The Effect of Discount Prices and Competitiveness of Mobile

Internet Services in Improving Customer Loyalty through the

Quality of Telecommunication Provider Services as Moderation

Variables in Communities in Medan City

Hendra Jonathan Sibarani

and Fenny Krisna Marpaung

Management, Faculty of Economics, Universitas Prima Indonesia

Keywords: Customer Loyalty, Discount Prices, Service Competitiveness, Service Quality

Abstract: Telecommunication providers are internet service providers. The purpose of the research was carried out to

increase the growth and even distribution of telecommunication network infrastructure development which

could further reach and improve access to information for the Indonesian people more broadly. This research

method uses a quantitative approach, a type of quantitative descriptive research with the nature of research

that is explanatory. The population in this study were people in the city of Medan from the District of Medan

- Petisah. Sampling used in this study using the Slovin formula so that the number of samples used in this

study was 100 people. Sampling uses a non-probability sampling approach. The type of sampling chosen is

accidental sampling with a type of qualified volunteer sample. Research data analysis method is descriptive

statistical analysis and multiple regression analysis. The results obtained in this study are that discount prices,

service competitiveness and service quality as a moderating variable simultaneously have a positive and

significant effect in increasing customer loyalty in the community in Medan City but on service

competitiveness variables have a negative value and no significant effect in improving customer loyalty.

Moderation variables are proven to be able to influence discount prices, service competitiveness in increasing

customer loyalty in the community in the city of Medan, with a coefficient of determination of 15%.

1 INTRODUCTION

Information technology and communication are

inseparable from people's lives and become one of the

important needs to support activities, including

communication without limitation of distance and

time, getting up to date information, supporting

business activities, and etc. One of them is by using

internet services, the advancement of internet

technology is changing the way people view the

environment around and in the world in the era of

globalization. On the one side, the era of globalization

is expanding the product market, on the other side this

situation has led to increasingly sharp competition,

with the advancement of increasingly sophisticated

information and communication technology.

Consumer needs to access data with an easy and

flexible device has become a reality that the

telecommunications industry cannot reject. Seeing

the opportunity of the large number of internet users

in Indonesia, especially the need for mobile internet,

many companies provide mobile internet services or

referred to as ISP Mobile (Internet Service Provider

Mobile). Some of these companies include Smartfren,

Telkomsel Flash, XL Broadband, Indosat M2, Tri ‘3’,

and Bolt. This phenomenon explains the intense

competition between internet data service provider

companies or ISP Mobile so that the company is

aware of a need to maximize company assets for the

survival of the company, especially for companies

that provide internet data services or Internet Service

Providers.

Medan is the third largest city in Indonesia after

Jakarta and Surabaya, as well as the largest city

outside Java. The development of trends and lifestyle

of the Medan city community in the use of mobile

internet to date reaches up to 3.5 million people with

the criteria of internet users based on work, age,

gender, type of device used both mobile and computer

712

Sibarani, H. and Marpaung, F.

The Effect of Discount Prices and Competitiveness of Mobile Internet Services in Improving Customer Loyalty through the Quality of Telecommunication Provider Services as Moderation

Variables in Communities in Medan City.

DOI: 10.5220/0009501207120716

In Proceedings of the 1st Unimed International Conference on Economics Education and Social Science (UNICEES 2018), pages 712-716

ISBN: 978-989-758-432-9

and other social media usage. This is what underlies

the community in the city of Medan using a

telecommunications provider that is able to provide

discounted prices at the time of purchase of internet

data service quota, namely purchases can be made

through services available to each

telecommunications provider or direct purchase, as

well as alternative price options at the time of

purchase. In addition to discount prices, service

quality will also have an impact on customer loyalty

and whether customers remain loyal using the product

from the telecommunications provider or not.

2 THEORICAL FRAMEWORK

2.1 Discounted Prices.

Price is the sum of all values that consumers exchange

for the amount of benefits by owning or using an item

and service (Aryani and Rosinta, 2010). The prices

referred to here include the affordability of prices,

price competitiveness, price compatibility with

product quality and prices according to the services

provided. Discounts are one type of sales promotion.

A discount is a reduction in the product from the

normal price in a certain period. While sales

promotion is a form of direct persuasion through the

use of various incentives that can be regulated to

stimulate product purchases by and or increasing the

amount of goods purchased by customers (Tjiptono,

2008: 229).

2.2 Competitiveness.

According to Muhardi (2007: 39), competitiveness is

a function that is not only oriented internally but also

externally, that is, responding to the market's business

objectives proactively. The competitive advantage of

a business in serving the market segment can be built

by selling goods at a lower price than its competitors.

2.3 Customer Loyalty

According to Hasan (2008: 83), that customer loyalty

is a customer who simply does not buy back an item

and service for example by recommending someone

else to buy. According to Griffin (2010: 04), loyalty

is that a consumer is said to be loyal or loyal if the

consumer shows buying behavior on a regular basis

or there is a condition that requires consumers to buy

at least twice in a certain time interval.

