The Relationship Between Social Media Marketing, Psychological Distance, Purchase Intention And Customer Loyalty: Case Of Hypermarket Social Media Users In Indonesia

THE RELATIONSHIP BETWEEN SOCIAL MEDIA

MARKETING, PSYCHOLOGICAL DISTANCE,

PURCHASE INTENTION AND CUSTOMER LOYALTY: CASE OF HYPERMARKET SOCIAL

MEDIA USERS IN INDONESIA

By

RETNO DEW ANTI

Thesis submitted in

Fulfilment

of the

Requirements

for the

Degree

of Doctor of

Philosophy

May

^20t5

ACKNOWLEDGEMENTS

I would like to extend my

gratitude

^{to all those}

people

^who

helped

^and

supported

^{me in}

completing

^this

project.To

my

supervisors,

^{Prof. Dato' Ishak Ismail and}

Dr.

Malliga

Marimuthu, ^{and Dr. Yudi Fernando} my heartfelt thank you for their continuous support ^and

guidance throughout

^the formulation stage, ^data collection, ^and written and oral

presentation phase

^{of this}

project.

^{Thank you for the}

knowledge

^and

patience

^{that were}

given during

^the

completion

^{of this}

study. They inspired

^{me to work}

more

efficiently

^{on this}

project.

^{I would like to also}

deeply

^{thank to} my examiners, ^Prof.

Samsinar Bt. Md.

Sidin,

Associate Professor Dr. Mahmod Sabri Haron, ^Associate ProfessorDr. Nabsiah Abdul Wahid for_{their very} valuable

suggestions

^{and comments.}

I am

grateful

^for my

loving

^{children -}

Augusto Dagama

Pelawi and Alward Gutama Pelawi for

encouraging

^and

being patient throughout

^the

completion

^{of this}

Ph.D program.

Many

thanks also to my parents ^{Soewandono &}

Junartiningsih

^for

supports ^{and love.}

Finally, special appreciation

^{is dedicated to Prof.} Dato' Hasnah and my friends in the USM Ph.D room and my friends from Binus

University,

Jakarta, ^for the constructive

criticisms, suggestion

^and encouragement.

DEDICATION

This thesis is dedicated to the

Almighty

^{God for his}

provision, protection,unending

^and

unconditional support

given

^{to me.He has also}

guided

^me

during

^the

completion

^ofthis

project.

^{To my}

family

^a million thanks for

being

^{with me all}

along

^{and to believe in}

what I am

doing.

It has been ^adream comestrue.

