ANALYSIS ON PRICE AND QUALITY OF METAL INDUSTRIES

TOWARD CUSTOMER DECISION

(A STUDY CASE OF BAKRIE METAL INDSUSTRIES IN BEKASI,

JAWA BARAT)

BY
PANDU HARDIANSYAH
ID NO. 014201200105

CHAPTER I
INTRODUCTION
I.1 Background of the study
PT Bakrie Metal Industries, is a holding company that manages operations of PT Bakrie &
Brothers in the field of manufacturing metal / steel, consisting of PT Bakrie Pipe Industries,
PT Bakrie Metal Industries - Bekasi Fabrication Unit , PT South East Asia Pipe Industries
and PT Bakrie Construction.
An extensive international client base, a strong domestic presence and an unquestioned
commitment to quality, are trademark of the company's commercial footprint. This has
enabled success in the production of a broad mix including steel pipes and fabrications, work
class engineering and construction services, corrugated steel, building material and cast iron
products. We have continuously upgraded its production capacity and improved quality
across all business units in order to conform to international standards and effectively
compete in the global market.
PT. Bakrie Metal Industries is a company that has been certified for quality management &
ISO 9001:2008. The production capacity of PT. Bakrie Metal Industries is 19.200 ton/year,
consisting of Nestable Flange, Multi Plate, Guard Rail, Bridge Deck, Steel Fabrication and
Steel Bridge. The corrugated steel products of PT. Bakrie Metal Industries have the SNI
quality standard. For galvanizing process, its capacity reaches 12.000 ton/year.
Beside the good quality, price is the problem why people or buyer still considering to
purchase bakrie product. Even though good price provide good quality, its be worth if you
sell with maybe little bit expensive than others but you provide high quality. Thats what
bakrie did or implemented now. They have a license to prove it and also bakrie is a big name
where has been long time move in metal sectors. So, actually people know that as well but
there is some problem affected purchasing decision in metal market like impact of the
inflation, material and competitor. Bakrie itself have many corporation and loyal customer
like Dinas PU (pekerja umum) for bridge and road, PT. Jasa marga , Plantantion (Smart tbk,
PT.Asian Agri Group, Salim Ivo group and Bakrie Sumatera Plantantion) and then for Mines

(PT.freeport, KPC Kalimantan) there are several company whos using Bakrie Metal
product.
According to the theory of price (TOP) Xie and Shugan (2000: 230) reveals that consumers
are more sensitive in new price comparison than a long time consumers do purchase
transaction. This sometimes creates the opportunity to differentiate prices for a new entrant is
associated with a very price sensitive.
And according to the theory of quality (TOQ) Feigenbaum (1991) the quality of the overall
characteristics of the products and services that include marketing, engineering,
manufacturing, and maintenance, in which products and services are in use will be in
accordance with the needs and expectations of customers.

I.2 World-Class Marketing

Bakrie Metal Industries export-oriented marketing strategy has in recent years yielded results
far exceeding the targets set by the Group. With buyers in several countries worldwide, it is
clear that the marketing arm of Bakrie Metal Industries has succeeded in communicating a
world-class level of quality and competence that is recognized by our overseas customers.
Our immediate aim is to achieve a balance that will stimulate further growth and hedge the
Group against currency and market fluctuations.

I.3 Human Resources

Bakrie Metal Industries derive strength from the inspiration and dedication of our people and
we are motivated by their drive and persistence. A rich multicultural background is what
forms the foundation of our corporate culture; and our ability to continuously upgrade and
periodically renew our management to a cooperative environment that encourages creativity
and innovation. This is in turn is reflected in our superior products and services.
Our dedicated employees work together in a team oriented environment that honors
dynamism and personal initiatives. Furthermore, a clear and well-articulated productivity
measurement system focused on self-assessment has created a workplace where a perpetual
quest for excellence is the rule rather than the exception.

I.4 Advance Technology

Bakrie Metal Industries is a large consumer of modern technology. Each of our production
facilities is equipped with state-of-art manufacturing equipment, computerized QC systems,
and automated processes in compliance with international standards. In order to remain at the
top of our respective industries-producing and delivering only the most modern products and
services, Bakrie Metal Industries is always looking to integrate technological developments
that can serve to increase capacity, minimize production time, improve product quality thus
creating added value.

