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FACTORS INFLUENCING PURCHASE INTENTION IN THE

SMARTPHONE SELECTION CONTEXT IN MILLENNIALS


GENERATION
Haryadi Sarjono Celinsky Brenda Sasmita Bambang Leo Handoko
International Marketing Program International Marketing Program Accounting Department
Management Department Management Department Faculty of Economics and
Binus Business School Binus Business School Communication
Undergraduate Program Undergraduate Program Bina Nusantara University
Bina Nusantara University Bina Nusantara University, Jakarta, Indonesia, 11480
Jakarta, Indonesia, 11480 Jakarta, Indonesia, 11480 bambang.handoko@binus.edu
haryadi_s@binus.edu celinskyb@gmail.com

ABSTRACT network cards, large screens similar to personal computers [1].


This research was made with the aim to find out how the influence The smart phones is a higher improvement in technology of the
of Product Features, Price, and Social Influence on Purchase existing cell phone which could only be used to make calls, send
Intention in the context of choosing an Android based Smartphone text messages and may support constrained browsing quoted by [2]
and its impact on Actual Purchase Behavior. This research method [3]. Nowadays, consumers tend to shift their preferences from a
is a quantitative method using Structural Equation Model (SEM) basic cell phone to a smart phone and this is obviously the major
analysis techniques with the Smart PLS 3.0 program. The reason why mobile phone manufacturers move their production
questionnaire was distributed in the Jabodetabek (Indonesia), area towards smart phones, Chow [3].
as a research sample, which is the millennial generation at the age As of 2017, the smart phone users reached 2.3 billion or 33% of
of 18-40 years. The results of this study are that there are world population. For this reason, the manufacture present and
significant effects between the variable Product Features and offer new features such as finger and face detection, wider touch
variable Price on Purchase Intention and variable Purchase screen, high resolution camera, big storage, more powerful rand &
Intention on variable Actual Purchase Behavior. The Social cup, etc [1]. Smartphone users certainly come from various
Influence variable does not have a significant effect on Purchase generations including the millennial generation. Two unique
Intention. elements in the generation of millennial relate to cellular
technology and social network relationships. Millennial are
CCS Concepts described as the first 'high-tech generation' [4]. They are digital
• Applied Computing ➝ Operation Research ➝ Consumer natives [5] and enthusiastic about technological advances in the
Products. journal [4]. Purchase intention is a kind of decision-making that
studies the reason to buy a particular brand by consumers [6]. [7]
Keywords also define that purchase intention is a behavior tendency of
Product Features, Price, Social Influence, Purchase Intention, customer who is intended to purchase a product [1]. Some
Actual Purchase Behavior, SEM, Millennial. researchers define purchase intention as a predetermined decision
to behave in a continuous certain manner in the near future [8]. In
1. INTRODUCTION addition, some studies found that a positive correlation exists
Many industries type in Indonesia, are very helpful in economic between consumers purchase intentions and their actual buying
growth in Indonesia in the form of foreign investment and behavior [9] in the journal [10].
domestic investment. The electronics industry is ranked eight out
of many industries that is quite influential on economic growth 2. LITERATURE REVIEW
based on BKPM, 2015. Technology is developing very rapidly as
time goes by. Smart phones are phones with very sophisticated 2.1 Product Features
features that include a powerful CPU, storage space, RAM, Product features is a special characteristics or additional
idiosyncrasy in the form of complement characteristics, for
Permission to make digital or hard copies of all or part of this work for example equipment of interior and exterior. Examples of
personal or classroom use is granted without fee provided that copies are dimensions features is products have different newest
not made or distributed for profit or commercial advantage and that
copies bear this notice and the full citation on the first page. Copyrights
technological individuality with other brands, having additional
for components of this work owned by others than ACM must be function which is not owned by other brands, and have
honored. Abstracting with credit is permitted. To copy otherwise, or specification more compared of other brand [11]. A feature is an
republish, to post on servers or to redistribute to lists, requires prior attribute of a product that meet the satisfaction level of
specific permission and/or a fee. consumer’s needs and want through the owing of the product,
Request permissions from Permissions@acm.org. usage, and utilization for a product [12] in journal [3]. [13]
ICBDC 2019, May 10–12, 2019, Guangzhou, China categorized into two different features of products which are
© 2019 Association for Computing Machinery hardware (Larger touch screen, creative design, high resolution
ACM ISBN 978-1-4503-6278-8/19/05…$15.00
camera, high performance Ram & CPU, etc.) and software. When
http://doi.org/10.1145/3335484.3335525 consumers make purchase, they always want more features than
one from product in order to meet their different needs [1].