2.4 Quality of Service

According to Kotler (2009: 49), service quality is "All

trait and characteristics of a product or service that

affect the ability to satisfy the stated or implied

needs". This is clearly a definition of quality that is

customer-centered, a producer can provide quality if

the product or service provided can meet or exceed

consumer expectations.

3 RESEARCH METHOD

The type of research used is quantitative descriptive

research. Quantitative descriptive research involves

collecting data to test hypotheses or answering

questions about the final status of the research subject

(Sugiyono, 2010). The nature of research is

explanatory research.

Population and Sample. The population in this

study is the population of Medan City in Medan

Petisah Subdistrict in 2016 as many as 70,610 people

by using the Slovin formula, the number of samples

is 100 respondent.

4 ANALYSIS

Statistical analysis used in this study using statistical

analysis with moderated regression analysis (MRA)

or interaction test is a special application of linear

multiple regression where in the equation regression

contains elements of interaction or multiplication of

two or more independent variables. (Ghozali, 2013).

This research model is described based on the

regression equation. Regression equation is multiple

regression to test all hypotheses in the study between

1 Hypothesis 1 (H1)

Influence of Discount Price (X1) on Customer

Loyalty (Y)

Y = a + b1X1 + e

2 Hypothesis 2 (H2)

Influence of Competitiveness (X2) on Customer

Loyalty (Y)

Y = a + b2X2 + e

3 Hypothesis 3 (H3)

Influence of Discount Price (X1) and Service

Competitiveness (X2) together on Customer

Loyalty (Y).

Y = a + b1X1 + b2 X2 + e

4. Hypothesis 4 (H4)

Interaction Test :

Y = a + b1 X1 + b2 X2 + b3 X3 + b4 X1X3 + b5

X2X3 + e

Information :

a = Constants

b1, b2 ... b5 = Regression Coefficient of Each

Variable

X1 = Discount Price

The Effect of Discount Prices and Competitiveness of Mobile Internet Services in Improving Customer Loyalty through the Quality of

Telecommunication Provider Services as Moderation Variables in Communities in Medan City

713

X2 = Service Competitiveness

X3 = Quality of Service as Moderating

Y = Customer Loyalty

e = % error (10%)

5 RESULTS

Data analysis method. Statistical analysis used in this

study uses statistical analysis with moderated

regression analysis (MRA) or interaction test is a

special application of linear multiple regression in

which the regression equation contains elements of

interaction or multiplication of two or more

independent variables. (Ghozali, 2013). This research

model is described based on the regression equation.

Regression equation is multiple regression to test all

hypotheses in the study, among others:

Y = a + b

+ b

Information :

a = Constants

b1, b2 ... b5 = Regression coefficient of each variable

X1 = Discount Price

X2 = Service Competitiveness

X3 = Quality of Service as Moderating

Y = Customer Loyalty

e = % error (10%)

Table 1: Research Analysis Model Test Results

Based on Table 1.1 above obtained multiple linear

regression equation, as follows :

Y = 19,487 – 0,452 X1 - 0,233 X2 – 0,758 X3 + 0,077

X1X3 + 0,010 X2X3 + e

The regression equation model above can be

interpreted that a constant of 19,487 means that if the

value of the independent variable is discounted

prices, service competitiveness and service quality is

zero, it is considered non-existent, it will increase

customer loyalty by 19,487%. Discounted price (X1)

has a regression coefficient of 0.452 and is negative,

this means that every reduction of one percent of the

discount price variable will give a decrease in

customer loyalty by 0.452 or 45.2% if other variables

are assumed to be constant. This gives an explanation

that discount prices are part of the changes that are

not in line with increasing customer loyalty. Service

competitiveness (X2) has a regression coefficient of

0.233 and is negative, this means that every decrease

of one percent of service competitiveness variables

will provide a decrease in customer loyalty by 0.233

or 23.3% if other variables are assumed to be

constant. This gives an explanation that service

competitiveness is part of the change that is not in line

with increasing customer loyalty. Service Quality

(X3) has a regression coefficient of 0.758 and is

negative, this means that every one percent reduction

in service quality variables will provide a decrease in

customer loyalty by 0.758 or 75.8% if other variables

are assumed to be constant.

This gives an explanation that service quality is

part of the change that is not in line with increasing

customer loyalty. Interaction discount prices (X1) and

service quality (X3) have a regression coefficient of

0.077 and are positive, this means that every increase

of one percent of the discount price variable and

service quality will increase customer loyalty by

0.077 or 7.7% if other variables assumed to be

constant. This gives an explanation that discount

prices and service quality are the parts that change in

the direction of increasing customer loyalty. The

interaction of service competitiveness (X2) and

service quality (X3) has a regression coefficient of

0.010 and is positive, this means that every increase

of one percent of service competitiveness variables

and service quality will provide an increase in

customer loyalty by 0.010 or 1.0% if other variables

are assumed to be constant. This provides an

explanation that competitiveness and service quality

are parts that change in the direction of increasing

customer loyalty.