I.5 Price List and Quality Certificate Of Bakrie Metal Products

Figure 1.1: Price List Nestable Flange

Figure 1.2: Price List Multi Plate Pipe

Figure 1.3: Price List Guard Rail

Figure 1.4: Quality Certificate ISO 9001:2008

I.6 Problem Identification
Bakrie Metal industries (BMI) are the one and only located in Bekasi, jawa barat. There are
no other branches around Indonesia. But in bekasi there is Bakrie Pipe Industries (BPI) also
and its BMI friends or son branch. BPI focused on pipe production and BMI focused on
metal production activities. I think the problem what BMI against now are like appear new
competitor and company image. And then talking about Bakrie competitors like PT.Union
Metal, PT.Metal Corfix Indonesia, PT.Metal Stamping and etc. Actually Bakrie was lead
metal market in Indonesia for a long time until now them maybe as an alternative choice for

customer decision. And also Inflation of course gives big impact to this company such as up
or down the currency in Indonesia. Value of Rupiah goes down and dollar increase, if the
price of materials increase of course cost production will increase. And customer will
considering purchasing the product, but insensitive customer never looking for the price as
long as that company provide high quality and different for sensitive customer they very
selective to purchase a product depends on their budget or money.
The high price of materials also following by that inflation, but bakrie metal still use standard
material to create their product. They never change the ingredients or deduct the component
to get high profit. They still commitment anything should be worth it, we sell high price
because we have good quality. Sometimes people need a cheaper price to get more profit,
even though they didnt know it does will inflict many people up there. Bakrie wont lies or
think for himself, good price have good quality.
Also in this research, researcher would like to find out the analysis on price on quality toward
customer decision through inflation, materials and competitor in Indonesia.
Based on the statement above, the title of this research is Analysis on price and quality of
metal industries toward customer decision in Bekasi

I.7 Statement of Problem

Specifically, this study aims to answer the following question:
1. Does Inflation have partial significant relationship toward Purchasing Decision in
Bakrie Metal Industries?
2. Does Material have partial significant relationship toward Purchasing Decision in
Bakrie Metal Industries?
3. Does Competitor have partial significant relationship toward Purchasing Decision in
Bakrie Metal Industries?
4. Does Inflation, Material and Competitor have simultaneous relationship toward
Purchasing Decision in Bakrie Metal Industries?

I.8 Research Objectives

Based on the preceding research questions, the research objectives of the study can be translated
as follows:
1. To find out that Inflation have partial significant relationship toward Purchasing
Decision in Bakrie Metal Industries.
2. To find out that Material have partial significant relationship toward Purchasing
Decision in Bakrie Metal Industries.
3. To find out that Competitor have partial significant relationship toward Purchasing
Decision in Bakrie Metal Industries.
4. To find out that Inflation, Material and Competitor simultaneous relationship toward
Purchasing Decision in Bakrie Metal Industries.

I.9 Significance of study

Through this research hopefully could expand knowledge, information, and suggestion for:
1. Bakrie Metal Industries: The output of the research would become reference for BMI to
keep their performance and implementation that good price good quality. Compete any
competitor in field and ensure the people to buy the product.
2. Government: As reference for Central government, Bekasi , and West Java government to
put more attention with local product and gain better ideas through this research to solve
the Metal material market problem in Indonesia.
3. Researcher: To find out how strong brand quality of PT.Bakrie Metal with PT. Union
Metal and PT.Metal Corfix Indonesia product in around Indonesia and gain more
understanding on brand prices and Perceived quality also their impact on the consumer
purchasing decision.

4. The Future Researcher: The output of the research would become a baseline and
additional knowledge to enhance the needs of people who would do future research about
the Brand Prices and Brand Quality and their impact on the purchasing decision
5. The University: to increase the literatures and studies in field of Brand Price and Quality
in Purchasing decision.

I.10 Definition of Terms

Some terms used in this research are as follows according to Cambridge Advanced
Learners Dictionary (2008):
1. Brand: a type of product made by a particular company.
2. Brand Equity: the set of brand assets and liabilities linked to the brand its name and
symbols that add value to, or subtract value form, a product or service.
3. Brand Loyalty: the extent to which people are loyal to a brand.
4. Competitor: a person, team, or company that is competing against others: Their prices are
better than any of their competitors. How many competitors took part in the race?
5. Industries: the companies and activities involved in the process of producing goods for
sale, especially in a factory or special area.
6. Inflation: a general, continuous increase in prices: high/low inflation the rate of inflation
7. Loyalty: the quality of being loyal.
8. Material: a physical substance that things can be made from: building materials, such as
stone Crude oil is used as the raw (= basic) material for making plastics.
9. Metal: a chemical element, such as iron or gold, or a mixture of such elements, such as
steel, that is generally hard and strong, and through which electricity and heat.

