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Research Article | Volume 4 Issue 1 (Jan-June, 2023) | Pages 1 - 6
The Effect of Country of Origin and Electronic Word of Mouth through Brand Image on Consumer Purchasing Decisions of Laneige Skincare Products
 ,
 ,
1
Master of Management Study Program, Faculty of Economics and Business University of Jember, Indonesia Kalimantan Street No. 37, Tegal Boto, Jember, East Java 68121, Indonesia
Under a Creative Commons license
Open Access
Received
March 8, 2023
Revised
April 22, 2023
Accepted
May 13, 2023
Published
June 26, 2023
Abstract

This study examines the effect of country of origin and electronic word of mouth through brand image on consumer purchase decisions. The sample of this study are customers of Laneige skincare products in East Java as many as 150 respondents that collected by purposive sampling. This research is catagorized as explanatory research. The research method are path analysis and sobel test. The results show that country of origin and electronic word of mouth has a significant effect on brand image, country of origin, electronic word of mouth, and brand image has a significant effect on consumer purchase decisions and brand image is able to mediate the effect of country of origin and electronic word of mouth on consumer purchase decisions. All hypotheses in this study are accepted.

 

Keywords
INTRODUCTION

In recent years, the rapid advancement of telecommunication technology has driven significant development across various industrial sectors. According to Airlangga Hartarto, the Minister of Industry, the import of cosmetic products is relatively high. Based on and article from beritasatu.com he imports value of Indonesia's cosmetic industry has continued to increase from $583.3 million in 2016 to $850.16 million in 2018, and slightly decreased to $803.58 million in 2019. A survey conducted by ZapClinic and Markplus among 19,889 Indonesian women found that many Indonesians use skincare products from South Korea.

 

Laneige, a South Korean skincare brand, has gained popularity among Indonesian women due to its appealing benefits. It is produced by Amorepacific, the largest cosmetics company in South Korea. Laneige holds the third position as the top-selling South Korean beauty product in Indonesian e-commerce. According to a survey conducted by MarkPlus and ZAP Clinic targeting Indonesian women, Laneige secured the second position as the most commonly used skincare brand by Indonesian women. Laneige specializes in moisturizing and brightening skincare products. It is renowned for its water-based formulations. The brand has received positive reviews and gained popularity in Indonesia, with several products achieving awards.

 

In expanding its business to Indonesia, Laneige needs to adapt its marketing strategy to Indonesian consumers behavior. The perception of the country of origin is something that needs attention. Country of Origin, according to Kotler et al. [1], refers to the psychological association and beliefs triggered by a particular country. Perceptions and attitudes towards a specific country often influence products and brands known to originate from that country. Such perceptions contribute to the country of origin effect, which forms part of the brand image and contributes  to  brand  equity  [2].  Previous researchs  by Kim et al. [3], Fauziyyah et al. [4], Wijaya and Sulistyawati [5], Putri and Yulianti [6], Ellen and Tunjungsari [7], Rinjani et al. [8], and Kinasih et al. [9] indicating the influence of the country of origin on brand image. Country of origin also plays a role in purchase decisions. The country-of-origin association almost always has the potential to influence purchase decisions and affect brand choices [10]. Studies by Putri and Yulianti [6], Hong and Kamaruddin [11], and Saremi et al. [12] have shown that country of origin has an impact on purchase decisions. However, Kinasih's [9] research yielded different results, indicates that country of origin does not influence purchase decisions.

 

Litvin et al., [13] defined Electronic Word of Mouth (EWOM) as informal communications directed at consumers through internet-based technologies related to the use or characteristics of specific products or services, or their sellers. Sandes and Urdan, as cited in Ismagilova et al. [14], suggested that online consumer comments can influence brand image. Previous studies by Gunawan et al. [15], Kala and Chaubey [16], Ellen and Tunjungsari [7], Alrwashdeh et al. [17], and Asnawati et al. [18] have shown that EWOM significantly influences brand image.  According to Tsao and Hsieh, as cited in Ismagilova et al. [14], consumers use EWOM as one of the most important sources of information in making purchasing decisions. Research by Wijaya and Paramita [5], Handi et al. [19], Pratiwi et al. [20], and Asnawati et al. [18] has proven the significant influence of EWOM on purchase decisions. However, a study by Bahi et al. [21] showed that EWOM does not have a significant impact on purchase decisions.

