Chapter I INTRODUCTION

1.1 BACKGROUND Brand is one of the most important consideration in creating a product or services. Nowadays, as we know theres a lot of competition of the companies to make their brand well-known and attractive to the consumers. The companies are vying to create the character and awareness through the product and services they offer to customers. Theyre compete to attract the consumers with innovation through their product and services. Theyre try their best to make variety of the product or services. But, to built the strong character and quality of their product, they need to manage and considered about the brand equity and brand awareness of their product carefully. Its not easy to built a brand and can be accepted by people. It took a long time to make it true. To improve the brand equity and brand awareness, first we have to think about in what consumers need and what consumer wants. It will make an added value for the brand and will influence the purchasing decision of the consumers. To make the product or services strong and feasible to sell in the market, we need to considered also about the quality of a product. If it has a good quality, the consumers will satisfy and will decide to buy our product again and become a loyal consumer. So that, from one loyal consumer, it will be thousand loyal consumers if company always do the best with the product or services. So, from that we can assume that brand equity and brand awareness can influence the consumer purchasing decision. Brand equity has become an important issue from a variety of perspectives: mergers and acquisitions, evaluation of strategies (advertising, promotion, quality improvement) and management (in terms of its impact on value creation, brand extensions, enhancement

and exploitation of brand strengths), to mention a few. Theres a few factors that we need to know in built Brand equity, there are brand loyalty, brand preference, brand position, brand image, brand personality, brand identity, brand attitudes, brand familiarity, and brand associations.

And theres five general approaches to assessing the value of brand equity have been proposed.

Price premium that the name can support Impact of the name on customer preferences Stock market valuation (stock value less tangible assets Earning power of the brand Replacement value of the brand

For example, we all know about one of the popular fast-food restaurant in the world Kentucky Fried Chicken (KFC). Although they are well known and preferred by many people from all over the world, they still want to make a breakthrough and inovation of their brand. It is not easy for them to make this brand well known and accepted by all the society in the world. It took a long time to make KFC become bigger and bigger from time to time. Kentucky Fried Chicken was founded by Colonel Harland Sanders in 1952. Although Sanders died in 1980, he remains an important part of the company's branding and advertisements, and "Colonel Sanders" or "The Colonel" is a metonym for the company itself. The company adopted KFC, an abbreviated form of its name, in 1991. Starting in April 2007, the company began using its original name, Kentucky Fried Chicken, for its signage, packaging and advertisements in the U.S. as part of a new corporate re-branding program; newer and remodeled restaurants will adopt the new logo and name, while older stores will continue to use the 1980s signage.

In indonesia, especially in Manado KFC restaurant is a really popular fast-food restaurants and become the favorite one until now. Everybody loves KFC, in all ages from childrens, teenagers and the adults.

1.2 PROBLEM STATEMENTS 1. Does Brand Equity simultaneously affects Purchasing Decision? 2. Does Brand Equity Partially Affects Purchasing Decision? 3. 4. Does Brand Awareness Simultaneously Affects Purchasing Decision? Does Brand Awareness Partially Affects Purchasing Decision?

1.3 OBJECTIVE OF THE RESEARCH 1. To Analyze The Effect of Brand Equity on Purchasing Decision (Simultaneously) 2. To Analyze The Effect of Brand Equity on Purchasing Decision (Partially) 3. To Analyze The Effect of Brand Awareness on Purchasing Decision (Simultaneously) 4. To Analyze The Effect of Brand Awareness on Purchasing Decision (Partially)

CHAPTER II Theoretical Review

2.1 Previous Researches

Based on this research, I found that my research about brand equity and brand awareness can influence the purchasing decision. So I have 3 journal from this research: 1. Impact of Brand Equity on Customer Purchase Decisions: An Empirical Investigation with Special Reference to Hatchback Car Owners in Central Haryana ( Ashutosh Nigam, Rajiv Kaushik ; 2011 ) Strong brand equity allows the companies to retain customers better, service their needs more effectively, and increase profits. Brand equity can be increased by successfully implementing and managing an ongoing relationship marketing effort by offering value to the customer, and listening to their needs. Brand equity factors influencing customer purchase decision criterion has been discussed. The study concluded that brand managers efforts should be focused on customer loyalty, trustworthiness, brand advocacy, brand distinction and innovative features in managing brand equity. Right marketing mix should be focused to exploit brand equity in terms of the purchase decisions and repetitive sales of the products. I Use This Journal because it proves that Brand equity has the relationship with purchasing decision where the brand equity factors influencing customer purchase decision criterion. And to make the customers think that it is the good/best product, the managers should manage the brand equity to get the positive response from the customers to buy their product.