10. Perceive: to come to an opinion about something, or have a belief about something.
11. Perceived Quality: the extent to which a brand is considered to provide good quality
product.
12. Price: the amount of money for which something is sold.
13. Quality: a characteristic or feature of someone or something.

I.11

Scope and Limitation

Scope
The Study is conducted to Analysis on price and Quality of Metal Industries towards
Purchasing Decision of Metal. A case study of Metal product in Bekasi, West Java).
Limitation
This Study is focused on Indonesian citizen in Bekasi, West Java. Questionnaires are distributed
to 20 Metal buyers in Indonesia. The Study will limit on Metal product and this Study only
analyzes the impact of this Price and Quality toward purchasing decision (inflation, material and
competitor) for Bakrie Metal Industries.

CHAPTER II
Literature Review
2.0

Price and Quality Theory

The Price Theory Initiative supports innovative research that examines behavior through the lens
of markets, prices, and incentives. Programs prepare young scholars to work creatively in this
productive vein. Faculty research explores topics such as education, marriage, crime and
corruption, addiction, health decisions, and political bias and ideological segregation in the
media. An important strand of the initiative uses field experiments to understand economic
behavior by collecting data in natural settings. Graduate students working with the program also
study voting behavior and the impact of social norms on environmental behavior.
Chicago Price Theory holds the idea that economic tools provide a powerful analysis that can

explain what is going on in the world; the range of topics is diverse and virtually limitless.
Steven Levitt, Director
Quality theory, according to Josep Juran means that a product meets customer needs leading to
customer satisfaction, and quality also means all the activities in which a business engages in to

ensure that the product meets customer needs. You can think of this second aspect of quality as
quality control - ensuring a quality manufacturing process.

2.1

Inflation

In economics, inflation is a sustained increase in the general price level of goods and services in
an economy over a period of time. When the general price level rises, each unit of currency buys
fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power
per unit of money a loss of real value in the medium of exchange and unit of account within the
economy. A chief measure of price inflation is the inflation rate, the annualized percentage
change in a general price index (normally the consumer price index) over time.
Inflation affects an economy in various ways, both positive and negative. Negative effects of
inflation include an increase in the opportunity cost of holding money, uncertainty over future
inflation which may discourage investment and savings, and if inflation were rapid enough,
shortages of goods as consumers begin hoarding out of concern that prices will increase in the
future. Positive effects include ensuring that central banks can adjust real interest rates (to
mitigate recessions) and encouraging investment in non-monetary capital projects.

2.1.1 Inflation Relationship toward Customer Decision

There are different schools of thought as to what causes inflation. Most can be divided into two
broad areas: quality theories of inflation, and quantity theories of inflation. Many theories of
inflation combine the two. The quality theory of inflation rests on the expectation of a buyer
accepting currency to be able to exchange that currency at a later time for goods that are
desirable as a buyer. The quantity theory of inflation rests on the equation of the money supply,
its velocity, and exchanges. Adam Smith and David Hume proposed a quantity theory of
inflation for money, and a quality theory of inflation for production. Keynesian economic theory
proposes that money is transparent to real forces in the economy, and that visible inflation is the
result of pressures in the economy expressing themselves in prices. Customer will considering to
purchase a goods based on the global economic, value of rupiah decrease and other side value of
dollar increase its make many company will increase their product price because the material

cost maybe import from Europe or US so expensive meanwhile the product price actually not too
expensive in market. The company of course wont loss, and the other side as a customer looking
for this very carefully to purchase a product. They prefer to choose the cheaper one than the
product they usually buy.
There are three major types of inflation, as part of what Robert J. Gordon calls the "triangle
model":
1. Demands pull inflation: inflation from high demand for goods and
low unemployment.
2. Cost push inflation: presently termed "supply shock inflation," from
an event such as a sudden decrease in the supply of oil, which would
increase oil prices. Producers for whom oil is a part of their costs could
then pass this on to consumers in the form of increased prices.
3. Built-in inflation: induced by adaptive expectations, often linked to
the "price/wage spiral" because it involves workers trying to keep their
wages up with prices and then employers passing higher costs on to
consumers as higher prices as part of a "vicious circle." Built-in
inflation reflects events in the past, and so might be seen as hangover
inflation.

2.1.2 Materials
The material or materials are substances or objects from which something can be made of it, or
the stuff it takes to make something. The material is sometimes used to refer to clothing or fabric.
The material is an input in the production. They often are the raw materials which have not
been processed, but on occasion have been processed before being used for further production
processes. Generally, in a society of advanced technology, materials are the ingredients that
consumers haven't finished. Some examples are paper, silk and iron seed.

