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Chapter 1

Introduction

Along with the development of the world in this era of globalization, it cannot be denied that various fields are growing and developing rapidly simultaneously. Starting from the business, economic, social, political and other fields. Everyone involved in it also requires high mobility. This growth also makes various types of technology develop and makes it easier for humans to carry out their daily activities. Technology has a large role in facilitating the running of an activity. One of them is the internet that comes from daily activities to education and business activities. The internet is widely used because it is global and its use is able to reach widely.

Currently the development of information technology is very complex and gives a lot of impact on human life, including the business world on the internet called E-Commerce, which is a way to shop or trade online that uses the internet where there are websites that provide get and delivery. In trade, it takes various efforts to introduce products to society at large and this effort requires high costs. The opportunity given by E-Commerce is very beneficial because it saves time and there is not much capital needed to promote products. E-Commerce serves the sale of goods and services so that anyone can develop a business and compete by reducing operating costs.

In addition, business websites such as Lazada, Tokopedia and Bukalapak are the largest online stores in Indonesia. This website provides business opportunities and sells various types of products at more affordable prices than most stores. This website has a search engine that makes it easy for consumers to search for products, and directory features that are used as shopping catalogs.

To launch its marketing activities, these websites collaborate with several banking institutions and other companies so that consumers easily make payments. In addition, this online shopping website collaborates with major shipping agents in Indonesia to facilitate inspection of the shipping status of goods.

According to Turban, et al. (2015: 7) in 2002 a master of management, Peter Drucker predicted that e-commerce would affect how to do business very significantly. The current situation also illustrates that the world has embraced e-commerce in accordance with these predictions. To be able to reach consumers widely and be consumer-oriented, companies need to do a type of strategy called e-marketing.

This marketing strategy is a marketing strategy carried out by applying technology to meet consumer needs. E-marketing is the use of information technology in the process of creating, communicating, and conveying value to customers, and can also be used to maintain customer relationships for mutual benefit (Strauss and Ansary in Prasetya and So, 2014). The website used in this strategy is a site that contains information and product specifications that serve to provide information and also promote products to consumers.

Marketing a product has also taken advantage of a system commonly referred to as e-marketing. With the website, companies can more easily introduce and deliver information on a product. The company can also facilitate communication and increase trust in the company. (SWA, 2017) E-marketing will be important depending on the consumers of an industry. If the industry has consumers among young people or Y genes, this will be very important for improving their business. (SWA, 2015)

Companies need to modernize using e-marketing with the aim of increasing productivity and efficiency. Development of e-marketing can make commodities and products produced will be oriented to the interests of consumers. (Tribunnews, 2017)

It should be understood that e-marketing can occur due to a shift in marketplace that has changed to migrate to electronic marketplace. Internet is growing very fast and is definitely influencing the running of businesses in the world that can reach up to billions of consumers worldwide. (Chaffey and Smith 2008: 4)

Companies need to understand the needs of consumers to be able to understand consumers and know what is needed and desired by consumers. Companies must also be able to know what influences consumer purchasing decisions as an indicator of whether or not a marketing strategy is successful in the e-commerce market. The Indonesian e-commerce market from 2012 to 2016 increased by around 39%, the highest number among Southeast Asian countries and is predicted to continue to increase until next year. This has become one of the opportunities for business people. (SWA, 2016)

Based on data from Bolton Consulting Group (BCG), in 2013 quoted by BERITASATU, that the middle class in Indonesia had reached 74 million people and predicted in 2020, this number would increase to 141 million people or around 54% of the total population in Indonesia. Looking at this data, it is clear and certain that the market potential of E-Commerce in Indonesia is very large. With the rise of the middle class, people will not hesitate to consume their money to buy the various items they want.

The rapid growth of the E-Commerce market share in Indonesia cannot be doubted. With the number of internet users reaching 82 million people or around 30% of the total population in Indonesia, the E-Commerce market is a gold mine that is very tempting for some people who can see the potential in the future. This growth is supported by data from the Ministry of Communication and Information which states that the value of E-Commerce transactions in 2013 reached Rp130 ​​trillion. The following are the results from the initial research on online shopping at Indonesian E-Commerce:

 Figure 1.1 Research Results of Early Shopping in Indonesian E-Commerce Source: Researchers (2017)

If we see Indonesia as a vast archipelago country, E-Commerce is a market that has the potential to grow very large in Indonesia. In 2012, an E-Commerce company in Indonesia noted that 41% of their sales came from Jakarta, Indonesia.

