The Effect of Brand Equity Towards Students Decision in Choosing President University As Their College (Study Case President University Students Batch 2012)

THE EFFECT OF BRAND EQUITY TOWARDS STUDENTS DECISION IN CHOOSING PRESIDENT UNIVERSITY AS THEIR COLLEGE (STUDY CASE PRESIDENT UNIVERSITY STUDENTS BATCH 2012)

By Muhammad Iqbal Hardiansyah 014200900101

A thesis presented to the Faculty of Economics President University in partial fulfillment of the requirements for Bachelor Degree in Economics Major in Management

February 2013 i

THESIS ADVISOR

RECOMMENDATION LETTER

This thesis entitled “THE EFFECT OF BRAND EQUITY TOWARDS STUDENTS DECISION IN CHOOSING PRESIDENT UNIVERSITY AS THEIR COLLEGE (STUDY CASE PRESIDENT UNIVERSITY STUDENTS BATCH 2012)” prepared and submitted by Muhammad Iqbal Hardiansyah in partial fulfillment of the requirements for the degree of Bachelor in the Faculty of Economics has been reviewed and found to have satisfied the requirements for a thesis fit to be examined. I therefore recommend this thesis for Oral Defense.

Cikarang, Indonesia, February 11, 2013

Acknowledged by, Recommended by,

Irfan Habsjah, MBA, CMA Drs.Agus B. Adidi, MA, CCA Head of Management Study Program Thesis Advisor

DECLARATION OF ORIGINALITY

I declare that this thesis, entitled “THE EFFECT OF BRAND EQUITY TOWARDS STUDENTS DECISION IN CHOOSING PRESIDENT UNIVERSITY AS THEIR COLLEGE (STUDY CASE PRESIDENT UNIVERSITY STUDENTS BATCH 2012)” is to the best of my knowledge and belief, an original piece of work that has not been submitted, either in whole or in part, to another university to obtain a degree.

Cikarang, Indonesia, February 11, 2013

Muhammad Iqbal Hardiansyah

PANEL OF EXAMINERS APPROVAL SHEET

The Panel of Examiners declare that the thesis entitled “THE EFFECT OF BRAND EQUITY TOWARDS STUDENTS DECISION IN CHOOSING PRESIDENT UNIVERSITY AS THEIR COLLEGE (STUDY CASE PRESIDENT UNIVERSITY STUDENTS BATCH 2012)” that was submitted by Muhammad Iqbal Hardiansyah majoring in Management from the Faculty of Economics was assessed and approved to have passed the Oral Examinations on February 6, 2013.

Irfan Habsjah, MBA, CMA Chair – Panel of Examiners

Dra. Genoveva, M.M Examiners I

Drs.Agus B. Adidi, MA, CCA Examiners II

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ABSTRACT

This study is motivated by the growing phenomenon about the increasing number of private university that as a consequences from the increasing number of students every year who are willing to continue their studies in higher education instituiton. That situation increase the competition between private universities that are offering various or even the similar study program, and service attributes. This situation will create the brand parity, where there are many products or services offered with identical benefits. Then the consumer will not based their purchase decision in quality, since they see the quality among that brand name is not much different, then it is required the strong brand equity to create the differentiation and competitive advantage between one brand with its competitors. Particularly this study analyze the effect of brand equity of President University that can support the students to make decision about their college. The problem of this study is “whether brand equity elements in President University can influence the students decision in choosing President University as their college”. This study is aimed to analyze the effect of brand equity elements, that consist of brand awareness, perceived quality, brand association, and brand loyalty towards the students decision in choosing President University as their college. After literature review and hypothesis development, the data was collected by questionnaire method using simple random sampling technique to 90 respondents. The population in this research is President University students batch 2012. Data was analyzed by using quantitative analysis. Quantitative analysis consist of validity and reliability test, classical assumption test, multiple regression analysis, hypothesis testing by T test and F test, and coefficient of determination (R2) analysis. Where buying decision is (Y), brand awareness is (X1), perceive quality (X2), brand association (X3), and brand loyalty is (X4). Hypothesis testing using T test shows that partially brand awareness, brand association, and brand loyalty has significant effect into the students decision, meanwhile perceived quality does not have significant effect. F test showed that all independent variable are adequate to test dependent variable, means that independent variable have a significant effect into dependent variable with F score is 32.056. Adjusted R2 of 0.583 shows that 58.3% of students decision is explained by all of independent variables in this research, and the other 41.7% is explained by other variables.

Keywords: Students Decision, Brand Awareness, Perceived Quality, Brand Association, Brand Loyalty.

ACKNOWLEDGEMENT

All praise and gratitude writer prayed to Allah SWT for all the blessings and guidance and to Prophet Muhammad SAW, so I can complete the thesis entitled “THE EFFECT OF BRAND EQUITY TOWARDS STUDENTS DECISION IN CHOOSING PRESIDENT UNIVERSITY AS THEIR COLLEGE (STUDY CASE PRESIDENT UNIVERSITY STUDENTS BATCH 2012)” very well, both morally or spiritually so in this occasion the author would like to thank to:

1. My beloved parents, Muhari Syaiful Rokhman, and Yustini, who have fought hard, pay attention and prayer for me, and for the moral support they gave me over the years, until I can complete my studies at the President University.

2. Mr. Drs. Agus Burhanuddin Adidi., MA.CCA., as my advisor in this study that has give me a lot of time and attention to give me guidance and direction during the preparation process of this thesis.

3. For my beloved Rafika Nindia Putri, that has give me a lot of her support to me during my study in President University. Thank you very much for all of the helpful hand, that you, Mr. Uka Djukardie, and Mrs. Roni Banawati for me.

4. Special thanks to my best friends Zeflin Angga Winata, Antonius Tan, Rendy Martindo Yamin, Muhammad Yogi Rahardi Putra, Eri Rahman, Ridho D. Ikhwan, Agil Triyasmoko, Gianie Abdu, Hakim Sadik Alwi, Wenny Setianingtyas, for their kindness to accompanying me in this adventure of education process and lend me their laptop that makes me being able to finish this thesis.

5. For the respondents that give me their time to filled in the questionnaire.

6. All parties that can not be mentioned one by one by the writer, who has providing sincere prayers and support for up to the completion of this thesis.

The authors realize that in writing this thesis is still far from perfectly. Therefore, all criticism and constructive suggestions will refine this thesis writing and useful for writers, readers, and for future research.

TABLE OF CONTENTS

THESIS ADVISOR ...... i PANEL OF EXAMINERS APPROVAL SHEET ...... iii ABSTRACT ...... iv ACKNOWLEDGEMENT ...... v TABLE OF CONTENTS ...... vi TABLE LIST ...... ix FIGURE LIST ...... x CHAPTER I ...... 1 INTRODUCTION ...... 1 1.1. Background of Study ...... 2 1.2. Organization Profile ...... 6 1.2.1. History ...... 6 1.2.2. Vision and Mission ...... 7 1.2.3. Organization Chart ...... 7 1.3. Problems Identification ...... 8 1.4. Statement of the Problem ...... 9 1.5. Research Objectives ...... 9 1.6. Significance of the Study ...... 10 1.7. Theoretical Framework ...... 10 1.8. Scope and Limitations of the Study ...... 11 1.9. Assumptions and Hypothesis ...... 11 1.10. Definitions of Terms ...... 12 1.11. Chapter Outline ...... 13 CHAPTER II ...... 14 LITERATURE REVIEW ...... 14 2.1. Definition of Marketing ...... 14 2.2. Consumer Behavior ...... 15 2.2.1. Consumer Decision Making Process for Services ...... 16 2.3. Brands ...... 19

2.3.1. Definition of Brand ...... 20 2.3.2. Functions of Brand ...... 20 2.4. Strategic Brand Management ...... 22 2.4.1. Brand Identity Strategies ...... 22 2.4.2. Identity Implementation ...... 24 2.4.3. Brand Strategy over Time ...... 24 2.4.4. Managing the Brand Portfolio ...... 25 2.4.5. Leveraging the Brand ...... 26 2.5. Brand Equity ...... 28 2.5.1. Defining Brand Equity ...... 28 2.5.2. Benefit of Brand Equity ...... 28 2.5.3. Steps to Building Brand Equity ...... 29 2.5.4. Measuring Brand Equity ...... 31 2.5.5. Brand Awareness and Its Relation with Students Decision ...... 32 2.5.6. Perceived Quality and Its Relation with Students Decision ...... 34 2.5.7. Brand Association and Its Relation with Students Decision ...... 36 2.5.8. Brand Loyalty and Its Relation with Students Decision ...... 40 CHAPTER III...... 44 RESEARCH METHODOLOGY ...... 44 3.1. Variable of the Research and Operational Variable ...... 44 3.1.1. Independent Variable ...... 44 3.1.2. Dependent Variable ...... 45 3.2. Research Framework ...... 47 3.3. Research Method ...... 48 3.3.1. Location and Time Research ...... 49 3.4. Sampling Design ...... 49 3.4.1. Size of the Population ...... 49 3.4.2. Sampling Method ...... 50 3.5. Type of Data ...... 50 3.5.1. Primary Data ...... 50 3.5.2. Secondary Data ...... 51 3.6. Data Collection Method ...... 51 3.6.1. Questionnaire ...... 51

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3.6.2. Literature Study ...... 52 3.6.3. Data Measurement ...... 52 3.7. Analysis Method ...... 53 3.7.1. Validity and Reliability Test ...... 53 3.7.2. Classical Assumption Test ...... 56 3.7.3. Multiple Regression ...... 58 3.8. Testing Hypothesis ...... 59 3.8.1. F Test ...... 59 3.8.2. T Test ...... 59 3.8.3. Correlation Coefficient (R) ...... 60 3.8.4. Coefficient of Determination (R2) ...... 61 CHAPTER IV ...... 62 ANALYSIS DATA AND INTERPRETATION OF RESULTS ...... 62 4.1. Descriptive Analysis of Respondent Characteristics ...... 62 4.1.1. The Characteristic of Respondents based on Gender ...... 62 4.1.2. The Characteristic of Respondents based on Age ...... 63 4.1.3. The Characteristic of Respondents based on Major ...... 63 4.1.4. The Characteristic of Respondents based on City of Origin ...... 64 4.2. Descriptive Analysis of Variable ...... 66 4.2.1. Analysis of Respondents Answer Index ...... 66 4.3. Classical Assumption Test ...... 71 4.3.1. Normality Test ...... 71 4.3.2. Heterocedasticity Test ...... 73 4.3.3. Multicollinearity Test ...... 74 4.4. Multiple Regression Analysis ...... 75 4.5. Testing Hypothesis ...... 77 4.5.1. F Test ...... 77 4.5.2. T Test ...... 77 4.5.3. Correlation Coefficient (R) ...... 78 4.5.4. Coefficient of Determination (R2) ...... 79 4.6. Interpretation of Results ...... 79 4.6.1. The Effect of Brand Awareness (X1) towards Students Decision (Y) ...... 80 4.6.2. The Effect of Perceived Quality (X2) towards Students Decision (Y) ...... 80