Material engineering is the kind of material that is widely used in process engineering
and industry. Engineering materials are grouped into 6 groups, there are:
1.
2.
3.
4.
5.
6.

Metal: steel, cast iron, titanium, metal alloys, etc.

Polietilan: polymer, polypropylene, polycarbonate, etc.
Rubber: isoprene, neoprene, natural rubber, etc.
Glass: glass of soda, silica glass, borosilicate glass
Ceramics: alumina, Silicon nitride, silicon carbide, etc.
Hybrid: composite, foam, sandwich

2.1.3 Material Relationship toward Customer Decision

Choosing a Material is the important one before we buy a product, a good material of course will
make a good product. Moreover for manufacturing product component for build a house, college,
bridge, road and etc. its very important to select what kind type or specs we need to build a
building. Not all material suitable for any construction, they are having strength and weaknesses
depend on for you building condition. People should know well about the material before build
it, good customers know what kind product or material they need.
For example: How to choose a good and light steel true
What is the brand used to be seen? If the manufacturer of the well-known or less known for
brands usually affects the quality of the light steel. Held like where the rate of elasticity is neither
too supple nor too harsh? Mild steel which is nice not too hard and not too flexible.
See how its thickness? for standard thickness: 0.75 mm for mild steel which is nice for sure in
each stem there is production date stamp and stamp the SNI (standard National Indonesia) buy
lest not there licenses well
Because we cannot identify whether the correct light steel thickness 0.75 0.65 or if there is any
right rod in that stamp we are not hard-hard-to measure the thickness of the steel with micro
meter gauges.

Ask the right kind of mild steel because there are 2 types of lightweight steel Galvanize and
Zincalume steel which is yet to be great are the best composition because Zincalume with a mix
of 55% aluminum 43.5% zinc and 1% is silicon.

2.1.4 Competitor
Merriam-Webster defines competition in business as "the effort of two or more parties acting
independently to secure the business of a third party by offering the most favorable terms". It was
described by Adam Smith in The Wealth of Nations (1776) and later economists as allocating
productive resources to their most highly valued uses and encouraging efficiency. Later
microeconomic theory distinguished between perfect competition and imperfect competition,
concluding that no system of resource allocation is more efficient than perfect competition.
Competition, according to the theory, causes commercial firms to develop new products, services
and technologies, which would give consumers greater selection and better products. The greater
selection typically causes lower prices for the products, compared to what the price would be if
there was no competition (monopoly) or little competition (oligopoly).
However, competition may also lead to wasted (duplicated) effort and to increased costs (and
prices) in some circumstances. For example, the intense competition for the small number of top
jobs in music and movie acting leads many aspiring musicians and actors to make substantial
investments in training which are not recouped, because only a fraction become successful.
Critics have also argued that competition can be destabilizing, particularly competition between
certain financial institutions. Experts have also questioned the constructiveness of competition in
profitability. It has been argued that competition-oriented objectives are counterproductive to
raising revenues and profitability because they limit the options of strategies for firms as well as
their ability to offer innovative responses to changes in the market. In addition, the strong desire
to defeat rival firms with competitive prices has the strong possibility of causing price wars.

2.1.5 Competitor Relation toward Customer Decision

Competitors are companies that produce or sell goods and services on the same or similar to the
products offered. The quality of human beings will increase due to healthy competition. Human
competitors are people who are consciously practicing and working hard to compete and it's

competition. Uncontrolled competition in a positive way will cause the split even war that
created a lot of good soul sacrifice as well as treasure. Many of the teachings and spiritual values
that teaches people to live peacefully and get along well without creating adverse violence, but
human history has been recorded, that man is the creator of human violence and have the
character to build and destroy. The competition has created the ego and self-resilience to survive
in this harsh life. Seems to identify competitors is a task of the company is simple. However the
scope of actual and potential competitors the company is actually much broader. The company is
more likely to be defeated by rivals or by emerging new technologies, compared by its
competitors at this time. In the world of competition, the main task of the entrepreneur is to hook
customers as much as possible, both new customers and old customers, and also how do I turn
off the pace of the development of competition. Thus, in running a competitive company
strategy, a businessman is expected to continually learn and monitor the movements of each
competitor.
Some things to note from the competition:
1.
2.
3.
4.
5.