2. Brand Awareness Effects on Consumer Decision Making for a Common, Repeat Purchase Product: A Replication ( Emma K. Macdonal Byron M. Sharp; 2000 ) Brand awareness is an important choice tactic for consumers facing a new decision task; and that subjects who are aware of one brand in a choice set tend to sample fewer brands across a series of product trials. Brand awareness seems to play an important Quality Differentials part in explaining habitual choice patterns. Consumers usually make a decision from a set of brands they recall from memory, and/or they recognize in their environment known as their consideration set. Brand awareness seems to be an important choice tactic for consumers, even when facing a familiar or repeat choice task and although some consumers can be enticed to break their habit using an awareness heuristic many show a ten denc to return to this habit. I Use This Journal because it proves that brand awareness have a relationship with purchasing decision because in this journal we will find how important the brand awareness on purchasing decision. The consumers usually make a decision from a set of brands they recall from memory, and /or they recognize in their environment known as their consideration set. It means that, if our brand have a good performance and quality also well-known in market the consumers will recognize the band, and thats will become of their consideration to buy our product. 3. The Importance of Brand Awareness in Consumers Buying Decision and Perceived Risk Assessment ( Babes Bolyai ; 2006 ) Brand awareness, as one of the fundamental dimensions of brand equity, is a prerequisite for the market success of both durables and nondurables brands. It represents a main factor for a brand to be included in the buying decision process consideration set, as most of the consumers prefer buying brands they are aware of (brands they are familiar with or, at least, they have heard of). Brand awareness influences consumers confidence in the purchase decision.

I Use This Journal because it proves that brand awareness also have a relationship with purchasing decision. In this journal explain that Brand awareness, as one of the fundamental dimensions of brand equity, is often considered to be a prerequisite of consumers buying decision. Brand awareness influence confidence in the purchase decision, due to familiarity with the brand and its characteristics. it means that the consumers need to know the brand well and the characteristics of the brand so that they can consider to buy the product 4. Pengaruh Brand Equity Flash Disk Merek Kingston Terhadap Keputusan Pembelian Pada Mahasiswa AMIK MBP Medan (Oon Boy M S Pane, Endang Sulistya Rini ; 2011 ) Ekuitas merek (brand equity) yang terdiri dari variabel kesadaran merek (brand awareness), asosiasi merek (brand association), persepsi kualitas (perceived quality), dan loyalitas merek (brand loyalty) secara bersama-sama berpengaruh positif dan signifikan terhadap keputusan pembelian flash disk merek Kingston pada mahasiswa AMIK MBP Medan. Kekuatan dari variabel loyalitas merek (brand loyalty) bukan menjamin bahwa pelanggan tidak akan pernah berpindah lagi. Tentunya perusahaan harus dapat menjaga kekuatan loyalitas merek itu dengan tetap melakukan inovasi dan respon yang cepat terhadap berbagai kondisi pasar. Ekuitas merek yang kuat belum dapat menjamin bahwa merek itu tidak akan jatuh. I Use This Journal because it proves that Brand equity has the relationship with purchasing decision. In this journal theyre explain about how

Kingston flash disk influence to AMIK MBP Medan students prefer choose to buy the Kingston flashdisk compare than the other flashdisk brand. Its because Kingston make the innovation with their product to get a quick response to the market to attract the consumers.

5. The impact of brand on Thai female consumer in purchase decision of foreign makeup product (Joakim Netz ; 2009 ) Consumer in some market confronts more various kinds of products available in the market, both foreign and domestic products, which cause them more opportunities to choose from those available merchandises. Highly competitive situation in the market causes marketers to work extensively to gain the customers satisfaction and marketshare. Thailand is one of countries where a large number of products from various countries imported every year. Thai consumers had positive attitudes and view towards foreign products and global brands as they felt that global brands were at higher quality in comparison to domestic brands which is consistence with where their research indicated that foreign products in developing countries are believed to have higher quality and reliability than domestic ones. And it is assured by the former studies that Thai consumers had positive attitudes and view towards foreign products and global brands as they felt the global brands were at higher quality compare to domestic brands. Our research is aimed to investigate the relationship between brand equity: brand loyalty, brand awareness, brand association and perceived quality, and purchase decision of Thai female consumers who live in Bangkok. I Use This Journal because it proves that Brand equity has the relationship with purchasing decision because, in this journal we will find a few explanation about how the foreign makeup product influence the purchasing decision of the Thai female consumers. The Thai female consumers prefer to choose the foreign makeup product because they felt the global brands were at higher quality compare to domestic brands. It is proves that the brand equity of foreign product is more influence the purchasing decision of female Thai than the domestic product. Surely the foreign product manage their brand equity and quality continuously and make more innovation than the other domestic product.