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4.6.3. The Effect of Brand Association (X3) towards Students Decision (Y) ..... 81 4.6.4. The Effect of Brand Loyalty (X4) towards Students Decision (Y) ...... 81 4.6.5. The Effect of Brand Awareness (X1), Perceived Quality (X2), Brand Association (X3), and Brand Loyalty (X4) towards Students Decision (Y) ...... 82 4.7. Managerial Implication ...... 82 4.7.1. Brand Awareness ...... 82 4.7.2. Perceived Quality ...... 83 4.7.3. Brand Association ...... 84 4.7.4. Brand Loyalty ...... 85 CHAPTER V ...... 86 CONCLUSION AND RECOMMENDATION ...... 86 5.1. Conclusion ...... 86 5.2. Recommendation ...... 87 REFERENCES ...... 90 APPENDICES ...... 93

TABLE LIST

Table 1.1. Trends of state and private applicants 2007-2009 ...... 2 Table 1.2. Trends of state and private new students 2007-2009 ...... 3 Table 1.3. Trends of public and private institution 2007-2010 ...... 4 Table 3.1. President University population ...... 50 Table 3.2. Likert scale ...... 52 Table 3.3. Validity test ...... 54 Table 3.4. Reliability test ...... 56 Table 3.6. Interpretation for correlation coefficient ...... 61 Table 4.1. Characteristic respondents based on gender ...... 62 Table 4.2. Characteristic respondents based on age ...... 63 Table 4.3. Characteristic respondents based on major ...... 63 Table 4.4. Characteristic respondents based on city of origin ...... 64 Table 4.5. Three-box method ...... 67 Table 4.6. Respondents’ Answers about brand awareness Index (X1) ...... 67

Table 4.7. Respondents’ Answers about perceived quality Index (X2) ...... 68 Table 4.8. Respondents’ Answers about brand association Index (X3) ...... 69 Table 4.9. Respondents’ Answers about brand loyalty Index (X4) ...... 70 Table 4.10. Respondents’ Answers about students decision Index (X1) ...... 70 Table 4.11. Kolmogorov-Smirnov test...... 73 Table 4.12. Multicollinearity test ...... 75 Table 4.13. Regression Analysis ...... 75 Table 4.14. Result of F test ...... 77 Table 4.15. Result of T test ...... 78 Table 4.16. Result of Correlation Coefficient (R) and Coefficient of Determination Test (R2)...... 79

FIGURE LIST Figure 1.1. Organization Chart...... 7 Figure 1.2. Theoretical Framework ...... 11 Figure 2.1. Consumer Decision Process ...... 18 Figure 2.2. Strategic Brand Management ...... 22 Figure 4.1. Normality test ...... 72 Figure 4.2. Heterocedasticity ...... 74

CHAPTER I INTRODUCTION

1. Chapter 1 Nowadays the number of high school students who decide to continue their education into college, both state and private is always increasing. This is supported by the increasing needs of the work environment for higher education as their requirement. Increased demand for higher education has increased the growing amount of state and private universities in providing the program that can help them to learn the subjects that students need. This situation make the students that want to continue their education into the higher level, become a bit confused about their choices, since many universities open the same study programs, and offers similar facilitites and benefits.

There are five form of higher education according to the Republic of Indonesia laws chapter 2 article 11 about the form of higher education, those are university, institute, high school, polytechnic, and academy (www.dpr.go.id, accessed 2012). The university is college that implementing science and vocational education in the fields of science that are manifold. University consists of faculties from the various fields of science. Qualification studies are bachelor up to doctoral degree. Institute is college that implement science education and vocational programs in the fields of science, such as agricultural education, arts or technology. Study of existing studies from diploma to doctoral degree. The high school is one college that teaches vocational education. Vocational education consists of many majors or educational programs. Qualification studies are diploma and bachelor degree. Polytechnic is a college that conducting applied education in the field of specialized knowledge with diploma level study. And Academy is a college that conducting vocational education programs with diploma level (bk21jkt.blogspot.com, 2008). Sembiring (2009) as cited in Usman (2011), states that the college is one of the education institutions that are formally assigned the duty and responsibility of preparing students in accordance with the national education goals, which fills community need and the availability of skilled experts with the level and type of capabilities that are very diverse. It was

Clearly explained that college has the responsibility to give contribution in nations education and economics development.

With the classification form of college in Indonesia, the aspects of the marketing process should work perfectly (Usman, 2011). Selection of marketing strategy also important in addition to improving the quality of services on that university. Due to the increasing number of private colleges that offer the same products and services. The university has to build some characteristics that are unique to the brand of the university to make the perception of students that the university with a given brand name is different and better, so it can increase student interest in choosing university as their college.

1.1. Background of Study

The demand for higher education institution in Indonesia, is on average always increasing every year. The data from Kemdiknas, 2010, record that the trends of the applicants in the higher education from 2007-2009 in Indonesia, as shown in the table below:

Table 1.1. Trends of State and Private Applicants 2007-2009 Higher Education 2007 2008 2009 State Universities 1,491,994 1,605,893 1,304,650 (PTN) Private Universities 785,208 1,204,620 1,203,792 (PTS) Total 2,265,127 2,810,513 2,508,442 Source: Kemdiknas (2009/2010) From that amount of applicants that willing to continue their study in higher education institutions, only some of them were accepted in the higher education, as shown in the table below:

Table 1.2. Trends of State and Private New Students 2007-2009 Higher Education 2007 2008 2009 State Universities 305,209 469,284 476,393 (PTN) Private Universities 773,113 528,247 547,986 (PTS) Total 1,090,417 997,531 1,024,379 Source: Kemdiknas (2009/2010)

From the table above we can see that only 20.45% applicants were become the new students in state universities, but 98.45% applicants were becoming the new students in private universities in 2007, in 2008 only 29.22% applicants were accepted in state universities, and 43.85% of applicants were becoming the new students in private universities, and in 2009, there were 36.51% of applicants that become the new students in state universities, meanwhile 45.52% apllicants were become new students in private universities. From the data above, the number of new students were increasing every year both in state and private universities, but the percentage of applicants that become the new students in private universities is higher than in state univerisites. This big margin of applicants that do not accepted in state universities become the potential “consumer” (prospective students) for the universities, and might give some effect of the increasing amount of private universities that are competing in obtaining them to register in their private universities. Since the demand from the consumer or the students is high, then every year the number of private universities is always increasing, as shown in the table below:

Table 1.3. Trends of State and Private Institution 2007-2010 Higher Education 2007 2008 2009 2010 State Universities 82 83 83 83 (PTN) Private Universities 2598 2892 2928 2987 (PTS)

Total 2680 2975 3011 3070 Source: Kemdiknas (2009/2010); Pantonanews.com (2011)

The increasing in the amount of private universities is as a causal effect from the increasing number of students those are willing to continue their study in a higher education level. Since 2007 until 2010, there are 389 new private university were established, and on average there are 98 private universities were established every year. Director General of Higher Education Ministry of Education and Culture, Djoko Santoso even stated that based on data in August 1, 2012, there are 3244 colleges under the Ministry. From that number, there are 3124 private universities (PTS) and 92 state universities (PTN). It means, in 2012 there is 6.69% increasing in the number of private university since 2009. This big amount of universities makes the competition of that private universities become very tight. They are competing each other in order to gain their students every year, those who have a competitive advantage can be a positive point for private universities to get a bigger number of applicants.

The competition of private universities in getting their students also faced a new barrier, in 2011, the government set an additional quota for students who want to continue their education to the state university through SNMPTN as many as 82.000 to 162.225 seats, from only 80.000 seats, it is also accompanied by an increase in state universities who participated SNMPTN from 54 to 60 (Kompas, 2011), and in 2012 the government also increased the quota of 10% for students in state universities, to give more chance for students to go to the state universities, as stated by education minister, Mohammad Nuh (Winanto, 2012).

With the government's policy of increasing quota for SNMPTN in 2011 and 2012, as well as the increasing number of universities participating in SNMPTN, it will create the competition among the private universities become tight, beside that the increasing number of private universities, will make the options of higher education institution become vary, since there are multiple brand name of private universities exist in Indonesia. This condition will form a brand parity.

Brand parity is a condition in the market when many products of services have nearly identical benefits, then there is a perception of the consumer that they believe most brand offer the same set of attributes. Since many private universities were established by offering nearly the same benefits and study program, it will result brand parity. When brand parity is happening, consumer will purchase from a group of accepted brands rather than one specific brand, quality is not a major concern, because consumers believe there only minor quality differences exist, in other words, consumer view quality level of the products or services offered by the company or in this case is private universities as being nearly equal, and as a result, they often based the purchase decisions on other criteria, such as price, availability, or specific promotional deal (Kenneth E. Clow & Donald Baack, 2010).

In response to that condition, marketing team has to create message that express the company’s products or services are clearly different. The messages are designed to convince the consumers that the company’s brand is superior and is not the same as the competitors, by creating strong brand image. Strong brand image will result the brand equity. Brand equity is a set of characteristics that make the brand is different and better to both consumer and businesses (Kenneth E. Clow & Donald Baack (2010). This brand equity will make the brand of the products or services are salient. And the consumer will see the brand different with competitors brand.

Since in order to convince the consumer that the brand is superior and different with the competitors, we need to know the brand equity analysis about the brand. Brand equity can create the competitive advantage that differenciate the

product or service from the competitors, analysis of brand equity is used to find out how is the brand equity of President University in its students perception. the researcher want to find out how is the students perception about the brand equity of President University, and this research aimed to analyze the effect of brand equity in student decision in choosing President University as their college. The researchers expect the existence of this research can help the marketing department of President University to assess the effect of the brand equity of President University towards the students decision in choosing President University. The result of this research will be used to make recommendations to the President University brand strategy according to the theory that are exists and the real condition in the students perception in students of President University.

According the background as stated above, the title of this research is “The Efffect of Brand Equity towards Students Decision in Choosing President University as Their College” a case study at President University students batch 2012.

1.2. Organization Profile

1.2.1. History

The conceptual plan of President University was first formulated in September 1997 by Mr. S. D. Darmono, the President Director of PT Jababeka Tbk. and Prof. Donald W. Watts, who was the President of Bond University, Queensland and Vice Chancellor of Curtin University, Western Australia. The goal of their proposed University was to create an institution of learning which would prepare future leaders of industry and society by giving them the skills and experience necessary to excel upon graduation. The university officially began in 2001, offering a Bachelor of Engineering degree. At that time, the institution was called the School of Engineering based in Cikarang, Bekasi. On 16 April 2004, the Ministry of Education granted President University official status as a full fledged university. Although still a young University, President University (PresUniv) is growing at a tremendous rate every year. There are now around 3,500 students

attending President University from Indonesia as well as many other countries. President University has expanded its course offerings and now offers 32 different majors in subjects ranging from Industrial Engineering to Public Relations. President University is located in Jababeka Education Park in Kota Jababeka, surrounded by Jababeka Industrial Estate with more than 1,500 national as well as multinational companies such as Unilever, Mattel, Samsung, Mulia, ICI Paints, and others. It’s location also allows students to make use of world-class facilities such as the Jababeka Golf & Country Club and the President Executive Club.

