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Product Differentiation, Celebrity Endorsement and Purchase Intention: Case Study of Makuta Cake Bandung, West Java, Indonesia.

Introduction

Bandung city is one of the tourist destinations in Indonesia. Bandung as atourism destination is considered perfect in creativity; and the number of tourists who intend to revisit Bandung is high, meaning that Bandung is a good place to revisit (Ratih Rurriyati and Dara Myrna Pusparani, 2015). Bandung along with four other cities / regions namely Yogyakarta, Solo, Semarang, and Bali, designated as Indonesia's culinary tourism destination by the Ministry of Tourism. In the future, cities are expected to be included in the UNESCO world heritage site, remains a positive impact for the country. (Pikiran-Rakyat.com, 2015). In 2015, an estimated number of foreign tourists to Indonesia reached 10 million tourists to the foreign exchange earnings of about 10 billion US dollars This foreign exchange earnings of about 30 percent comes from culinary or about 30 billion US dollars. Culinary business competition in Bandung increasingly tight with many new brand emergence. cake and bakery business in Bandung is increasingly varied. It requires businesses to be more competitive. This culinary business opportunity is utilized by entrepreneurs from large investors, small and medium entrepreneurs including among celebritiess. Now one of the culinary business is on the rise is bandung Makuta Cake (wisatabdg.com, 2017). in entering the competition in this culinary industry makuta cake owned by the celebrities named Laudya Cynthia Bella must determine strategy. One of the factors that influence the competitive advantage of a product in the market is the diversification of products. product diversification is developing new products or markets or both, in order to pursue growth, increased sales, profitability, and flexibility santoso (2011). According Dwi Minastitik (2000) steps taken by a company to differentiate itself from competitors if the product has a uniqueness and high value for consumers. According to Lewis and Booms (2000) differentiation is one type of competitive advantage that the company has to win the competition in the global market. Product differentiation can be done through the form, privileges, quality of work, quality of conformity, durability, reliability, easy to improve, style, and design, so that the differentiation results provide interrelated contribution purchase intention.

Advertising is a popular and challenging form of marketing communications. With increasing competition for consumer attention and new product introductions, advertisers are being forced to use celebritiess that can attract attention. These celebrities can help the ads be more artactive, thus enhancing communicative ability by reducing noise in the communication process (Young, Moses & Putit, 2012). Celebrity endorsements have also been found to produce better memory or recognition on behalf of brands (Friedman & Friedman, 1979; Petty, Cacioppo & Schumann, 1983). Many studies also show that celebrity endorsers do well to influence important advertising effective actions such as attitudes toward advertising (AAD), brand attitudes (ABR) and purchase intentions (PIN) (Atkin & Block, 1983; La Ferle & Choi, 2005; Petty et al., 1983). Furthermore, a celebrity support strategy has the ability to create images for products through transfer of meaning (McCracken, 1989). For this benefit, companies are willing to pay a premium for celebrities to support their brand in advertising. Shimp (2003: 460) argues that Celebrity Endorser is using the celebrities as an advertisement star in the media, ranging from print media, social media, and media telivisi. In addition, celebrities are used because of the attributes of their fame including their good looks, courage, talent, elegance, strength, and sexual attraction that often represent the appeal desired by the brand they are advertising. Based on this background, the formulation of the problem in this research is how the influence of product differentiation and celebrities endorsement affect the purchase intention. Based on the formulation of the problem, the purpose of this research is how the influence of product differentiation and celebrities endorsement affect the purchase intention.

