CHAPTER 1 Introduction
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CHAPTER 1 Introduction This research is replicated from a research paper titled “Factors Influencing Generation Y’s Purchase Intentions of Prototypical and Me-too Brands” authored by Vanessa Quintal, Ian Pau, Daniel Simss, and Isaac Cheah (2016). In this specific chapter of the journal, the authors provide information about generation Y’s purchase intentions by examining the perceived risk, self-confidence, extrinsic attribute, and perceived quality of a specific product in a way that can drive generation Y’s purchase intention. 1.1 Background Generation Y is the early adopter of the new technology (Kumar. 2009). Generation Y is a generation who was born after generation X, specifically they were born between 1977-1994 ( Sullivan & Hetmeyer, 2008). And based on Rugimbana (2007) Generation Y is the largest demographic segment in most developed country. Since gen Y is being in the early stages of consumer lifecycle, the group mostly consist of single young professionals, tertiary students, and married young professional couple (gurau, 2012). Dr. Grace Judio Kahl stated that With the change of lifestyle pattern in Indonesia, with the faster life pace that happen in recent year, this change of lifestyle cause Indonesian people especially generation Y tend to choose something instant for their option especially in food and beverage sector (Suara.com, 2012). The development of fast food restaurants in Indonesia stated by director of investor relations of corporate secretary of PT. Mitra Adi Perkasa Tbk (MAP) Fetty Kwartati in an interview to kompas.com in 2013. According to Kwartati, the high growth of 1 fast-food restaurant industry in Indonesia is caused by the desire of the young to get fast paced service. Indonesia is one of the most populated country in the world. Given that most of the population falls in productive age bracket, it is not a surprise that the income per-capita has grown quite rapidly. The PT. Mira Asset Sekuritas stated that Indonesia’s young demographics are leading to demand western food product. Figure 1. 1 Generation Y population Source: Jajak Pendapat Based on the data from JAKPAT Gen Y aged 23-40 has overlapped Gen X in Indonesia, almost 60% of productive citizen, it proved that generation Y is dominating the workplace. 59.71% of productive Indonesian are gen Y which approximately 97,327,300 citizens. With the increase number of fast food fried chicken outlet in Indonesia, at this time, fast food restaurant is the right choice amidst the economic situation and the development of the population of Indonesia. This growth indicates that fast food restaurant has the potential to grow and has the better prospect continues promise in food and beverage business. More and more companies 2 emerge in the same industry, is due to the promising market demand. The table below shows the top 5 biggest fast food outlets in Indonesia. Figure 1. 2 Number of Fast Food Outlets Source: PT Mirae Asset Sekuritas Since the term fast food is too broad, this research has narrowed down to prototypical brand and me-too brand in fast food industry that specifically sells fried chicken as their main product. Since according to table 1.2 fast food that sells fried chicken has the biggest outlet and continue to grow and expand the business more 1.2 Brief History of Fast Food Chain The concept of eating outside of the home has been around for centuries, but, fastfood chain that we know didn’t get its start until the post-WWII (Franklin e Jacobs. 2013). According to Parsa and Kahn (1991) quick service resturant can be categorized into four life cycle stages: Pre-introductory stage (pre 1950’s), Introudctory stage (early 1960’s), growth stage (early 1960’s to 1980’s). 3 1.2.1 Pre-Introductory Stage (Before 1950’s) World War II has provoked several adjustment within the food service, one of them is fastfood chain. In the 1940’s labor and food shortaged was occurred. As a result, dehydrated food and portiob-controlled packages were introduced to overcome the product shortage and to moderate waste. And hamburger and fried chicken was introduced as the staple family diners in U.S.A . the NRA slogan for 1947 was “Eating Out is Fun… Take the Family Often” (industry Report, 1979). 1.2.2 Introductory Stage (1950’s - Early 1960’s) According to Parsa and Kahn (1991) As stated in Industry Report, this rapid growth direcly correlated to specific factors,such as increased population, more travel, shorter work week, more suburban restaurant, more flexible work pattern, and eating out as a budgeted family habit (Rolmar, 1979) As stated in Industry Report, this growth wasdirectly attributable to specific factors, such as increased population, more travel, a shorter workweek, more suburban restaurants, work patterns which were conducive to eating out, increased demand for take-home food, and eating out as a budgeted family habit (Rolmar, 1979). During this period, most restaurant chains featured limited menus, core product specialization, low prices and limited service (Parsa and Kahn, 1991). 