Effect of Product Quality, Price, and Promotion on Purchase

Decisions

Gaeldeba Garaika

, Nerika Rianda

, Dyah Sugandini

, and Danang Yudhiantoro

Sekolah Tinggi Ilmu Ekonomi Trisna Negara, Sumatera Selatan

Universitas Pembangunan Nasional Veteran Yogyakarta

Keywords: Product Quality, Price, Promotion, Purchasing Decision

Abstract: This study aims to determine the effect of Product Quality, Price, and Promotion on the Purchase Decision of

Fragrant Buds. The sampling technique used was purposive sampling with the following criteria:

undergraduate students University in Yogyakarta and South Sumatera, with 200 respondents. The analysis

technique used is multiple linear regression analysis and hypothesis testing using the F test together

(simultaneous) and partial t-test. The results of the analysis show that the variables of Product Quality, Price,

and Promotion jointly influence and significantly influence the Decision of Purchasing. Then partially, the

three independent variables consisting of Product Quality, Price, and Promotion are the positive and

significant effects on the purchase decision.

1 INTRODUCTION

As an agrarian country, Indonesia is blessed with

abundant natural wealth, plus Indonesia's position,

which is considered very strategic. Starting from the

geographical side, Indonesia is located in a tropical

area that has high rainfall so that many types of plants

can live and grow quickly. In February 2016, the

Central Statistics Agency (BPS) recorded 31.74

percent of the workforce in Indonesia or 38.29 million

workings in the agricultural sector. In addition to

producing spices, Indonesia ranks sixth out of the ten

largest tea producing countries in the world. History

records the tea-producing plant (Camellia Sinensis)

first entered Indonesia in 1684, in the form of tea

seeds (allegedly tea sinensis) from Japan brought by

a German national named Andreas Cleyer.

As time goes by, people want to be able to enjoy

tea anytime and anywhere. Consumer behavior that

follows an instant and practical lifestyle can lead to

an interest in bottled tea being one of the choices. This

is an opportunity for the tea beverage business, which

in the end, comes to a variety of bottled tea drinks

offered to the public with various brands and forms of

packaging as well as various flavor images. Along

with the development of business, the development of

the ready-to-drink packaged tea industry in Indonesia

is growing rapidly and causing each other to compete

with each other. This is evidenced by the many new

brands that appear and are ready to compete with old

players.

Many factors affect consumer behavior in

purchasing decisions. Swastha (2014: 13), in the most

common understanding, a decision is the selection of

two or more alternative choices. Consumer decision

making is an important aspect of marketing because

consumers will make purchases or not based on the

decisions they make. The first reason consumers in

determining purchasing decisions are the

quality/product attributes with a percentage of 98.3%

while for product prices 74.2%. This shows that

Indonesian consumers not only prioritize product

prices but rather prioritize aspects of product

quality/attributes as a major factor in determining

purchasing decisions. Another factor that can

influence purchasing decisions is price. According to

Kotler and Armstrong (2011), the notion of price is

the amount of money charged for an item or service

or the amount of value that consumers exchange for

the benefits of owning or using the item or service.

Promotion of one of the important marketing

activities for companies with efforts to maintain and

increase sales. In the promotion, the company can

communicate the product of Tea drink to consumers.

The advantages of the Tea drink can be known by

consumers and can make consumers interested in

trying and then will make a decision to buy.

Garaika, G., Rianda, N., Sugandini, D. and Yudhiantoro, D.

Effect of Product Quality, Price, and Promotion on Purchase Decisions.

DOI: 10.5220/0009963200790083

In Proceedings of the International Conference of Business, Economy, Entrepreneurship and Management (ICBEEM 2019), pages 79-83

ISBN: 978-989-758-471-8

2 LITERATURE REVIEW

Purchase decision is a consumer decision that is

influenced by financial economy, technology,

politics, culture, product, price, location, promotion,

physical evidence, people and process, so as to form

an attitude on consumers to process all information

and draw conclusions in the form of responses what

products will be purchased (Alma, 2011: 96).

The characteristics of the buyer and the decision-

making process give rise to certain purchasing

decisions. The task of the marketer is to understand

what is happening in the awareness of the buyer,

starting from the presence of external stimuli to the

emergence of the buyer's purchasing decisions

(Lembang, 2010: 14).

2.1 Product Quality, Price, Promotion

and Purchasing Decisions

Many factors influence consumer behavior in

purchasing decision making. Swastha (2014: 13), in

the most common understanding, a decision is the

selection of two or more alternative choices.

Consumer decision making is an important aspect of

marketing because consumers will make purchases or

not based on the decisions they make. The first factor

that makes consumers in determining purchasing

decisions is product quality. According to Kotler and

Armstrong (2012: 365), product quality is the main

view for consumers before buying a product.