1.2.2. Vision and Mission

Vision “To be a world class university that produces leaders in their fields and communities.“

Mission “To educate future generations through the transfer of skills and knowledge in order to build character and wisdom.“

1.2.3. Organization Chart

Figure 1.1. Organization Chart

Source: HR Department of President Univeristy, 2012

1.3. Problems Identification

The number of students that interested to continue their study is always increasing every year by applying themself in higher education, but only 20.45% applicants were become the new students in state universities, but 98.45% applicants were becoming the new students in private universities in 2007, in 2008 only 29.22% applicants were accepted in state universities and 43.85% of applicants were becoming the new students in private universities, and in 2009, there were 36.51% of applicants that become the new students in state universities, meanwhile 45.52% apllicants were become new students in private universities. The students that are accepted in state universites is less than those who applied in private universities, and the students that did not accepted in state universities become the potential “consumer” for private universities. The demand of higher education and the reason that has been stated above results the increasing number of state and private universities in order to provide the students with the study program they are interested in. The competition among private universities also added by the government regulation in 2011 and 2012 that increased the quota of SNMPTN for students who want to go to state university from 82,000 to 162,225 seats in 2011. This policy also raise the number of university which participated in SNPTM from 54 to 60 state university (Kompas, 2011). In 2012, government also increase the quota for SNMPTN about 10% (Winanto, 2012). Although the marketing strategy that has been applied by President University succeeds in increase the number of students, but by the external influences such as the government policy, and also other private universities that has nearly similar program studies, facilities and benefits, that will results the brand parity, a condition where there are many products or services being offered have identical benefits, that result in the consumer perception that quality is not the major concern in their purchase decision, since they believe that only minor differences exist, will be a big threats for the university. That is why the university needs to build characters that are unique to the President University brand name, because one of the benefit from brand equity is

to prevent erosion of a product’s or service’s market share, even when there is many endless promotional maneuvers from the competitors (Clow and Baack, 2010), because the strong brand name is the thing that is hard to be imitated by the competitors. The main discussion in this research is to find the effect of Brand Awareness, Perceived Quality, Brand Association, and Brand Loyalty as the elements in Brand Equity, to the students decision in choosing President University as their college.

1.4. Statement of the Problem

The problems that will be tested and evaluated in this research can be formulated in the form of question as stated below: 1. What is the effect of brand equity towards students decision in choosing President University as their college? 2. What is the effect of brand awareness towards students decision in choosing President University as their college? 3. What is the effect of perceived quality towards students decision in choosing President University as their college? 4. What is the effect of brand association towards students decision in choosing President University as their college? 5. What is the effect of brand loyalty towards students decision in choosing President University as their college?

1.5. Research Objectives

The research objective according to the problem statement are:

1. To analyze the effect of brand equity on students decision in choosing President University as their college. 2. To analyze the effect of brand awareness on students decision in choosing President University as their college. 3. To analyze the effect of perceived quality on students decision in choosing President University as their college.

4. To analyze the effect of brand association on students decision in choosing President University as their college. 5. To analyze the effect of brand loyalty on students decision in choosing President University as their college.

1.6. Significance of the Study

The researher have some purposes in doing this research, hopefully this research will produce following benefits:

1. The result of this research for the President University marketing department is to provide valid information about the analysis of the effect brand equity on students decision in choosing President University as their college. 2. As an input for formulate development of Brand Strategy of Broad and Specific Action Program of President University. 3. The result of this research hopefully can broaden researcher’s knowledge about brand and its application in creating brand strategy in the organization. 4. The results of this research could be a reference for further research in the future.

1.7. Theoretical Framework

Based on the probem and the use of alternative solution that researcher will use to conduct this research, it can be arranged the theoretical framework to analyze the effect of brand equity in the students decision in choosing President University as their college. In analyzing the brand equity, researcher will use brand awareness (X1), perceived quality (X2), brand association (X3), and brand loyalty (X4) as the elements of brand equity. These elements will be assessed to the students decision in choosing President University as their college (Y).

Brand Awareness (X1)

Perceived Quality (X2) Students decision in choosing

President University as their

Brand Association (X3) college (Y)

Brand Loyalty (X4)

Figure 1.2. Theoretical Framework Source: Conducted by researcher

1.8. Scope and Limitations of the Study

The scope and limitations of the study is made in order to identify the areas covered and those areas which are not covered yet by this analysis. It defines the limitations, boundaries, or constraints of this analysis. The researcher will analyze the effects of brand equity towards students decision in choosing President University as their college.

The scope of this research is President University Students batch 2012. There are two types of research, quantitative analysis and qualitative analysis. Quantitative usually involves data and statistics, while qualitative analysis is only based on group’s discussion related to existing theories in making a conclusion without using data and statistics. In this thesis, considering the short amount of time available, and cost, the researcher limits on using quantitative analysis.

1.9. Assumptions and Hypothesis

From the statement of problem above, researcher formulate the hypothesis in this research are:

1. H0 – Brand equity does not have effect into the students decision in choosing President University as their college.

H1 – There is an effect between brand equity into the students decision in choosing President University as their college.

2. H0 – Brand awareness does not have effect into the students decision in choosing President University as their college.

H2 – There is an effect between brand awareness into the students decision in choosing President University as their college.

3. H0 – Perceived quality does not have effect into the students decision in choosing President University as their college.

H3 – There is an effect between perceived quality into the students decision in choosing President University as their college.

4. H0 – Brand association does not have effect into the students decision in choosing President University as their college.

H4 – There is an effect between brand association into the students decision in choosing President University as their college.

5. H0 – Brand loyalty does not have effect into the students decision in choosing President University as their college.

H5 – There is an effect between brand loyalty into the students decision in choosing President University as their college.

1.10. Definitions of Terms

Brand Equity: A set of characteristics that are unique to a brand. Brand Awareness: The strength of the existence of a brand in the minds of consumers. Perceived Quality: The consumer’s perceptions of the overall quality or superiority of a product or service with respect to its intended purpose. Brand Association: Anything which is deep seated in consumer’s mind about the brand. Brand Loyalty: The attachment that a consumer has on brand. Brand Parity: Brand parity occurs when there are few tangible distinctions between competing brands in mature markets. Salient:The salient is that the product or brand has benefits consumers consider important and has higher quality than other brands, and the consumer view that brand is a good value, so it is perceived that the brand is superior to other brands because of its image. Value Proposition: The value proposition conveys the benefit offered by the brand. These benefit may be functional, emotional, or self expressive. The value proposition is used as the benefit that distinguishes a brand from its competitors.

SNMPTN: Seleksi Nasional Masuk Perguruan Tinggi Negeri.

1.11. Chapter Outline

In order to give an outline description of what the content of this paper, it is presented the structure and sequence of each chapter, as follows:

CHAPTER I : INTRODUCTION

This chapter elaborate the background of the research, organization profile, problem identification, statement of problem, research objectives, significance of study, research framework, scope and limitation of the study, assumption and hypothesis, definition of terms, and chapter outline.

CHAPTER II : LITERATURE REVIEW

This chapter elaborate the theoretical basis which are related with this research, the result from the previous research that relevant with this research, and hypothesis framework.

CHAPTER III : RESEARCH METHODOLOGY

This chapter contain the research framework, research methodology that is used, including the determination of sample size, type and source of data, data collection method, and analysis method for the data in this research.

CHAPTER IV : ANALYSIS OF THE RESULT AND INTERPRETATION OF THE RESULT

This chapter describe the descriptive respondent characteristics in this research, descriptive analysis of variables, analysis of the data, and the interpretation results from the data analyzed.

CHAPTER V : CONCLUSION AND RECOMMENDATION

This chapter contain the conclusion from the result of the research, and recommendation which can be used as a material consideration for the decision strategy that need to be done by the organization for further development.

CHAPTER II LITERATURE REVIEW

2.1. Definition of Marketing

Marketing is critical to the success of every organization, not only for profit firms, like Procter and Gambler, Marriot, Apple use marketing, non-profit organizations, like colleges, Hospitals, museums, are also using marketing (Kotler and Amstrong, 2008). Marketing is one of the main activity that is done by the company or organization to maintain its existence in the market to growth and maximize the shareholder value for the company or organization.

American Marketing Associations (2007) define marketing, “Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offering that have value for consumers, clients, partners, and society at large”. The new definition include the role marketing plays within society at large and defines marketing as a science, educational process and a phylosphy, not just management system (marketingpower.com, 2008). Marketing as defined by Philip's Kotler is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging value with others (Kotler and Amstrong, 2008). According to the definition of marketing as stated by Kotler, marketers need to understand consumer needs and wants and the market place within they operate. Human Needs are states of felt deprivation. They include basic physical needs for food, clothing, warmth, and safety; social needs for belonging and affection; and individual needs for knowledge and self-expression. Meanwhile, wants are form of human needs take as they are shaped by the culture and individual personality. Wants become demands when backed up with buying power. Consumer needs and wants are fulfilled through a market offering. Market offering is some combination of products, services, informations, or experiences that is offered to a market to satisfy a need or want of the consumer (Kotler and Amstrong, 2008).

Marketing is not only used by the manufacturer company, it is also used in service industry. Kotler (2008) defines service as any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything.

There are some characteristics of service according to Kotler (2008).

1. Intangibility Service cannot be seen, tasted, felt, heard, or smelled before they are bought. 2. Inseparability Service cannot be separated from their providers, whether the providers are people or machines. If a service employee provides the service, then the employee become parts of the service. Because the consumer is also present as the service is produced, the interaction between provider- consumer interaction is a special feature in service marketing. Both provider and consumer affect the service outcome. 3. Variability The quality of services depends on who provides them as well as when, where, and how they are provided. 4. Perishability Service cannot be stored for later sale or use. The perishability of service is not a problem when demand is steady. However, when demand fluctuates, service firms often have difficult problems.

2.2. Consumer Behavior

Understanding the consumer behavior about what they think (cognitive), how they feel (affective), and also what they do (behavioral) is very important for the company. In the strict market competition for certain industry, understanding the consumer behavior is very important or marketers. Marketers have to understand what is needed, what it feels, and how consumer make decisions. Therefore the analysis of the various factors that have an impact on consumer behavior becomes the basis for the development of marketing strategy.

Consumer behavior is the thoughts and feeling people experience and the action they perform in consumption process. These thought, feeling, and actions also being influenced by the environment, like comments from other customes, advertisements, price information, packaging, prooduct appearace, and many others (Olson, 2005).

2.2.1. Consumer Decision Making Process for Services

Consumer decision is ability to define problems and select the best course of action (Kotler, 2008). The terms of consumer decision is an image of an individual carefully evaluating the attitudes of a set of products, brands, services, and rationally selecting the one that solves a clearly recognized need for the least cost. Finding ways to influence the consumer purchasing process is a vital role in marketing communications. We need to know why people buy the products or services and why they purchase it from specific brands. In considering how consumer decide what to buy, Cravens, and Piercy (2006), stated that it is useful to analyze how they move through the sequence of steps leading to a decision to purchase particular brand. Buyers normally follow a decision process.The consumer decision making process for services is classified into three stages: prepurchase stage, service encounter stage and postpurchase stage as shown in Figure 2.1. (Lovelock, C. ,Wirtz, J. , Tat Keh, H. , Lu, X. ,2005).