1.2.3 Growth Stage (Early 1960’s - Early 1980’s) During this period, convenience service has became a major trend, the new creation of kitchen modification and design (such as deep frier, streamers & 4 improved conventional ovens) has helped the industry to provide a faster time to produce more food (Parsa and Kahn, 1991). 1.2.4 Maturity Stage (Early 1980’s - Late 1980’s) This stage saw a decline in the QSR industry due to a number of factors, such as bankruptcies, mergers, acquisitions, and basic economic failures. In addition, the consumer continued to be calorie conscious, which forced fast food chains to change their menus and include salads and other healthy alternatives (Parsa, 1989). The 1980’s witnessed yet another trend in the foodservice industry: home delivery. Domino’s Pizza experienced overwhelming success with this innovation, which made this trend popular. Though the 1980’s witnessed a decrease in growth rate in quick service restaurants, they still managed to steadily increase their market share 10% from 1980 to 1988 (Gallup, 1988). 1.2.5 Emerging Trends (Late 1980’s - Present) In the 21st century it has brought its own demand to the fast food restaurant industry. With the advent of cell phones and computers, there has been an increase in take-out ordering using mobile devices. In addition, niche market has become one of the most popular market in consumer perspective. Furthermore, there has been an increase in interest in organic, locally-grown food and this has had an additional impact on QSRs. Greater environmental awareness has motivated consumers to be more discerning regarding biodegradable and recyclable products, which puts more pressure on QSRs to provide these higher costs supplies. Finally, innovative food choices are increasingly more available at fast food restaurants, as well as nontraditional locations. 5 1.3 History of fast food chain in Indonesia The economic growth in Indonesia is also one of the factors why the rapid increase of fast food chain, based on Nielsen’s survey in 12 cities in Indonesia, the number of middle and high income citizen has increased from 46% in 2008 to 62% in 2010. With this kind of development, many retailers started to see Indonesia as a promising market for fast food chain. Fastfood chain has widely spread around the world, as well as Indonesia. As the amount of middle class in Indonesia has increased, the amount of people who create a fastfood franchise is beyond overwhelming. Moreover, when the monetary crisis occurred in 1998, the number of fastfood chain in Indonesia increased up to 74.2% (Ben Bland, 2013). Based on the survey that was conducted by AC. Nielsen in 2010 that 28% of Indonesian consume fast food product once a week and 33% of them consume it at lunch time. So, eating fast food is considered as a common thing for Indonesian. 1.4 Prototypical Brand Generally, according to Kalamas (2006), brands might be sorted as prototypical and me-too. A prototypical brand is characterized as having more prominent level of family likeliness, with more properties that are normal for an item classification, or you can say it possesses a greater degree in family resemblance (Kalamas, 2006; Ward 1994). Such traits are esteemed (Loken and Ward, 1990) since they are a more natural model of an item class (Han, 1998) For prototypical brand, KFC is one of the biggest fast food chain in Indonesia and it is suitable for this research since both company is already got the title of market share leader (Veyzer & Hutchinson, 1998). Based on authenticity and familiarity prototypical brand Friezen and Moriarty (2015) 6 stated that “prototypical brands is relatively close to the consumer who feel they know the brand very well” and “in term of authenticity, whoever perceived first is original, but the rest are followers”. So, based on the definition, in fast-food fried chicken industry, if you think about fried chicken, KFC will be the first think that come to your mind as a prototypical brand. Figure 1.3 Popular Brand Index Source: W&S Research Based on the figure 1.3, KFC is the number one top of mind in fast-food fried chicken industry, as Pizza Hut is not considered as a fast-food chain that provide fried chicken, the company will not be suitable for this research. As buyers react positively to them and they are more favored (Gordon & Holyoak, 1983), they frequently progress toward becoming piece of the overall industry pioneers (Veryzer & Hutchinson, 1998). Based on Indonesia Investment, KFC brand is indonesia’s market leader in term of fast food fried chicken. At the start of 2015 The KFC brand is Indonesia’s market leader in the fast food chain of restaurants.