International Review of Management and

Marketing
ISSN: 2146-4405

available at http: www.econjournals.com

International Review of Management and Marketing, 2018, 8(1), 13-18.

Impact of Social Media Marketing on Purchase Intention and

Brand Loyalty: Evidence from Indonesia’s Banking Industry

Patria Laksamana*

Perbanas Institute, Indonesia. *Email: [email protected]

ABSTRACT
The purpose of the study is to explore the impact of social media marketing towards purchase intention and brand loyalty. The context of the study was
retail banking in Indonesia and a questionnaire was developed with 286 respondents. It has been found that social media marketing leads to purchase
intention and brand loyalty. Hence, brand loyalty affected by purchase intention. The implications for marketing managerial and future research are
discussed.
Keywords: Social Media Marketing, Purchase Intention, Brand Loyalty
JEL Classification: M31

1. INTRODUCTION 51 min, only 27% have purchased a product or service online

in the past 30 days (Kemp, 2016). Given these statistics and
As the social media continues to grow and becoming part of daily information, Indonesia provides a valid platform on social media
activities for customer, business entitites have integrated their marketing study.
marketing activities into social media marketing. This relatively
new form of communication demonstrates new challenges and However, despite popular use of social media in marketing, the
opportunities for brands. lack of understanding on the impact of social media marketing
in various products and services is need to be explored
It is a must for retail banking using the latest technology for (Ahmed and Zahid, 2014). Hence, more comprehensive study
engaging with customer (Peng, 2006). This includes social media on multi-various social media sites is needed (Vries et al.,
that could be accessed 24 h in mobile devices. Consequently, 2012). Therefore, this study is to respond from those previous
as part of future marketing effort and one-to-one relationship research.
building, social media is not only selling products but also develop
brand loyalty (Hennig-Thurau et al., 2010). The context of the 1.1. Research Questions
research is retail banking in Indonesia. For the purpose of the study, the question arise:
1. Does social media marketing have an influence to purchase
Thus, as the largest country in the Southeast Asia, Indonesia intention and brand loyalty?
has an active social media users for about 79 million (30%) out 2. Does purchase intention have an influence to brand loyalty?
of total population 259.1 million (Kemp, 2016). Interestingly,
Indonesia is ranked 7th along with Saudi Arabia and Thailand 1.2. Research Objectives
in the world in terms of daily time spent on social media. This The objectives of this study are:
means Indonesian spend more hours on social media than people 1. To determine the impact of social media marketing on
in developed countries such as USA (1.7 h), United Kingdom purchase intention and brand loyalty.
(1.5 h), Australia (1.2 h) and Japan (0.3 h). Additionally, with 2. To determine the impact of purchase intention on brand
the average daily use of social media in Indonesia is 2 h and loyalty.

International Review of Management and Marketing | Vol 8 • Issue 1 • 2018 13

 Laksamana: Impact of Social Media Marketing on Purchase Intention and Brand Loyalty: Evidence from Indonesia’s Banking Industry