TABLE OF CONTENTS

ACKNOWLEDGEMENT ^" i

DEDICATION ii

TABLE OF CONTE,NTS iii

LIST OF TABLES ^IX

LIST OF FIGURES ^x

LIST OF ABBREVATIONS x'i

ABSTRA.K ^Xll

A,BSTRA.CT xiv

CHAPTER 1 ...1

INTRODUCTION: 1

1.0 Introduction l

1.1 Scenario of retail trade in Indonesia 1

1.2 Problem statement 6

1.4 Research

question

¹⁴

1.4 Researchobjectives ¹⁵

1.5 Scope^ofstudy ¹⁵

1.6

Significance

^{ofresearch "' 18}

1.7 Contribution 22

1.7.1Contribution ^totheoretical perspective ²²

1.7.2Managerial

Contributions ^, 26

1.8 Key^{term 27}

1.9 Organization^ofthe remainingchapters ^{, 30}

CHAPTER 2 ^"' 32

LITE'RATURE REVIEW ^{' '} 32

2.0 Introduction 32

2.1 Customerloyalty ³⁸

2.2 Social MediaMarketing ⁴⁰

2.3 Review oftherelationship ^{SMM and customer}

loyalty

⁵⁰

2.4 Purchase intention 56

2.5 Review^on

psychological

^{distance 58}

2.6 Theoretical framework and research hypotheses ⁶⁶

2.6.1 Framework 68

2.6.2 Research hypotheses ⁷²

2.6.2.1

2.6.2.2

2.6.2.3

2.6.2.4

SMM and

purchase

^{intention 74}

Purchase intention and customer loyalty ⁷⁵

Mediating^effectof

purchase

^{intention 76}

Moderating

^effect

ofpsychological

^{distance 78}

2.7 Chapter ^{summary 80}

CI-lA.PTER 3 81

RESEARCH METHODOLOGY 81

3.0 Introduction 81

3.1 Researchdesign ⁸¹

3.2 Unit of

analysis

⁸³

3.3

Population

⁸³

3.4

Sampling

^{method 86}

3.5 Sample^{size 88}

3.6 Research variable 89

3.6.1 Social Media Marketing (SMM) ⁸⁹

3.6.2 Purchase intention 91

3.6.3 Psychological ^{distance 92}

3.6.4 Customerloyalty ⁹³

3.7 Survey instruments 95

3.8 Survey administration 97

3.9

Analysis

^{method 98}

3.10 Goodness of fit analysis ¹⁰⁰

3.11 Explanation ^ofmediating

effect-bootstrapping

^{method 101}

3.12

Explanation

of moderator effect 103

3.13 Structural model 105

3.14 Research model ¹⁰⁷

3.15 Summary

ofChapter

^J09

CHA.PTER ^{4 "' "' "' ' 110}

DATA ANALYSIS AND FINDING J 10

4.0 Introduction 110

4.1 Profile

respondents

¹¹⁰

4.2 Dataanalyses ^{andresult 113}

4.2.1.PilotStudy ¹¹³

4.2.2.Goodness ofmeasures 116

4.2.3.Measurement model 117

4.2.4.Constructvalidity ¹¹⁸

4.2.5.Intemal consistency

reliability

¹²⁰

4.2.5.1. Cronbach'salpha (CA) ¹²⁰

4.2.5.2. Composite reliability (CR) ¹²¹

4.2.5.3. Convergent validity (CR) ¹²¹

4.2.5.4. Discriminantvalidity ¹²²

4.3 Evaluation-criteria for formative construct. 125

4.4Validity assessmentsofthestructural model.. 126

4.4.1 Quality ^assessmentof the structural model. 129

4.4.2 The hypotheses testing^{structural model. 129}

4.4.3 Purchase intentionas mediator 131

4.4.4

Moderating

^{effect of}psychological ^{distance 134}

4.5

Summary

¹³⁶

CHAPTER 5 ^' 138

CONCLUSION AND RECOMMENDATION 138

5.0 Introduction^" 138

5.1

Recapitulation

^ofthe study ¹³⁸

5.2 Discussion 142

5.2.1 Is Social Media

Marketing

(SMM) ^{able toinfluence}

purchase

intention... 142 5.2.2 Doespurchase intention effect customer

loyalty

¹⁴³

5.2.3 Does

purchase

intention mediate the

relationship

¹⁴⁴

5.2.4 Does

psychological

distance moderate the

relationship

¹⁴⁶

5.3 Contribution ofthe study ¹⁴⁸

5.3.1

Implication

^fortheory ¹⁴⁸

5.3.2 Practical

Implication

¹⁵⁰

5.4 Researchlimitations 152

5.5

Suggestion

for future research 153

6.0 Conclusion 153

REFERENCES 155

APPENDICES 177

APPENDICSA:

Copy

^{ofcover letter 177}

APPENDICS B: Questionnaire ¹⁷⁸

SECTION A:

Demographic

^{data 178}

SECTION B: Assesmentof social media

marketing (SMM)

¹⁸⁰

SECTION C: Assessment ofpurchase ^{intention 181}

SECTION D: Assessmentof

psychological

^{distance "0 182}

SECTION E: Assessmentofcustomer

loyalty

¹⁸³

APPENDICS C: PLS quality ^{crieteriaoverview ) 84}

APPENDICS D: Latentvariable correlation 184

APPENDICSE: R square 184

APPENDICS F: Cross

loadings

¹⁸⁵

APPENDICS G: AVE 186

APPENDICS H: Communality ¹⁸⁶

APPENDICS I: Total effect 186

APPENDICS J:

Composite

reliability ¹⁸⁶

APPENDICS K: Calculation result 187

APPENDICS .L: Outer loadings ¹⁸⁸

APPENDICS M: Outer model (weight^orloading) ¹⁸⁹

APPENDICS N: Path coefficient 190

APPENDICS O: Latent variablescore 190

APPENDICS P: Outerweights ²⁰⁰

APPENDICS

Q:

Measurement model (restandardised) ²⁰¹

APPENDICS R: Measurement model 202

APPENDICS S: Latent variables scores 203

APPENDICS T: Index Value for latent variables 215

APPENDICS U: Manifest variable scores

(used)

²¹⁶

LIST OF TABLES

Table 1.1 Survey

result-Corporate image

^award

industry

^of

hypermarket

category Table 1.2 Indonesia

placed

^{fourth offacebook user} in the world

Table 1.3 Indonesia

placed

^{fifth oftwitteruser}in the world Table 2.1 The Research

Hypothesis

Table 3.1 Selection of

Hypermarkets

^{from Jakartaareas}

Table 3.2. Measurement items of SMM

Table 3.3 Measurement items for purchase ^intention

Table 3.4 Measurement items for

psychological

^distance

Table 3.5 Measurement items forcustomer

loyalty

Table 4.1

Respondent profile

Table 4.2 The summary ruleof thumb evaluation model measurement

Table 4.3

Loading

Table 4.4 Cronbach's

alpha

Table 4.5

Composite reliability

Table 4.6 AYE

Table 4.7 Discriminant

validity

^ofconstructs

Table 4.8

Loading

^andcross

loading

Table 4.9 Rule ofThumbformative Construct

Table 4.10.