The completeness of the quality, design and product form

The price offered
Distribution channels or branch locations are owned
Promotions that run
Plan activities ahead of competitors

2.1.5 Customer Decision Process Theory

In an early study of the buyer decision process literature, Frank Nicosia (Nicosia, F. 1966; pp 9
21) identified three types of buyer decision making models. They are the univariate model (He
called it the "simple scheme".) in which only one behavioral determinant was allowed in a
stimulus-response type of relationship; the multi-variate model (He called it a "reduced form
scheme".) in which numerous independent variables were assumed to determine buyer behavior;
and finally the "system of equations" model (He called it a "structural scheme" or "process
scheme".) in which numerous functional relations (either univariate or multi-variate) interact in a
complex system of equations. He concluded that only this third type of model is capable of
expressing the complexity of buyer decision processes. In chapter 7, Nicosia builds a
comprehensive model involving five modules. The encoding module includes determinants like
"attributes of the brand", "environmental factors", "consumer's attributes", "attributes of the

organization", and "attributes of the message". Other modules in the system include consumer
decoding, search and evaluation, decision, and consumption.

2.2 Theoretical Framework

INFLATION
(X1)

MATERIAL
S (X2)
COMPETITO
R (X3)

H1

H2

CUSTOMER
H3

DECISION
(Y)

H4

Figure 2.1: Theoretical Framework

Figure 2.1 illustrates the process of Price and Quality through Inflations, Materials and

Competitor on customer decision in Bekasi, west java. Price and Quality through Inflation,
Materials and Competitor acted as Independent Variable influences Customer Decision as
Dependent Variable.

2.3

Hypothesis

H1o

: There is no partial significant relation between Inflation and Customer Decision.

H1a

: There is a partial significant relation between Inflation and Customer Decision.

H2o

: There is no partial significant relation between Materials and Customer Decision.

H2a

: There is a partial significant relation between Materials and Customer Decision.

H3o

: There is no partial significant relation between Competitor and Customer Decision.

H3a

: There is a partial significant relation between Competitor and Customer Decision.

H4o

: There is no simultaneous relation between Inflation, Materials, and Competitor towards

Customer Decision.

H4a

: There is a simultaneous relation between Inflation, Materials, and Competitor towards

Customer Decision.

Chapter III
RESEARCH METHODOLOGY
3.1

Research Design

There are two methods in doing scientific research those are qualitative and quantitative
research. The differences between qualitative and quantitative research are the type of data,
research process, instrument in collecting data and the purpose of research.
1. Qualitative method usually gathered by observations, interviews or focus groups
and the data also is gathered from written documents and through case studies, it
less emphasis on counting numbers of people who think or behave in certain ways
and more emphasis on explaining why people think and behave in certain ways.
2. Quantitative method involves smaller numbers of respondents, Utilizes openended questionnaires or protocols, Best used to answer how and why questions.
(Civicpartnership.org ,2013)

Quantitative observations are made using scientific tools and measurements. The results can be
measured or counted, and any other person trying to quantitatively assess the same situation
should end up with the same results. In Quantitative method pieces of information that can be
counted mathematically, it usually gathered by surveys from large numbers of respondents
selected randomly and it is analyzed using statistical methods Best used to answer what, when

and who questions (Civicpartnership.org,2013). The researcher use quantitative method in

conducting research.
Multiple Regressions analysis is an extension of simple linear regression. It is used when we
want to predict the value of a variable based on the value of two or more other variables. The
variable to be predicted is called the dependent variable (or sometimes, the outcome, target or
criterion variable). The variables that used to predict the value of the dependent variable are
called the independent variables (or sometimes, the predictor, explanatory or regress or variables)
(statistics.laerd.com, 2013).
Therefore, this study uses the quantitative method with Factor Analysis and Multiple regressions
Analysis to answer the research questions.

3.2

Research Framework

The main topic of this research is Analysis on Price and Quality of Metal Industries toward
customer decision. As described in Chapter 2, Price and Quality is the most valuable asset that a
company has, and it creates value for customers and firms. Therefore, Inflation, materials and
competitor affect the purchase decision.
This research specifically analysis on price and quality of metal industries, in bekasi. Before
conducting this research, the researcher had to collect data containing the total number of Metal
Industries Company directly from the 20 metal customers, in bekasi.
After collecting the data, the researcher directly proceeded to the problem identification. From
the data obtained, Bakrie Metal is already famous for a long time ago. This encouraged the
researchers curiosity to find out why it could happen. After reading some supporting passages
from journals and articles, it could be identified that price and quality affect the customer
purchase decision. Furthermore, the problem statement was constructed as the basic view of the
topic. To support the problem statement, theories and opinions are explored. All those findings

