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CHAPTER I

INTRODUCTION

1.1 Background

Word-of-mouth or basically known as WOM in short has been generally recognized

as a powerful communication tool due to its ability of influencing people’s buying

behaviors (Sorensen, 2010). As WOM has been widely known as one of the most

influential resources to transmit information, thus, emergence in information

technology and online social networks have changed the process on how the

information itself is being transmitted (Jalilvand and Samiei, 2012).

WOM can come in any aspects. It might happen when a person is talking about

certain product to another person directly (traditional word-of-mouth) or

electronically. Electronic Word-of-mouth or mostly known as e-WOM refers to both

positive and negative statements that are made by consumers who have made actual

purchases of certain products and delivered the information of their purchasing

experiences via the Internet (Hennig-Thurau et al., 2004).

In the previous years, companies used traditional marketing communications such as

television, radio, or magazine advertising to promote the products or services and do

the activities of word of mouth. However, nowadays, many companies have been

applying e-WOM to boost the market’s attentions, especially the new businesses that

are still not familiar in the consumers’ ears. Instant messaging such as Blackberry

Messenger (BBM), LINE, and Whatsapp are used to deliver instant messages in

 

 

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faster and easier way. The attentions that have grown from sending messages via

those instant messages receive faster responses from the consumers as people are

now more ‘attached’ to them.

In Indonesia, there are several brands that have used electronic word-of-mouth to

promote their products that include one of the most popular fast food restaurants,

KFC. Facing a vast competition with other fast food restaurants such as Burger King

and McDonalds in Indonesia, KFC tends to boost its popularity by using the e-WOM

facilities such as Twitter. Mario Ledres, the General Manager of Fast Food Indonesia

or FFI in short, stated that he was afraid of the local fast food brands were in a strong

competition that ate up the market share for KFC. However, in order to cut the costly

television and billboard advertisements, e-WOM has been used to make this a

successful promotion that could reach the consumers of the market.

Figure 1.1 KFC Indonesia Official Twitter Account

Source: Twitter

 

 

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As many consumers are now confronted with many advertisements, the messages

being delivered to them seem so blur with a lot of similarities. Hence, some of the

consumers feel confused especially with many promotions and information are being

shown to them. With the help of e-WOM, it will help to eliminate those uncertainties

and blurred information, as one is able to know which information is real and

reliable.

1.1.1 e-WOM in Technology Industries

Since the information technologies have been highly developed and innovated,

spreading information has been much faster than it used to be in the past (Chen,

2011). Technologies such as Blackberry, iPhone, Androids have been spreading their

wings to compete with one another and racing to bring innovation to the markets.

In this research, the author investigated about how e-WOM could have had

significant impact on the repurchase intention and the brand image for Blackberry

smartphones in Jakarta, Indonesia.

For years, Blackberry has expanded its popularity across the globe that is among

individuals from different ages and backgrounds. Originally, Blackberry

smartphones were designed by a Canadian company, Research in Motion in 1999.

Initially, the target markets for Blackberry were the business people as all the

applications were intended for them to use, such as push-emails, instant messaging,

and basic business facilities that were easier and faster to use. However, it seems that

Blackberry is mostly popular among the younger generations nowadays as we can

 

 

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see that many of these young consumers are busy typing their Blackberry

smartphones.

In mid 2000s, which approximately around year 2004, the market for Blackberry

smartphones entered to cities in Indonesia and the craze for them had started

especially in Jakarta (www.zdnet.com accessed on October 28, 2013). It was no

more a surprise to see young teenagers or students of Generation Y during that time

had owned at least one Blackberry smartphone and as a result, there are more and

more demands of Blackberry smartphones for these young consumers rather than the

businesspeople that once were predicted to be the targeted users (www.zdnet.com

accessed on October 28, 2013).

According to TechinAsia (Lukman, 2013), Blackberry has now reached

approximately of 15 million users in Indonesia, as of July 2013. It means that these

15 million users in Indonesia have made up more than 18% of Blackberry’s 80

million users in worldwide (Lukman, 2013). Based on personal observations, what

makes Blackberry so popular is that it is user friendly, which means that the

applications and facilities are easy to be used even for the elder users.

Having the feature of instant messaging, which are known as Blackberry Messenger

(BBM), it was one of the greatest ‘inventions’ at that time. This BBM application

makes communications seem easier and faster, and BBM has the features of making

groups for chatting and sending broadcast messages. The Blackberry users could

receive a lot of information from these broadcast messages, even though not all of

 

 

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them are real or considered as hoax, but still the fun of broadcasting the messages

seems very contagious to some people.

Figure 1.2 Cotton Ink Company Uses BBM as Social Media for Advertising New Clothing

Collections

BBM allows users to chat and communicate with one another that also have the

Blackberry smartphones devices. Users can chat with one another either individually

(personal message), in group, or creating conference chat. Furthermore, receiving

and sending pictures, sending voice notes, and saving photos are also applicable in

this BBM application.