 

According to Keller [10], brand image is the consumer's perception of a brand, as reflected in the brand associations stored in their memory. Sangadji and Sopiah state that consumers choose to purchase products with a good brand image, and conversely, if the brand image is negative, consumers tend to consider their options more carefully before making a purchase. Researchs by Wijaya and Sulistiawati [5], Sudaryanto et al., Putri and Yulianti [6], Tupti et al. [22], Sudaryanto et al. [23], Segoro and Nurlita [24], Rahayu et al. [25], Asnawati et al. [18], and Lamasi and Santoso [26] reveals that brand image has an influence on purchase decisions.

 

The research gap arises from inconsistencies in previous research findings. Kinasih's study [9] indicates that country of origin does not have a significant influence on purchase decisions, contradicting the results of studies by Putri and Yulianti [6], Hong and Kamaruddin [11], and Saremi et al. [12]. Another research gap is in Bahi et al. [21], which states that Electronic Word of Mouth (EWOM) does not have an impact on purchase decisions. This finding contradicts the research by Wijaya and Paramita [5], Handi et al. [19], Pratiwi et al. [20], and Asnawati et al. [18]. The lack of clarity regarding whether country of origin can significantly affect consumer purchase decisions and whether EWOM can significantly influence purchase decisions is one of the motivating factors for conducting this study. The inconsistencies in existing research findings are seen as an interesting area to investigate.

 

Theory Review

Consumer Behavior

Consumer behavior involves the study of consumer choices, which includes the processes of searching, evaluating, purchasing, and using products and services believed to satisfy their needs. It describes how consumers decide to spend their money, time, and effort on the offerings of marketers and explains which products and brands consumers choose and why, when, and where they make their purchases [27].

 

Country of Origin

According to Kotler et al. [1] Country of Origin perceptions are psychological associations and beliefs that are triggered by a particular country. Buyers have different attitudes and beliefs about brands from different countries. These perceptions can influence the attributes in the decision-making process. Perceptions and attitudes towards certain countries often influence products and brands that are known to originate from that country. Such perceptions contribute to the country of origin effect which becomes part of the brand image and contributes to brand equity [2]. Country-of-origin associations almost always have the potential to make purchasing decisions and influence brand decisions [10]. Based on the theory, the hypothesises are made:

 

  • H1. Country of origin influences the brand image of Laneige skincare products

  • H2. Country of origin influences the consumer purchase decisions of Laneige skincare products

 

Electronic Word of Mouth (EWOM)

Litvin et al. [13] defines Electronic Word Of Mouth (EWOM) as all informal communications directed at consumers via internet-based technology related to the use or characteristics of certain goods and services, or their sellers. Sandes and Urdan in Ismagilova et al. [14] said that online consumer comments can affect brand image, exposure to negative comments related to brands can make the brand image look worse, while exposure to positive comments related to brands can positively affect perceived brand image. According to Tsao and Hsieh in Ismagilova et al. [14], consumers use eWOM as one of the most important sources of information for making purchasing decisions. Based on the theory, the hypothesises are made:

 

  • H3. Electronic Word of Mouth (EWOM) influences the brand image of Laneige skincare products

  • H4. Electronic Word of Mouth (EWOM) influences the consumer purchase decisions of Laneige skincare products

 

Brand Image

Brand image is defined by Keller [10] as a consumer's perception of a brand, as reflected in the brand associations that exist in consumers' memories. According to Sangadji and Sopiah, consumers will determine their choice to buy products that have a good image, and vice versa, if the brand image is negative, consumers tend to consider further when buying a product. Based on the theori, the hypothesis is made:

 

H5. Brand image influences consumer purchasing decisions for Laneige skincare products

 

Consumer Purchase Decisions

Consumer purchasing decisions in Kotler et al. [1] is a process that includes the consumer experience of learning, choosing, using, and even disposing of a product where consumers usually go through stages from problem recognition to post-purchase behavior. Purchasing decisions according to Kotler and Keller [10] 

 

  • Introduction to problems

  • Search for information 

  • Evaluation of alternatives 

  • Purchase decision 

  • Post-purchase behavior 

MATERIALS AND METHODS

This research is catagorized as explanatory research. This research explains whether or not there is a correlation between Country of origin (X1) and Electronic word of mouth (X2) through Brand image (Y1) on consumer purchasing decisions (Y2) and if a correlation is found between these variables, then this study explains how strong the correlation is.The data used in this research is quantitative data obtained from the scores of the questionnaire answers that have been given to respondents through the Google form The sample of this study are customers of Laneige skincare products in East Java as many as 150 respondents that collected by purposive random sampling. The research method are path analysis and sobel test.