Literature Review

Product differentiation

According to Kotler (2003, 347) "differentiation is defined as an act designed a series of meaningful distinctions to differentiate a firm offer with a competitor's bid. This strategy requires the development of unique goods or services of unmatched by relying on customer loyalty to the brand. The company can offer a higher quality, performance, or unique features that each can justify a higher price. Miller (1987) argues that differentiation products companies tend to invest in research and development activities to improve their innovative capabilities and improve their ability to compete with their competitors innovate. According to Kotler (2007: 09) product differentiation is an action for designing some significant differences to distinguish the company deals with a competitor's bid. The difference it made to have the advantage of value and benefits to meet the needs of customers According to Kotler (2005: 350) indicator in Product Differentiation among others: (1) Form (Form), (2) Feature (Feature), (3) Quality of Performance (Performance Quality), (4) Compliance (Conformance Quality), (5) Durability (Durability), (6) Reliability (Reability), (7) Easily Fixed (Repairability), (8) Style (Style), and (9) Design (Design). In this study, the authors use five indicators that were considered appropriate to the type of products: (1) Form (Form), (2) Feature (Feature), (3) Quality of Performance (Performance Quality), (4) Compliance (Conformance Quality). Forms (Form) products can be differentiated by shape or size, model or physical structure of the product. Feature (Feature) the product offered has a feature or features that are different and complement the basic functions of the product. The attempt to be the first to introduce new features that are considered valuable is one of the most effective ways to compete. Quality Performance (Performance Quality) product performance can be defined as the level of the basic characteristics of the product. The more quality product, the higher-level characteristics. Superior product performance impact on repeat purchases are more, customer loyalty, and positive impression on the customer. Suitability (Conformance Quality) Buyers expect quality products have conformity with the standard or specification is high. Quality conformity is the level of conformity and fulfillment of all units produced to the specifications of the promised target. Durability (Durability) The buyer expects some products have a normal life and or weight. Products which have advantages in durability will attract more customers to pay more for products that are expected. Reliability (Reability) Buyer will pay more to get a product that has the reliability. Reliability is a measure of the probability that a particular product will not be damaged or fail within a certain time period. Easily Fixed (Repairability) The buyer selects the product easy to repair, which is a measure to improve product ease when damaged or failed. Customers interested in the types of products that easily corrected also for reasons of time and cost efficiency can be improved if its own. Style (Style) Describe the appearance and feeling generated by the product to the buyer. Style influence on customers by showing the uniqueness and performance products to attract customers to buy. Design (Design) Design become one of the most powerful ways potential to differentiate and position the company's products and services. The design is also a factor that will often be the hallmarks of the company, namely as the totality of features that affect the appearance and function of specific products required by customers. Design parameters are all forms of quality, features, performance, suitability, durability, reliability, ease of repair, and style.

Celebrity Endorsment

Creativity infinite young people in the process of marketing to influence the attitudes and behaviors that look could become a benchmark of the development of the marketing world today, especially in the field of branding. Can be seen by consumers often assume that the celebrities used as commercials is an appreciation that they have achieved, or idol which is the main attraction for consumers. Shimp (2003: 460) argues that the celebrities's Celebrity Endorser is used as commercials in the media, ranging from print media, social media, and the media television. In addition, celebrities are used because of the attributes of their fame including their good looks, courage, talent, elegance, strength, and sexual attraction that often represent the appeal desired by the brands they advertise. Celebrities are considered more attractive (liked) by consumers and therefore more easily recognizable (Kelman, 1961). Product Differentiation is the creation of a product or product image quite different from the products that have been circulated with the intent to attract consumers (Griffin, 2003: 357). More and more celebrities are involved in the business not only as an endorser, but also has the role of financial and decision-making in this business. Hunter (2010, p.2) defines a celebrity as an individual entrepreneur known for their famous and take part in owning or running a business (or portrayed as doing it). Launching a new product they are usually reported by the media; therefore, creating publicity for celebrities and businesses. Relationships with companies making celebrities as endorsers of companies and products. It has been understood that by default all employers' celebrity is a celebrity endorser, but not all celebrity endorser is a celebrity entrepreneurs. Because employers are also celebrity endorser, a reasonable way to investigate celebrities entrepreneurship is through celebrity endorsements framework Shimp (2007) classifies five special dimension celebrity endorser to facilitate communication effectiveness. Special celebrity endorser five dimensions described by the acronym TEARS, namely: trustworthiness (Trustworthy), Expertise, Attractiveness (Fascination), Respect (Quality Appreciation) and Similarity (Similarity with the intended audience)

Purchase Intention

Mowen and Minor (2002: 322) state that: "Consumer behavior consists of all consumer actions to acquire, use and dispose of goods or services. Some consumer behavior is to buy a product or service, provide word of mouth information about an advertised product and services that have been informed to others, forget the product and find out information about a desired product. Before making a decision, consumers often develop a desire to behave according to the possibility of action that will be done. The desire to behave can be interpreted as buying consumer interest to behave according to their own views in making the decision to discard and use the product or service ". Dimensions purchasing decisions according to Kotler and Armstrong (2008: 146), so that the indicator for the purchase decision are: Selection of products / services, Brand choice, Timing and the choice of method / means of payment.

Theoretical Framework and Hypothesis Development

Theoretical Framework

the study proposes a conceptual model (Figure 1). This model shows the relationship between the strategies of product differentiation, Celebrity Endorsment on Purchase Intentions

Product Differentiation and Purchase Intention

Differentiation strategy undertaken by the company on its products encourages excellence in competition. With the implementation of good differentiation and superior to, the company will be able to win the competition, because consumers would prefer to buy and use a product from a company that is superior.