1.3. Research Contributions 2.4. Brand Loyalty

There are two significance of the study. First, theoretical Brand loyalty is defined as customer’s consistent repurchase one
contribution. The study integrates the model that incorporates a brand out of a set of alternative brands (Aaker, 1991). Brand
full range of stimulus and individual level variables along with loyalty is important because it could generates entry barriers to
multiple outcomes in social media marketing in retail banking. competitors, avoid competitve threats from competitors, increasing
And second, managerial implication. The findings are useful in sales and revenue (Delgado-Ballester and Munuera-Aleman, 2001)
identifying better strategy for social media marketing efforts, and lowering customer price sensitivity (Rowley, 2005).
enhancing the impact for purchase intention and brand loyalty in
the retail banking industry. 3. HYPOTHESES DEVELOPMENT AND
RESEARCH MODEL
2. LITERATURE REVIEW
3.1. Hypotheses Development
2.1. Ground Theory As a means to provide communication, selling and relationship to
One of the well-known framework for decision-making process their customers, banks have now turn to social media. This two-
is “hierarchy of effects” (HOE) models from Lavidge and Steiner way communications platform is perfect for sharing information
(1961). The model involves consumers perceive, process, and use and opinions. Social media is considered more sincere to
of advertising and other marketing communication efforts for consumers because it communicates what the brand is instead of
engagement between consumers and a specific brand. It starts from try to control its image. This type of interaction enhanced positive
attaining awareness and knowledge about a product, developing attitudes towards the brands, affects stronger commitment and
positive or negative feelings towards a product and finally whether purchase-decision making process Hutter et al. (2013). Further, it
buying or rejecting the product (Kotler and Bliemel, 2001). has been found that social media affects brand’s sales performance
Zhu and Zhang (2010). Accordingly, purchase intention influenced
Further, the technological acceptance model by Davis (1989) by social media marketing (Kim and Ko, 2010) therefore:
explained the possibility of user’s behavioral intention in using
innovative technology. This belief-attitude-intention-behavior H1: There is a positive relationship between social media marketing
causal relationship in anticipating technological acceptance and purchase intention.
derived from theory of reasond action (Ajzen and Fishbein, 1980)
and theory of planned behavior (Ajzen, 1985). With its practical and flexibility characteristics, social media
has been widely used for marketing communication effort. The
2.2. Social Media Marketing advantages of using social media include no restrictions on time,
Social media defined as “a group of internet based applications place, media and cost (Kim and Ko, 2012). Therefore, it has been
that build on ideological and technological foundations of web 2.0, widely used for communicating and promoting products and
and allow the creation and exchange of user generated content” services (see for examples, Karimi and Naghibi, 2015; Pentina and
(Kaplan and Haenlein, 2010. p. 61). It has been studied in various Koh, 2012; Phan et al., 2011; Vries et al., 2012). Finally, it has been
contexts, such as public relations (Andzulis et al., 2012; He et al., found that it could increase brand loyalty (Laroche et al., 2013) thus:
2013), engagement (Kumar et al., 2013; Mangold and Smith,
2012; Parent et al., 2011), networking (Hsu, 2012; Pentina and H2: There is a positive relationship between social media marketing
Koh, 2012), promotion and sales (Curran et al., 2011; Phan et al., and brand loyalty.
2011) and branding (Gensler et al., 2013). There are four types
of social media, they are weblogs, social networks micro-blogs, The likelihood of a consumer purchasing a product or service to
photo and video sharing sites. Further, the advantages of using one particular brand depends on its attributes, features, quality,
social media are no restrictions on time, place, media and cost image and price. Regardless the outcome of consumers’ past
(Kim and Ko, 2012). purchasing experience, it has been found that the experience of
purchasing remains in consumers’ mindset for a long time (Keller,
Retail banking actively utilizes social media for advertising 2008). Consequently, it has been found that brand loyalty affected
and marketing. This two-way communication platform is ideal by purchase intention (Keller, 2008; Macintosh and Lockshin,
for increasing customer’s value by interacting with relevant 1997) therefore:
information, media, events and entertainment (Kim and Ko, 2010).
H3: There is a positive relationship between purchase intention
2.3. Purchase Intention and brand loyalty.
With the constant buying decisions every day and numerous
options in the market, consumers have to cope with information Research model for the study is presented in Figure 1.
overload. Purchase intention is defined as the possibility of
consumer in purchasing product or service in the near future (Ajzen 4. METHODOLOGY
and Fishbein, 1980). One of the most well-known HOE model in
purchase decision is attention, interest, desire, action (AIDA) that This study is an empirical research with cross-sectional
consists of AIDA (Hutter et al., 2013). approach. It was conducted in Jakarta with 286 respondents. A

14 International Review of Management and Marketing | Vol 8 • Issue 1 • 2018

 Laksamana: Impact of Social Media Marketing on Purchase Intention and Brand Loyalty: Evidence from Indonesia’s Banking Industry

Figure 1: Research model are Social Media Marketing Social Media Marketing 1.5, Social
Media Marketing 1.9, and Brand Loyalty 3.4 (Table 1). Therefore,
they need to be terminated for further statistical analysis (Hair
et al., 2006).