RESULTS AND DISCUSSION

The validity test was carried out to determine the extent to which the statement items in the questionnaire can measure the variable to be measured. To test the validity, Pearson correlation analysis (r value) was used between the item scores and the total score. If the Pearson correlation produces a calculated r value greater than r table, then the statement item can be declared valid. Meanwhile the reliability test was conducted to determine the extent to which the statement items can produce consistent or reliable answers. To measure reliability, the Cronbach's alpha value is used, where if the resulting Cronbach's alpha value is greater than 0.6, then the item statement is declared reliable.

 

Table 1 shows that the r value for each item are greater than the r table, so that all items used in the questionnaire can be declared valid. In the reliability test it was also found that the Cronbach's alpha value was greater than 0.6. These results indicate that the questionnaire items are reliable.

 

To find out whether the resulting regression model is a regression model that can produce the best estimator, it is necessary to test the classical assumptions of regression.

 

Based on Table 2, it can be seen that the significance value of the Kolmogorov Smirnov test for each regression model is greater than 0.05, so it can be concluded that the residuals in each regression model are normally distributed. The VIF value of each independent variable in the two regression models has a value less than 10, so it can be said that the two regression models are free from multicollinearity. The Glejser test produces a significance value greater than 0.05, so it can be concluded that in both regression models there is no heteroscedasticity.

 

Table 1: Validity and Reliability Test Results

Variable

Item

r value

r tabel (n=150,α=5%)

Cronbach Alpha

Explanation

Country of origin (X1)

X1.1

0,763

0,160

0,834

Valid & Reliable

 

X1.2

0,697

0,160

X1.3

0,741

0,160

X1.4

0,747

0,160

X1.5

0,726

0,160

X1.6

0,776

0,160

Electronic Word of Mouth (X2)

X2.1

0,758

0,160

0,807

Valid & Reliable

 

X2.2

0,838

0,160

X2.3

0,809

0,160

X2.4

0,780

0,160

 

Brand Image (Y1)

Y1.1

0,847

0,160

0,728

Valid & Reliable

 

Y1.2

0,785

0,160

Y1.3

0,791

0,160

Purchase Decisions (Y2)

Y2.1

0,790

0,160

0,824

Valid & Reliable

 

Y2.2

0,776

0,160

Y2.3

0,657

0,160

Y2.4

0,787

0,160

Y2.5

0,816

0,160

 

Table 2: Classical Assumptions Test Results

Regression Models

Kolmogorov-Smirnov Test Sig.

Independent Variable

VIF

Glejser  Test Sig.

I

Y1 = ꞵ1X1 + ꞵ2X2 + ε1

0,200

X1

X2

0,336

0,187

1,267

1,267

II

Y2 = ꞵ3X1 + ꞵ4X2 + ꞵ5Y1+ ε2

0,200

X1

X2

Y1

0,268

0,288

0,728

1,541

1,635

1,932

 

Table 3: Path Analysis Results

Regression Models

Independent Variable

Standardized Coefficient

t

Sig. t

I

Y1 = ꞵ1X1 + ꞵ2X2 + ε1

R-Square = 0,482

X1

X2

0,376

0,436

5,630

6,530

0,000

0,000

II

Y2 = ꞵ3X1 + ꞵ4X2 + ꞵ5Y1+ ε2

R-Square = 0,634

X1

X2

Y1

0,163

0,374

0,397

2,620

5,837

5,703

0,010

0,000

0,000

 

Table 4. Standardized Coefficient and Standard Error

Model  Regresi

Variabel Independen

Standardized Coefficient

SE

I

Y1 = ꞵ1X1 + ꞵ2X2 + ε1

X1

X2

0,376

0,436

0,074

0,071

II

Y2 = ꞵ3X1 + ꞵ4X2 + ꞵ5Y1+ ε2

X1

X2

Y1

0,163

0,374

0,397

0,066

0,065

0,067

 

To determine the effect of country of origin and electronic word of mouth on purchasing decisions through the brand image of Laneige skincare products, a path analysis was performed consisting of two regression models. The following table presents the results of path analysis using two regression models. 

 

In the regression model I, The significant t value in testing the effect of country of origin and electronic word of mouth on brand image has a value less than 0.05 (α=5%). These results indicate that country of origin and electronic word of mouth each have a significant effect on the brand image of Laneige products, so that H1 and H3 of the study are acceptable. In testing the regression model II, it can be seen that the significant t value in testing the effect of country of origin, electronic word of mouth, and brand image on purchasing decisions, has a value less than 0.05 (α = 5%). These results indicate that country of origin, electronic word of mouth, and brand image each have a significant effect on purchasing decisions for Laneige products, so that H2, H4, and H5 are acceptable. [Table 3]

 

To determine the mediating effect of brand image on the country of origin relationship, and electronic word of mouth on purchasing decisions, the Sobel test was carried out. The following presents the standard coefficient values and standard errors used in the calculation of the Sobel test.