Prepurchase Stage

Awareness of Needs

The stage when the consumer made the decision to buy and use a service. Buyer needs and expectation are very important in this stage, because they influence what alternatives consumer will consider.

Information Search

The stage in consumer decision making in which the consumer search for more information for the services they need to buy or use.

Evaluation of Alternative Service Suppliers

The stage when the consumer identify the potential suppliers and then weigh the benefits and risk of each option before making a final decision. This element of perceived risk is especially relevant for services that are high in experience or credence attributes and thus difficult to evaluate before it is being purchased. First time user are likely to have greater uncertainty in using or purhcasing the services. The consumer can use variety of methods in order to reduce their uncertainty about the risk of purchasing services in prepurchase stage, like:

a. Seeking information from respected personal sources (family, friends, peers) b. Relying on an organization that has a good reputation c. Looking for guarantees and warranties d. Visiting service facilities or trying aspects of the service before purchasing e. Examining tangible cues or other physical evidence f. Using the web to compare service offerings

Service Encounter Stage Request service from chooosen supplier The stage where the consumer make a contact with their chosen service provider. The service encounter stage often begin with submitting an application, requesting a reservation, or placing an order

Awareness of Need

Information Search  Define Needs  Explore Solutions  Identify Alternatives Service Suppliers PREPURCHASE STAGE

Evaluation of Alternative Service Supplier

 Review Documentation  Consult with Other People  Visit Possible Service Suppliers, Speak to Personnel

Request Service from Chosen Supplier or Initiate Self Service SERVICE ENCOUNTER STAGE Service Delivery

Evaluation of Service Performance

POSTPURCHASE STAGE Future Intentions

Figure 2.1. Consumer Decision Process Source: Lovelock, C. ,Wirtz, J. , Tat Keh, H. , Lu, X. ,2005

Service Delivery

The stage in consumer decision making process in which the consumer are given with services ordered before. It can be vary, in high contact services, such as restaurant hotels, health care, consumer may become actively involved in one or more service processes. But in low contact service, such as telecommunication provider, consumer are rarely being involved in service process.

Postpurchase Stage

Evaluation of Service Performance

The stage in which the consumer evaluate the service quality and their satisfaction/dissatisfaction with the service experience.

Future Intentions

The stage in which consumer will decide their further actions, such as whether or not to return the provider that delivered service and whether to give positive or negative recommendations to family members and other relatives.

2.3. Brands

A brand is a name, term, sign, symbol, design or a combination of them. It is used to identify the goods or services of one seller or group of sellers, and to differentiate them from the competitors (Cravens, Piercy, 2006). From the definition about, we can see that branding has several advantages for both buyers and sellers. For the buyers, brand names help them to identify products that might benefit for them, brand also say something about product quality and consistency, so the consumer who always buy the same brand know that they will get the same features, benefits and quality each time they buy. For the seller, brand name becomes the basis on which a whole story can be built around a product’s special qualities. The seller’s brand name and trademark provide legal protection for unique product features that might be copied by the competitors, beside that branding can helps the seller to segment markets (Kotler and Amstrong, 2008).

The goal of branding is to set a product apart from its competitors. Marketers have to find one thing that brand can stand for, that consumer recognize, and that is salient to the consumers. When these tasks completed, more powerful brand recognition occurs (Clow and Baack, 2010).

2.3.1. Definition of Brand

Brand is a name, term, symbol, design, or combination of them that is aimed to create the identity for the products or services from the company or sellers, and to differentiate them from the competitors (Kotler and Amstrong, 2008; Clow and Baack, 2010; Cravens and Piercy, 2006). An effective brand name allows a company to charge more for products which in turn increase the gross margins. Strong brands provide consumers with assurances of quality and reduction of search time in the purchasing process. One primary feature that keep brand strong is that is contain something that is salient to consumers. The salient atribute can come from several sources, one is that the product or brand has benefits consumers consider important and has higher quality than other brands. The second atributes may come from the view that brand is a good value. A third might be the belief that the brand is superior to other brands because of its image (Clow and Baack, 2010).

2.3.2. Functions of Brand

Brands are powerful assets that must be carefully developed and managed, because brands can add value to a product. Cravens and Piercy (2006) stated that a strategic brand perspective requires the manager to be clear about what are the roles of the brand for the company in creating consumer value and shareholder value. Since this can be the basis for the company or organization for directing and encouraging the brand investments into the most productive areas. They also distinguish the two differences of the role of brands for buyers and sellers.

The roles of brand for the buyers are:

1. Reduce consumer search cost, by identifying products quickly and accurately.

2. Reduce the buyer’s perceived risk, by providing an assurance of quality and consistency of the products or services offered.

3. Reduce the social and psychological risk associated with the owning and using wrong product or service, by providing psychological rewards for purchasing brands that symbolize status and prestige.

The roles of the brands for the sellers:

1. Repeat purchases that enhance the company’s financial performance, because the brand enables the consumer to evaluate the product or service by comparing with the competitors.

2. The introduction of new products, because the consumer is familiar with the brand from previous buying experience.

3. Promotional effectiveness, by providing point of focus in serving the targeted market.

4. Premium pricing, by created a basic level of differentiation compared to competitors.

5. Market segmentation, by communicating a coherent message to the targeted consumers, by telling them for whom the brand is intended and for whom it is not.

6. Brand loyalty, repeated buying will create loyalty and there will be a loyal buying from the consumer, and it is one of the importance in buying behavior of the consumer

This potential contribution of the brand in building consumer value and competitive advantage has encouraged manager to focus on the concept of brand equity.

2.4. Strategic Brand Management

Strategic brand management consists of several interrelated initiatives as shown in figure 2.2. as described by Cravens and Piercy (2006).

Brand Identity 3.

Identity Implementation Brand Equity

Brand Strategy over Time

Strategic Managing the Brand Brand Analysis Portfolio

Leveraging the Brand

Figure 2.2. Strategic Brand Management Source: Cranvens and Piercy, 2006

2.4.1. Brand Identity Strategies

Brand identity is a unique set of brand associations that the brand strategists wish to create or maintain. These associations represent what the brand stands for and imply a promise to consumers from organization members. Brand identification commonly used to identify the products or service provided by the company.

David Aaker extends brand identification to the brand as a person and the brand as a symbol. The brand as a person, or brand personality perspective recognize that strong brands may have an identity beyond the product or service of the company, which has positive impacts on consumer relationship and perception of value. The brand as a symbol underlies the role in brand building of visual imagery, metaphors, and brand heritage. This brand identity enables the consumer to better understanding of the promise of the brand and its value

proposition from the company. A clear and effective brand identification strategy is a foundation for building brand strength (Cravens and Piercy, 2006).

There are some options of the brand identity that may be appropriate to be used for the company:

1. Specific Product Branding

The strategy of assigning a brand name to a specific product or service, and it is used by various producers of frequently purchased items. The brand name in the product gives unique identification in the marketplace. For example, Pampers diapers, Lux soap, Head & Shoulder shampoo, JNE as a delivery company.

2. Product Line Branding

This strategy places a brand name on a line of related products. It provides focus and offers cost advantage by promoting the entire line rather than each product. This strategy is effective when a firm has one or more lines, each of it contains an interrelated offering of product items. For example, Sosro was launched Estee brand for tea drink brand. This strategy is used to compete directly with other tea drinking brand like Teh Kotak, that has different price.

3. Corporate Branding

This strategy builds brand identity using the corporate name to identify the entire product offering. For example, BMW in automobiles, and Prudential in insurance company. Corporate branding has the advantage of using one advertising and sales promotion program to support all of the firm’s products. It also facilitates the introduction of new products.

4. Combination Branding

Combination branding is a branding strategy by using both product line and corporate branding strategy. The benefit from combination branding strategy is the brand can get the consumer’s association of the corporate

name with the product line brand name. For example, Kecap Sedaap, and Lifebouy shampoo.

5. Private Branding

This is another form of corporate branding, that mostly used by retailers with established brand name, like Giant and Carrefour. They cooperate with producers to manufacture and place the retailer’s brand name on products sold by retailer. For example, Giant water mineral and sugar brand.

2.4.2. Identity Implementation

Identity implementation involves deciding the components of brand identity and value proposition to be included in the brand position statement. Determination of the brand position is the core of the implementation strategy, by selecting the part of the core identity to be communicated to the target consumers, including the key benefits of the brand that will differentiate its brand with the competitors.

2.4.3. Brand Strategy over Time

The brand has to be managed from its initial launch throughout its life cycle. While the brand strategy is applied over time, the application of the strategy has to be consistent with its initial purpose in launching that strategy, build the strength of the brand and avoid damaging the brand.

Strategies for building brand strength and keep it to be always strength over time require attention to the implementation of brand identification in brand building strategies, revitalizing the brands in the later stages of their life cycles, and recognizing the strategic vulnerabilities of core brands, since the brand may be vulnerable to competitive attack or changing market condition.

Brand Building Strategies

The essence of strategies for brand strength is that management should actively build, maintain, and manage the four assets that underlie brand equity

(awareness, perceived quality, brand association, brand loyalty). The critical thing in this process is developing brand identification strategy and implementing that identity throughout the company and the marketplace.

In addition to creating brand identification, attention is frequently also needed in coordinating the brand identity across the organization, the different media it uses, and the different markets and segments it serves.

Brand Revitalization

During its life cycle, the brand can come into its mature level. The mature brand that gives the important company’s overall strategy may require rejuvenation. Brand need to be repositioned into the new identity, so it will avoid the saturated market, so when the market has strong perception of the brand for a particular identity, then it might need a new image on the brand to attract new market and rebuilt market share.

Strategic Brand Vulnerabilities

A strategic perspective on brands also requires that decision makers be aware of the vulnerability of the brands. Brand need to be measured from the consumer perception. This information can help the company in making the decision. For example, when the shop was recruiting the convict labor as the shopkeeper, the consumer will be afraid to purchase the product, and it will give bad effect into the brand equity of that shop.

2.4.4. Managing the Brand Portfolio

Aaker as cited in Cravens and Piercy (2006) define the brand portfolio strategy as a strategy that specifies the structure of brand portfolio and the scope, roles, and interrelationship of the portfolio brands. The goal of this strategy is to create synergy, leverage, clarity within the portfolio and relevant, differentiated, and energized brands. That means companies or organizations that have different brands and product categories should manage them as a system rather than pursuing independent brand strategies.

A brand portfolio perspective encourages the use of the brands to support the entire portfolio as well as its support of each brand. The key concept of the management of brand portfolio is that the specific brand play different role in the system. One brand can be used as the lead or driver in their role where the other brands in the system may play supportive roles.

2.4.5. Leveraging the Brand

Brand leveraging strategy is an activity that introducing the new product or service by linking them to an established brand name. The primary advantage from leveraging the brand is the new product will immediately get the name recognition from the consumer. There are some method to leveraging the brand, such as line extension, strecthing the brand vertically, brand extension, cobranding, and licensing.

Line Extension

This strategy is offering the new products or services in the same product class or category as the core brand. Extension may include new forms, flavours, colours, and package sizes. For example, Walls’ Buavita with different tastes Mango, grape, orange, lychee.