Hypothesis

^Result

Table 4.11. Purchase Intention as a Mediator

Table 4.12

Summary

^ofresultof

hypothesis testing

l

2 3 74

86 90 92

93 95 III 117 119 120 121 122 123

124 126

130

134

136

LIST OFFIGURES

Figure

^2.1 Research model

by

^{Kim and Ko}

(2010) Figure

^2.2 Research model

by

^{Kim and Ko}

(2012) Figure

^2.3

Theory

^ofTPB

(theory

^of

planned behavior) Figure

^{2.4 framework}

Figure

^{3.1 Baron and}

Kenny's mediating

^model

Figure

^3.2

Moderating

^model

Figure

3.3 The research model

Figure

^3.4

Theory planned

^behavior

Figure

^4.1.

Validity

^SMM

activity

Figure

4.2 Measurement model R2 the

endogenous

^variable

Figure

^4.3 Ilustration of

mediating

^model

purchase

^intention

Figure

4.4 Illustration ofmoderatorvariable

49

50

52

68

102

104

107

108

116

128

132

135

TABLEOF ABBREVA TIONS

AC :

Average

communalities AVE :

Average

^{variance extracted}

CA ^: Cronbach's

alpha

CFA :

Confirmatory

^factor

analysis

CL ^:

Cross-loading

CR :

Composite reliability

DTC ^:

Psychological

^distance

GOF : Goodness offit INT ^: Purchase intention LYT : Customer

loyalty

LV : Latent variable

OLS :

Ordinary

least squares PLS : Partial least square

SEM : Structural

equation modeling

SMM : Social media

marketing

TPB :

Theory

^of

planned

^behavior

VIF : Variance inflation factor

HUBUNGAN ANTARA PEMASARAN SOSIAL MEDIA, ^JARAK PSIKOLOGI, ^NIAT PEMBELIAN DAN KESETIAAN

PELANGGAN: KEs PENGGUNA PASARAYA SOSIAL MEDIA

DI INDONESIA

ABSTRAK

Kini

terdapat banyak

pasaraya besar yang

menggunakan

media sosial

bagi menguruskan hubungan

^diantara

pelanggan dengan syarikat

agar

ianya dapat meningkatkan tahap

kesetiaan

pelanggan terhadap

pasaraya. Persoalan inilah yang cuba

dikupas

^oleh

kajian.Kajian

ⁱⁿⁱ

menggunakan

^Teori Kelakuan yang

Dirancang

yang ^mana memberi

perhatian kepada

model pemasaran media sosial

dengan

^melihat

kepada

keberkesanan penggunaan sosial media dalam

mewujudkan keinginan

^{untuk membeli serta}

kesannya terhadap

^kesetiaan

pelanggan. Kajian

ⁱⁿⁱ

menganalisis

^data

menggunakan Square

^Least

separa

(PLS-Partial

^Least

Square).

^Data

dikutip daripada

⁴⁸²

responden

^yang

meliputi

20

hypermarket

^{di bawah 4}

jenama

yang terbesar di lima kota sekitar Jakarta. ^Data

dikutip daripada

pengguna yang

mempunyai

^{akaun Twitter dan}

juga

Facebook dan yang

datang

membeli-belah di salah sebuah

daripada empat

^{pasaraya besar tersebut}

(Carrefour, Giant, Hypermart, Lottemart). Dapatan menunjukkan

bahawa pemasaran media sosial

mempunyai pengaruh

yang

positif terhadap keinginan

untuk membuat

pembelian. Tujuan pembeliaan mempunyai

^{kesan yang}

positif terhadap perhubungan

kesetiaan

pelanggan

^dan

juga

^di

dapati mempunyai

^{kesan mencelah}

terhadap

perhubungan

pemasaran sosial media dan kesetiaan

pelanggan.

^Jarak

psikologi juga

^di

dapati mempunyai

^kesan

penyederhanaan terhadap perhubungan

pemasaran media sosial dan

keinginan

^{untuk membuat}

pembeliaan. Pasaraya

^adalah

digalakkan

^untuk

membentuk pengurusan pemasaran sosial media yang

strategik

untuk menarik minat

pelanggan

^kearah

^keinginan

^untuk membeli dan

dengan

ⁱⁿⁱ

pada

^masa

jangka panjang

akan

meningkatkan

^kesetiaan

pelanggan.

THE RELATIONSHIP BETWEEN SOCIAL MEDIA

MARKETING, PSYCHOLOGICAL DISTANCE, ^PURCHASE

INTENTION ^AND CUSTOMER LOYALTY: CASE ^OF HYPERMARKET SOCIAL MEDIA USERS ^IN INDONESIA

ABSTRACT

To date there are many

hypermarkets

^{that uses} social media to manage its

relationship

between the customers and the company ⁱⁿ order to increase the level of customers'

loyalty

^towards

hypermarket.

This is what this research addresses.

Study

^uses

Theory

^of

Planned Behavior. The

study

also focuses ^on the social media

marketing

model where it looks at the effectiveness ^on the _usage of social media in

developing

the intention to

purchase

^{and the}

loyalty

among the ^customers. This data is

analysed using

Partial Least

Square (PLS).