 

Based on the Table 4, the combined standard error value (Sat) and the combined t-count value will be calculated as follows:

 

The Effect of Country of Origin on Purchasing Decisions Through Brand Image

 

       = 0,039

     = 3,824

 

The Effect of Electronic Word of Mouth on Purchasing Decisions Through Brand Image

 

       = 0,041

     = 4,250

 

The results of the combined tvalue (tab) show that the tab of the influence of Brand Image mediation on the relationship between Country of Origin and Electronic Word of Mouth on purchasing decisions, each has a value of 3.824 and 4.250 (greater than 1.96). These results indicate that Brand Image can mediate the effect of Country of Origin and Electronic Word of Mouth on purchasing decisions.

 

Based on the results of data analysis using path analysis (path analysis) shows that the hypothesis in this study is accepted. The results of the research analysis are explained as follows:

 

Effect of Country of Origin on Brand Image

The results of the analysis show that there is an influence of country of origin on the brand image of Laneige skincare products in East Java with a path coefficient of 0.376, a t value of 5.630 and a significance value of 0.000 <0.05 so it can be interpreted that the first hypothesis is accepted or country of origin has a significant effect on brand image.

 

Effect of Country of Origin on Purchasing Decisions

The results of the analysis show that there is an influence of country of origin on consumer purchasing decisions for Laneige skincare products in East Java with a path coefficient of 0.163, a t value of 2.620 and a significance value of 0.010 <0.05 so it can be interpreted that the second hypothesis is accepted where the country of origin has a significant effect on purchasing decisions.

 

Effect of Electronic Word of Mouth on Brand Image

The results of the analysis show that there is an influence of electronic word of mouth on the brand image of Laneige skincare products in East Java with a path coefficient of 0.436, a t value of 6.530 and a significance value of 0.000 <0.05 so it can be interpreted that the third hypothesis is accepted where electronic word of mouth has an effect significant to brand image.

 

Effect of Electronic Word of Mouth on Purchasing Decisions

The results of the analysis show that there is an influence of electronic word of mouth on consumer purchasing decisions for Laneige skincare products in East Java with a path coefficient of 0.374, a t value of 5.837 and a significance value of 0.000 <0.05 so it can be interpreted that the fourth hypothesis is accepted where electronic word of mouth significant effect on purchasing decisions.

 

Effect of Brand Image on Purchasing Decisions

The results of the analysis show that there is an influence of brand image on consumer purchasing decisions for Laneige skincare products in East Java with a path coefficient of 0.397, a t value of 5.703 and a significance value of 0.000 <0.05 so it can be interpreted that the fifth hypothesis is accepted where brand image has a significant effect on decisions purchase.

 

The results of the Sobel test calculations show the mediating effect of brand image on the relationship between Country of Origin and Electronic Word of Mouth on purchasing decisions, where each tab value has a value of 3.824 and 4.250 (greater than 1.96). These results indicate that brand image is able to mediate the influence of Country of Origin and Electronic Word of Mouth on purchasing decisions.

CONCLUSION

Based on the results of the research analysis, the following conclusions can be drawn:

 

  • The country of origin has a positive and significant influence on brand image, which means that the better the perception of the country of origin of Laneige, namely South Korea, the better the brand image of Laneige itself.

  • Country of origin has a positive and significant influence on purchasing decisions, which means that the better the perception of the country of origin from Laneige will increase consumer decisions to buy Laneige skincare products.

  • Electronic word of mouth has a positive and significant influence on brand image, which means that the better the electronic word of mouth for Laneige skincare products, the better Laneige's brand image will be.

  • Electronic word of mouth has a positive and significant influence on purchasing decisions, which means that the better electronic word of mouth for Laneige skincare products, it will increase consumer decisions to buy Laneige skincare products.

  • Brand Image has a positive and significant influence on purchasing decisions, which means that the better the brand image of Laneige skincare products, the higher the consumer's decision to buy Laneige skincare products.

 

Based on the discussion and conclusions obtained from this study, the following are some suggestions that can be considered:

 

  • Laneige company management should highlight the perception of the Country of origin, namely South Korea, which is currently good at promoting its products so as to increase consumer interest in Laneige. Laneige should also actively interact with consumers in electronic word of mouth communication to further enhance brand image and attract more consumers.

  • Because there are limitations in this study, it is hoped that future researchers can add other research variables beyond country of origin, electronic word of mouth, and brand image in order to find out other factors that influence purchasing decisions. Future researchers can also expand the research area to become national and complement previous research.
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