Stretching the Brand Vertically

The form of this line extension may including moving up or down the price or quality from the core brand. The name for the line can be the same, or the brand name could be less linked directly to the core brand. For example, like Marriot hotel, that providing some brand of hotel for different segment, JW. Marriot, and Coutyard by Marriot brand. The advantage of this strategy are expanded market opportunities, shared costs, and leveraging distinctive capabilities.

Brand Extension

This strategy is use the name of the familiar brand in consumer mind to launch a new product line in another product class. The new brand may or may not be closely related with the brand from which it is being extended. For

example, Lifebouy soap and Lifebuoy shampoo, Nike shoes and Nike apparel. The extension has to be carrefully evaluated to avoid the possibilities in resulting the negative impact on the brand equity of the core brand.

Cobranding

This strategy is a cooperation between two well known brands working together in promoting their products or services. This brand name can be used for various promotional efforts. For example train industry cobranding with retailers. PT. Kereta Api Indonesia cobranding with Indomaret. The advantage from this strategy are leveraging the consumer awareness of the two brands, promotional budget can be shared, and new product introductions can be facilitated form the cooperation from the two brands.

Licensing

Licensing is a strategy of renting or leasing the firm’s brand name to another company for use in noncompeting products or services. A company may choose to license its brand when they believe there is strong consumer acceptance for brand extension. For example, when Apple lauched the iPod, there was an immediate need for accessories like headphones, charger, and the carrying case. Apple decided not to manufacture these products, instead choose the company to make the product, and Apple will put its brand. All of these accessories are sold by licenses.

All of these strategic brand management may have a positive or negative impact on the value of the brand. the objective of these brand strategic management is to build the brand equity over time, since brand equity recognize the importance of the brand value. If the brand has a good value, so it will have direct positive impact on its brand equity.

The strategic brand management also will provides essential information for decision making process for each of the brand management activities, and the analysis includes the consumer or market, competitor, and brand information (Cravens and Piercy, 2006).

2.5. Brand Equity

Clow and Baack (2010) stated that one of the major problem for many established companies is brand parity. Brand parity occurs when there are few tangible distinctions between competing brands in mature markets. Brand parity means consumers see only minor product differences, one of the solution to fight the brand parity is brand equity.

2.5.1. Defining Brand Equity

Brands are more than just names and symbol. They are a key element in the company’s relationship with the consumers. Brands represent consumer perceptions and feelings about a product and its performance.

The real value of a strong brand is its power to capture consumer preference and loyalty. A powerful brand form the basis for building strong and profitable consumer relationship. A powerful brand has high brand equity (Kotler and Amstrong, 2008). Kotler (2008) define brand equity as the positive differential effect that knowing the brand name has on consumer response to the product or service.

Clow and Baack (2010) define brand Equity is a set of characteristics that are unique to a brand. In essence, brand equity is the perception that a good or service with a given brand name is different and better.

From the definitions above we can see that brand equity is the different perception of consumer for the brand name of the product or service with another competing brand name, and consumer will see that brand with have good brand equity is better than competitors brand.

2.5.2. Benefit of Brand Equity

High brand equity provides a company with many competitive advantages:

1. High level of consumer brand awareness and loyalty.

Since the brand is perceived different and better than the competitors the consumer will be more aware and loyal to the brand that has high brand equity. 2. Creates higher gross margins. Because consumers expect stores to carry the brand, the company has more leverage in bargaining with resellers. 3. Ease the company to launch line and brand extensions. Because the brands that have high brand equity are having high credibility, the company can more easily launch line and brand extensions. 4. Protect the company from fierce price competition. When the demand from the consumers are high for a certin produt, there will be some competitors that will start to grab the consumers attention by giving them the discount or cheaper price than other competitor to get the sales, but brand equity can protect the company for the competition in price (Kotler and Amstrong, 2008). 5. Allows the company to charge more for products or services. Because the products or services with high brand equity will creates loyal consumers, then the company have chance to charge more for the products or services sold. 6. Prevents erosion of market share. Brand equity prevents erosion of product’s or service’s market share, even there is an attact from other brands with endless promotional maneuvers from competitors (Clow and Baack, 2010).

2.5.3. Steps to Building Brand Equity

Building brand equity requires company to achieve more than brand recognition. Brand recognition and recall can be built through repetitious advertising. Recognition is only first phase of the marketing program (Clow and Baack, 2010). There are several steps to build brand equity:

1. Research and analyze what it would take to make the brand distinctive.

Brand has to be distinctive and has unique selling point that will be promoted later.

2. Engage in continuous innovation.

In building brand equity, the companies or organizations need to continually innovate. Many products or services compete in the market, and the companies or organizations that do not innovate and move forward quickly will fall behind.

3. Move fast.

In today’s society consumer want innovations and new products or services offers for them. They also want them fast.

4. Integrate new and old media.

Another ingredient in building brand equity is to integrate new and old media. Since consumers are bombarded with advertising messages from many sources, the marketing team have to try to integrate all message while looking for new, non-traditional methods of communicating. Although television, radio, magazines, and newspaper remain as key media, newer alternative advertising methods can help strengthen a brand name. For example, in the past we put high portion of advertisement on TV ads, and now, since the development in technology and social network, the marketing team shifted significant dollars to put advertisement on the internet ads and web sites.

5. Focus on domination.

Brand equity involves domination. Domination is a strongly held view that the brand is number one in its product category. Domination can take place in a geographic region or in a smaller product category or market niche. To dominate the brand must be viewed as number one in some way. Domination means delivering the promise, the consumer can assess whether the company or organization has done what they promise or not.

(Clow and Baack, 2010)

2.5.4. Measuring Brand Equity

Brand Equity is a set of brand assets and liabilities linked to a brand, its name, and symbol, that add to or substract from the value provided by a product or service to a firm and/or to that firm’s consumers (Cravens, Piercy, 2006). The major asset categories are: brand awareness; peceived quality; brand associations; brand loyalty. From the description above, we can see that there are four elements that has role as a set of assets in construct the brand equity:

1. Brand Awareness

2. Perceived Quality

3. Brand Associations

4. Brand Loyalty

According to the research that is done by Arianis Chan (2010), there is positive and significant effect of brand equity towards the consumer purchase deicision process in Bank Muamalat Indonesia, in Bandung branch, that is shown by the R2 value is 0.950, which means the consumer purchase decision process in Bank Muamalat, Bandung branch is 95% can be influenced by brand equity variables, and other 5% is influenced by other variables than brand equity. Astuti and Cahyadi (2007) stated that if the consumer do not attracted to a brand and buy because of the product characteristics, prices, convenience, and with a little consideration in brand, it might be the brand equity is low. Meanwhile, if the consumers need to buy a brand whether faced by the competitors that offers better quality of products, like in terms of price and practicality, then that brand has high value of brand equity.

David A. Aaker develop a model to measure the brand equity, called brand equity ten as an extend of brand equity concept. This measure was grouped into five categories, the first four categories represent the perception of consumers into the brand through these four dimensions of brand equity: loyality, perceived quality, brand association, brand awareness. The fifth category includes measure of those types of market behavior which represents the information obtained from the market and not directly from the consumers (Durianto et al, 2004). This 31

research will use the first four category as the variables, because this research only do the research based on the consumers perception.

2.5.5. Brand Awareness and Its Relation with Students Decision

According to Aaker (1991), as cited in Astuti and Cahyadi (2007), brand awareness is the strength of the existence of a brand in the minds of consumers. That strength can be shown by the ability of the consumers to recognize and recall the brand. Meanwhile, Keller (2003) as cited in Fayrene and Lee (2011) defines awareness as the consumers ability to recall and recognize the brand as reflected by their ability to identify the brand under different condition and to link the brand name, logo, symbol, and so fort to certain associations in memory.

Brand awareness is the key of brand assets or the key opener to get into other elements. If the brand awareness is low, then it almost certain that the brand equity also low (Durianto et al, 2004).

There are four levels of brand awareness as described by Aaker in the Durianto et al (2004). The following is the order from the lowest level to the highest level:

1. Unaware of Brand, is the lowest level of brand awareness, where the consumers do not aware of the existence of a brand.

2. Brand Recognition, is the minimum level of brand awareness, where the recognition of a brand re-emerged after recollecting through the assistance from others (aided recall).

3. Brand Recall, is a recall of the brand without assistance (unaided recall).

4. Top of Mind, is a brand was first mentioned by the consumer or that first emerged in the minds of consumers.

The role of brand awareness can help the brand to be undestood clearly by understanding how brand awareness create values (Durianto et al, 2004). Here are the values of the brand awareness (Durianto et al, 2004):

1. Anchor to which other associations can be attached.

A high brand awareness will help the associations attached to the brand because cruising range of the brand is high in the minds of consumers. It can be concluded that if the brand awareness is low, the association created by the marketers will be hard to be attached into that brand.

2. Familiarity-Liking

The high level of brand awareness can create the taste of liking of the consumers to the brands marketed.

3. Signal of Substance or Commitment

If a brand has high brand awareness, consumers can always find the presence of the brand. That is why if the quality of the two brands are the same, brand awareness will become the deciding factors that influence consumers’ decision in purchasing products or services. 4. Brand to be Considered

Before making their purchase decision, consumers will select the brands within a group to consider and decide which brand to buy. Therefore a brand that has a high level of brand awareness will always be stored in the mindconsumers and will be considered by consumers. From the research that has been done by Sri Wahjuni Astuti and I Gde Cahyadi (2007), shows that brand awareness become one of the elements in brand equity that has the positive effects and significant to the consumers’ confidence in the buying decision Honda motorycle in Surabaya, with regression value 0.115. and also from the research that is done by Achmad Farizka (2008), that brand awareness has positive and significant impact into the consumer buying desision in Yamaha Dealer Blimbing Motor with T count score 4.798, which is higher than T table 2.776. From their research, it was stated that a well known brand with high level of brand awareness can cause the consumers to have the confidence in their decision making. This thing can reduce the perceived risk level for the brand that will be purchased. Consumers tend to buy the brand that have been known before, because they feel safe with something known, and consumers assume that a well-known

brand may be reliable and offer quality products that can be justified (Astuti and Cahyadi, 2007). From the previous research and opinions above, so researcher conclude the hypothesis as follows:

H2: There is an effect between brand awareness (X1) into the student decision (Y) in choosing President University as their college.

2.5.6. Perceived Quality and Its Relation with Students Decision

According to Aaker (1997), as cited in Durianto et al (2004), perceived quality is the consumer’s perceptions of the overall quality or superiority of a product or service with respect to its intended purpose. Perceived quality is a consumer perception for the attributes that are considered important for him/her. Perceived quality is an assessment, which of course can be vary between one consumers to anothers (Astuti and Cahyadi, 2007).

There are five value that can describe the Perceived Quality (Durianto, et al (2004) as follows:

1. Reason to buy

A good perceived quality can help the advertisement and promotion that was done by the company or organization to become more effective, that would be associated with the purchase decision.

2. Differentiation or position

Perceived quality of a brand will has an effect to determine that brand position in the market in the competition.

3. Optimum price

The right decision to determine the optimum price can help the company or organization to increase the perceived quality of that brand.

