exchange,
which is intended for one's own use or for resale (Khairiyah & Yunita, 2018). Consumers who
want to make a purchase will go through a process called a purchasing decision before deciding
to buy a product (Tandia & Iriani, 2018). According to Kotler and Armstrong (in Tandia & Iriani,
2018) purchasing decisions mean buying the most preferred brand, but two factors can be
between the intention to purchase and making the purchasing decision. The purchasing decision
making process itself can go through stages such as recognizing needs, information search,
evaluation, alternatives, purchasing decisions, and post-purchase consumer behavior, but not
always all of these stages are passed or carried out by consumers as a whole (Setiadi 2013 in
Kadir et al. , 2018).

Product Innovation
Product innovation is any item or product that has been developed or modified which is
considered new (Tandia & Iriani, 2018). Product innovation is related to the development of a
product or something new that is discovered, this is done so that consumers do not get bored
with the old products produced (Aryoni, Eildine, & Muniroh, 2019).
Innovations carried out on products by companies are considered to eliminate feelings
consumer boredom or boredom regarding product choices by consumers who tend to lack
diversity and lack uniqueness (Al Rasyid & Tri Indah, 2015). With innovation carried out by
industry or companies, it will provide added value to the products they have so that consumer
expectations will be met. One of the benefits of innovation aims to beautify products so that they
are more attractive to consumers (Sumarsih, 2019).
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Hypothesis Development
Product Innovation and Purchasing Decisions
Soleha & S, (2019) conducted a research on product innovation regarding Honda Mobilio
car purchasing decisions. Their research findings found that there was a positive and significant
influence between product innovation and purchasing decisions. This shows that with product
innovation it will be a consideration in deciding to buy. This is also strengthened by the findings of
research conducted by (Abdjul, Soegoto, & Soepeno, 2018) showing that product innovation has
a positive and significant effect on purchasing decisions. To increase customer decisions and
loyalty, product innovation must continue to be carried out continuously.

Product Innovation and Loyalty

Product innovation influences customer loyalty. This means that product innovation will
encourage customers to continue using the product. Previous research has proven that there is an
influence between product innovation and loyalty.
Syafrizal, Makmur, & Seprini (2017) in their research concluded that customer loyalty is influenced
by product innovation. The same research findings were also found by Aryoni et al (2019) in their
research who found that there was an influence between product innovation and consumer loyalty.

Purchase Decisions and Loyalty

A customer who has made a purchase will form loyal or disloyal behavior. This depends on how
the customer perceives the product they have purchased.
If customers feel positive about the product they purchased, the customer will be loyal. Meanwhile,
if customers experience a negative perception of the product they purchased, the customer will be
disloyal and switch to another product. Research related to the relationship between purchasing
decisions and loyalty was conducted by Hendriko, (2018) who found that purchasing decisions
influence customer loyalty. Research conducted by (Rejeki, H, & Yulianto, 2015)
also found that decisions have an influence on customer loyalty. The conceptual framework of the
research can be described as follows.

Product Innovation Buying decision Loyalty

Figure 1. Research Conceptual Framework

2. Research Methods
This research approach is a quantitative research approach. The population in this study were
Toyota Calya car users in the cities of Bogor and Bekasi. The sampling technique was accidental
sampling, which means that samples were taken from Calya car users who happened to meet the
researcher. A total of 203 questionnaires were successfully collected. Therefore, the sample in this
study was 203 people.
The use of a sample of 203 respondents has fulfilled the requirements for analyzing data using
Structural Equation Modeling which recommends a sample of more than 200 respondents (Hair et
al, 2017). Data analysis was carried out using Structural Equation Modeling. In

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In this research, there are three research variables, namely product innovation, purchasing
decisions and customer loyalty. The measurements of each variable can be seen in Table 2.

Table 2. Measurement of Research Variables

Variable Indicators/Statement items

Product Innovation There are various types of Toyota Calya products
(Ekasari & Roza, 2017), Product quality is always improved. Product design
(Al rasyid & Tri Indah, is always improved
2015) Availability of spare parts
Engine performance is very good
Buying decision I use Toyota Calya products to meet my mobility needs
(Al rasyid & Tri Indah, I looked for information about Toyota Calya before making a purchase I evaluated other
2015) brands before deciding to buy I am confident in my decision to buy Toyota Calya
products
I feel satisfied after purchasing the Toyota Calya product
Customer loyalty For transportation, I prefer the Toyota Calya product over other products
(Bobâlcÿ, Gÿtej(Bradu), & I feel very happy using this product
Ciobanu, 2012) I bought this product because I really like it
I will continue to buy Toyota Calya products in the future.
I recommend Toyota Calya products to others
I convey positive things about Toyota Calya products to other people

3. Research Findings
3.1. Normality
Test One of the requirements that is met in the data analysis method using Structural Equation
Modeling is that the data must be normally distributed. According to Schumacker & Lomax, (2010)
recommends a cr value of <± 2.58 and the skewness and kurtosis values of all indicators are below
<2.58 (Schumacker & Lomax, 2010).