^{Data was} collected from over 482

respondents

^{from 20}

hypermarkets

which is under 4 different

major

^{areas in} cities around the Jakarta

Metropolitan

^{area. Data was}

collected from customers who are twitter and facebook ^{account users} from the

shops

^{at the}

identified at the four

hypermarkets.

Findings

^{indicates that social media has a}

positive

^{influence on the intention to}

purchase.

Intention to

purchase

^{was found to have a}

positive

^{effect on customers'}

loyalty

^{and was}

also found to mediate the

relationship

^{between social media}

marketing

^{and customer}

loyalty. Psychological

distance moderates the

relationship

^of social media

marketing activity

^and

purchase

^intention.

Hypermarkets

^are

encouraged

^to

develop

^a

strategic

social media

marketingto

^{increase customers intention to}

purchase

^{and in the}

long

^run

will enhance customer

loyalty.

CHAPTER 1 INTRODUCTION

1.0. Introduction

This

chapter ^consists

of nine sections. The first section describes the current

scenario

in Indonesia

regarding

^the

impact

of Social Media

Marketing

^{on customer}

loyalty.The

^{second section} describes the

problem

^{statement. The third and fourth}

sections outline the research

questions

^and

objectives.

^The fifth section

explains

^the

scope of the

study

^{which also}

provides

^{an overview} of the research

framework.

Section six elaborates the

significance

^{of the}

^study,

while section seven

explains

^the

contribution

of this

study.

^{This is followed}

by

^section

eight

^{where the}

key

^{terms used in} this research

are

explained.

^{The last}

chapter

details the

organization ^of

^the

remaining chapters.

1.1. Scenario of Retail Trade in Indonesia

Retail trade is

important

for the economic

growth ^of

Indonesia. In

2011,

^the

Contribution of the retail sector to

Indonesia's

Gross Domestic Product reached about 110 trillion

rupiahs.

^The

biggest

^{share was} contributed

by

^the

Hypermarket, (Indonesian

Commercial

Newsletter, 2011).

Table 1.1

Survey result-Corporate Image

^Award

Industry

^of

Hypermarket Categories

Hypermarket

^{ell 2012}

Category

PT Carrefour Indonesia 3.834 Excellent

PT Hero

Supermarket,Tbk (Giant)

^3.495

PT

Hypermart Indonesia,Tbk

^3.477

PT Lotte

Shopping

^{Indonesia 3.426}

Industry

^{3..558 ,}

The

biggest hypennarkets

in Indonesia werebuilt in the areas of Jabodetabek

(Jakarta, Bogor, Depok, Tangerang, Bekasi)

^- Carrefour with 42

outlets.following

^Giant

with 23

hypermarkets, Hypermart

^{with 19}

outlets,

^{and Lotte mart} with 8 outlets. The four

biggest hypermarkets

^{have the}

capability

^to succeed because their Twitter and Facebook official ^accounts have more than

20,000

followers/fans

(www.carrefour.co.id).

(www.hero.co.id), (www.hypermart.co.id), (www.lottemart.co.id).

^The

population

ⁱⁿ

Jakarta is

9,607,800 (BPS, 2012)

which makes it the most

populous

^{Facebook account in}

the country

(socialbakers.com, 2012). Furthermore,

Indonesia is the fourth

biggest

Facebook

community

^{in the world with more than}

^43,978,360

^{users; mean while it is}

also ranked as the fifth country ^{with over 29} million Twitter users. Facebook is the first choice of socialmedias with twitter ^at second

place.

^{Therefore the}

Hypermarkets opened

an access to

only

^Facebook and twitter. The table below shows this progress.

Table 1.2 Indonesia

placed

fourth level of Facebook user in the world

.ll'l.!U._�_._ _. �

.:le • •••^1�5�9640

NotPicture4: Hana Konc.MAld.iYu. Palestine.Sinal pore.!D!WAn

[10

^LargestCOU�

1. unnec Stales 2. Brazil 3. India 4. moonesta 5. MexiCo 6. Turkey 7. UnitedKingdom 8. Philippines 9. France 10. Germany

News about Faceboo'k

• _ _

;ilOFastest.��PastWeeil

155.549.640 ^{1. Brazil} 3.67 % 1.680.500 53.052.660 2. lnelia 2_82% 1.402.580 51,204,280 ^{3. MexiCo}

43.97B.360 ^4. Vietnam 36.249.280 ^{5. ThaiLand} 30.765.240 ^6. Philippines 30.433.220 7. Argentina 28.563.860 ^8. Egypt 24.197,400 g Qatar 23.789.360 10. South Afrlca

1.82% 648.860 10.01 % 548.580 3.37% 504.600 1.12% 317.400 1.42% 271.040 1.92% 217.720 3668% 177.680 3.54% 175.840

22July 2012110:30_00^am

Source: List ofCountries ^on Facebook from

beritateknologi.com,

^2012.

Table 1.3 Indonesia

placed

fifth level of twitter user in the world.