Hypothesis Testing

1. Simultaneous Hypothesis Testing (Test F)

Table 2 : F Test Results (Simultaneous)

ANOVA

Model Sum of

Squares

f Mean

Square

Sig.

egressio

134.717 3 44.906 5.626 .001

esidual 766.193 96 7.981

Total 900.910 99

a. Dependent Variable: Customer Loyalty (Y)

b. Predictors: (Constant), Quality of Service (X3),

Service Competitiveness (X2), Discount Prices (X1)

Source : Primary Data Processed, 2018 (SPSS)

Simultaneous testing or F test aims to see how the

discount prices influence and the competitiveness of

mobile internet services in increasing customer

loyalty through the quality of telecommunications

service providers as a moderating variable in the

UNICEES 2018 - Unimed International Conference on Economics Education and Social Science

714

community in the city of Medan. Based on the results

of the above test, the Fcount value is 5.626 and the

significance value is 0.001. The Fcount value will be

compared with the Ftable value of 2.70 (obtained see

Ftable with the criteria df1 = 2 and df2 = greater than

100), then the results obtained are Fcount > Ftable

(5.626> 2.70) and a significance value of 0.001 < 0.05

so it can be concluded that discount prices,

competitiveness of mobile internet services and the

quality of telecommunications service providers

together have a positive and significant effect in

increasing customer loyalty to the community in

Medan City.

2. Partial Hypothesis Testing (t-test)

Table 3: T Test Results (Partial)

Based on Table 3 above, it appears that:

1. Test the partial hypothesis of the discount price

variable from the table can be seen the value of tcount

discount prices variable (X1) is equal to 3.722 with a

significance of 0.000. Then the results of the study

show that Ha hypothesis is accepted because tcount >

ttable (2.005 >1.98447) and is significantly smaller

than 0.05, which means that the discount price

variable (X1) partially has a positive and significant

effect on increasing customer loyalty to the people in

Medan City

2. Partial hypothesis test of service competitiveness

variables from the table can be seen the value of

tcount variable service competitiveness (X2) is equal

to -0.902 with a significance of 0.369. Then the

results of the study showed Ha hypothesis was

rejected because tcount < ttable (-0.902 < 1.98447)

and significance was greater than 0.05, which means

that service competitiveness variable (X2) partially

had no effect and was not significant in increasing

customer loyalty to the community in Medan City

3. Partial hypothesis testing variable service quality

from the table can be seen the value of tcount service

quality variable (X3) is 2.107 with a significance of

0.038. Then the results of the study show that the Ha

hypothesis is accepted because t count > ttable (2.107

> 1.98447) and the significance is less than 0.05,

which means that the service quality variable (X3)

partially has a positive and significant effect on

increasing customer loyalty to the community in

Medan City .

3. Test of Moderating Variable Test Hypothesis

Interaction

Table 4: Interaction Test Results for Moderation

Variables

The table shows that the moderating variable has

proven significant in influencing discount prices and

service competitiveness in increasing customer

loyalty. Prediction of negative values indicates that

the moderating effect provided is negative, meaning

that service quality has the effect of reducing the

influence of discount prices and service

competitiveness in increasing customer loyalty. The

insignificance of the X1 discount price coefficient

(sig 0.794) and X3 service quality (sig 0.235)

indicates that this variable is a pure moderator

variable and cannot be placed as an independent

variable. But if the results show that discount prices

(X1) and service quality moderation (X3) are both

significant then it can be concluded that the service

quality variable is a quasi moderator variable or can

be used as an independent variable as well as a

moderator variable.

6 CONCLUSIONS

Increasing customer loyalty requires good quality of

service and followed by price discounts and service

competitiveness between telecommunications

providers, this can be seen from the number of users

of mobile internet services who move from one

telecommunications provider to another

telecommunications provider.

Discount prices, service competitiveness and

service quality simultaneously have a positive and

significant effect in increasing customer loyalty in the

community in Medan City while partially

competitiveness of services has a negative value and

does not significantly influence customer loyalty to

the people in Medan City.

Factors affecting the increase of customer loyalty

in the community in Medan City are discount prices

because they have the most dominant influence in

increasing customer loyalty to the people in Medan

City.

The Effect of Discount Prices and Competitiveness of Mobile Internet Services in Improving Customer Loyalty through the Quality of

Telecommunication Provider Services as Moderation Variables in Communities in Medan City

715

Service quality as a moderating variable has been

proven to significantly affect discount prices and the

competitiveness of telecommunications service

providers in increasing customer loyalty to the people

in Medan City.

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