Focusing on the success of BBM application, it is one of e-WOM communication

tools to share information with other people. Mentioned earlier, in the blackberry

messenger, there is a feature that is known as broadcasting message. Creating or

 

 

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sending the broadcast message seems like a new feature of “SMS Blast” with

cheaper, faster, and easier version. With just one click of selecting the “all contacts”

box, the sender could just send the message in one go to all of his contacts in the

blackberry messenger. This feature is very booming and sometimes the information

that is received might not be the authentic one or mostly known as hoax issues.

Many BBM users make use of this friendly feature to send information, whether it is

for business use or randomly sending information for personal fun and sharing such

as greeting the families and friends on certain occasions (New Year, Christmas, Eid

Mubarak, and birthdays), forwarding jokes and other silly stuffs, the latest news and

information, as well as important warnings and awareness for example disaster or

people who need helps. This is considered as e-WOM as it uses technology to expose

information to the users around the globe and create their attentions to that sources.

Once the user has received the message, he or she could have the intention to send

the message to another users and somehow it is like a message chain that is not

stoppable and keeps on continuing and reaching to many users around the world.

According to the Seventy Nine PR, it was stated that Blackberry Messenger is a

marketing tool for business and most effective and important marketing strategy in

today’s technology industries. With the use of BBM, the marketers are able to

promote any advertisement either by sending broadcast messages or displaying any

products available to be put on the display picture of their BBM profile. Writing

personal status is also available in the profiles and every update will come out on the

recent updates. This recent update tends to give high awareness for the users to any

 

 

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individuals to know if their friends have changed their profile pictures or personal

status and sometimes both at the same time.

What makes this BBM so effective for electronic word-of-mouth then? Well,

marketers do not need to spend any penny to send a single or multiple messages at

one time. To keep this in mind, BBM helps to expose new or current information for

marketers with cheaper, faster, and easier access, rather than just paying advertising

agencies to promote their products and it costs more to do that. As a result, this kind

of e-WOM really gives a satisfaction for the marketers to introduce new and current

products to the public.

1.1.2 Social Media

E-WOM communications can take places in certain ways such as by the ease of

using social media. Nowadays, social media has become one of the most effective

tools to deliver messages and information and its popularity has increased

dramatically over the past few years (Pradiptarini, 2011). Customers are able to post

their reviews and comments as well as feedbacks about their purchasing experiences.

These reviews are indeed important for both the company and the competitors as

they help to identify the strengths and weaknesses of the products that they have

sold.

According to Kaplan and Haenlein (2010), we cannot understand social media

without first knowing the definition of Web 2.0, in which it is referring to a new term

that people use the World Wide Web (www.). “It is more a matter of what people do

with the technology than the technology itself, thus they are not just retrieving

 

 

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information, but learn on how to create and consume it by adding values to

websites” (Campbell et al., 2011).

As a result of users adding values to the nowadays website, there are many examples

of social media that are considered as e-WOM communication tools such as

Facebook, Twitter, Foursquare, and also the booming new comers, Instagram and

Path. These social media are not only well known as in the form of entertainment but

also as effective communication mediums that are influenced by the quality of

messages and contents, the involvement from respective companies, as well as

marketing platforms that are highly associated with them (Pradiptarini, 2011).

When people are sharing information in social media, the flow of information to

reach to another person is way faster than using the traditional marketing

communications. Furthermore, Blackberry smartphones tend to give easy access to

these social media and sharing and exposing medias or news are very comfortable

and user friendly.

In Blackberry smartphones, users can download Facebook, Twitter, and Foursquare

for free, yes; no charge is taken to gain these social media applications. With this

easy shortcut of social media, users are able to share information faster and easier,

and more importantly, they could upload the pictures and tag the places directly from

the Blackberry smartphones.

1.1.3 Generation Y

Young consumers today have many options to choose when they need to decide on

buying products and services. These young consumers are in the Generation Y who

 

 

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is mostly known as the ‘now’ generation or echo-boomers (Mirpuri and Narwani,

2012).

According to the Australian Bureau of Statistics (ABS) (McCrindle, n.d.), the

Generation Y was merely born in the year of 1982 to 2000. This means that the

average of young consumers in 2013 would be between the ages of 13 to 31 years

old.

Figure 1.3 Description of Generation According to ABS Census

Source: ABS Census

According to Sensus Penduduk, there are more than 42,000,000 people in the

Generation Y in Indonesia with the total of Indonesian’s population, which are

approximately there will be more than 250,000,000 people in 2013, with the

population growing by 1.49%.

 

 

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Figure 1.4 Indonesia Populations According to Age Group and Gender

Source: Sensus Penduduk

1.2 Problem Statement

Technologies are improving from time-to-time, and yet they are more advanced than

we have already known. Blackberry smartphones have strong competitors such as

iPhone from Apple, and Androids, in which their products keep on innovating and

improving.