Top ^{20countries in terms of Twitteraccounts}

, • J, '.

6 __

• ^_.._bo_O'.(I,·20'2

• D'.(I'·2'1117_0141-2011

_._,.., , us.

,.­

,-

• U.K.

�-

7 ",-"", , e..­

e_

'o­

Il ...

l? ec-­

t� "WI.:ru.a.

,... R.uI....

t50��

16 __

n ..._^...

18 FrtnCJIII 19 a-...,.

20 R"Y

Source:

Top

20 countries in ^terms of Twitter accounts

by

^Semiocast

Analysis,

^2012.

Many hypermarkets

^{are now using Social Media}

Marketing

^{to interact with}

customers to

help

^{maintain their}

loyalty.

^The management ^of

hypermarkets

^{needs to}

understand the

community

^channels

dynamically

and conceive new ways of

organizing

and

executing

channel activities that add values to the customers.

Therefore, using

Social Media

Marketing

^{to understand customer}

loyalty

^{is needed.}

Social Media

Marketing

enables the

hypermarket

^{to take this} process further

by identifying

smaller groups of^customers with

homogeneous

needs. Twitter communities and Facebook ^{act as a}

catalyst

^to

strengthen

^{the bond between}

hypermarkets

^and

consumers. Indonesia's

huge

^{numbers ofusers} contribute in ^new _ways to run a business and have made a considerable progress.

Ahadmotlaghi

^{and Pawar}

(2012),

have stated that ^{success customer}

relationship

leans to

higher loyalty.

^Customers' engagement ^on Social Media

Marketing

contributes

to

organizational

^success

through

^customer

loyalty,

^better information

gathering.

Information of

Technology (Williams

^&

Sawyer, 2005)

^{is a}

general

^term that describes any

technology

^that

helps

^to

produce, manipulate,

^store,

communicate,

and disseminate information

(p.3). Technology, including ^Twitter,

Facebook and other

websites,in spite

of"customer

engagement"

^is

being

^{viewed in}

technological

^{terms, as one of the}

pillars

of which online communication ^was created

(Luck

^and

^Lancaster, 2003).

^{Refers to the}

communications in frastructure of the

Internet,

^{which is based on the IP}

protocol.

^{IP is}

part

of the TCP/IP

protocol

^{suite. It may also refer to voice over IP}

(YoIP),

^{which uses}

the Internetto make

telephone

^{calls. See}

^VoIP,

^{IP and} TCP/IP. Social media is driven

by

internet

technology.

Social media as the online

community

^{is a} part of the evolution of IT called the internet WEB 2.0

(Sin

^et

al, 2012).

^This social media is referred to as a

community

^to

develop

virtual communications and

relationships

^{between the members.}

This process ^{will occur}with the

availability

^{ofthe internet.}

Social media is the collective of online communications channels dedicated to

community-based input, interaction, content-sharing

and collaboration. Websites and

applications

^{dedicated to}

forum, microblogging,

^social

networking,

^social

bookmarking,

social

curation,

^{and wikis are} among the different types of social media. It refers to a

group of internet-based

applications

that allow the creation and

exchange

^{of user­}

generated

^content.

A computer ^{network IS a} system ^{that connects}

computers

via communication media so that data can be transmitted _among them. The internet has created this

opportunity

^to almost everyone because it enables

organizations

^to conduct businesses in

cyberspace

^{or connect}

people

^{worldwide without}

geographical

limitations.

According

^to

Alavy (2011),

online communities can become

opinion leaders,

influence the

opinion

and decision of entire consumer communities.

Creating

^{an online}

community

^{on Twiner}

and Facebookhas become ^a proven strategy ^{to create}

positive

commercial and emotional

relationships

^between

companies

^and their actual ^or

potential

^customers

^(Romero, 2012).

The

study

is conducted to prove whether the

hypermarket

^{social media users}

would be

loyal

^{to the stores because} of the social network.

According

^{to Weiss and}

Cropanzano (1996),

^the affective and the

cognitive

responses, emotional and behavioral responses, and

neuropsychological

responses affect the

purchase

intentions.

Therefore,

users should be

managed

^both

cognitively

^and

physically (

^{Bennett et}

al., 2003).

^This

could become the customers' intention to

purchase

^{at one of} many

hypermarkets

because ofthe

good relationship

^on social media. The

positive

^emotional

feelings

^{as a}

subjective

^mental

feeling

^{will form a}

purchase

^intention

(Lin

^&

Liang,

^{20 l}

1).

^Purchase

intention is the best

predictor

^{towards customer}

loyalty (Peter

^&

Olson,

^20l

O).

Purchase intention is an

important

^matter

today.

