Background of the Study

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CHAPTER I INTRODUCTION

A. Background of the Study

Business is concerning on how to sale things, exchange their goods into money. In the last decades, firms have come to realize that understanding, meeting and anticipating customer needs is probably the most important source of sustained competitive advantage for a firm Vilares and Coelho, 2003. Offering things that might be needed by their consumer and focus on what the consumer wants then produce it is the only concern of business. Whereas beside selling, offering and giving products to the customer, about how we deliver, communicate our product and last to the consumer and make consumer satisfied with it, is important. That is why delivering our product with a good manner of service is essential in the business. Excellent customer service may indeed be the best answer to encounter the increasing trend of outsourcing. In order to maintain and gain consumer and to sustain the business, we must concern to the service as well. According to Rudie and Wansley 1985, Thompson, DeSouza and Gale 1985 cited in Parasuraman 1988 that one strategy that has been related to success in these businesses is the delivery of high service quality. Services are usually intangible economic activities offered by one party to 2 another. Often time-based, services performed bring about desired results to recipients, objects, or other assets for which purchasers have responsibility. In exchange for money, time, and effort, service customers expect value from access to goods, labor, professional skills, facilities, networks, and systems; but they do not normally take ownership of any of the physical elements involved. Christopher and Wirtz, 2011. In this tight competition world of business, the way we compete with other is not only by the quality of our products but also the quality of service that we offer to the consumer who wants to buy our products. The fact that the perceived quality of the product is becoming the most important competition factor in business world has been the reason of naming the present business era as “Quality Era” Peeler 1996 cited in Mosahab et al. 2010. Service that satisfied consumer will lead to the consumer loyalty once they know the quality of service a business has. Consumer will feel more comfortable when entering a store with a warm greet from the seller than nothing at all. And a word such ‘thank you and see u again’ or ‘thank you and have a good day’ will affect the mood of consumer after buying an item from a store. In the study of Dabholkar et al., 1996, service quality measured by five dimensions, name: physical aspects, reliability, personal interaction, problem solving and policy. Brand Cronin 2001 used three variables service environment, interaction quality, empathy and reliability. Perez et al ., 2007 used five dimensions of service quality, such: reliability, 3 assurance, responsiveness, empathy and tangibles. Then, these variables used as the variables to explain the dimension that make service quality. Modernization is one of the impacts of globalization that bring along the life style changes. Everyone uses technology to help doing the daily life activity including buying and selling. As stated by Szymanski and Hise 2000, Devaraj et al. 2002, Anderson and Srinivasan 2003, Ribbink et al. 2004, Shih 2004, Flavian et al. 2006 cited in Sun and Lin 2009 that a number of studies have documented the significant role of website technology factors and service quality in influencing customer e- satisfaction and e-loyalty, concerned with consumers’ psychological state, attitude and behavior, derived from how they feel about their online shopping experiences. Recent research also suggests that customer satisfaction in the online environment is significantly higher than in traditional channels as a result of ease of use in acquiring information Hernandez et al. 2009, Poddar et al. 2009, Yang et al. 2008, Verhagen and Dolen 2009 cited in Lin and Sun 2009. Digital facility become closer to the people daily life. Almost every thing done by the digital technology. Because the technology using is consider more efficient and cheaper. However, the conflict caused to get the market happen. “The growing of daring business in 2013 reach 71 Rp 18 billion, over Tiongkok that reached 61” Kompas, 2015:15. In 2012, an e-commerce company noted that 41 of sale came from Jakarta, but in the last 6-month the number decrease to 22. This shows that the consumers 4 are not only in Jakarta that regularly buying, even consumers outside Jakarta also did to follow the globalization era. Data from the research institution ICD predicted that e-commerce market in Indonesia will grow 42 from 2012-2015. This number is quite higher compare to other countries such as Malaysia 14, Thailand 22 and Philipines 28. Companies need to avoid the mistake of setting customer expectations too high through exaggerated promotional claims since this can lead to dissatisfaction if performance falls short of expectations Jobber stated in Mattsson, 2009:12 cited in Azhari 2015. Lazada is one of few of e-commerce sites in Indonesia. The largest online shopping mall in Southeast Asia, which launched in 2012 selling electronics, health and beauty aids and lifestyle products, Lazada quickly gained a following. The Web site has five million Facebook fans, said Martell Hardenberg, cofounder and fashion category manager. Lazada partners with local delivery companies to ship thousands of orders every day to the five countries it services Indonesia, Malaysia, Vietnam, Thailand and the Philippines Edelson, 2013. According to Matthew Driver, president of MasterCard for South East Asia regional, Indonesia is one of the country with the biggest growth of e-commerce market in Asia-Pasific. Though, the total of sale in Indonesia still consider low compare to others country, but the growing of it is quite rapid. 5 Picture 1.1 Estimated B2C eCommerce Picture 1.2 Fact About Mobile Phone User In Indonesia According to a recent Rocket Internet report, Lazada Group clocked around US1 billion in gross merchandise values as of March. Additionally, it received 5 million total annual customers last year and 5 6 million daily visits. The company had 1.6 million unique active product listings SKUs, 15,000 active selling partners, 58 ;ast mile distribution hubs and 51 logistics partners. Lazada’s total user base grew from 3.9 million at hte end of 2014 to 5.3 million end of Q1 2015. Online business gives customers a wider product selection, competitive price and most importantly, an easy access to information Khristianto et al. 2012 cited in Hila Ludin et al. 2014. Christodoulides and Michaelidou 2011 cited in Hila Ludin et al. 2014 state that online retailers that are able to provide and exchange information via formal or informal platform with the customers would most likely increase the customers satisfaction and add value to the shopping experience. Based on this background, the title of the study is “The Influence of Service Quality and Promotion toward Costumer s’ Satisfaction”.

B. Problem Definition