According to Matthew Driver, president of MasterCard for the Southeast Asia region, Indonesia is one of the countries with the largest E-Commerce market growth in Asia-Pacific.

The following data shows the development of E-Commerce in Indonesia:

Figure 1.3 Data on E-Commerce Sales Growth (2013-2016) Source: startupbisnis.com

Technology development is so high, making many ways for companies to reach the market and increase sales by utilizing strategies from the marketing mix.

E-marketing is one type of marketing that is done through internet media and according to data from www.apjii.or.id internet usage in Indonesia of 31.5% is used for trade and 26.1% is used for services. Companies must be able to identify their customers and be able to convince them to purchase products or services offered. If this can be done then it can be said that marketing is done

has succeeded in meeting marketing and business goals will be able to survive. (Bolos, Idemudia and Mai, 2016)

In carrying out a business activity, there is a service provided by a company. With the existence of services, it can become one of the companies' weapons to be able to survive in a business competition. (Amanah, Harahap and Lisnawati, 2017). In the e-commerce market, the services provided are known as E-service Quality. (Fitria, Rahma and Slamet, 2017). E-service Quality is a service provided through the internet or services provided online. Consumers can assess and feel the service provided by the company. Companies must pay attention to the level of service quality because it sells products not directly and easily which also affect consumers in making decisions to buy products. (Clemes, Gan and Zhag, 2014)

One strategy that can be used to increase sales is to have an effective and efficient marketing strategy. Marketing here plays a role in marketing products to be shorter and easier by utilizing internet facilities through websites, social media, email, blogs, and others. The advantage of e-marketing is that it can reduce information costs, able to create two-way communication and interaction and be able to overcome the limitations of space and time which makes it accessible anywhere and anytime and can be updated in real time. (Harianto and Iriani, 2014)

Based on high internet usage opportunities in Indonesia and expected to continue to grow, Indonesia is an e-commerce market which is the highest market in Southeast Asia. For this reason the writer wants to discuss the extent of e-commerce linkages with their influence with e-marketing, e-service quality on consumer purchasing decisions in Jakarta, Indonesia.

1.1 Research Questions

A good research questions will bring a good research design (Cabraal; 2014) which mean that these questions are really important in this research paper to define the particularly topic that has been through research process. Problems to be discussed in this research in Jakarta, Indonesia based on the background described can be mentioned as follows:

1. What is the influence of e-commerce in relation to e-marketing on purchasing decisions in Jakarta, Indonesia?

2. What is the influence of e-commerce in relation to e-service quality on purchasing decisions in Jakarta, Indonesia?

3. What is the influence of e commerce in relation to e-marketing and e-service quality on purchasing decisions in Jakarta, Indonesia?

1.2 Research Aims

This research is to know what the impact of e-commerce on e-marketing, e-service quality and purchase decision in Jakarta, Indonesia.

1. To find out the effect of e-commerce in relation to e-marketing on purchasing decisions in Jakarta, Indonesia

2. To determine the effect of e-commerce in relation to e-service quality on purchasing decisions in Jakarta, Indonesia

3. To determine the effect of e-marketing and e-service quality on purchasing decisions in Jakarta Indonesia.

1.3 Significance of Study

1.3.1 Academic Significance

This research is expected to provide knowledge in the development of e-commerce related to e-marketing and e-service quality on buying decisions. The results of this study are expected to be a reference and information for further research related to e-marketing, e-service quality, and also e-trust on purchasing decisions.

1.3.2 Practical Significance

The results of this study are expected to provide benefits so that it can be useful to increase knowledge and understanding of the study for readers. It is also hoped that readers can implement the strategies implemented and be able to understand e-marketing as well as possible.

1.4 Research Limitation

The limitation of the results of this study is the lack of the number of respondents who participated in this survey, namely online users. Suggestion for future research is to analyze and compare the e-commerce impact in larger populations for online and non-online users in Indonesia.

1.5 Organization of this Research Report

1.5.1 Chapter 1 Introduction

In the research in this chapter, discuss the background of the case to be discussed, and contain the research question, then the research aims, the benefits or objectives of this research and the outline of the things that will be discussed in the following chapters.