^The

hypermarket industry

achieved fast

growing

markets with

tight competition. Hypermarkets

in Indonesia ^are

not

only facing

^{the local}

competitors

^{but also the new}

foreign hypermarkets

^{from other}

countries. On the other

hand,

^an increase of customer

mobility

^has resulted in them

having

^a greater ^{choice as to which}

hypermarkets they

^{wished to}

shop. Henceforth, psychological

distance will not be a

problem

^{to the customers.}

Psychological

^{distance is very}

important

^to determine the

vibrancy

^of

mobility

that affects

purchase

intention. Jakarta is claimed ^as one the cities with the

highest

income in Indonesia.

Psychological

^{distance as a}

subjective mentality

^{will become the}

trigger

^{to create a}

good relationship

^{between the}

community

^and

purchase

^intention.

Psychological

distance consists of emotional

feelings

indifferent

cultures,

^{habits or} individual views that are defined

by Zhang ⁽²⁰¹³⁾

^{as the sum of factors}

preventing

^or

disturbing

^{the flow of}information to and from the market.

This

study

^{adds a} variable into the

psychological

^{distance as an}

important

^matter

In Indonesia's

hypermarket

^case.

Horrigan (2008)

^{Internet and mobile}

telecommunication with individuals in distant

physical

location has risen

dramatically

within the last decade. This contribution will

help

^to pave the way for researchers to

understand howcustomers are

separated by places

^{and demands.}

People

^{have had}

experiences

^{from their}

community

^{and then}

couple

^{them with}

their emotions to influence their

purchase

^{intention. Purchase intention involves}

behavioral control such as

psychological

distance. With a shorten

distance,

^customers

feel more

loyal

^{to a business}

entity.

The aim of the

study

^{is to}

investigate

^the effect of Social media

marketing

activitiesoncustomer

loyalty

^with

purchase

^{intentions as a}

mediating

^{variable and}

psychological

^{distance as a}

moderating

variable in the context of

hypennarkets

ⁱⁿ

Indonesia.

1.2.

Problem Statement

Theuse of social media is

increasing

in various business sector as a tool to attract

& retain customers. This is still under

study

^{in the context of}

hypermarket.

^Therefore

this research

investigate

^hoe social media

play

^{role to increase}

purchase

intention and

customer

loyalty.

Retail trade is

important

for the economic

growth

of Indonesia. In

2011,

the contribution of retail sector to Indonesia's Gross Domestic Product reached about 110 trillion

rupiahs.

^The

biggest

^{share came from the}

Hypermarket (Indonesian

Commercial

Newsletter, 2011).

Studies in Indonesia

by

^{Tambunan et al.}

(2004)

^{assessed the}

competition

ⁱⁿ

retail industries with

regards

^{to 3}

hypermarkets- Carrefour, Hero,

^{and H}yperm^art. The evidence showed that customers of modem retail increased 48% per year

(Tambunan

^et

aI., 2004). Although

^{there is an} increase in customers of

Hypermarkets, nevertheless, competition

amongst ^the

hypermarkets

^{is very} intense. With the advent ofsocial

media,

customers are mobile and do not stay

long

^{in one}

hypermarket.

^The

Hypermarket industry

in Indonesia is

facing

^stiff

competition

^not

only competitors

but also from new

foreign hypermarkets

from other countries.

The increased

mobility

^{of customers} has resulted in them

having

^a greater choice as to which

hypermarkets they

^{wished to}

shop. Henceforth, psychological

distance will not be a

problem

^{to the customers. This}

study

^{has included}

psychological

distance as a moderator which is a new contribution of the

study. Psychological

^distance

is the

cognitive thinking

^{of whether}

distance,

^a different class level of

shoppers

^{and the}

time the

hypermarket

^is

opened

^{would be a hindrance to customers who}

shop

^{at a}

particular hypermarket. Thus,

this variable is seen to be ^an

important

^{variable to be}

studied.

It can be seen that

hypermarkets using

^{social media as a}

marketing

^{tool tends to}

perform

^better than those that do not. Social media

marketing

^{in this}

study

^{is seen as a}

catalyst

^{to boost the}

purchase

intention ofcustomers of

hypermarkets ^which,

in turn, will have an

impact

^{on customer}

loyalty.

Practitioners and academics have

argued

^{that an essential} strategy ^{for success} and survival in

today's

^market

place

is the maintenance ofcustomer

loyalty (Pan,

^et

ai, 2012; Alrubaiee, 2010; Vessel, 2009). Loyalty

^{is defined as those customers who hold a}

favorable attitude towards ^an

organization by recommending

^the

organization

^{to other}

consumers and exhibit

repurchase

^behavior

(Sivarack, 2011).

Some researchers have

argued

^that

loyalty

^{involves a}

willingness

^ofcustomers

in the interest of

maintaining

^their

relationships

with retailers

(Martin, 2009).

^{In other}

words,

^customer engagement ^{is seen to be crucial in the}

relationship

^{to increase}

customer

loyalty. Loyalty

^{is the}

objective

^of

long-term

^customer engagement

(Behravan

and

Rahman, 2012).

^Customer engagement describes how

deep

the connection between

customers and the company.

Engaging

^{customers with the} company

practically

^means

creating

^customer

loyalty (Behravan

^and

Rahman, 2012).