Furthermore, other factors that can influence

purchasing decisions are pricing. James C. Anderson,

James BL Thomson and Finn Wynstra (2000)

revealed that price is an important enough

consideration for consumers to make a purchase

because consumers will compare prices of the product

of their choice and then evaluate whether the price is

in accordance with the value of the product and the

amount of money must be issued by consumers. And

the last factor that can influence consumers in making

decisions is the holding of promotions. Sutrisna

(2013: 172), said the promotion is one of the

important marketing activities for companies with

efforts to maintain and increase sales.

Based on empirical findings and theories about

the above commitments formulated the following

hypotheses,

H1: Quality of product, price, and promotion

influence of the buying decision

2.2 Product Quality and Purchasing

Decision

Product is anything that can be offered to the market

to satisfy a desire or need (Kotler and Armstrong,

2008). Kotler and Armstrong (2008) state product

quality are one of the most relied upon by a marketer

in marketing a product. According to Kotler and

Armstrong (2008) states that the better the quality of

the product produced will provide an opportunity for

consumers to make purchases. With this, if the quality

of the product produced is good, then consumers will

tend to make purchases.

Based on empirical findings and theories about

the above commitments formulated the following

hypotheses,

H2: Quality products influence the purchase

decision.

2.3 The Price and Purchase Decision

Product is anything that can be offered to the market

to satisfy a desire or need (Kotler and Armstrong,

2008). Kotler and Armstrong (2008) state product

quality are one of the most relied upon by a marketer

in marketing a product. According to Kotler and

Armstrong (2008) states that the better the quality of

the product produced will provide an opportunity for

consumers to make purchases. With this, if the quality

of the product produced is good, then consumers will

tend to make purchases.

Based on the discussion above, it can be said that

product quality is one of the determining factors in

purchasing decisions. This is proven by research from

InneHanif (2018) and Yulasmi (2015), which shows

that product quality has an influence on purchasing

decisions. Based on empirical findings and theories

about the above commitments formulated the

following hypotheses,

H3: Price affects the buying decision.

2.4 Promotion and Purchasing

Decisions

Relationships Modern marketing is not just about

developing good products, setting attractive prices,

and making them affordable. The company must also

be able to communicate with the parties concerned

now to the future and not forget the general public.

Every company inevitably has to plunge into the role

of communicators and promoters (Kotler and Keller,

2008). According to Swastha and Irawan (2002),

promotion is a one-way flow of information or

persuasion created to direct a person or organization

to actions that create exchanges in marketing. Thus,

the role of a product promotion to attract consumers

ICBEEM 2019 - International Conference on Business, Economy, Entrepreneurship and Management

in making purchasing decisions has an important role,

because consumers will be more interested in making

a purchase decision when getting an incentive in the

form of promotion of the product. Based on empirical

findings and theories about the trust the above

formulated the following hypotheses,

H4: Promotion effect on the Buying Decision.

3 RESEARCH METHOD

3.1 Population and Sample

The population in this study were all students of the

University in Yogyakarta and South Sumatera. The

sample used was 200 respondents.

3.2 Test Validity and Reliability

Used to measure the validity or validity of a

questionnaire. A questionnaire is said to be valid if

the questions on the questionnaire are able to reveal

something that is measured by the questionnaire.

Validity measurement in this study was carried out

using the corrected item-total correlation (Ghozali,

2013). Each indicator is declared valid if the

correlation between each indicator to the construct

score shows a significant result that is <0.05.

A reliability test is a test to measure a

questionnaire, which is an indicator of a variable or

constructs. A questionnaire is said to be reliable and

reliable if a person's answers to questions are

consistent or stable from time to time. A construct or

variable is said to be reliable if it characterizes

Cronbach alpha> 0.60 (Ghozali, 2013).

3.3 Data Analysis

Method The data obtained will be used to test the

hypothesis. The method of testing hypotheses and

analyzing data is by using Multiple Linear

Regression. The reason for using this method is

because the results of this multiple linear analysis are

able to identify and explain some significant

independent variables to the dependent variable, and

are able to explain the linear relationship that may

exist between the dependent variables with more than

one independent variable.

3.4 Result of Hypothesis

The testing F test is used to test whether the loyalty

model is influenced by commitment, trust, conflict,

and relationship satisfaction is significant or

acceptable (Ghozali, 2002). The F test can be

observed from the significance value F. The t-test

shows how far the influence of one independent

variable individually in explaining independent

variation (Ghozali, 2002). This significance test can

be observed from the significance value of each

variable. Significance value <0.5 indicates that the

effect of variable X on Y is significant.

4 RESULTS

4.1 Test Results Goodness of Fit (R

)

The coefficient of determination (R

) of 0.995, or

99.5%, meaning that the model's ability

determination Product quality, price, and promotion

can only explain 99.5% and a Purchase Decision, the

remaining 0.5% is influenced by other variables

outside this study.

