CHAPTER I

INTRODUCTION

This chapter outlines the entire framework of this research. It covers the background of the study,
research issue and problems, research objectives, and research outline to be used in this final
academic writing.

1.1 Background of The Study

Modern technology has been developed to the extent that even shopping is made possible over
the internet through online device. The process called online-shopping has been introduced and
developed in Indonesia as well, creating a whole new experience in shopping; simple, fast, and
easy.
The number of internet users in Indonesia, which has reached 71.19 million people,
triggers the activities of online shopping (Pitoyo, 2014). Around 57 percent of those internet
users actively involved in online business with growth of about 15 percent each year (Nisaputra,
2013). This growing number triggers the rising of new online shop all over Indonesia, especially
the ones using social media (Facebook, Instagram, Line) as their medium. The use of social
media to facilitate e-commerce is a huge opportunity for potential seller, who has no sufficient
capital, to open an online shop.
E-commerce is growing because Indonesians are finding it increasingly easy to get
online, and the offline stores have not been able to keep up with their demand (Yuniar, 2015)

Still from Yuniar, aside from the ability to shop from the comfort of home, most e-stores also
offer round-the-clock customer care and various payment methods (Yuniar, 2015). Yuniar also
stated that when it comes to buying things online in Indonesia, women rule. About 40 million
women are now online in the country, in which women control 65% of purchasing decisions,
according to a recent survey by Female Daily Network, the countrys largest online forum for
women (Yuniar, 2015)
Instagram, the recent fad in mobile photo sharing applications, provides exactly that: a
way to snap photos, tweak their appearance, and share them on various social networks with
friends, family and complete strangers. Although only launched in October 2010, its 15 million
users have already taken more than 400 million pictures from all over the globe (Instagram 2011)
(Hochman & Schwartz, 2012). This social media has become the medium of most online shop in
Indonesia, as they provide photos and captions at Instagram, it attracts customers to buy the
products/services.
The increasing number of Instagram based online shop in Indonesia is significant, with
the huge variety of goods and services. Every company tries to establish the brand by using the
different sign, symbol, and attribute in order to create a differentiation with the others among the
competitive market (Armstrong et al., 2009, p.239). A well-known person tends to have a great
effect on the consumer buying behavior, therefore, to increase customers trust, online shops at
Instagram usually use endorsement as their primary choice.
Testimonials and endorsements play a huge role on increasing customers trust level.
Testimonials are mostly said to work on the basis of social proof. Social proof is a psychological
process in which people copy the behavior of others, in an attempt to reflect correct behavior

(Valk, 2014). Endorsement is defined as the fact of a famous person appearing in an

advertisement saying that they use and like a product according to Cambridge Dictionary.
An exploratory study had been conducted toward 38 students at UPH Business School in
which they were asked to fill questionnaires related to celebrity and endorsement in Instagram.
The questionnaire was distributed online but personally through SurveyMonkey.com. The
respondent had been narrowed down to 38 persons qualified. The mandatory qualification to fill
the questionnaire is whether they have Instagram or not.

YES (38)
NO (0)

Picture 1.1 Do You Have An Instagram Account Chart

Picture 1.1 shows that according to the result of the exploratory study questionnaire of 38
students in UPH Business School, all of the 38 respondents own an Instagram account. This
shows that all the respondents are qualified and aware about Instagram as social media.

YES (29)
NO (9)

Picture 1.2 Do You Follow Celebrities and/or Famous Person That Have More Than 1000
Followers Chart
Picture 1.2 shows that according to the result of the exploratory study questionnaire of 38
students in UPH Business School, 29 respondents or about 76.32% are following celebrities
and/or famous person that have more than 1000 followers on Instagram. The remaining 9
respondents or 23.68% arent following celebrities and/or famous person in Instagram.

MORE THAN 5
TIMES A
MONTH (2)
LESS THAN 5
TIMES A
MONTH (21)
NEVER (15)

Picture 1.3 Have You Ever Shopped Online in Instagram Chart

Picture 1.3 shows that according to the result of the exploratory study questionnaire of 38
students in UPH Business School, 2 respondents or about 5.26% have shopped online more than

5 times a month in Instagram. Also, 26 respondents or about 55.26% have shopped online in
Instagram, but less than 5 times a month. The remaining 15 respondents or about 39.47% stated
that they never shop online at Instagram until now.

AGREE (5)
OCCASIONALLY
(21)
NOT AGREE (12)

Picture 1.4 Celebrity or Famous Persons Endorsement Will Attract You To Buy The Product
Chart
Picture 1.4 shows that according to the result of the exploratory study questionnaire of 38
students in UPH Business School, 5 respondents or about 13.16% agree that an endorsement
from celebrity or famous person in Instagram would attract potential customer to buy the
product. Another 21 respondents or about 55.26% think that an endorsement from celebrity of
famous person in Instagram sometimes/occasionally would attract potential customer to buy the
product. The remaining 12 respondents or about 31.58% disagree that an endorsement from
celebrity or famous person in Instagram would attract potential customer to buy the product.