1.5.2 Chapter 2 Literature Review

In the study in chapter 2, the literature review. This chapter will discuss the research outline that requires theories and concepts in the form of definitions, types or explanations related to the topics to be discussed, namely the influence of e-commerce in relation to e-marketing, e-service quality and purchasing decisions. These theories are obtained from various sources such as journals, books and articles that aim to explain the theory from research question in chapter 1.

1.5.3 Chapter 3 Research Methodology

In the third chapter, we will discuss what methodology will be used to answer questions in a research question. In chapter 3 this methodology will then be used as a data collection which will be discussed in Chapter 4 in the data analysis section. The methodology used for this study is the SERVQUAL and multiple regression methods.

1.5.4 Chapter 4 Data Analyse

In chapter 4 of this study contains data analysis that contains data collection and the results are in the form of reports that contain how much influence e-commerce on e-marketing, e-service quality on purchasing decisions that occur in Jakarta, Indonesia. This data is processed using SPSS software from the existing data based on the survey and interview questions that have been distributed in the form of questionnaires.

1.5.5 Chapter 5 Conclusion

In the last chapter, chapter 5 will contain conclusions that the results will be related to chapters 2 and 4. In this last chapter will be concluded answers from research questions, what shortcomings faced during data collection and work on this project take place and suggestions for research will be done in the future.

Chapter 2:

Concepts and Theory

2.1 Marketing Management

Definition of Marketing Management according to Kotler and Keller (2011: 14) Marketing Management as an art and science to choose a target market and achieve, maintain, and grow consumers by creating, delivering, and communicating profitable customer value.

Whereas according to Elliott Rundle-Thiele Waller (2014: 3), the formal definition of marketing is activity, regulating institutions or institutions, and the process of creating, communicating, conveying and exchanging offers that have value for consumers, clients, partners and the wider community in general.

If, according to Philip Kotler and Gary Armstrong (2016: 29), marketing management is more than other business functions, dealing with consumers. The simplest definition is marketing involving consumers and managing profitable relationships with consumers, by attracting new consumers who can benefit and safeguard and develop consumers today by giving satisfaction

Thus, it can be seen that the task of marketing management is not only to offer goods or services that are in accordance with the needs and desires of the market, set effective prices, communication and distribution to provide information, influence and serve the market but more than that. The task of marketing management is to influence the level, time and composition of requests to help companies achieve their goals.

2. 2. Marketing

According to Harris and Botten (2009: 5) marketing is a management process that is able to recognize, anticipate and give satisfaction to consumers to get profit for the company. Marketing requires a good and right planning process in order to be able to meet the goals of a company and it can be said that marketing is the main key to running a business or business.

In developing a business that aims to achieve predetermined goals, Kotler and Armstrong (2014: 5) argue that marketing is the main key. In running a business, the thing that must be considered is being able to provide good prices in the right place and also at the right time. With the marketing going well and precisely, a company can be close to consumers and able to meet consumer needs so as to provide satisfaction to consumers which has an impact on competition with competitors.

According to Kotler and Armstrong (2010: 29) marketing is a process for companies to create a value and also build relationships that aim to regain value from consumers. In this day and age, marketing cannot only be defined as "telling and selling" as in ancient times. Marketing must be able to meet the needs of consumers. As if the producer is able to understand the needs and desires of consumers, able to provide good prices, be able to distribute and promote these products effectively, the products or services offered can be sold easily. (Kotler & Armstrong, 2014: 27)

There are five marketing processes according to Kotler & Amstrong (2014: 27), namely:

1. Able to understand the market and the needs and desires of consumers

2. Design a marketing strategy that focuses on consumers

3. Applying an integrated marketing program that can convey values ​​to consumers.

4. Building a beneficial relationship with consumers and also able to provide satisfaction to consumers.

5. Get back the value from consumers to create profit and customer equity.

2. 3. Electronic Commerce (E-commerce)

According to Reid and Lorenz (2008: 3) with the existence of a global network such as the internet, the way people in the world to interact also evolves and changes from the way they share information to how to do business. The internet creates wider consumers and is able to share information, messages, products or even services. For some types of business, the internet is very important not only as a medium of communication but also as part of the operations carried out every day. The things that are included are e-commerce, communication, collaboration and training.