2.2 Theoritical Review 1. Definition of Brand Equity Feldwick (1996) simplifies the variety of approaches, by providing a classification of the different meanings of brand equity as: the total value of a brand as a separable asset when it is sold, or included on a balance sheet; a measure of the strength of consumers' attachment to a brand; a description of the associations and beliefs the consumer has about the brand. David Aaker defined Brand equity is a set of assets (and liabilities) linked to a brand's name and symbol that adds to (or subtracts from) the value provided by a product or service to a firm and/or that firm's customers. The major asset categories are: 1. Brand name awareness. 2. Brand loyalty. 3. Perceived quality. 4. Brand associations. Kevin Lane Keller (1998 ) approaches brand equity from a customer based perspective defining it as the differential effect of brand knowledge on consumer response to the marketing of the brand. Brand equity is the set of associations that permits the brand to earn greater volume than it would without the brand name (Marketing Science Institute). Brand equity is everything the customer walks into the store with (Peter Farquhar). A set of associations which are most strongly linked to a brand name (Andrea Dunham). (source: Franzen, 1999). Brands represent enormously valuable pieces of legal property, capable of influencing consumer behavior, being bought and sold, and providing the security of sustained future revenues to their owner. The value directly or indirectly accrued by these various benefits is often called brand equity (Kapferer, 2005; Keller, 2003).

2. Definition of Brand Awareness ( Martin Roll ) Brand awareness is a common measure of marketing communications effectiveness. Brand awareness The strength of a brands presence in the consumers mind (Aaker, 1996) Broken down into 3 parts: First mentioned brand as strong brands should be at the front of the memory and come up spontaneously when thinking about a category TOMA (=top of mind awareness) Spontaneous brand awareness -Expression of total presence of brand of a brand category toothpaste in consumers mind and behaviour. These brand were bought and will be bought in future part of the consideration set Aided brand awareness, brand recognition from a list. Only marginal influence in choice behaviour. These brands are not part of consideration set. (Franzen, 1999). Brand awareness is the first and prerequisite dimension of the entire brand knowledge system in consumers minds, reflecting their ability to identify the brand under different conditions: the likelihood that a brand name will come to mind and the ease with which it does so (Keller,1993). Brand awareness is a critical thing for all business, that people cannot buy your product unless they know that those product exist. (George wright)

3. Definition of Purchasing Decision According to Kotler and Keller (2009:184), a person's buying decision is the result of a process that consists of five stages, namely the introduction of needs, information search, alternative evaluation, purchase decision, and the behavior after the purchase itself. Kotler (2009:184) said on consumer buying decision process through five stages: problem recognition, information search, alternative evaluation, purchase decision and post purchase behavior. Kotler (2001:247) distinguishes four types of consumer buying behavior based on the degree of buyer involvement and the degree of difference between different brands of the four types of behavior are as follows: the complex buying behavior, buying behavior that reduce the discrepancy. Purchasing behavior who seek variety, buying behavior according to the custom. Decision or intention to buy is something

related to consumers plan to buy a particular product, as well as how many units of product required to purchase a period tertentu. Mental decision statements that reflect consumer buying plans a number of products with a particular brand (Setiadi, 2003:17) . The customer mindset includes everything that exists in the minds of customers with respect to a brand thoughts,feelings, experiences, images, perceptions, beliefs, attitudes, etc (Aggarwal & Rao, 1996).

4. The Relationship between Brand Equity and Purchasing Decision According to Kotler (2009:263), brand equity is given added value to the products and services that may be reflected in the way consumers think, feel, and act in conjunction with the brand, as well as pricing, market share and profitability given the brand for the company. Keller (1993) offered a cognitive psychology perspective, dening customer-based brand equity as the differential effect that brand knowledge has on consumer response to the marketing of that brand. Adopting an information economics view, Erdem and Swait (1998) argue that consumer-based brand equity is the value of a brand as a credible signal of a product's position. The customer mindset includes everything that exists in the minds of customers with respect to a brand thoughts, feelings, experiences, images, perceptions, beliefs, attitudes, etc. (Aggarwal & Rao, 1996) as outlined above in terms of sources of brand equity. As claimed by Vranesevic and Stancec (2003), the importance of the brand equity can be seen primarily in its impact on consumers choice and thei rloyalty through identifying and differentiating quality and origin, as well as creating additional values. Brand awareness can also affect decisions about brands within the consideration set (Hoyer & Brown 1990; Keller 1993).