On the other

hand, polygamous loyalty

^should

not be

ignored (Uncles

^et

aI, 2003;

Vesel &

Zabkar, 2009)

^{so Reichheld}

(2002)

^indicated

in past research that customer

loyalty

^{cannot be earned} in isolation. Lovelock and Wirtz

(2011)

insisted that

building

^customer

loyalty

is difficult. Five decades of scientific

marketing

has resulted in a situation when crucial

concept

^{such as behavioral}

loyalty

gets ^{defined in terms of elusive consumer emotions and on the}

(not unreasonable) assumption

^{that consumers} will continue to act

irrationally

^{from time to time}

(Taylor

^et

al.,2004).

Marketers ^can get ^involved in online communities ^In two ways:

they

^can

participate

ⁱⁿ

existing

web communities ^or

they

^{can set} up their own

(Kotler

^&

Amstrong, 2013; 539). Participation

^and

engagement

^{is the}

part

^{of social media}

characteristics

(Mayfield, 2008).

^This

study

^triesto

gather

^{focused on} engagement ^which these traits underlie

peoples conceptions

^{of ideal} partners ^{in intimate}

relationships (Aaker

^et

al., 2004)

^{and trust. Kotler &}

Amstrong (2013)

^{said that most}

companies

^are

still

experimenting

^{with how to use them}

effectively

and results are hard to measure.

Such online networks ^are

largely

^{user controlled therefore}

investigation

^{of the Social}

Media

Marketing

^is

timely

and needed.

Many hypermarkets

^{in Indonesia}

provide

^the

technology

^to

respond

^social

network on Facebook and Twitter communities. This

approach

^is called Social Media

Marketing

with its characteristics based on interactions

through

^the internet between

customers and

hypermarket

administrators. Interactive communication between

customers and

hypermarketscan provide

^{a two way} communication and form communities called

hypermarket

followers/members. These communities ^can be used for customerengagement ^which

ultimately

^{leads to consumer}empowerment. ^Consumers

can communicate with

hypermarkets

^{or other consumers about}

products,

^{brands or}

stores at any

time,

^not

just

^{at the end of the}

purchase

sequence. Khalifa & Shen

(2005)

stated that

good

interaction _among customers can

happen

^when

they

^{are more well­}

informed.

Trustworthy

^customer facilitates more

purchase

^intention.

Hennig-

^{Thuaru et al.}

(2012)

^have

argued

of the effects of social media on

purchase

intention and lifetime values. The

desirability

^or

undesirability

^ofa

particular

^{issue or behavior}

depends

^{on the}

subjective

^norm

(Kazemi

^et

al, 2013).

^The

Subjective

^{norm is the}

perception

^{related to}

opinions

^ofa

society

^about

doing

^{or not}

doing

the behavior

by

^{an individual}

(Taylor

^and

Todd, 1995;

^{Kazemi et}

al., 2013).

^This

study investigates

^the

relationship

^between

Social Media

Marketing

^as

subjective

^{norm and}

purchase

^intention.

The

uniqueness

of social media

provides

^a social connection

through

the internet which allowsliberal communication and interaction among ^{customers to}

hypermarkets, hypermarkets

^{to customers and to} each other.

(Kaplan

^and

Haenlein,

^20l

O)

^Social

media refers to a group of internet-based

applications

that allow the creation and

exchange

^of

user-generated

^{content. Internet}

technology provided

^a social media that will be easy ^{to use as} well as have usefulness. Internet

technologies provide buyers

^with

an easier access to information about

products

^&

suppliers,

^thus

bolstering buyer bargaining

power

(Porter, 2001;

^{Barrutia &}

Echebarria, 2005).

^{In the context of social}

media

through

^the

^internet,

^users may ^assess the sites based on how easy ^it is to use and how effective it is in

helping

^them

accomplish

their social media related needs

(Rauniar

et

al., 2014).

If customer engagement ^is

high, people

may

experience strongly

^affective

response intentions. The social media represents ^an ideal tool for Social Media

Marketing

^{as consumers}

freely

disseminate the

experience

^{that can be considered}

by people

^to

purchase

intention. The

importance

of social media becomes ^more definite while Swift

(2001)

stated that an

enterprise approach

^{can influence customer behavior}

through meaningful

communications. Laroche

(2013)

stated that social media has

positive

^{effects on}

loyalty.

From an academic

perspective,

^as

long

^as the behavioral is

voluntarily

^controlled

by

^the

individual,

^{it can}

accurately explain

^{the factors}

influencing technology adoption

(Laukkanen

^&

^Cruz, 2009).

^{The construct}

perceived

^{control of behavior as the}

individual's

perception

^{about the ease or}

difficulty

^of

doing

^{behavior. This also}

indicates the individual's

perception

^about

opportunities

ⁱⁿ

doing

^that

particular

behavior

(Ajzen,

¹⁹⁹¹

).lntention

^{was linked to the actual}

purchase

^behavior

(Leng

^et

^al., 2012).