are expressed in Chapter 2 of Literature Review. This then brings benefits to the construction of
the questionnaires.
Questionnaires were checked for validity and reliability test. Pearson correlation matrix used to
measure the validity and Cronbach Alpha used to measure the reliability of the questionnaire.
Pearson correlation matrix will indicate the direction, strength, and significance of the bivariate
relationships among all the variables that were measured at an interval or ratio level (Sekaran
and Bougie, 2010, pp.321). Cronbach Alpha is a reliability coefficient that shows how well the
items in a set are positively correlated to one another (Sekaran and Bougie, 2010, pp.324).
Before being spread, the questionnaires went through the stage of Tryout. Twenty different
people were selected and gathered by the researcher to examine whether the statements in the
questionnaires were clear enough to understand. This stage is also intended to revise some
statements, so that every respondent will have the same perception towards them. After some
reviews and proof readings, the questionnaires were finally spread to 20 respondents whose
characteristics have been provided in one of the explanations below.
In this research, SPSS was utilized to analyze the data. Finally, the points of conclusion and
recommendation are drafted. All steps conducted by the researcher from problem identification
to the result accomplishment are reflected in the following figure of research framework.

Price List and Quality Certificate of Bakrie Metal Product

Problem Identification and Problem Statement

Literature Review

Construct Questionnaire

Pre-test Questionnaire: Validity and Reliability Test and Dry Run

Data Collection

Data Analysis and Interpretation

Conclusion and Recommendation

Figure 3.1: Research Framework

3.3

Constructed by Researcher

Research Instrument

Research Instrument is the tool that used to answer the research questions that stated in the
previous chapter. The Researcher intention is to gather the information from as much various
sources. Data can be obtained from primary or secondary data, Primary data refers to information
obtained first-hand by the researcher on the variables of interest for specific purpose of the study
RESEARCH
and secondary data refer to information gathered from sources that already exist (Sekaran,
Bougie, 2010). In order to fulfill the validity of this research, the researcher use both primary
and secondary data as shown in the figure 3.2 below:
DATA COLLECTION

PRIMARY

DATA

SURVEY

SECONDARY DATA

BOOKS AND JOURNALS

LITERATURE STUDY

ARTICLES ON INTERNET

DATA SELECTION

Figure 3.2: Data Collection Method

3.3.1

Primary Data

Primary data is the specific information collected by the person who is doing the research. It can
be obtained through clinical trials, case studies, true experiments and randomized controlled
studies. This information can be analyzed by other experts who may decide to test the validity of
the data by repeating the same experiments (Ehow.com, 2013).
Primary data in this research of Analysis on Price and Quality of Metal Industries toward
customer decision in Bekasi, study case on Bakrie Metal industries) is obtained directly from
the questionnaires that used for survey. Questionnaires are a technique of data collection done by
giving series of written statements that are consists of research variables. These questionnaires
will be spread to the numbers of samples.
3.3.2

Secondary Data

Secondary data is information gathered for purposes other than the completion of a research
project and Secondary data is also used to gain initial insight into the research problem
(steppingstones.ca, 2013). Secondary data is the data that have been already collected by and
readily available from other sources. Such data are cheaper and more quickly obtainable than the
primary data and also may be available when primary data cannot be obtained at all
(managementstudyguide.com, 2013).
Secondary data on this research is the literature studies. A literature studies is a technique of data
collection based on information gathered from books and journals related to the research

discussion. Data collected by learning and selecting from previous literature studies, books,
journals and related websites.

3.4

Sampling Design

Sampling Design is part of statistical methodology that related in taking a portion of the
population. If a sampling is done correctly, statistical analysis can be used to generalize a whole
population. There are two major types of sampling design: probability and nonprobability
sampling. In probability sampling, the elements in the population have some known non-zero
chance or probability of being selected as sample subjects. In non-probability sampling, the
elements do not have a known or predetermined chance of being selected as subjects (Sekaran,
Bougie, 2010).
3.4.1

Population

Population is all elements, individuals, or units that meet the selection criteria for a group to be
studied (businessdictionary.com, 2013). The Population refers to the entire group of people,
events, or things of interest that the researcher wishes to investigate (Sekaran, Bougie, 2010, pp.
262). In this study, research population is focused on people in Bekasi who are Bakrie metal
costumers and had ever purchase the Bakrie Metal.
3.4.2

Sample

Sample is a subset of population (Sekaran, Bougie, 2010, pp. 263). Sample on this research will
be used to investigate the research problems. This Research will use the probability sampling.
Unrestricted sampling design in Probability sampling is more commonly known as simple
random sampling; every element in the population has a known equal chance of being selected
as a subject.
n = 20
Thus, researcher takes 20 samples in this research by using the method of simple random
sampling. Questionnaires then are distributed to 20 Bakrie Metal consumers in indonesia,
especially around Bekasi , West java.