As for the reliability test, the results provided decent confirmation

of measurement choice. Cronbach’s alpha for the four constructs
ranged between 786 and 820. The lowest is purchase intention and
the highest is Social Media Marketing (Table 1).

As H1 stated that there is a positive relationship between social

media marketing and purchase intention, it has been demostrated
that the correlation is weak as indicates by the multiple correlation
self-administered survey was conducted and a non-probability coefficient (R) 42% and only 18% (R²) of purchase intention can
convenience used for accomplish a great deal of respondents be explained or predicted by social media marketing. Hence,
inexpensively and in a short period of time and in (Swartz and with a significance level of almost 100% (significance = 0.000)
Iacobucci, 2000). Further, a five-point Likert scale was used, where it indicates a significant relationship. Therefore, H1 is supported.
1 = “strongly disagree” and 5 = “strongly agree.” The questions
from the survey was derived from previous studies. Similarly, H2 posited that there is a positive relationship between
social media marketing and brand loyalty. It has been shown
The measurement was come from past studies. The social media that the correlation between the two latter is weak with R values
marketing was measured from the study of Kim and Ko (2012). 38% and R² values 14%. That means only 14% of brand loyalty
Whilst purchase intention was adopted from Bolton and Drew (1991), is explained by social media marketing. Further, it affirms that
brand loyalty was adopted from Aaker (1991) and Yoo et al. (2000). social media marketing creates brand loyalty with significance
level of almost 100% (significance = 0.000). Consequently, H2
The inferential statistics and several statistical analysis were is supported.
conducted for the study. First, for ractor loading significance,
exploratory factor analysis (EFA) was empolyed. Only factor Finally, the findings also support the hypothesis that there is a
loading with values over. 50 were accepted. Consequently, items positive relationship between purchase intention and brand loyalty
with loading <50 were eliminated for further statistical analysis (H3). It has been demostrated that there is a very strong signifance
(Hair et al., 2006). Second, reliability test was used for consistency, value at 0.000 with correlation at 56% (R) and 32% (R²) of brand
stability and credibility of the presented findings (Hair et al., 2006). loyatly was explained by purchase intention.
In other words, the higher the construct, the higher the reliability is.
Accordingly, values below 60 considered unacceptable (DeVellis, In sum, Table 2 indicates that all of the hypotheses were supported
2003). Lastly, for testing hypotheses ANOVA was used for testing with statistically significant well above the conventional 95%
a dependent variable with two or more independent variables confidence level.
(Zikmund et al., 2011).
6. DISCUSSION AND CONCLUSION
5. RESULTS
Results indicate that social media marketing is significantly
Out of the total sample of 286 respondents, 144 (49.7%) were impacts both purchase intention and brand loyalty. It also reveals
men and 142 (50.3%) were women. The majority of respondents that purchase intention affects brand loyalty. These findings offer
were aged between 21 and 30 (59.4%), professionals in the new insights for both research and managerial implications.
private sectors (40.9%). Further, the majority were high school
education background (43.7%) with monthly income in less than First, social media marketing was found affects purchase intention.
Rp.5.000.000, - (52.8%). The respondents were also asked what This is in support with previous studies from Kim and Ko (2010)
type of bank do they associated with. Not surprisingly, most of the and Hutter et al. (2013). The social media allows two-way
respondents have bank account(s) in national commercial bank communications between consumers and the banks. Consequenlty,
(57.7%), followed by state owned bank (33.9%), foreign bank its interaction has a positive impact on product evaluations and
(5.6%) and sharia bank (2.8%). financial performance (Zhu and Zhang, 2010).