Research conducted by Mohammad Reza Ansyari (2016) states that research results obtained by the author Product Differentiation positive and significant effect on purchasing decisions Honda. Additional research is also done by Anisa Rimayati (2009) with the title stating that there are positive influence between product differentiation and the image on purchasing decisions

H1 : Product differentiation will have significant relationship with purchase intention

Celebrity Endorsement and purchase Intention

According to Clark & Horstman (2003) states that the product is in endorsement by the celebrities will make more purchases by consumers with higher prices Mishra and Beauty (1990) Petty et al (1983) and Menon et al (2001) showed that celebrity endorsements improve brain memory. Petty et al found that the subjects tended to like the product more when supported by famous athletes than the average citizen Baber region, California. Mishra and Beauty found that the subjects tended to rate the product as better and higher quality if supported by celebrities.

According to Rodriguez (2008: 97), says that in relation to the credibility of the endorser, the only qualities that influence attitudes toward advertising and purchase intent are: Experienced, Knowledgeable, Qualified and Reliable. Spokesman who have these qualities more persuasive and better able to positively influence the attitudes toward advertising and intention to buy H2 : Celebrity endorsement will have significant relationship with purchase intention

Method

Design

To test the hypothesis, the multi item scales used in previous studies were identified and modified to fit this research model. The questionnaire was designed to find out the respondents related to the effect of product diversification and celebrity endorsement on consumer purchase intention. The first independent variable is product differentiation. According to Kotler (2005: 350) product differentiation measured by 9 dimensions are Form, Feature, Performance Quality, Conformance Quality, Durability, Reability, Repairability, Style and Design. While the second independent variable is celebritiy endorser, measured with five dimensions. celebrity endorser according to Shimp (2007) Trustworthiness, Expertise, Attractiveness, Respect and Similarity dimensions. Independent variable in this research that is purchase intention. according to Kotler and Armstrong (2008: 146) purchase intention can be measured by Selection of products and services, Brand selection, Timing and Choice of methods or means of payment. Each of the variables is measured using a 5-point likert scale: "How do you agree or disagree with this statement?" (1 = strongly disagree and 5 = strongly agree). 30 visitor makuta bakery Jl. Van Deventer no. 2 was selected to be a research sample through the "convenience sample" technique

Data Analysis Techniques

This study uses data analysis with SmartPLS software version 3.0. PLS (Partial Least Square) is a structural equation model (SEM) based variants that can simultaneously perform testing at the same measurement model structural model testing. Measurement model used for validity and reliability, while the structural model used to test the causality (hypothesis testing predictive models).

The First step in the analysis was the evaluation of the measurement model (Hair et al., 2014). Internal consistency reliability was tested by calculating Cronbach's alpha and composite reliability for the outer loadings. The convergence of indicators on the construct that they are measuring was tested by calculating the average variance extracted. Constructs were tested for discriminant validity by ensuring that their outer loadings were greater than their cross-loadings on all other constructs. Because informal learning was defined as a second order construct, tests of convergence and discriminant validity were applied to confirm the distinct first order constructs.

The second step in the analysis was the evaluation of the structural model {Hair et al., 2014 #4384}. In order to include the second order constructs in SmartPLS, we adopted the repeated indicators approach (Wetzels et al., 2009). The coefficients of determination (R2) were calculated for all endogenous variables. For each path in the model, the size of the path coefficients were calculated and bootstrapping was used to determine their significance.

Findings

The Measurement Model

According to Cooper and Schindler (2014) measurement model is also called outer model can be used to test the construct validity and reliability of the instrument, measurement model used to test the construct validity and reliability of the instrument,

The Structural Model

In assessing the model with PLS begins with a look at the R-square for each latent variable dependent, here is the value of R square of latent variable dependent, The result shows that the value of R Square research variable dependent that is of purchase intention of 0.580, proving that purchase intention can be affected by variable product diversification and Celebrity Endorsement by 58%, while the remaining 42% or d by other variables not examined in this study.