4. Interest in the distribution channel

The reseller will be more likely to market the products that are favored by the consumers, and consumers favor the products which have the good perceived quality.

5. Brand extension

Strong perceived quality can be used as a basis by the company to implement brand extension policy.

According to the concept of brand equity ten as developed by David A. Aaker (1996) has two elements in measuring perceived quality: 1. Perceived Quality Perceived quality can be measured with scale such as the following: a. Comparison about the quality with other alternatives brand. 2. Leadership/Popularity Leadership has three dimension, first, it reflects in no. 1 syndrome. The logic is that if enough consumers are buying into the brand, it is reasonable that it will make the brand to be the sales leader. Second, leadership can make a way for innovation within product or service class. The third one is leadership taps the dynamics of consumer acceptance, reflecting the fact that consumer want to be on the bandwagon, they following what becomes the trends nowadays, and feels uneasy to go againts the flow in the society (Aaker, 1996). The indicators in measuring leadership/popularity are: a. Whether the brand is one of the leading brand in its category. b. Whether the brand is innovative, first with advance in product or service. c. Whether the brand is growing in its popularity. From the previous research that was done by Sri Wahjuni and I Gde Cahyadi (2007), shows that consumers’ perceived quality have positive effects to the confidence level of the consumer in the decision in buying Honda motorcycle in Surabaya, with score regression of 0.552. From the research that was done by Farizka Achmad (2008), perceived quality has positive and significant effect into the consumer buying decision in Yamaha Dealer Blimbing Motor with T count score of 4.364, which is higher than T table 2.776. The result of their research was show that perceived quality has the influence to the respondent in their decision making through the attributes uniqueness, because it create the reason to buy for the consumers, that were

considered to be able to meet the desired benefits from the consumer (Astuti and Cahyadi, 2007). From the previous research and opinions above, so researcher conclude the hypothesis as follows:

H3: There is an effect between perceived quality (X2) into the student decision (Y) in choosing President University as their college.

2.5.7. Brand Association and Its Relation with Students Decision

Brand association is anything which is deep seated in consumer’s mind about the brand. Brand associations are not the benefit, but are images and symbols that associate with the brand or brand benefit. Brand association is relating perceived quality of a brand to a known entity. For example, Hyatt Hotel is associated with luxury and comfort, BMW is associated with advanced technology, fun driving, and superior engineering (managementstudyguide.com, accessed 2012). Brand association is a powerful aspect that should not be neglected by the company or organization, since it reflects what consumer think about the brand. Brand should be associated with something positive, that can help consumers to better perceive the brand positively, so that can better remind the consumer to the company or organization and what the organization are trying to achieve. Whenever they see something with the organization’s brand associate, they will think back to that organization’s brand (Marketingdeviant.com, accessed 2012. The underlying value of a brand often is its set of associations, or what can be termed its meaning to people, and represent the foundation of purchase decision making (Aaker, 1991 as cited in David Njite, 2005). Many associations exist and vary in the ways they provide value. Brand associations create value in the following ways (Aaker, 1991 as cited in David Njite, 2005): 1. A source of information processing or retrieval Association can be used as a summary of various facts and specification about a brand that is hard for consumer to remember. By creating strong position relative to the competitors on a given dimension or attributes, such as product

quality, service quality, and so on (David Njite, 2005). Association can also influence the interpretation of facts and recall of information, especially during the decision making (Aaker, 1991 as cited in David Njite, 2005). For example, Nokia, are recalled as the brand for handphone. 2. Create a basis of differentiation Brand associations provide a basis for differentiation. In education industry, where the service similarity offered by the university is high, associations provide basis for purchase. A differentiating association provides the competitive advantage for a particular brand (David Njite, 2005). A well positioned brand evokes positive and strong associations that provide a reason for purchase and a barrier to competitors (Keller, 2003; Aaker 1991 as cited in David Njite, 2005). 3. Generate a reason to buy With the differentiation made by the organizations or the companies, it is easier for the consumer to recognize the brand name and its specification, and when the needs for a certain product arises, the consumers have a name of the brand to fulfill their needs since they already know the products or services they belief can solve their problems through the well positioning created by the organizations or companies. 4. Create positive feelings Some associations are linked and can transfer easily to another brand. For example, to create the feeling between the brand and its association, brands use endorsers to create associations that can be transferred to the brand. When the endorser image is match with the brand association that are trying to be built, the alliance between endorser and brand are successful, for example, the successful partnership of Nike and Michael Jordan (David Njite, 2005). Create the identity for a product also can make a positive feeling to the consumer when using the products. For example, Harley Davidson, is success in creating the gentle and manly experience for the consumer in using that motorcycle. Some associations generally provide positive feelings during the use experience, serving to transfer

and add more value than in the absence of the brand (Aaker, 1991 as cited in David Njite, 2005). 5. Provide a basis for brand extension. Certain associations can be owned by a brand (David Njite, 2005). For example, Nike is known as the brand for sports shoes, and when Nike launch new product, by extension, results in new beliefs and associations transferring from the original brand and possibly from the original product category (Park, Milberg, & Lawson, 1991 as cited in David Njite, 2005). According to the Brand Equity Ten method in measuring brand equity, that was developed by Aaker (1996), measurement of association can be structured into three perspectives on the brand: brand as product (value), brand as person (personality), brand as organization (organizational associations). 1. Value The brand as product perspective focuses on the brand as value proposition. The value proposition, which usually involves a functional benefit, is basic to brands in most product classess. If the brand does not generate value, it will usually be vulnerable to competitors. The value measure provide a summary indicator of the brands success at creating that value proposition. Because the measure is focus on value rather on specific functional benefits, a measure is created which can apply across product classes. Brand value can be measured by the following: a. Whether the brand provides good value for money. b. Whether there are reasons to buy this brand over competitors. 2. Personality Brand personality is measured based on the brand as person perspective. For some brands, the brand personality can provide a link to the brands emotional and self-expressive benefits as well as a basis for consumer/brand relationship and differentiation. The company or organization should include the specific personality dimension that relevant with their activity, in creating the brand association to that company or organization. For example, for many retailer,

energy/vitality dimension is central. And exciting brand personality dimension may be relevant across different cosmetic products. Service firms, such as banks, telephone companies, and hotels might find friendly and reliable to be important. A rugged personality might be relevant to trucks and sports utility vehicles. The indicators to measure the strong personality of the brand that are compact and not product specific according to Aaker (1996) are: a. The existence of personality of the brand. b. The attractiveness of the brand. A study has found a scale that can be used to measure brand personality (Durianto et al, 2004), as follows: a. Sincerity (simple, honest, wholesome, cheerful) b. Uproar (daring, spirited, imaginative, up to date) c. Skills (trustworthy, intelligent, successful) d. Worldliness (the upper class, charming) e. Toughness (hard, tough)

3. Organizational associations The third dimension of brand association is brand as organization, which considers the organization (people, values, and programs) that lies behind the brand. This perspective can be particularly helpful when brands are similar with respect to attributes, when the organization is visible (as in durable goods or service businesses), or when a corporate brand is involved. Organizational association that is importantly used as the bases of differentiation and choice often include having the concern to the consumers, being innovative, striving for high quality, being successful, having visibility, being oriented toward community, and being a global player. Aaker (1996) stated that there is a distinction between having innovative products and being an organization that is commited to innovation. Having innovative products is a reputation that is based on current offering and being an innovative organization is more long lasting.

Means that the concerns for being an innovative organization can give the company long term profits, compared to just having the innovative products. The indicators that can be used to measure the organizational association is: 1. The consumer perception of credibility of the organization

Research related to brand association that was conducted by Sri Astuti and I Gde Wahjuni Cahyadi (2007), suggests results that brand association as an element of brand equity have positive and significant impact on consumer in their purchasing decisions of Honda motorcycles in Surabaya, with a regression of 0.507. From the research that was done by Farizka Achmad (2008), show that consumer buying decision in Yamaha Dealer Blimbing motor is positively and significantly influenced by brand association, with T count value 3.008, which is higher than T table 2.776.

Research results showed that brand association can create a good brand credibility in the minds of consumers, because with the existence of positive benefit association in the minds of consumers. It will make the consumer feel confidence for the purchase decision that they made (Astuti and Cahyadi, 2007). That means the brand association will have effect on the consumer decision in purchasing the products or services. From the previous research and opinions above, so researcher conclude the hypothesis as follows:

H4: There is an effect between brand association (X3) into the student decision (Y) in choosing President University

2.5.8. Brand Loyalty and Its Relation with Students Decision

Brand loyalty as defined by Aaker (1991) as cited in Fayrene and Lee (2011) is the attachment that a consumer has on brand. Brand loyalty is a situation where the consumer are afraid to purchase or use the products or services from another brand that he does not trust. It is measured by seeing the word of mouth publicity, repetitive buying, price sensitivity and commitment towards the brand, brand trust, and consumer satisfaction (managementstudyguide.com, accessed 2012). Brand loyalty exist when the consumer feel that the brand can

give the right products or service characteristics and quality at right price, even if the other brands are offering the cheaper price or better quality, the brand loyal consumer will still using that brand. From managementstudyguide.com (accessed 2012) brand loyalty can be developed through various ways, such as quick service, ensuring quality of the product or sevice offered, continuous improvement, and many others.

According to the Brand Equity Ten Method developed by Aaker (1996), there are two elements of brand loyalty:

1. Price Premium

The basic indicator of loyalty is the amount of consumer will pay for the brand in comparison with another brand offering similar benefits. Loyal consumers are willing to pay a higher price for the same offer from the competitors to a certain preferred brand. Price premium might be high or low and positive or negative depending on the two brands involved in comparison. If the brand is compared with higher priced brand the price premium could be negative. In comparing the price premium, the company or organization have to be specific in selecting the competitors to be compared with the brands. A set of competitors is usually preferred for measurement, because the brand equity for single competitor can decline while the equity of other competitors remains stable.

2. Consumer Satisfaction/Loyalty

A direct measure for consumer satisfaction can be applied to existing consumers, who can be defined as those who have used product or service within a certain time frame such as the last year. The focus of consumer satisfaction measurement is in the last use experience from the the consumers view. In service industry, like banks, hotel, or car rental, satisfaction measurement is very powerful, since the loyalty is formed from the last used experiences in using the service provided by the company or organization. The indicator that can be used in measuring the consumer satisfaction according to the brand equity ten method by Aaker (1996) are:

a. The commitment of consumer for keep using the brand for a product or service.

b. The willingness of consumer to give recommendation for a product or service to others.

Loyal consumer will generates more profits for the organization or the company, and according to the study from Reichheld and Sasser, as cited in Lovelock, Wirtz, Keh, Lu, Service Marketing in Asia, 2005, they found that the longer consumer remained with an organization, the more profitable they become to serve. Richheld and Sasser states that there are four factors that make the loyal consumer give more profits to the organization. Those factors are:

1) Profit derived from increased purchases. Over time, business consumers often grow larger and so need to purchase in greater quantities. Individuals also may purchase more as their families grow. Both types of consumer may decide to conduct their purchases with a single supplier who provides high quality service. 2) Profit from reduced operating cost. As consumer become more experienced, they make fewer demands on the supplier, like asking for more information about the services offered and the assistance to do some activities, thus contributing to greater productivity. 3) Profit from referrals to other consumers. Positive word-of-mouth recommendations are like a free sales and advertising, saving the organization from having to invest as much money in these activities. 4) Profit from price premium. New consumer often benefit from introductory promotional discounts, whereas long term consumers are more likely to pay regular prices. Moreover, when consumer have put their trust or believe in one supplier, they may be more willing to pay higher prices at a peak periods, express work, or better services. (Lovelock, Wirtz, Keh, Lu 2005).