YES (19)
NO (19)

Picture 1.5 You Ever Buy A Product After Seeing An Endorsement From Celebrity Or Famous
Person In Instagram Chart
Picture 1.5 shows that according to the result of the exploratory study questionnaire of 38
students in UPH Business School, 19 respondents or exactly 50% have ever bought a product
after seeing an endorsement from celebrity or famous person in Instagram. The remaining 19
respondents or exactly 50% have never bought a product after seeing an endorsement from
celebrity or famous person in Instagram. (INI HARUS DI UBAH, KALO ENDORSEMENT
GA ADA EFEK KENAPA DI TELITI? HARUS DI TEST PAKE
From the exploratory study above, although more than 50% of the respondents agree that
celebrity endorsement has effects on customer buying intention, there is still only 50% of the
respondents who ever shop online. This study is conducted due to large
Getting more customers to put faith in online purchasing is something e-commerce
companies (including online shops) hope to do, since it would allow them to tap a young
population that is tech savvy and increasingly affluent. This study aims to investigate how
Instagram celebritys endorsement could positively affect customer buying behavior in Indonesia
by replicating the model developed by Chin-Lung Hsu.

1.2 Research Issue and Problem

Taking into account the above mentioned background, the issue in this study is how celebrity
endorsement will positively affect customer buying behavior in Indonesia using Instagram as the
media.
Several questions are addressed following to research issue:
1. Does perceived usefulness of celebrity recommendation positively affect Instagram users
attitude toward online shopping?
2. Does perceived usefulness of celebrity recommendation positively affect Instagram users
3.
4.
5.
6.

intention to shop online?

Does trust positively affect Instagram users perceived usefulness?
Does trust positively affect Instagram users attitudes toward online shopping intentions?
Does trust positively affect Instagram users intention to shop online?
Does Instagram users attitude toward shopping online positively affects their intentions to

shop online?
7. Does celebrity reputation (followers) affect the relationship proposed?

1.3 Research Objectives

The purpose of this research is to investigate how celebritys endorsement could affect
Indonesian buying intention on online shop in Instagram. Thus the objectives of this research are,
as follows:
1. To determine how perceived usefulness of celebrity recommendation positively affects
Instagram users attitude toward online shopping.
2. To determine how perceived usefulness of celebrity recommendation positively affects
Instagram users intention to shop online
3. To determine how trust positively affects Instagram users perceived usefulness.
4. To determine how trust positively affects Instagram users attitudes toward online
shopping intentions.
5. To determine how trust positively affects Instagram users intention to shop online.
6. To determine how Instagram users attitude toward shopping online positively affects their
intentions to shop online.
7. To determine how celebrity reputation (followers) affects the relationship proposed.
The researcher prefers using a replication study, with a modified model, which is a
deliberate repetition of previous research procedures in a clinical setting purposed for
strengthen the evidence of previous research finding, and correct limitations, resulted in a
favor of a completely different result. This research is only sourced its research model from
Chin-Lung Hsu and also adopted in Indonesia environment.
The replication and modification are being used due to several reasons followings (Hani,
2009):
1. The original research question is important and highly related to the study of marketing,
especially consumer behavior, trust, and endorsement.
2. The existing literature and policies are highly relevant to the literature and policies in the
research study.
3. The replication study used for extending its generalizability.
4. The replication study is a rigor as the original study.

1.4 Research Outline

Chapter I

Introduction
The first chapter will discuss the research study background, formulation
of research issue and problem, explanation of the purpose of the study. It
will also state the systematic writing outline of the consecutive chapters.

Chapter II

Theoretical Foundation
In this chapter, theoretical foundations of general and specific variables in
the study and the relationship between the variables will be elaborated in
support of the study and to solve the problem formulated in chapter I. the
propositions will also be included and the research model is presented at
the end of this chapter.

Chapter III

Research Method
This chapter will explain the research method starting from the initial
process of the research: type of research, research object, unit of analysis,
variable measurement, measurement scale, conceptual and operational
definitions up-to-collecting-data technique.

Chapter IV

Results and Discussion

This chapter consists of the results of pretest and actual research of the
linkages among variables that are being studied. All of these results are
derived from statistical examinations performed with the data collected.
The results discussions are also presented at the end of this chapter.

Chapter V

Conclusions,

Implications,

and

Recommendations

for

Future

Research
The last chapter consists of the conclusions, managerial implications, and
the limitations of the study and recommendations for the future research.

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