In the physical market, there are various types of communication media used to market an item or service in the buying process. If in the past marketing and sales were only done directly, the advent of the internet made the way of marketing also changed. Communication that takes place in e-commerce will be more easily delivered with a wide range through the internet. (Hollensen, 2014)

The presence of online communication is increasingly developing inter-world trade, a company can easily make sales in a country because of the smooth communication that makes it easy to monitor and run a business activity outside of other countries. Besides facilitating communication, the emergence of the internet also creates e-commerce. (Reid and Lorenz 2008: 3)

By utilizing the internet as a medium that is used, the internet has changed the way companies do business and this is one factor in how marketing and sales in a company can be said to be successful. (Dewi and Warmika, 2017). The internet appears and has changed how the world deals. Online media makes consumers able to choose and also influence in the process of buying and selling. (Stokes, 2013: 22). E-commerce exists as an intermediary for the process of buying and selling products, information and services using the internet and other online environments. (Kaur, Pathak and Kaur, 2015)

2. 4. E-marketing

2.4.1 Definition of E-marketing

Technological developments in communication make considerable changes in personal life and also at work. Technology changes the way people communicate, find information, and also shop. Technology also influences a company in marketing its products and services in a new way and also the way they do business with suppliers and distributors. (Harris and Botten, 2009: 146)

According to (Kaur, Pathak and Kaur, 2015) e-marketing is an element that "moves" dynamically following the development of technology which is one of the strategies in marketing and is a computerized activity and

connected to an environment consisting of networks. E-marketing is a way to market by optimizing digital channels in business. (Stokes, 2013: 20). So it can be concluded that e-marketing is a dynamic process that aims to market products and services to consumers who use technology, especially the internet, to be effective and sell more easily.

2.4.2 E-marketing objectives

E-marketing is an effective method because it can reach consumers in large numbers and is also able to reach consumers globally in a short time with funds that are not too large. (Dewi and Warmika, 2017)

According to (Kaur, Pathak and Kaur, 2015) e-marketing offers goods or services directly to consumers through various types of media. The main purpose of e-marketing is to build good and long-term relationships with consumers through activities carried out online, where the internet becomes an intermediary for the exchange of ideas, goods and services that can satisfy both parties namely companies and consumers. In addition to these main objectives, according to (Kaur, Pathak and Kaur, 2015) there are also several other objectives of e-marketing, namely:

a) Methods for being able to make the market more effective and able to meet the needs desired by consumers.

b) As a basis for conducting research related to natural characteristics such as demographics, preferences, existing consumer needs, also able to meet the potential needs of consumers.

c) Design the process so as to be able to provide strong communication that exists between the company and the client.

d) Identify quality customer service in the right way.

Other opinions are obtained from Chaffey and Smith (2008: 35) where

the main purpose of e-marketing is to get closer to consumers and save the value that consumers give by keeping consumers to increase sales in the future.

2.4.3 Dimensions of E-marketing

Reporting from research conducted by Selim there are 13 criteria that can be used to evaluate e-marketing. According to Selim in Prasetya and So, 2014 there were three criteria used in his research. The use of these three dimensions is also considered suitable for researching a company's website as an electronic marketing medium that contains product information as well as other information that can be used in making purchases through a website.

• Accessibility

Is the level of ability to access a website. In determining the accessibility of a website, the content contained in the website has an important role to determine the level of accessibility of a website. The ease of finding a website with search engines and being accessible to the public without having to register first and also be accessed efficiently without any time limit and other requirements are things that can be assessed from this accessibility dimension.

• UrrencyCurrency / timeliness

This is the level associated with various updates available on the website. Like a company that will provide the latest information needed by consumers and also information that is easy to understand. The company also provides information when the website was last updated.

CcAccuracy / credibility

How true and reliable is the information contained on the website. The material on the website is also assessed to fulfill this dimension. As a reference, there is a physical company that can be contacted to get information.

2. 5. E-service Quality

2.5.1 Definition of E-service Quality

E-service quality is a service provided by a company to consumers through internet media. (Al-dweeri, et al., 2017) e-service quality is now known as E-ServQual which is the latest development of e-service quality. E-service quality is the ability that a company must have to be able to provide services that are able to meet consumer desires and expectations (Connolly in Nasser, et al., 2017)

The difference between traditional service quality and e-service quality is that there is no seller (salesman) who serves buyers directly, creates two-way communication between sellers and buyers virtually, and buyers who do self-service. (Lee and Lin in Nasser, et al. 2015). E-service quality is not only as a benchmark in consumer purchasing decisions.