Research related to brand association that was conducted by Sri Astuti and I Gde Wahjuni Cahyadi (2007), suggests results that brand loyalty as an element

of brand equity have positive and significant impact on consumer in their purchasing decisions of Honda motorcycles in Surabaya, with a regression of 0.155. From the research that is done by Farizka Achmad (2008), brand loyalty positively adn significantly influence consumer buying decision in Yamaha Dealer Blimbing Motor, with T count score is 4.795, which is higher than T table 2.776.

Research results showed that the consumers that have loyalty to the brand will have more confidence in their choice (Astuti and Cahyadi, 2007).This opinion also stated by Aaker (1991) as cited in Astuti and Cahyadi (2007), Aaker said that the high level of brand loyalty, which include the strong commitment from the consumer to the brand can create high self confidence for the consumer when they decide to purchase a product or service. This is caused by the linkage between the consumer and the brand, that makes the consumer believe that their decision to buy that brand is the right decision. From the previous research and opinions above, so researcher conclude the hypothesis as follows:

H5: There is an effect between brand loyalty (X4) into the student decision (Y) in choosing President University as their college.

CHAPTER III RESEARCH METHODOLOGY

3.1. Variable of the Research and Operational Variable

3.1.1. Independent Variable

Independent variable is the variable that influences the dependent variable in either positive or negative way (Sekaran and Bougie, 2009). The independent variables in this research are: 1. Brand Awareness According to Aaker (1991), as cited in Astuti and Cahyadi (2007), brand awareness is the strength of the existence of a brand in the minds of customers to recognize and recall the brand. The brand awareness in his research means the strenght of the brand name of President University in the students mind, with indicator (Astuti and Cahyadi, 2007): a. The ability of the students to recognize the brand name of President University. b. The ability of students to remember the brand in top of mind level. c. The students ability to remember the advertisment of President University

2. Perceived Quality According to Aaker (1997), as cited in Durianto et al (2004), perceived quality is the customer’s perceptions of the overall quality or superiority of a product or service with respect to its intended purpose. Perceived quality in this research is the students perception about the President University brand name, with indicators (Aaker, 1996): a. Comparison about the quality with other alternatives brand b. Whether the brand is one of the leading brand in its category c. Whether the brand is innovative, first with advance in product or service d. Whether the brand is growing in its popularity

3. Brand Association

Brand association is anything which is deep seated in customer’s mind about the brand (managementstudyguide.com, accessed 2012). Brand association in this research is anything that related with students memory that can create association in President University brand name, with indicator (Aaker, 1996): a. Whether the brand provides good value for money b. Whether there are reasons to buy this brand over competitors c. The existence of personality in President University brand name d. The attractiveness of the brand name of President University e. The customer perception of credibility of the organization

4. Brand Loyalty Brand loyalty as defined by Aaker (1991) as cited in Fayrene and Lee (2011) is the attachment that a customer has on brand. Brand loyalty is a situation where the customer are afraid to purchase or use the products or services from another brand that he does not trust. Brand loyalty in this research means that the commitment of the students to keep consistently using the service that is provided by President University, with indicator (Aaker, 1996): a. The commitment of customer for keep using the brand for a product or service b. The willingness of customer to give recommendation for a product or service to others c. The customer perception of credibility of the organization

3.1.2. Dependent Variable

Dependent variable is the variable that become the primary interest to the researcher (Sekaran and Bougie, 2009). Dependent variable is variable that influenced by independent variable. Dependent variable in this reseach is consumer decision of the students in President University batch 2012. Consumer decision is the ability to define the problem or need and individual carefully evaluating the attitudes of a set of products, brands, services, and rationally selecting the one that best solves a clearly recognized problem or need (Kotler, 2008). The consumer decision in this research means, the students decision in

choosing President University as their college, with indicator (Lovelock, C. ,Wirtz, J. , Tat Keh, H. , Lu, X. ,2005): a. Awareness of the need for the education b. Actively search information about university before making decision c. Students’ evaluation of alternatives brand in the same level d. The students decision in choosing the brand e. Students overall satisfaction level with the performance of the brand

Here is the summary of definition variable operational and its indicators:

Table 3.1. Summary of Definition Variable

Measurement No. Variabel Definition Indicator Scale The ability of the students to recognize the brand Brand awareness is the name of President strength of the University Brand existence of a brand in The ability of students to 1 X1 Likert scale Awareness the minds of customers remember the brand in top to recognize and recall of mind level the brand. The students ability to remember the advertisment of President University Comparison about the quality with other alternatives brand Perceived quality is the Whether the brand is one of customer’s perceptions the leading brand in its of the overall quality Perceived category 2 X2 or superiority of a Likert scale Quality Whether the brand is product or service with innovative, first with respect to its intended advance in product or purpose. service Whether the brand is growing in its popularity Whether the brand provides good value for money Whether there are reasons to buy this brand over competitors Brand association is The existence of Brand anything which is deep 3 X3 personality in President Likert scale Association seated in customer’s University brand name mind about the brand. The attractiveness of the brand name The customer perception of credibility of the organization

The commitment of customer for keep using the Brand loyalty is the brand for a product or attachment that a service customer has on brand. The willingness of Brand loyalty is a customer to give Brand situation where the 4 X4 recommendation for a Likert scale Loyalty customer are afraid to product or service to others purchase or use the The willingness of products or services customer to pay a higher from another brand price for the same offer that he does not trust from the competitors to a certain preferred brand Awareness of the need for the education Consumer decision is Actively search the ability to define the information about problem or need and university before making individual carefully decision evaluating the attitudes Consumer Students’ evaluation of Y of a set of products, Likert scale Decision alternatives brand in the brands, services, and same level rationally selecting the The students decision in one that best solves a choosing the brand clearly recognized problem or need. Students overall satisfaction level with the performance of the brand

3.2. Research Framework

In doing this research, there are some steps which have to be done by the researcher before get the result from the analysis in this study. The figure below show the step for formulating the background of the study, study the literature review to find the solution to solve the problem that stated in the background, collecting data through the questionnaire, transforming and analyzing it using SPSS v.20, interpretation of the result, and lastly is conducting the conclusion and recommendation.

Background of Study

Literature Review

Pretest Questionnaire

Validity and Reliability No test Data processing, Valid and Reliable? Yes

Final Questionnaire

Collect Data from Respondents

Data Transformation and Processing Data by Using SPSS 20

Data Interpretation

Conclusion and Recommendation Figure 3.1. Research Framework Source: Conducted by researcher

3.3. Research Method

This research is conducted by using quantitative method, since according to Sugiyono (2007) quantitative method is used to conduct the research on current population or representative sample. The process of the research is deductive where in order to answer the problem identified, theories is used to get the hypothesis, later on the hypothesis is tested by collecting data on the field. Instrument is used in data collecting technique. Data collected is analyzed quantitatively by using descriptive or inferential statistics then hypothesis can be concluded whether it is proven or not. Quantitative research commonly done to the random sample, so the result of the research can be generalized into the population where the sample was taken. This reseach is causal, means research that are trying to find out is there any effect between two or more variable, and

how much is the effect, after that results of this research can give some suggesstion that can help the organization’s decision making process. The advantage of using quantitative method for the researcher it is more controllable and more reliable to test the correlation between variables.

3.3.1. Location and Time Research

The reseach is conducted in President University, located in Jl. Ki Hajar Dewantara Kota Jababeka, Bekasi 17550, Indonesia. The research started from September 2012 until December 2012.

3.4. Sampling Design

Sample is a subgroup or subset of the population. by studying the sample, researcher should be able to make conclusions that can be generalized to the population (Sekaran & Roger Bougie, 2009). Sample is used if the size of population is big and it is impossible for the researcher to study all of the population, because of time and budget limitation of the researcher. That is why researcher have to choose the representative sample from the population (Sugiyono, 2007).

3.4.1. Size of the Population

Uma Sekaran and Roger Bougie (2009) define population as the entire group of people, events, or things of interest that the researcher wishes to investigate. The population of this research is President University Student. Researcher use President University students batch 2012 as the population to get the perception of the students. In this research, researcher found 839 students President University batch 2012 as a population as shown on table 3.2.

Table 3.2. President University Population Student Batch Population 2009 481 2010 661 2011 771 2012 839 Total 2752

Source: Academic Department of President University 2012.

3.4.2. Sampling Method

In this research, in determining the sample of the population, researcher used simple random sampling method. Simple random sampling is the sampling method where every element in the population has a known and equal chance of being selected as subject of the research (Uma Sekaran & Roger Bougie, 2009). To determine the ideal sampling size, researcher used Slovin formula (Anwar Sanusi, 2011).

Where: n = Number of Samples N = Number of Population E = Margin of Error

Therefore:

n = 89.350373 90 people

Based on Slovin formula, researcher determine sample on 90 people with 10% margin of error.

3.5. Type of Data

3.5.1. Primary Data

Primary data is the data which is obtained directly from the source of the data, observed, and noted for the first time by the researcher. Primary data in this 50

research was obtained by distributing the list of questions in form of questionnaire to the President University students batch 2012.

3.5.2. Secondary Data

Secondary data is the data that is obtained indirectly from the source of data in form of the references from previous research, and other reading related with this research. Secondary data in this research was obtained from the previous research related with the topic in this research, President University academic department, Human Resource department, books, journal, and other reading related with this research from the internet.

3.6. Data Collection Method

3.6.1. Questionnaire

In conductingthe research, researcher use survey method in collecting data. Survey techniques are based on the use of structure questionnaires given to a sample population. A questionnaire is preformulated written set of questions to which respondents record their answers, usually within rather closely define alternatives. Questionnaire is an efficient data collecting technique if the researcher knows exactly what is required and how to measure the variables of interest (Sekaran and Bougie, 2009). Questionaire can be in form of question whether close or open ended questions, that can be delivered directly to the respondents or by using mail. Questionnaire is used for a big number of respondents (Sugiyono, 2007). The survey method has several advantages, the researcher can collect the data from all collected responses within a short period of time. Any doubt that the respondents might have on question can be clarified on the spot. The researcher also has the opportunity to introduce the research topic and motivate the respondents to give their frank answer. In administering the questionner to the large number of respondent at the same time is less expensive and less time consuming than interviewing the respondents (Sekaran and Bougie, 2009).

3.6.2. Literature Study

Literature study is the method of data collection obtained from booksand other literature related to the research materials. Literature study that is used in this study is the use of data as the basic theory obtained and studied in the literature on the subjectconsumer purchasing decisions, brand awareness, perceived quality, brand associations, and brand loyalty.