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2.2 Price 2.5 Actual Purchase Behavior
According to [14], prices can determine where consumers will Theory of Planned Behavior (TPB) is divided by three kinds of
trade with a product. Smith and Carsky also stated that prices will considerations which are behavioral beliefs: beliefs about the
always be the main factor considered by consumers before making likely of the behavior, normative beliefs: beliefs about other
a purchasing decision [3]. Prices can be said is the most influential people's expectations to perform particular behavior, and control
factor affecting the purchase of a new smart phone, [15]. [15] beliefs: beliefs about perceived factors which can facilitate or
founds that the level of price positively affect behavioral impede performance of the behavior [22]. Some studies have
intentions majorly due to the fact that price establishes an image found a positive correlation between consumer purchase intention
of the brand (product) in the eyes of the consumers. Therefore, it and their actual buying behavior [22]. [23] saw that buying
can be assumed that there is a positive relationship between intention was the originator of direct behavior. Therefore, [24]
Smartphone prices and buying behavior in journals [3]. In a define actual purchase behavior as individual readiness and
narrow sense, price is the amount of money charged for a product willingness to buy certain products or services [10]
or service, or the amount of value that a customer exchanges as an
advantage to owning or using a product or service. Price is one of 2.6 Millennial
the most flexible marketing mix elements. At the same time, According to [5], the generation of Millennial is a generation born
prices are also the number one problem for many marketing in 1978-2000. From all aspects, Millennial generation according
executives, and many companies don't handle prices well. Most to [25] is a generation that highly values diversity, prefers to
importantly, as a value proposition for the entire company, prices cooperate rather than take orders, and is very pragmatic when
have a major role in creating customer value and building solving problems. [26]. During millennial formative years three
relationships with consumers [12]. societal support system necessary for young people were strong
(family, religion and government programs) [27]. Here are some
2.3 Social Influence the characteristics of the millennial generation according to
According to [16] social influence is an understanding of changes Fishman, 2016:
in feelings, attitudes, thoughts, behaviors, intentional or
unintentionally influenced by others. According to [12], consumer • Millennial expect companies to understand their real life needs
behavior is influenced by people around them. Global Digital • Millennial want a profession with a purpose
Report in 2017, social media users reached 2.9 billion and 51.4%
of this provided information in the form of digital video, text, • Millennial were the first generation since 1943 to see themselves
images using smart phones on social media. In addition, the as part of a group not just as individuals
growth of information dissemination was more than 25% • Millennial need instant feedback and praise, now and especially
compared to the previous year [1]. Social influence occurs when as they aged
someone's emotions, opinions, or behavior are influenced by
others. According to [17], social influences include the influence • Millennial are the first generation to be raised in the digital
of the media, parents, and peers. In general, peers are the main world.
influence followed by the media and parents [3].
3. MATERIAL AND METHODS
2.4 Purchase Intention This framework is based on references from the previous journal.
Purchase intention is part of the consuming behavior component. Independent variables consist of Product Features, Price, and
According to [18], purchase intention is the stage of respondents' Social Influence. Whereas for the dependent variable consists of
tendency to act before buying decisions are actually carried out purchase intention variables and actual purchase behavior. Here is
[19]. Purchase intention is related to the tendency of consumers to the theoretical framework.
take actual purchase actions and express the desire of consumers
to make purchases of goods and their assessment of alternative
options based on preference, experience and external factors, [20]. Product
[12] also defines purchase intention as a measure of general Features
effectiveness and is used to anticipate behavioral response [1].
Purchase Intention relates to the tendency of consumers to take Price Purchase Actual
actual action of purchase. According to [21], purchase intetion can Intention Purchase
be identified through the following indicators: [19]. Behavior
• Transactional intention: the tendency of someone to buy a Social
product Influence
• Referential intention: a person's tendency to refer products to ures
others Figure 1. Theoretical Framework.
• Preferential intention: interest that describes the behavior of Hypothesis:
someone who has a primary preference for the product
H1: There is a significant effect between Product Features to
• Explorative intention: an interest that describes the behavior of Purchase Intention in the context of the selection of Android-
someone who is always looking for information about the based smart phones in the millennial generation in
products they are interested in and seeking information to support Jabodetabek, Indonesia.
the positive traits of the product.
H2: There is a significant effect between price to Purchase
Intention in the context of the selection of Android-based