Social Media

Marketing

^can

significantly help

^the information flow within the

organization

^{as well as}

improve

^its

relationships

^{with customers}

especial1y

^enhance

customers' retention and

loyalty (A

^I

izera, 2012).

^This

study

has been used to

explain

how customers' behavior toward the

hypermarkets

^{is influenced}

by

^{social media}

marketing.

^This

study

^{intends to} examine how the

participation

in the selected

emerging

social media

provided by

^the

hypermarkets

^could influence the behavior of

shoppers.

The behavior ofthe consumers is measured the intention to

purchase

^{and their}

loyalty.

Thus,

^this

study

examines the

relationships

between social media

marketing, purchase

intention and customer

loyalty. Although

social media is

expected

^{to influence customer}

behavior and decision

making

^{there are} other factors such as

psychological

^distance

which would influence their decision.

Therefore, psychological

distance is examined ^as

a moderator between the

relationship

of social media

marketing

^and

purchase

^intention.

Based on past ^research

(Brewer, 2007), geographical

distance such as the distance in kilometers between the two closest

major

port ^cities found that the

discrepancy lay

^on

the

corresponding psychological

^distance.

Subjective

^{mental distance is}

generally

referred to the

psychological

^distance

(Zhang, 2013;

^{Dow &}

Larimo, 2009). Subjective

mental distance in this context is

perceived by

^{behavioral control that influences}

intentions and

performs

^a

given

^behavior.

Understanding

^the

psychological

distance will foresee consumer behavior in thecontext of

hypermarket.

Purchase intentions

largely depend

^on the customer's

visiting habits, particularly

in relation to the

learning

^cost involved in

developing knowledge

^{of a new store and}

travel cost

(Desmet, 2012).

^The

relationship

^between

geography

^and

community

^has

been

long

studied and

argued (Hampton

^&

^Wellman, 2003).

^The

subjective

^{norm on}

social

community

^{would be to}

perform purchase

intentions. The greater ^the

psychological

^{distance as}

perceived

^{control the} stronger ^the social media should be to

perform

^{the customer} intentions.

The

theory

^of

planned

behavior is

developed

^to

explain

this research. This social­

psychological theory

^with

regard

^to

perceptions

^of

performance control,

attempts ^to

predict involuntary

^behaviors

(Kazemi

^et

al., 2013).

^The

impacts

^{of three}

factors;

^such

as

attitude, subjective

^{norm and}

perceived

^{behavioral control with the}

tendency

^to

behave are also

explained.

^The

perceived

^control of behavior is the individual's

perception

^{about ease or}

difficulty

^of

doing

behavior and indicates the individual's

perceptions

^about

required skills,

resources, and

opportunities

ⁱⁿ

doing

^{the behavior}

(Ajzen, 1991).

^{This is}

important

^when

examining

^the

psychological

^distance

moderating

role on

relationships

^between the Social Media

Marketing

^and

purchase

intentions.

According

^{to the}

theory

^of

planned ^behavior,

the behavior is determined

by

^the

intention to use. The intention to use is determined

by

^{an attitude toward a}

behavior, subjective

^{norm and}

perceived

^{behavioral control}

(Kazemi

^et

aI., 2013).

^For

instance, purchase

intentions involve behavioral control such ^as

psychological

distance that can

make some consumers become ^more

loyal.

^Customer

loyalty

^{and social}

bonding

^are

synergistic effects,

^wherein

loyalty

^was

suggested

^{as a}

meaning

^commitment

(Ogba

^&

Tan, 2009; Ndubisi, 2004).

^{Commitment is one of the}

important

^{variables for}

understanding

^the

strength

^of

marketing relationships.

It is also useful for

measuring

^the

likelihood of customer

loyalty

^{as well as for}

predicting

^future

purchase frequency (Ndubisi, 2004). Loyalty

^{is a}

deeply

held commitment to

re-buy

^or

re-patronize

^a

preferred product

^{or service} in the future

despite

situational influences and

marketing

efforts which have

potential

^{to cause}

switching

^behavior

(Oliver, 1999; Ndubisi, 2004).

Customer

loyalty

gets ^{defined in terms of elusive consumer} emotions that

consumers will continue to act

irrationally

^{from time to time}

(Taylor,

^{Geluch &}

Goodwin, 2004).

^For

loyal buyers, companies

^{must invest in}

relationship building (Ndubisi, 2004).

^The

relationship

^{is a}

dynamic

process of

managing

^{a customer­}

company

relationship

^{that customers choose to continue}

through

beneficial commercial

exchange (Bergeron, 2002). (Chen

^&

Ching, 2007)

^The

relationship improves

^the

business'

ability

^to build their

loyalty.

This

study

^{focuses on Social Media}

Marketing through purchase

^{intentions to}

customer

loyalty

^with

psychological

^{distance as a} moderator. These

investigations

^are

expected

^to

provide

^invaluable

insights

^into

psychological

^{distances as a moderator}

variable.