Relating to the problem and issues that Blackberry has faced, an effective of

electronic word-of-mouth would be useful to re-capture Blackberry’s brand image

and boost its sales that leads to repurchase intentions of the consumers. Younger

generations (Generation Y) in Jakarta seem to be the main target in this research as

they play an important role in giving information on how to create the brand image

of Blackberry in order for it to increase its popularity again. They tend to spend more

on their gadgets rather than the elder generations or business people. Teenagers in

Jakarta seem to know more information quickly from their smartphones or any other

technology gadget that they have and they can be the one who observe the

development of certain products or services.

 

 

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From the data collected by Financial Post (2013), due to lacking of applications and

entertainments from the competitors, the demands of Blackberry have been slopping

down and its market share has declined more than 33% in market share, According

to Financial Post (2013), for the category of smartphone sales, mainly are dominated

by Samsung and Apple that have continued to rise to boost the market share. Both

Samsung and Apple have been innovating and creating entertainments that attract all

users especially the younger generations, with advanced applications that create

awareness to them.

This research is a replication from the original journal by Mohammad Reza Jalilvand

and Neda Samiei titled “The effect of electronic word of mouth on brand image and

purchase intention – empirical study in the automobile industry in Iran.” The current

research is titled “The effect of electronic word of mouth on repurchase intention

moderated by brand image to Generation Y – empirical study in the technology

industry in Jakarta”.

1.3 Scope

In this research, the author has investigated about how e-WOM could affect the

repurchase intention and how e-WOM affected the brand image that leads to

repurchase intention. The survey for this research was conducted by giving out

questionnaires that were in offline form and the targeted respondents who live in

Jakarta areas.

 

 

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The author expects to distribute questionnaires to the targeted respondents who are in

the Generation Y, which is from 18 to 31 years old. In order to prevent any bias

information, the author only distributed the questionnaires to those respondents who

are using Blackberry smartphones and have the experiences. The purpose of

restricting the respondents is to gain accuracy on the results from all the targeted

respondents and eliminate any bias from them.

1.4 Aims and Benefits

This section covers up the perspectives of aims and benefits that can be derived by

measuring the e-WOM among consumers towards repurchase intention and e-WOM

among consumers that affects the products’ brand images that will lead to repurchase

intention.

By conducting this research, there are several aims that the author would like to

cover such as follow:

1. To explore the impact of e-WOM communications on repurchase intentions for

Blackberry on the younger consumers (Generation Y).

2. To know whether e-WOM will affect the brand image of Blackberry that leads to

repurchase intention on the young consumers.

3. To investigate the importance of e-WOM towards the Generation Y in Jakarta.

4. To give solutions for Blackberry to uplift its brand image.

5. To provide references for academic community towards better understanding

about e-WOM, brand image, and repurchase intention.

 

 

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Based on the aims stated earlier, the author concluded that there are benefits that can

be gained from this research. By conducting this research, the author is able to

acknowledge whether this electronic word-of-mouth could be very important for the

Generation Y in Jakarta to look for information and other needs. Besides that, by

exploring and conducting research, the author will also know and understand

whether e-WOM could bring a successful impact towards the brand image of

Blackberry that leads to repurchase intention or whether it will affect directly to the

repurchase intention of the Generation Y itself.

1.5 Research Questions

From the objectives that the author has stated earlier, there are several research

questions that the author would like to conduct the research such as follow:

RQ1: Does electronic Word-of-mouth (e-WOM) have a significant impact on the

repurchase intention for Blackberry smartphones?

RQ2: Does electronic word-of-mouth (e-WOM) on consumers have a significant

influence to repurchase intention of consumers, moderated by brand image of

Blackberry smartphones?

1.6 Structure

CHAPTER I. INTRODUCTION

On this chapter, it describes the background of the word-of-mouth (WOM) and

electronic word-of-mouth (e-WOM), the problem statement of the issues, importance

of the topic, the scopes and limits of this research, as well as the aims that need to be

achieved and benefits that will be gained from it.

 

 

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CHAPTER II. THEORETICAL FOUNDATION

Theoretical foundation explains about the fundamental theories such as the factors

that influence e-WOM effectiveness, facts and findings, variable definitions and

relationships, and also there will be other relevant or additional information that are

reliable and applicable for this research.

CHAPTER III. RESEARCH METHODOLOGY

In this chapter, there will be explanations about the methodology that has been used

from both the original study as well as the one that the author used, provide with

adjustments and improvements from the author while the author is conducting the

research, and also to explain about the research questionnaire and sampling methods.

CHAPTER IV. RESULT AND ANALYSIS

Results and analysis will be displayed in this chapter with all the measure variables

used throughout the factor analysis, and also describe the findings from the issues

that have been mentioned and provide full description to the relation of this research.

 

 

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CHAPTER V. CONCLUSION AND RECOMMENDATION

This chapter summarizes the relevant results and analysis of the research findings

and identifies the conclusions that can be obtained from the results. In addition, this

chapter also highlights useful information and suggestion that can be recommended

as well as the results of analyses that provides fundamental explanation for the use of

this and future marketing research.