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smart phones in the millennial generation in Jabodetabek, Path Diagram
Indonesia. Before the validity and reliability testing, the formation of a
research path diagram is done so that the path chart can be seen
H3: There is a significant effect between Social Influence to properly.
Purchase Intention in the context of the selection of Android-
based smart phones in the millennial generation in
Jabodetabek, Indonesia.
H4: There is a significant effect between Purchase Intention to
Actual Purchase Behavior in the context of the selection of
Android-based smart phones in the millennial generation in
Jabodetabek, Indonesia.
This research uses quantitative methods by distributing
questionnaires to respondents. The researcher distributed the
questionnaire using a cross sectional method, which is the data
collected once [28]. Respondents used by researchers have the
following characteristic which is millennial generation (18-40
years) who use Android based smart phones in Jabodetabek.
Because this is market research, the minimum number of
respondents used is 200 respondents as a requirement from Bina Figure 2. Path Chart in the SmartPLS 3.0 program.
Nusantara University, Indonesia. The design of the research
conducted an associative research because the purpose of this Validity and Reliability Analysis
study is to investigate how it effect between variable and another. There are 3 criteria for assessing the measurement model (outer
The technique used to analyze data is the Structural Equation model) if using Smart PLS 3.0, which is: Convergent and
Model (SEM). The purpose of SEM is to examine the relationship Discriminant Validity, Composite Reliability and AVE .The rule
between latent variables and manifest variables [29]. There are of thumb that is usually used to assess convergent and
two types of SEM methods, namely: Covariance Based SEM and discriminant validity is that the outer loading value must be more
Variance Based SEM (PLS-SEM) [30]. The researcher used the than 0.7 [30]
PLS-SEM method using Smart PLS 3.0 program. Table 2. Convergent and Discriminant Validity
Actual Purchase
4. RESULT AND DISCUSSIONS Behavior
Validity
Respondent information: Demographic information reveals AP1 0,980 Valid
respondents' statistics including gender, age, occupation, domicile,
AP2 0,982 Valid
and monthly income. Male respondents had bigger percentage of
Price Validity
58% of female presentations. Compared with age, respondents
aged 18-24 years took 80% of the total respondents and 61% had P1 0,771 Valid
jobs as students. 37% of respondents have income of less than 2 P2 0,771 Valid
million IDR. Here's detailed demographic information: P3 0,800 Valid
P4 0,834 Valid
Table 1. Respondent Demographics Product Features Validity
Male 58% PF1 0,951 Valid
Gender
Female 42% PF2 0,907 Valid
18-24 years old 80% PF3 0,977 Valid
Age 25-30 years old 13% PF4 0,943 Valid
31-40 years old 7% Purchase Intention Validity
Student 61% PI1 0,806 Valid
Worker 30% PI2 0,949 Valid
Occupation
Entrepreneur 7% PI3 0,938 Valid
Housewife 2% Social Influence Validity
< IDR 2.000.000 37% SI1 0,964 Valid
IDR 2.000.000 – IDR 5.000.000 37% SI2 0,986 Valid
Monthly income IDR 5.000.000 – IDR 21% SI3 0,969 Valid
10.000.000
>Rp 10.000.000 5%
In PLS-SEM using the Smart PLS 3.0 program, to measure the
Jakarta 49%
reliability of a construct can be done in two ways, namely with
Bogor 6%
Cronbach's Alpha and Composite Reliability. But it is better to
Domicile Depok 5% look at the value of Composite Reliability because the use of
Tangerang 34% Cronbach's Alpha in testing construct reliability gives a lower
Bekasi 6% value. A construct conducted as reliable when the Composite
Using an Reliability value is greater than 0.7. [30]
Android-based Yes 100%
smart phone