As for the social media that being used, out of total 286 respondets, Second, similarly, the research has shown that social media
many of them have more than one social media for their daily used. marketing indeed affect brand loyalty. The overload information on
The majority has Line (191), followed by Facebook (135), Path the internet has been a challenge for communicating and engaging
(121), Twitter (87), Instagram (61), Snapchat (47), and others (1). with consumers. Therefore, for a positive impact on brand the
communication efforts must be interactive, customized and yet
For the purpose of the study EFA was conducted to study the factor entertaining. These findings is consistent with past research from
structure. Out of 19 items, 3 items had factor loading <50. They Hutter et al. (2013) and Zhu and Zhang (2010).

International Review of Management and Marketing | Vol 8 • Issue 1 • 2018 15

 Laksamana: Impact of Social Media Marketing on Purchase Intention and Brand Loyalty: Evidence from Indonesia’s Banking Industry

Table 1: EFA and inferential statistics

Construct Items in the questionnaire Factor loading Mean Cronbach’s alpha
Entertainment
Social media marketing 1.1 Using bank X social media is fun 0.750 3.496 0.820
1.2 Content shown in bank X’s social media seem 0.726 3.472
interesting
Interaction
1.3 bank X social media enables information sharing with 0.523 3.468
others
1.4 Conversation or opinion exchange with others is 0.877 3.328
possible through bank X social media
1.5 It is easy to deliver my opinion through bank X’s 0.426 3.521
social media
Trendiness
1.6 Contents shown in bank X’s social media is the 0.623 3.769
newest information
1.7 Using bank X’s social media is very trendy 0.514 3.615
Customization
1.8 Bank X’s social media offers customized information 0.638 3.514
search
1.9 Bank X’s social media provides customized service 0.125 3.769
Electronic word of mouth
1.10 I would like to pass along information on brand, 0.592 3.335
product, or services from bank X’s social media to my
friends
1.11 I would like to upload content from bank X’s social 0.852 3.171
media on my blog or micro blog
Purchase intention 2.1 I would intend to become bank X customer 0.570 3.569 0.786
2.2 My willingness to become bank X customer is high 0.696 3.468
2.3 I am likely to become bank X customer 0.600 3.489
2.4 I have a high intention to become bank X customers 0.668 3.507
3.1 The next time I am in the market for banking products, 0.754 3.741
I plan to buy from bank X
Brand loyalty 3.2 I intend to keep buying from bank X’s for the 0.618 3.608
foreseeable future
3.3 I am committed to bank X 0.690 3.517 0.811
3.4 Next time I buy a banking product, I would be willing 0.333 3.132
to pay more from bank X than other banks
EFA: Exploratory factor analysis

Table 2: Results of model tests

Hypotheses R R² Significant Results
H1
There is a positive relationship between social media 0.427 0.182 0.000* Supported
marketing and purchase intention
H2
There is a positive relationship between social media 0.382 0.146 0.000* Supported
marketing and brand loyalty
H3
There is a positive relationship between purchase 0.565 0.320 0.000* Supported
intention and brand loyalty
*Significant at 0.01

Finally, the study has demonstrated that purchase intention has on purchase intention and brand loyalty. Hence, brand loyalty also
positive impact on brand loyalty. This is in accordance with affected by purchase intention.
previous study that purchase intention affects brand loyalty
(Macintosh and Lockshin, 1997) and they were found to have
direct correlation one to another (Malik et al., 2013). 7. LIMITATIONS AND FUTURE RESEARCH

In conclusion, the results indicate that the study was successful. Although the study has demostrated the impact of social media
All of the hypotheses were supported. Overall, the study has marketing on purchase intention and brand loyalty, the study still
demonstrated that social media marketing has a positive impact presents some limitations.