4.2 Regression Variance Test or F

Regression Test or Multiple

Regression Test

The results of the F test in Table 4.10 obtained a

significance value of 0.000 <0.05. The results of this

analysis indicate that Product Quality, Price, and

Promotion jointly influence the Decision of Purchase

of Fragrant shoots of Tea in Students at the university.

4.3 Significance of the Regression

Equation

Based on the results of the linear regression analysis

obtained by the multiple regression equation as

follows:

Y = 0.170 + 0.781X1 + 0.758X2 + 0.527X3 + e

In the equation above, the constant value is

obtained at 0.170, which means that if the scores on

Product Quality, Price, Promotion, equal to zero (no

change), then the Purchase Decision value is 0.170.

5 DISCUSSION

The purpose of this study is to analyze and test the

effect of product quality, price, and promotion on

purchasing decisions. The results showed that the

product quality, price, and promotion of purchasing

decisions significantly.

Effect of Product Quality, Price, and Promotion on Purchase Decisions

5.1 Product Quality Relationship

The results of the data analysis show that the effect of

company commitment on loyalty is significant. This

means that the higher the commitment of the

company, the higher the loyalty of partners. This

result is indicated by the significance value of 0.04.

The effect of company commitment on loyalty is

15.4%. The results of this study support research

conducted by Ndubisi (2007), which states that

corporate commitment can be aimed at continuously

learning to provide customer needs and quality of

service will increase customer satisfaction, which in

turn will lead companies to create close relationships

with their customers.

5.2 Product Quality and Purchasing

Decision

The results of this study support research conducted

by InneHanif (2018) and Yulasmi (2015), which

show that product quality has a positive and

significant influence on purchasing decisions.

Product is anything that can be offered to the market

to satisfy a desire or need (Kotler and Armstrong,

2008). Kotler and Armstrong (2008) state product

quality are one of the most relied upon by a marketer

in marketing a product. According to Kotler and

Armstrong (2008) states that the better the quality of

the product produced will provide an opportunity for

consumers to make purchases. With this, if the quality

of the product produced is good, then consumers will

tend to make a purchase.

Based on the discussion above, it can be said that

product quality is one of the determining factors in

purchasing decisions.

5.3 Price and Purchasing Decision

The results of this study show that the price of a

positive and significant influence on the purchase

decision. The results of this study support research

conducted by Hanif (2018) and Yulasmi (2015),

which shows that prices have a positive and

significant influence on purchasing decisions.

According to Philip Kotler and Keller (2007: 67),

price is one element of the marketing mix that

generates revenue, and other elements produce costs.

With the price, it makes it easier for consumers to

make a purchase decision and based on the price set,

and the consumer also determines how much to buy.

Thus the role of the price is very important for

consumers to make a purchase decision. Based on the

discussion above, it can be said that price is also an

important factor for consumers in deciding to buy a

product.

5.4 Promotions and Purchasing

Decisions Relationships

The results of this study indicate that promotion has a

positive and significant effect on the Purchase

Decision. The results of this study support research

conducted by InneHanif (2018) and Yulasmi (2015),

which shows that promotion has a positive and

significant influence on purchasing decisions.

Modern marketing is not just about developing good

products, setting attractive prices, and making them

affordable. The company must also be able to

communicate with the parties concerned now to the

future and not forget the general public. Every

company inevitably has to plunge into the role of

communicators and promoters (Kotler and Keller,

2008). According to Swastha and Irawan (2002),

promotion is a one-way flow of information or

persuasion created to direct a person or organization

to actions that create exchanges in marketing. Thus,

the role of a product promotion to attract consumers

in making purchasing decisions has an important role,

because consumers will be more interested in making

a purchase decision when getting an incentive in the

form of promotion of the product.

6 CONCLUSIONS

Product Quality, Price, and Promotion jointly

influence the Decision of Purchasing Fragrant Buds

in Tea Packaging for Students of University in

Yogyakarta and South Sumatera University. Product

quality has a positive and significant effect on the

decision to purchase fragrant shoots of tea in Students

of Yogyakarta and South Sumatera University. The

price has a positive and significant impact on the

Decision of Purchasing Tea on Students of

Yogyakarta and South Sumatera University.

The promotion has a positive and significant

effect on the decision to purchase fragrant shoots of

tea in Students of Yogyakarta and South Sumatera

University.

7 SUGGESTIONS

Variables examined are: Product quality, price, and

promotion as a whole show good results. However, it

can still be improved as product quality is

increasingly tight supervision of the quality produced,

price is always evaluated in relation to purchasing

power and the level of competition and promotion the

more intensively carried out with a variety of media

ICBEEM 2019 - International Conference on Business, Economy, Entrepreneurship and Management

and a variety of ways so that it hits the hearts of

consumers.

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Effect of Product Quality, Price, and Promotion on Purchase Decisions