5. The Relationship Between Brand Awareness and Purchasing Decision People like the familiar and are prepared to ascribe all sorts of good attitudes to items those are familiar to them (Aaker & Joachimsthaler 2000). Aaker & Alvarez Del Blanco (1999) have also indicated that brand awareness indirectly affects purchase behavior, as it has a positive influence on perceptions. Brand awareness is the first and prerequisite dimension of the entire brand knowledge system in consumers minds, reflecting their ability to identify the brand under different conditions: the likelihood that a brand name will come to mind and the ease with which it does so (Keller, 1993). Brand awareness has been argued to have important effects on consumer decision making by influencing which brands enter the consideration set, and it also influences which brands are selected from the consider action set (Macdonald and Sharp, 1996). Study of Hoyer and Brown (1990) carried out pioneering research at the individual decision level by examining the effects of brand awareness on consumer choice. It examined the impact of brand awareness as a heuristic, as well as exploring its effect on perceived quality. However, a study of Hoyer (1984) indicated that, in many purchase situations, the consumer is a passive recipient of product information who spends minimal time and cognitive effort choosing brands. In situations involving common, repeat purchase products, it may be that consumers choose the brand on the basis of a simple heuristic (e.g., brand awareness, package, price).

2.3 Hypothesis In order to prove the effect of brand equity and brand awareness on purchasing decision, based on the considerations of the problem, there are 4 hypothesis :

H1. Brand equity Simultaneously Affects purchasing decision H2. Brand equity Partially Affects purchasing decision H3. Brand awareness Simultaneously Affects purchasing decision H4. Brand awareness Partially Affects purchasing decision

2.4 Research Model Type of this research is causal research. Causal research is Causal Research explores the effect of one thing on another and more specifically, the effect of one variable on another. The research is used to measure what impact a specific change will have on existing norms and allows market researchers to predict hypothetical scenarios upon which a company can base its business plan.

Picture 2.2. Research Model The effect of Brand Equity and Brand Awareness on Purchasing Decision

Brand equity (x1) Purchasing Decision (Y) Brand awareness (x2)

Chapter III

Research Design

3.1 Type Of Research

The type of this research is causal research. Causal Research purposeis to explores the effect of one thing on another and more specifically, the effect of one variable on another. This research is use to measure the effect of brand equity and brand awareness on consumer behavior, so that we can learn about how important the quality of the brand based on brand equity and brand awareness.

3.2 Population and Sample 3.2.1 Population A population can be defined as including all people or items with the characteristic one wishes to understand. Population of this research are the people who love to eat Kentucky Fried Chicken (KFC) in Manado. 3.2.2 Sample A sample is simply a subset of the population. The concept of sample arises from the inability of the researchers to test all the individuals in a given population. The sample must be representative of the population from which it was drawn and it must have good size to warrant statistical analysis.

3.2.2.1.1

Sampling Technique

This research use Non probability sampling technique. Nonprobability sampling is a sampling technique where the samples are gathered in a process that does not give all the individuals in the population equal chances of being selected. In all forms of research, it would be ideal to test the entire population, but in most cases, the population is just too large that it is impossible to include every individual. This is the reason why most researchers rely on sampling techniques like convenience sampling, the most common of all sampling techniques. Many researchers prefer this sampling technique because it is fast, inexpensive, easy and the subjects are readily available. 3.2.2.2 Sample Size This research using 104 respondents who are love to eat KFC in Manado.

3.3 Measurement Issue and Scale In This Research, we use likert scale. A Likert scale is a psychometric scale commonly involved in research that employs questionnaires. It is the most widely used approach to scaling responses in survey research, such that the term is often used interchangeably with rating scale, or more accurately the Likert-type scale, even though the two are not synonymous. The scale is named after its inventor, psychologist Rensis Likert. Likert distinguished between a scale proper, which emerges from collective responses to a set of items (usually eight or more), and the format in which responses are scored along a range. Technically speaking, a Likert scale refers only to the former. The difference between these

two concepts has to do with the distinction Likert made between the underlying phenomenon being investigated and the means of capturing variation that points to the underlying phenomenon. When responding to a Likert questionnaire item, respondents specify their level of agreement or disagreement on a symmetric agree-disagree scale for a series of statements. Thus, the range captures the intensity of their feelings for a given item, while the results of analysis of multiple items (if the items are developed appropriately) reveals a pattern that has scaled properties of the kind Likert identified. Questionnaire as an instrument was used for this study which contained brief description about the purpose and the significance of the study. The questionnaire gathered information on consumers perceptions of effect of the brand equity and brand awareness on consumer behavior. Likert-format items were presented with 5 point of scales, where: 1 = Strongly Disagree 2 = Disagree 3 = Neither disagree nor agree 4 = Agree 5 = Strongly Agree

3.4 Data Collection

3.4.1

Sources of Data There are two sources of data in this research, those are : Primary data and secondary data. Primary Data is ..( See MR Book) Secondary Data is .. (See MR Book)3.4.2 Data Collection Method

-To Collect The Primary Data, we do survey (spread questionnaires) -To Collect Secondary Data, We browse information through internet, marketing books and marketing journals.