16 International Review of Management and Marketing | Vol 8 • Issue 1 • 2018

 Laksamana: Impact of Social Media Marketing on Purchase Intention and Brand Loyalty: Evidence from Indonesia’s Banking Industry

First, one limitation is that the current study only based on cross- Taiwan hotels. International Journal of Hospitality Management,
sectional data. Consequently, longitudinal studies would be 31, 972-980.
adequate for a new understanding. Hutter, K., Hautz, J., Dennhardt, S., Fuller, J. (2013), The impact of
iser interactions in social media on brand awareness and purchase
intention: The case of MINI on Facebook. Journal of Product and
Second, other factors influencing purchase intention or brand
Brand Management, 22(5-6), 342-351.
loyalty could be included to refine the model and further Kaplan, A.M., Haenlein, M. (2010), Users of the world, unite! The
understanding of social media marketing’s influence on those challenges and opportunities of social media. Business Horizons,
two variables. 53, 59-68.
Karimi, S., Naghibi, H.S. (2015), Social media marketing (SMM)
Third, caution should be noted in generalizing the results for strategies for small to medium enterprises (SMES). International
all industries. Consequently, it is recommended that empirical Journal of Information, Business and Management, 7(4), 86-98.
research in various industries are needed to further understand Keller, L.K. (2008), Strategic Brand Management: Building, Measuring
social media marketing in the various contexts. and Managing Brand Equity. 3rd ed. Upper Saddle River, New Jersey:
Pearson International Edition.
Kemp, S. (2016), Digital in 2016: We are social’s Compendium of Global
Finally, only social media users from Indonesia were recruited
Digital, Social, and Mobile Data, Trends, and Statistics Global
for the study, therefore generalizations for the entire population Overview. Singapore: We are Social.
of social media users are inappropriate. Therefore, research Kim, A.J., Ko, E. (2010), Impacts of luxury fashion brand’s social media
with various nationalities would be a value for having a better marketing on customer relationship and purchase intention. Journal
understanding in social media users. of Global Fashion Marketing, 1(3), 164-171.
Kim, A.J., Ko, E. (2012), Do social media marketing activities enhance
customer equity? An empirical study of luxury fashion brand. Journal
REFERENCES of Business Research, 65(10), 1480-1486.
Kotler, P., Bliemel, F. (2001), Marketing-Management. Stuttgart: Schaffer-
Aaker, D. (1991), Managing Brand Equity: Capitalising on the Value of
Poeschel Verlag.
a Brand Name. New York: The Free Press.
Kumar, V., Bhaskaran, V., Mirchandani, R., Shah, M. (2013), Practice
Ahmed, M.A., Zahid, Z. (2014), Role of social media marketing to
prize winner-creating a measurable social media marketing strategy:
enhance CRM and brand equity in terms of purchase intention. Asian Increasing the value and ROI of intangibles and tangibles for hokey
Journal of Management Research, 4(3), 533-549. pokey. Marketing Science, 32(2), 194-212.
Ajzen, I. (1985), From Intentions to Actions: A Theory of Planned Laroche, M., Habibi, M.R., Richard, M.O. (2013), To be or not to be
Behavior. Berlin: Springer Heidelberg. in social media: How brand loyalty is affected by social media?
Ajzen, I., Fishbein, M. (1980), Understanding Attitudes and Prediction International Journal of Information Management, 33(1), 76-82.
Social Behavior. New Jersey: Englewood Cliffs. Lavidge, R.J., Steiner, G.A. (1961), A model for predictive measurements
Andzulis, J.M., Panagopoulos, N.G., Rapp, A. (2012), A review of social of advertising effectiveness. Journal of Marketing, 25(6), 59-62.