Table 3. Normality Test

Variables skew cr kurtosis cr

Loy6 -.319 -1,855 -,295 -,857
Loy5 -.378 -2,199 -,173 -,502
Loy4 -.220 -1,278 -,266 -,772
Loy3 .128 ,742 -,229 -,667
Loy2 .038 ,220 -,245 -,714
Loy1 .009 ,054 -,293 -,853
Kep1 .008 ,046 -,223 -,647
Kep2 -.052 -,301 -,267 -,776
Kep3 .079 ,459 -,384 -1.117
Kep4 -.202 -1,177 -,040 -,116
Kep5 -.049 -,282 -,538 -1,564
Ino5 -.048 -,282 -,267 -,777
Ino4 -.061 -,356 -,369 -1,073
Ino3 -.044 -,258 -,378 -1,098
Ino2 .159 ,926 -,611 -1,777
Ino1 -.001 -,004 -,411 -1,197
Multivariate 6,070 1,802
Source: Data processing results, 2020

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Table 3 shows that the cr value has a value of <± 2.58 and the skewness and kurtosis values
of all indicators are below <2.58. This shows that the data in this study is normally distributed.
Thus it can be continued to the next stage.

3.2 Measurement Model

To find out whether the indicators are used to measure each research variable, a measurement
model was carried out using Confirmatory Factor Analysis
(CFA). The required loading factor value is greater than 0.50, the CR (Composite Reliability)
value is recommended ÿ 0.70 and AVE (Average Variance Extracted) ÿ 0.50 (Hair et al, 2017.
Table 4 shows that all indicators have a loading factor >0.50, value CR > 0.70, AVE value > 0.50.
Thus, the indicators used in this research are valid and reliable.

Table 4. Measurement Model

Variable Factor Information
Indicator CR AVE
Loading
Various types of Toyota 0.673
Innovation products Product quality improvements
Product are always 0.721 Valid and
being made Product design is 0.74 0.847 0.525 Reliable
always being improved 0.725
Availability of spare parts 0.761
Engine performance is very good
Using Toyota Calya to meet 0.676

mobility needs I look for information about

Toyota Calya products before 0.746 Valid and
Decision making a 0.835 0.503 Reliable
Purchase purchase I evaluate other brands
before deciding to buy I am confident 0.733

in my decision I want to buy Toyota Calya

0.665
products. I feel satisfied after
purchasing Toyota Calya products. For
0.724
transportation, I prefer Toyota
Calya products over other products
0.743

Loyalty I feel very happy using Toyota Calya

0.737
products. I bought this
product because I really like it. I will
0.711 Valid and
continue to buy
Toyota products in the future. 0.879 0.547 Reliable
0.713

I recommend Toyota products to other

0.749
people. I convey
positive things about Toyota Calya products
to other people 0.786

Source: Data processing results, 2020

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3.3 Model Suitability Test
The results of the model suitability test can be seen in Table 5 below.

Table 5. Model Fit Test

Criteria Results Decision
P-Value 0.053 Good Fit
Cmin/ DF 1.237 Good Fit
Adjusted Goodness of Fit (AGFI) 0.902 Good Fit
The goodness_of_Fit Index (GFI) 0.927 Good Fit
Comparative_Fit_Index (CFI) 0.984 Good Fit
Tucker Lewis_Index (TLI) 0.981 Good Fit
Root Mean Square Error of Approximation (RMSEA) 0.034 Good Fit
Source: Data processing results, 2020

According to Hair et al, (2017) some of the model suitability test criteria are Adjusted GFI
(AGFI) > 0.90, Goodness_of Fit Index (GFI) > 0.90, CFI > 0.90, TLI > 0.90, RMSEA < 0.08, and RMR
< 0.05 (Hair et al, 2017). Based on the data presented in table 5, it shows that the model in this study
is fit.

3.4. Hypothesis testing

To test the hypothesis in this research, it can be seen from the recommended critical ratio value,
which is greater than 1.96 and the sig. probability is smaller than 0.05 (Byrne, 2010). The results of
hypothesis testing in this research can be seen in Table 6 below:

Table 6. Results of Hypothesis Testing

Standardized
Form of Relationship CR P
Regression Weigh
Product Innovation ÿ Purchase Decision ÿ Loyalty ÿ ,617 6,417 ,000

Product innovation Loyalty ,282 3,368 ,002

Buying decision ,619 6,326 ,000

Source: Processed data, 2020

The results of hypothesis testing can be explained as follows.