3.5

Statistical Treatment

There are 3 (three) statistical tools used in this study, which are Likert Scale, Weighted Mean,
and Standard Deviation.
3.5.1

Likert Scale

The Likert scale is designed to examine how strongly subjects agree or disagree with statements
on a five-point scale with the following anchors (Sekaran, Bougie, 2010):

Figure 3.3: Likert Scale

(Source: Sekaran, Bougie, 2010)
The Questionnaire uses Likert Scale and all statements that express either a favorable and
unfavorable attitude will be scaled through Strongly Disagree, Disagree, Neither Agree Nor
Disagree, Agree, and Strongly Agree.
The figure of the questionnaire is shown below:
No
.
1
2
3
4
5

Statements

Figure 3.4: Likert Scale Questionnaire

(Source: Self Developed)

Note:
1.
2.
3.
4.
5.

For Strongly Disagree

For Disagree
For Neutral
For Agree
For Strongly Agree

Each of the five responses would have a numerical value which would be used to measure the
attitude under investigation.
Likert Scales have the advantage that they do not expect a simple yes / no answer from the
respondent, but rather allow for degrees of opinion, and even no opinion at all. Therefore
quantitative data is obtained, which means that the data can be analyzed with relative ease.
The Validity and Reliability testing must be done before the questionnaire spreads to the
respondents. Pre testing is conducted to check if the statements are proper as research
instrument.
3.5.2

Weighted Mean

Arithmetic mean computed by considering relative importance of each items is called weighted
mean. To give due importance to each item under consideration, numbers called weight to each
item in proportion to its relative importance. Weighted Mean is computed by using following
formula (Emathzone.com, 2013):

Which means :

Where:
= Weighted Mean of the factors related
W = Corresponding Weight
X = A set of number designated / rate of importance

3.5.3

Standard Deviation

The Standard Deviation is a measure of how spreads out numbers are. Standard Deviation is used
when data is drawn from a larger set chemistry.about.com (2013).

The sample standard deviation is used when a sample of data is analyzed. In this equation:
s = sample standard deviation
N = number of scores in a sample
N-1 = degrees of freedom or Bessel's correction
x = value of a sample
x bar = mean or average of the sample

3.6

Data Analysis

In analyzing the data obtained, the researcher uses two major programs that are statistic-related.
The first program that the researcher uses is Microsoft Excel. The employment of this program is
intended to tabulate the data obtained from questionnaires distribution. It simplifies the
researcher to analyze the data.

The second program is Statistical Package for Social Science (SPSS). SPSS is commonly utilized
by researchers to quantitatively examine the data obtained from questionnaires distribution. It
has been recognized to be helpful to investigate statistical data. SPSS in this research was used to
analyze reliability, validity, weighted mean, factor analysis, classic assumption and multiple
linear regression analysis.

3.7 Reliability and Validity

3.7.1 Reliability Test
The first requirement of a good instrument was reliability. The Reliability test of a measure
indicates the extent to which it is without bias (error free) and hence ensures consistent
measurement across the 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
instruments measures the concept and helps to assess the goodness of measure (Sekaran, Bougie,
2010). Accurate questionnaire may deflect the right question which is means when the question
is asked for several times, the interpretation would be the same from one respondent to another.
Measurement of Reliability (Internal-Consistency) in this research will use the Cronbachs Alpha
Coefficient; the equation is (Janzengroup.net, 2013):

Where,
k = number of items
r = average correlation between any two items
= reliability of the average or sum
Cronbach's alpha
0.9
0.8 < 0.9
0.7 < 0.8
0.6 < 0.7
0.5 < 0.6
< 0.5

Internal consistency
Excellent
Good
Acceptable
Questionable
Poor
Unacceptable

3.7.2

Validity Testing

The purpose of validity testing is to eliminate the proper question that will answer the research
objectives. The Pearson product-moment correlation coefficient (or Pearson correlation
coefficient for short) is a measure of the strength of a linear association between two variables
and is denoted by r. Basically, a Pearson product-moment correlation attempts to draw a line of
best fit through the data of two variables, and the Pearson correlation coefficient, r, indicates
how far away all these data points are to this line of best fit (how well the data points fit this new
model/line of best fit) (Statistic.laerd.com ,2013). The valid data is a representative statement of
variables that are ready to spread to the respondents.
In Pearson Correlations, results are between -1 and 1. A result of -1 means that there is a perfect
negative correlation between the two values at all, while a result of 1 means that there is a perfect
positive correlation between the two variables. A result of 0, on the other hand, means that there
is no linear relationship between the two variables. Most research will very rarely get a
correlation of 0, -1 or 1. Result would be somewhere in between. The closer the value of r gets to
zero, the greater the variation the data points are around the line of best fit.
The Quantitative interpretation of the degree of linear relationship existing is shown in the
following range of values.
1.00