Testing the hypothesis in this study is based on the values contained in the structural analysis model, the significance level obtained from the comparison of the value of t value with t table value that is equal to 2,051, the following output results of hypothesis testing using smartPLS 3.0

First hypothesis Testing

Based path diagram and table 6 shows that the t value of product differentiation towards purchase intention is equal to 2,482 bigger than t table with P values of 0.013 is below 0.05, it is proved that the Product differentiation significantly affect purchase intention (hypothesis 1 accepted)

Second hypothesis Testing

Based on the path diagram and table 6 it can be seen that the t value of celebrities endorsement on purchase intention is 5.457 bigger than the value of t table, with P values of 0.000 smaller than 0.05, this proves that Celebrity Endorsement significantly to the purchase intention (Hypothesis 2 accepted)

Discussion and Conclusion

Discussion

From the results presented above show that Product differentiation significantly affect purchase intention. In 2017 the company offers 5 types of flavor variants that make consumers can choose products according to taste. the company also offers a premium product called "makuta gold series" consisting of 2 flavors namely makuta peyeum and Makuta Cho Chezz. Consumers like flavor variants are offered from crowded queues in every store. Products offered at varying prices, product prices starting from Rp. 59,000, - up to Rp. 75.000, -. with a relatively affordable price makes the product desirable by the customer. every day customers are willing to queue to get the product.The more varied the products offered will increase purchase intention, the answer to the first hypothesis is also consistent with research conducted by (Susanto and Rahmi, 2013), in his research stating Hypothesis tests conducted found that the differentiation of the products have a significant effect to the purchase intention on fixie bikes in the city of Padang. This result is consistent with that expressed by Simamora (2003) where purchase intention is determined by several factors, among which the quality of the product quality and design of products where quality of product quality and product design is part or element of product differentiation. The second hypothesis in this study is the influence of celebrity endorsement of purchase intention, the result of hypothesis testing states that Celebrity Endorsement affects purchase intention. Selection of celebrities as endorsement celebrities has an impact on product value. An interesting celebrity can affect the buying interest of someone who sees an ad and buys an advertised product. Fascinating celebrities can increase purchase intention. This result is consistent with research conducted by (Ahmed et al., 2015) stating that there is a significant impact of celebrity endorsement on purchase intention. Although there are also conflicting studies such as research conducted by Syed Rameez ul Hassan, R. A. J. (2014) The results show that endorsements through local and Indian celebrities have a similar and insignificant effect on purchasing intentions in Pakistan, with no major differences with celebrity country of origin. In the study, the relationship between celebrity consumers was assessed and confirmed that the celebrity attribute (Local or Indian) is not so important to buy for an existing product but quality, brand image and brand loyalty are key factors to buy.

Conclusion

From the description of research results and research discussion as described in the previous description, it can be drawn some conclusions, among others, as follows:

1. Product Differentiation significantly affect purchase intention, it is intended by the value of t is greater than t table 5,457> 2,051, and the value of P value 0.000 <0.005, which means that the increasing differentiation of products will also increase purchase intention.

2. Celebrity Endorsement positive and significant effect on purchase intention, this is indicated by the value of t is greater than t table is 2,482> 2,051 and the value of the P value equal to 0.013> 0.05. Which means that the celebrity's role in supporting the product (celebrity endorsement) will affect purchase intention products makuta cake

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Radhi Abdul Halim Rachmat (*)

Universitas Widyatama

radhi.abdul@widyatama.ac.id

Ratih Hurriyati

Universitas Pendidikan Indonesia

Mokh. Adieb Sultan

Universitas Pendidikan Indonesia

(*) Corresponding Author
Table 1: Outer Loading

            Factor
Indicator   1            2                3
            Purchase     Celebrity        Product
            Intention    Endorsement      Differentiatiom

PI 1             0.654
PI 2             0.806
PI 3        0,773
PI 4             0.598
CE 1                     0.717
CE 2                     0.704
CE 3                     0.787
CE 4                     0.665
CE 5                     0.667
PD 1                                      0.659
PD 2                                      0.692
PD 3                                      0.732
PD 4                                      0.783
PD 5                                      0.797

Based on table 1 shows that all indicators in this study have values
above or greater than 0.5, it can be concluded that all variables in
this study valid
Reliability test is used to test the accuracy of questionnaire
measurement result that closely related to trust problem. A test level
is said to have a degree of confidence when the test gives the right
result, a variable is said to be quite reliable when the variable has
the value of the Avarage Variance Extracted (AVE) and Cronbach Alpha
greater than 0.5 (Henseler et al., 2009). While the composite reability
should be above 0.6 (Henseler et al., 2009). Here are the results of
the reliability test in the study.

Tabel 2: Path Coefficients

                      Original   Sample   Standard   T           P
                      Sample     Mean     error      statistic   Value

Celebrity - Purchase  0.543      0.569    0.099      5.457       0.000
Endorsement
Intention
Product - Purchase    0.325      0.335    0.131      2.482       0.013
Differentiation
Intention
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Author:Rachmat, Radhi Abdul Halim; Hurriyati, Ratih; Sultan, Mokh. Adieb
Publication:Global Business and Management Research: An International Journal
Geographic Code:9INDO
Date:Jan 1, 2019
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