E-service quality is an important factor that is useful for developing good relationships with consumers. E-service quality is one of the processes to create more value in the future in order to maintain marketing in the long term and get value back from consumers. (Chong and Man, 2017)

Al-dweeri, et al. (2017) argues that e-service quality must make the purchasing process efficient and can meet the needs and expectations of consumers without causing problems that make it difficult for consumers to make purchases.

From the above understanding it can be concluded that e-service quality is a service provided by the company to maintain consumers and get value back through electronic media or the internet.

2.5.2 Dimensions of E-service Quality

E-service quality is an important factor that can be used to provide the best service to consumers and is also a good way to maintain relationships with consumers (Shien and Yazdanifard, 2014). According to Zavareh, et al. (2012) there are several dimensions that can be used to measure e-service quality. Some of these dimensions are efficiency, privacy / security, fulfillment / reliability, site aesthetic, responsiveness and ease of use. These dimensions are measured electronically and the services provided by the company are not in the form of proof but through internet media.

• Efficiency

Is the ability of the website that is used to be able to provide the right information and can help consumers in choosing the desired product with minimal effort. This efficiency dimension is subdivided into sub-dimensions, namely website updates and website information, website design, usability, and website navigation.

• Privacy / security

To make transactions via the internet, companies must first be able to build good relationships and build trust. This is because in the midst of developing electronic commerce, there is a feeling of insecurity when making transactions via the internet.

• Fulfilment / reliability

Can be measured based on the timeliness of the website in providing responses to consumers and also reliability or to the response to act immediately if there are several types of problems.

• Site aesthetic

Is one type of dimension that is tangible or visible because it is able to show facilities physically and also describe the company. The appearance of a good and attractive website can make consumers interested and visit the website later on.

• Rensponsivness

Unlike the service quality in general, e-service quality is a broader concept through digital media. If consumers have questions or problems, then the response is needed by consumers to be able to shop and make payments.

• Ease of use

Because the use of the website as a basis for running sales, it is necessary to make spending easier. This is intended to provide convenience to consumers.

2. 6. Purchase Decisions

2.6.1 Definition of Purchase Decisions

According to Harris and Botten (2009: 59) consumers do not buy for a product, but for the value contained in the product. Online buying behavior is the process of buying products or services through the internet which consists of five decision making processes. (Baubonienė and Gulevičiūtė, 2015)

The process of purchasing decisions is the process of selecting decisions on several products carried out by end consumers for consumption that is done directly by themselves. (Kotler and Amstrong, 2014: 158) There are several factors that support consumers to make online purchases, but there are also several factors that make consumers reluctant to make purchases online. (Cho and Sagynov, 2015)

Many things need to be considered to succeed in marketing, especially the right marketing to potential consumers. In this era, where there are many potential customers who use the internet as a tool to facilitate their daily activities. Therefore, the right techniques are needed to be able to do marketing to the right consumers. (Vinerean, 2013)

2.6.2 Purchase Decision Process

The process of purchasing decisions by consumers according to Kotler and Armstrong (2014: 176-178) consists of five processes, namely need recognition, information search, alternative evaluation, purchasing decisions, and post-purchase behavior.

1. Introduction to needs

The decision making process begins with the introduction of needs that arise when consumers face a problem or need. The introduction of these needs can be influenced by various factors, namely internal stimulus that comes from within the consumer and external stimulus that comes from outside the consumer.

2. Search for information

Consumers who feel they want to fulfill their needs will begin to find information. Information retrieval can be obtained through several sources. Can be from personal sources (family, friends, neighbors) can also be from commercial sources (advertisements, promotions, sales people) or can also be obtained from public information (consumer reviews, mass media, online searches). The more information that consumers have about a product, the more knowledge and awareness of consumers about a product.

3. Alternative evaluation

Because the information that is already owned by consumers, it makes consumers have several alternative choices in buying products. Alternative evaluation is the process of evaluating the choice of products and brands and choosing them according to the conditions desired by consumers.

4. Purchase decision

After determining the choices of various alternatives available, the consumer will continue the next process, which is to take action to purchase the product. Where in this purchase decision there are two factors that influence, namely the attitude of others and also the unexpected situation factors.

5. Post-purchase behavior

After consumers decide to buy a product, the process doesn't just stop there. After buying a product there are two possibilities that occur to consumers, namely satisfaction or dissatisfaction. This depends on the product performance that is expected by consumers whether according to expectations. If the product exceeds expectations consumers will feel very satisfied, but if the opposite, the consumer will feel disappointed. And customer satisfaction is very important to be able to build long-term customer.

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