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Table 3.Composite Reliability Purchase Intention (PF  PI) (P  PI). Social Influence do not
Cronbrach’ Composite significantly affect Purchase Intention (SI  PI). And Purchase
Construct Reliability
s Alpha Reliability Intention has a significant effect on Actual Purchase Behaviour
Product Features(X1) 0,960 0,971 Reliable (PI AP). This means that consumers in Jabodetabek are more
Price (X2) 0,805 0,872 Reliable concerned with price and product features in the context of
Social Influence (X3) 0,972 0,982 Reliable choosing an Android-based smart phone.
Purchase Intention (Y) 0,880 0,927 Reliable
Actual Purchase 5. CONCLUSION
0,961 0,981 Reliable This study aims to analyze how is the effect of Product Features
Behavior(Z)
(PF), Price (P), and Social Influence (SI) on Purchase Intention
Average Variance Extracted (AVE) (PI) and its impact on Actual Purchase Behavior (AP) in the
Research result can be accepted if the AVE value is greater than context of Android-based smart phone selection in millennial in
0.5 [30]. Jabodetabek To analyze the effect between variables, this study
uses the SEM method or the Structural Equation Model. Based on
Table 4. Average Variance Extracted (AVE) the results of the analysis, it can be concluded as follows:
Construct AVE value a. There is a significant effect between Product Features on
Product Features (X1) 0,893 Purchase Intention of 0.450 or 45%. It can be said that Product
Price (X2) 0,631 Features has a quite big effect on Purchase Intention in the
Social Influence (X3) 0,947 context of the selection of Android-based smart phones in
Purchase Intention (Y) 0,810 millennial in Jabodetabek
Actual Purchase Behavior(Z) 0,962
b. There is a significant effect between Price to Purchase Intention
Significance Test of 0.537 or 53.7%. It can be said that Price has a big effect on
Significant test in the SEM model with PLS aims to determine the Purchase Intention in the context of the selection of Android-
effect of exogenous variables on endogenous. This test is carried based smartphones in Millennials in Jabodetabek
out by bootstrapping process with the help of Smart PLS 3.0. The c. There is no significant effect between Social Influence on
following summarizes the large value of the effect of exogenous Purchase Intention of 0.040 or 4%. It can be said that Social
variables on endogenous variables. Influence has little effect on Purchase Intention in the context
of the selection of Android-based smart phones in the
Table 5. Significance Test millennial in Jabodetabek.
Direct
Path T statistic T value Sig d. There is a significant effect between Purchase Intention to
Effect
Actual Purchase Behavior by 27.7%. It can be said that Price
Product Features has a quite big effect on Purchase Intention in the context of the
7.535 1.96 0.450 Sig
Purchase Intention selection of Android-based smart phones in millennial in
Price Purchase Jabodetabek
9.266 1.96 0.537 Sig
Intention
Social Influence The following are suggestions from researchers based on the
Not results of research tests that might be useful for industry and
Purchase 1.364 1.96 0.040
Sig subsequent research:
Intention
Purchase Intention
5.1 For the smart phone industry
Actual Purchase 5.035 1.96 0.277 Sig
Based on the results, when discussing Purchase Intention, the
Behavior smart phone industry should focus on increasing the consistency
and competence of the Price variable and the Product Features
Studies analyzing the results of this research using Smart PLS can variable. In this study, Price and Product Features variables are
answer hypotheses and are stated below: the variables that have the greatest effect. This variable can be
H1: Product Features has a significant influence to Purchase increased through indicators of the variable itself. On the other
Intention with significance value shown is 7.535 and direct hand the Social Influence variable has the smallest effect. The
effect value is shown 0.450 or 45% smart phone industry must also pay attention to the indicators of
the Social Influence variable. To improve Price variable
H2: Price have a significant influence to Purchase Intention with competencies, industries should give discounts or price
significance value shown is 9.266 and direct effect value is promotions. Second, the industry should also set smart phone
shown 0.537 or 53.7% prices according to the average price in the community. Third, the
H3: Social Influence has a non-significant effect to Purchase industry should try its best to make the price distribution evenly
Intention with significance value shown is 1.364 and direct distributed in every location of smart phone sales. To improve the
effect value is shown 0.040 or 4% competence of the Social Influence variable, industries should
focus more on media such as advertising on TV, magazines,
H4: Purchase Intention has a significant influence to Actual digital marketing, and other media facilities. The goal is for smart
Purchase Behaviour with significance value shown is 5.035 phones to be better known from all ages and social environments.
and direct effect value is shown 0.277 or 27.7% To increase the influence of Social Influence according to [31],
the smart phone industry should develop in community relations.
The results of the effect test based on the hypothesis can be
By making an event that can help people in large numbers, hoping
concluded as: Product features and Price has a significant effect to
that with the event, the community feels helped and made easier

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