The Influence of Product Innovation on Purchasing Decisions
The first hypothesis developed in this research is that there is a positive and significant influence
between product innovation and purchasing decisions. The results of hypothesis testing prove that
there is a positive and significant influence between product innovation and purchasing decisions. This
can be seen from the regression coefficient value of 0.617
with a calculated t value (CR) of 6.417> 1.96 and a P-value of 0.000. Therefore, it can be explained
that product innovation can influence consumers to make purchases.

Product Innovation on Consumer Loyalty

The second hypothesis developed in this research is that there is a positive and significant influence
between product innovation and consumer loyalty. The results of the hypothesis test proved that there
is a positive and significant influence between product innovation and loyalty.
This can be seen from the regression coefficient value of 0.282 with a calculated t value (CR) of 3.368>
1.96 and a P-value of 0.002. Therefore, it can be explained that product innovation can influence
customer loyalty.

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The Influence of Purchasing Decisions on Loyalty
The second hypothesis developed in this research is that there is a positive and significant
influence between purchasing decisions on consumer loyalty. The results of the hypothesis
test proved that there is a positive and significant influence between purchasing decisions on
loyalty. This can be seen from the regression coefficient value of 0.282
with a calculated t value (CR) of 6.326> 1.96 and a P-value of 0.000. Therefore, it can be
explained that product innovation can influence customer loyalty.

The mediating influence of Purchasing Decisions on Loyalty

In the fourth hypothesis, we will test whether purchasing decisions can mediate the
relationship between product innovation and loyalty. Testing is carried out with the Sobel Test.
The results of the Sobel Test show that the t-value obtained is 4.619 and the p-value is 0.000.
This shows that the mediating influence of purchasing decisions which forms the relationship
between product innovation and loyalty has a positive and significant influence.

4. Discussion

The research results show that consumer loyalty of Toyota car users is influenced by
innovation and purchasing decisions. This means that product innovation will make customers
feel interested in making a purchase, and from this purchasing decision, customer loyalty will
be formed for the Toyota Calya car in the cities of Bogor and Bekasi. Product innovation is
closely related to the attraction of customers to buy the product. Companies that are able to
modify products to provide added value in terms of model, design and product features can
influence consumer decisions in making purchases. Purchasing decisions will provide
consumers with product usage experiences. If customers have a positive response to their
purchases, this will form loyalty to the product.

The first hypothesis test was carried out and it was found that there was a positive and
significant influence between product innovation on purchasing decisions for Toyota Calya
brand cars in the cities of Bogor and Bekasi. The finding of the influence of product innovation
on purchasing decisions is strengthened by findings made by (Tandia & Iriani, 2018) that
product innovation significantly influences purchasing decisions. The results of research
conducted by Al Rasyid & Tri Indah (2018) show that product innovation is one of the factors
that influences consumers in making purchasing decisions. In other words, before buying a
product, consumers will pay attention to the innovation of the product. This will attract
consumers to make purchases.
The results of testing the second hypothesis also show that the influence of product
innovation on consumer loyalty is positive and significant. This means product innovation
well, then this will make consumers increasingly increase their loyalty to Toyota Calya brand
products in Bogor and Bekasi Regencies. These research findings are relevant to research
conducted by (Syafrizal et al., 2017) which found that there is a link between product innovation
and customer loyalty. This is also strengthened by research conducted by (Aryoni et al., 2019)
which found that consumer loyalty is influenced by product innovation. Thus, the findings of
this research show that product innovation is very important to maintain consumer loyalty.

Furthermore, testing the third hypothesis also proves that purchasing decisions influence
customer loyalty. This means that consumers who purchase Toyota Calya brand cars in the
cities of Bogor and Bekasi will influence their loyalty as customers.

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If the experience in making purchases is good, customer loyalty will be created.

The findings of this research are also supported by research conducted by (Hendriko, 2018)
who found that purchasing decisions. The same findings were also found by Rejeki et al (2015) who found that
purchasing decisions have a direct effect on customer loyalty.

5. Conclusion and Suggestions

5.1.Conclusion
Based on the research results and discussions described previously, the author concludes that product
innovation influences purchasing decisions positively and significantly. Product innovation and purchasing decisions
positively and significantly influence customer loyalty. The research results also prove that purchasing decisions
significantly mediate the influence of product innovation on customer loyalty.

5.2. Suggestion

Customer loyalty is very important for the company. Loyal customers will certainly maintain the sales performance
of Toyota Calya cars in the cities of Bogor and Bekasi, therefore innovation must continue to be carried out in order
to maintain the loyalty of Toyota Calya car users.

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