perfect Positive (negative) correlation

0.91 - 0.99

very high positive (negative) correlation

0.71 - 0.90

high Positive (negative) correlation

0.51 - 0.70

moderately positive (negative) correlation

0.31 - 0.50

low positive (negative) correlation

0.01 - 0.30

negligible positive (negative) correlation

1.0

no correlation

Correlation r formula:
For any two variables, X and Y, the correlation coefficient between them is given by the formula:

Where
n = number pair of scores

xy

= sum of the products of pair scores

= sum of x scores

= sum of y scores

= sum of squared x scores

= sum of squared y scores

The first requirement of a good instrument was validity. Thus, the researcher chooses Pearson
Product Moment Correlation by using the software SPSS 16.0 to fulfill the requirement of the
instruments validity.

3.8 Classic Assumption Test

Classical assumption is the statistical requirements that must be met in multiple linear regression
analysis (hellomgz.blogspot.com, 2013). In order to use multiple regression models, classic
assumption test need to implement such as normality testing, heteroscedascity testing and
multicollinearity.

Normality Test used to test the independent variable(X) and the dependent variable(Y) on the
resulting regression equation, whether normally distributed or not distributed normally.
Normality Tests performed using the test chart Histogram and P-P plots to test the regression
model residuals (dawaisimfoni.wordpress.com, 2013).
Heteroscedasticity Test generates chart patterns point spread (scatterplot). In a multiple
regression equation, it is needed to be tested for the same or not the variance of the residuals of
the observations with other observations.
If there residuals have the same variance, it is called homo scedascity. And if the residuals have
the difference variance, it is called heteroscedascity (dawaisimfoni.wordpress.com,
2013).Multiple regressions equation is good if there is no heteroscedasticity.
Analysis of heteroscedasticity assumption SPSS output through the scatterplot graph between Z
prediction (ZPRED) for the independent variable (X axis = Y outcome prediction), and residual
value (SRESID) is the dependent variable (Y-axis = Y predicted - Y rill).
Multi collinearity test aims to test whether the regression model found a correlation between the
independent variables. Good Regression model should not have correlation between independent
variables (dawaisimfoni.wordpress.com, 2013). Dawaisimfoni.wordpress.com (2013) added that
Multi collinearity occurs when the coefficient of correlation between independent variables is
greater than0.60. And multi collinearity occurs when the VIF value is more than 10 and tolerance
values less than 0.1.

3.9 Multiple Regression Analysis

Multiple regressions are a statistical tool used to derive the value of a criterion from several other
independent, or predictor, variables. It is the simultaneous combination of multiple factors to
assess how and to what extent they affect a certain outcome (technopedia.com, 2013).
Multiple regressions are a statistical method used to examine the relationship between one
dependent variable Y and one or more independent variables Xi. The regression parameters or
coefficients bi in the regression equation are estimated using the method of least squares
(medcalc.org, 2013):

There are 3 steps in doing Multiple Regression Analysis such as T-test, F-test and coefficient of
determination (R):
T-test for the partial regression coefficient is intended to determine how far the influence of one
variable independent (perceived quality, brand awareness, brand associations, and brand loyalty)
individually in explaining the dependent variable (purchase decision).
F-Test is also used to determine the influence of perceived quality, brand awareness, brand
associations, brand loyalty together on purchase decision. If F value > F table, Ho rejected and
Ha accepted. Oppositely, if F value < F table, then Ho accepted and Ha rejected.
The coefficient of determination (R) was essentially measures how much the ability of the
model to explain the variations dependent variable. The coefficient of determination is between
zero and one.

3.10 Limitations
Researcher makes some limitations because of several reasons related to this study, such as:
1. The researcher finds it difficult to manage the questionnaires distribution. Some of them
respond really fast; but in some cases, they become so ignorant and never return the
questionnaires. In the end, the researcher has to find other respondents which activity has
wasted lots of time already.
2. The Researcher finds it is hard to get the data of Price List and Quality certificate, because
the company only open price for the customer order not open for foreign people like me.
3. Another problem also arises in this study when it is time to gather the secondary data in
terms of literature review. Even though Adam Kurniawan Library of President University has
a wide-range collection of books, it is quite tough for the researcher to find good and updated
management literatures. Consequently, the researcher has to find them in other universities
library to support the references.