media and implications for the sales process. Journal of Personal Macintosh, G., Lockshin, L. (1997), Retail relationships and store loyalty:
Selling and Sales Management, 32(3), 305-316. A multi-level perspective. International Journal of Research in
Bolton, R.N., Drew, J.H. (1991), A longitudinal analysis of the impact Marketing, 14(5), 487-498.
of changes on customer attitudes. Jounal of Marketing, 55(1), Malik, M., Ghafoor, M., Iqbal, H., Riaz, U., Hassan, N., Mustafa, M.,
1-10. Shahbaz, S. (2013), Importance of brand awareness and brand loyalty
Curran, K., Graham, S., Temple, C. (2011), Advertising on Faebook. in assessing purchase intentions of consumer. International Journal
International Journal of E-Businness Development, 1(1), 26-33. of Business and Social Science, 4(5), 167-171.
Davis, F. (1989), Perceived usefulness, perceived ease of use, and Mangold, W.G., Smith, K.T. (2012), Selling to millenials with online
user acceptance of information technology. MIS Quarterly, 13(3), reviews. Business Horizons, 54(3), 219-229.
319-340. Parent, M., Plangger, K., Bal, A. (2011), The new WTP: Willlingness to
Delgado-Ballester, E., Munuera-Aleman, J. (2001), Brand trust in the participate. Business Horizons, 54(3), 219-229.
context of consumer loyalty. European Journal of Marketing, 35(11- Peng, B. (2006), Mobile marketing-the Chinese perspective. International
12), 1238-1258. Journal of Mobile Marketing, 1(2), 50-59.
DeVellis, R.F. (2003), Scale Development: Theory and Applications. 2nd Pentina, I., Koh, A.C. (2012), Exploring social media marketing strategies
ed. California: Sage Publications. in SMEs. International Journal of Internet Marketing and Advertising,
Gensler, S., Volkner, F., Liu-Thompkins, Y., Wiertz, C. (2013), Managing 7(4), 292-310.
brands in the social media environment. Journal of Interactive Phan, M., Thomas, R., Heine, K. (2011), Social media and luxury brand
Marketing, 27, 242-256. management: The case of buryberry. Journal of Global Fashion
Hair, J.F., Black, W.C., Babin, B.J., Anderson, J.C. (2006), Multivariate Marketing, 2(4), 213-222.
Data Analysis. 6th ed. London: Prentice-Hall. Rowley, J. (2005), The four Cs of customer loyalty. Marketing Intelligence
He, W., Zha, S., Li, L. (2013), Social media competitive analysis and text and Planning, 23(6), 574-581.
mining: A case study in the pizza industry. International Journal of Swartz, T.A., Iacobucci, D. (2000), Handbook of Services Marketing and
Information Management, 33(3), 464-472. Management. Thousand Oaks: Sage Publications.
Hennig-Thurau, T., Malthouse, E., Friege, C., Gensler, S., Lobschat, L., Vries, L.D., Gensler, S., Leeflang, P.S.H. (2012), Popularity of brand posts
Rangaswamy, A., Skiera, B. (2010), The impact of new media on on brand fan pages: An investigation of the effects of social media
customer relationships. Journal of Service Research, 13(3), 311-330. marketing. Journal of Interactive Marketing, 26, 83-91.
Hsu, Y.L. (2012), Facebook as international eMarketing strategy of Yoo, B., Donthu, N., Lee, S. (2000), An examination of selected marketing

International Review of Management and Marketing | Vol 8 • Issue 1 • 2018 17

 Laksamana: Impact of Social Media Marketing on Purchase Intention and Brand Loyalty: Evidence from Indonesia’s Banking Industry

mix elements and brand equity. Journal of the Academy of Marketing of Marketing, 74(2), 133-148.
Science, 28(2), 195-211. Zikmund, W.G., Ward, S., Lowe, B., Winzar, H., Babin, B.J. (2011),
Zhu, F., Zhang, X. (2010), Impact of online consumer reviews on sales: Marketing Research. 2nd Asia-Pacific edition. Melbourne: Cengage
The moderating role of product and consumer characteristics. Journal Learning.

18 International Review of Management and Marketing | Vol 8 • Issue 1 • 2018