3.6.3. Data Measurement

In quantitative research, the researcher will use instrument in order to collect the data. Instrument of the reseach will be used to measure the reseached variables. Likert scale is used to measure the variable value to be shown in form of number, so it can be analyzed accurately, eficiently, and more communicative (Sugiyono, 2007). Likert Scale Likert scale is designed to examine how strongly subjects agree or disagree with the statements on a five-point scale (Sekaran and Bougie, 2009) like we can see in table 3.3. Table 3.3. Likert Scale

Scale Rating 1 Strongly Disagree 2 Disagree 3 Neutral 4 Agree 5 Strongly Agree Source: Sugiyono, 2007

Likert scale technique used because it easy for researcher to analyze the data and also easy for the respondent to understand.

Pre Testing

Before completing the questionnaire, pre testing was conducted on the entire questions listed in the questionnaire. Pre testing referes to the use of a

questionnaire on a trial basis in a small sample of respondent to determine how well the questionnaire works (Churchill, Brown, and Suter, 2010). The pre testing will be conducted on 30 respondents within the students of President university batch 2012.

3.7. Analysis Method

Analysis method of the data to test the hypothesis in this research is multiple regression analysis, with sigificance of error is 10%. This analysis method is chosen since, multiple regression analysis can determine how much the effect of two or more independent variable into dependent variable. In order to get the good result in the analysis of the data, multiple regression requires theclassical assumption test. Then, before doing regression testing, researchers will do the classical assumption test first. 3.7.1. Validity and Reliability Test

In doing the research, it is important to make sure the instrument that is developed by researcher to measure a particular concept is indeed accurately measuring the variable, means, researcher is accurately measuring the concept that he/she wants to measure (Sekaran and Bougie, 2009). Beside that, the instrument also has to be able to measure the variables consistently, means the answer from the respondent if it is asked several times, the answer will be consistent (Sunyoto, 2011). Hence, the goodness of the measure has to be developed, the instruments that is used by researcher has to be valid and reliable. Therefore test for validity and reliability of the instrument have to be carried out. So the instrument can measure what it has to be measured accurately.

3.7.1.1. Validity Test

Valid means the instrument that is used can measure the particular concept it is indeed to measure (Sekaran and Bougie, 2009). Validity is concerned with whether we measure the right concept with the instrument being used in the research. Measuring the validity of the instrument is important, since the research

can be continued if the instrument is valid. Instrument is valid if it has internal fullfill the internal and external validity requirements. Instrument is said has internal validity if the the criteria that exist in the instrument theoritically can reflect what it is measured. Instrument is said has external validity if the result of the study can be generalized into other sample or population for the other research (Sugiyono, 2007). To test the validity of this research, researcher will measure the correlation between the score from the item score of the questionnaire with the total score of the construct or variable. The test will be used to determine the significance of the item score in the questionnaire with the total score of the variable by comparing the value of r count with r table for the degree of freedom = n-k (Sunyoto, 2011). In this research is 30-2, or df 28, Since the samples that will be used in pre testing is 30. The researcher used SPSS version 20.0 to check validity of the instrument. The result of the calculation by using Statistical Program for Society Science (SPSS) calculation then will be compared to the product moment correlation (r) from r table. Since the validity test will be done in 30 sample, from r table, with significance or alpha is 0.10, it is shown the value is 0.306. If the r count from each item of questions in the questionnaire ( see corrected item-total correlation) is positive and greater than r table, the variable is valid. If the r count is negative and smaller than r table, than the variable is not valid.

Table 3.4. Validity Test Variabel Item/Code R count R table Description X1_1 ,700 0.306 VALID Brand Awareness X1_2 ,228 0.306 NOT VALID X1_3 ,461 0.306 VALID X2_1 ,480 0.306 VALID X2_2 ,707 0.306 VALID Perceived Quality X2_3 ,458 0.306 VALID X2_4 ,571 0.306 VALID X3_1 ,693 0.306 VALID X3_2 ,780 0.306 VALID Brand Association X3_3 ,635 0.306 VALID X3_4 ,340 0.306 VALID X3_5 ,615 0.306 VALID

X4_1 ,782 0.306 VALID Brand Loyalty X4_2 ,564 0.306 VALID X4_3 ,493 0.306 VALID Y1 ,747 0.306 VALID Y2 ,713 0.306 VALID Students Decision Y3 ,425 0.306 VALID Y4 ,746 0.306 VALID Y5 ,577 0.306 VALID Source: Primary Data, Proceed by SPSS v.20

From the table 3.3. above, we can see that the value of r table with the level of significant 10% for 30 sample is 0.306. From the calculation using SPSS v.20 all of the statement excluding statement number 2 in Brand Awareness variable (X1), which means these statement are valid. Meanwhile the score of r in Corrected item-Total Correlation column for statement number 2, in Brand Awareness is 0.228 which is less than 0.306, means the second question in Brand Awareness variable (X1), which is “when asked to name the private university in Indonesia, then PresUniv is the first name that comes into my mind”, needs to be eliminated for further test.

3.7.1.2. Reliability Test

Reliability of a measure indicates the extent to which it is without bias, and hence ensures consistent measurement across time and across the various items in the instrument. In other words, the reliability of a measure is an indication of the stability and consistency with which the instrument measures the concept and helps to assess the goodness of a measure (Sekaran and Bogie, 2009). Cronbach Coefficient Alpha will be used to test the reliability of the data in this research. Cronbach’s alpha is a reliability coefficient that indicates how well the items in a set are positively correlated to one another. The closer Cronbach’s alpha is to 1, the higher the internal consistency reliability (Sekaran and Bougie, 2009). In order to get the value of the Cronbach’s alpha, researcher will use SPSS version 20.0 program. A variable or construct is said to be reliable if the value of its cronbach’s alpha is more than 0.6 (Sunyoto, 2011).

In order to test the reliability of the data in this research, Cronbach Coefficient Alpha will be used. A variable or construct is said to be reliable if the value of its cronbach’s alpha is more than 0.6 (Sunyoto, 2011). The result from reliability tes in this research can be seen in table 3.5. below:

Table 3.5. Reliability Test Variables Items N Cronbach Alpha Reliability Brand Awarenes 2 30 0.710 Reliable Perceived Quality 4 30 0.729 Reliable Brand Association 5 30 0.809 Reliable Brand Loyalty 3 30 0.663 Reliable Student Decision 5 30 0.805 Reliable

Source: Primary Data, Processed by SPSS V.20

From table 3.4. we can see that the cronbach alpha for all the variables are higher than 0.6,means that all of the variables are reliable.

3.7.2. Classical Assumption Test

Before performing the regression analysis, classical test assumptions has to be done, in order to estimate an unbiassed and efficiency from a multiple regression equation. There are some classical assumptions eligibility criteria that has to be met

3.7.2.1. Normality Test

Normality in parametric statistics such as regression and ANOVA is the first condition. Normality test aims to test whether in the regression model, intruders or residual variables have a normal distribution. If this assumption is violated, the statistical test becomes invalid or bias, especially for small samples. There are many ways in doing normality test. Normality test can be carried out through two approaches, graphic analysis, namely charts approach (histograms and PP plots) and statistical analysis (the Kolmogorov-Smirnov test) (Teorionline.wordpress.com, 2012).

In this research, researcher use PP plots graph for graphic analysis and in order to avoiding mistake in interpreting the graphic result visually, in this research, researcher use statistical analysis by using non-parametric test Kolmogorov-Smirnov (K-S). The criteria for Kolmogorov-Smirnov test is if the significant value (Asymp. Sig.) > 0.05, then the residual data is normally distributed. And if the significant value (Asymp.Sig.) < 0.05, then the residual data is not normally distributed.

3.7.2.2. Heterocedasticity Test

Multiple regression model needs also to be tested whether the varians of the residual from the observation with other observation is similar or not. If the residual has the same varians, then it is called homocedasticity, and if the residual is different, then there is heterocedasticity (Sunyoto, 2011). A good regression model is homocedasticity model or does not happened heterocedasticity. In this research, researcher using scatterplot graph to see whether any heterocedasticity cases or not. If there is any particular pattern like dots in the scatterplots that form a regular pattern, either narrowed, widened, or wavy then it indicates heterocedasticity. And if there is no any particular pattern in the dots, and the dots spread out in the upper and lower of 0 in Y axis, then there is no heterocedasticity cases (homocedasticity).

3.7.2.3. Multicollinearity Test

Multicollinerity test is one of the key assumption test of multiple regression that wanted to know whether the independent variables are independent one another. Multicollinearity means a statistical problem in which two or more independent variables in multiple regression model are highly correlated. The higher level of intercorrelation among the independent variables, the worse the problem becomes (Sekaran and Bougie, 2009; Churchill, Brown, Suter, 2010). In order to determine the presence or absence of multicollinearity can be assessed from the large value of Tolerance or its inverse Value of Inflation Factor (VIF) through SPSS program. Tolerance measures the amount of variability of the selected independent variable not explained by the other independent variables.

Higher tolerance value, means a smaller degree of multicollinearity, since tolerance () is equal , and Variance Inflation Factor (VIF), which is

calculated simply as the inverse of tolerance value . The VIF translates the tolerance value, which directly expresses the degree of multicollinearity. VIF equals 1/tolerance value, means the higher tolerance the lower VIF value, and the lower degree of multicollinearity (Hair, Joseph F. ,et al., 2009). The common measure to determine whether the independent variables do not symtom multicollinearity is if the tolerance value more than 0.10, and as a result the VIF value is less than 10 (Sekaran and Bougie, 2009).

3.7.3. Multiple Regression

Statistical method that is used to analyze the data in this research is multiple regression analysis. Multiple regression analysis, is statistical technique used in situation where more two or more independent variables are hypothesized to affect one dependent variable so that will result in an equation form that can be used to predict, or explain the outcome variable (Sekaran and Bougie, 2009; Churchill, Brown, Suter, 2010). Multiple regression analysis provides a means of objectively assessing the degree and the character of the relationship between independent variables and dependent variables. The regression coefficients later used to indicate the relative importance of each of the independent variables in the prediction of the dependent variable. Then the model equation used in this research can be explain as follows (Sekaran and Bougie, 2009):

Where: Y = Student Decision

= Constant

= X1regression coefficient

X1= Dimension score of Brand Awareness

= X2 regression coefficient

X2 = Dimension score of Perceived Quality

= X3 regression coefficient

X3 = Dimension score of Brand Association

= X4 regression coefficient

X4= Dimension score of Brand Loyalty e = Standard Error

3.8. Testing Hypothesis

3.8.1. F Test

Significant testing in order to know whether the independent variables have significant influence into dependent variable simultaneously, (Sugiyono, 2007). This test is done by comparing the value of F count with the value of F table using a significant level of 10%. If the F count value is greater than F table then all of the independent variables simultaneously affect the dependent variable. Besides that, it can also be seen from the value of probability. If the value of probability is smaller than 0.10 (for a significance level = 10%), then independent variables simultaneously affect the dependent variable. Meanwhile, if the value probability is greater than 0.10 then the independent variables are not simultaneously have effect on the dependent variable (accept H1, reject H0). 3.8.2. T Test

Significant testing in order to know whether the independent variables is partially have significant influence into dependent variable or not. The hypothesis used in this study are: