CHAPTER I INTRODUCTION

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1 CHAPTER I INTRODUCTION 1.1 Research Background Branding and brand equity have become topics of interest to marketing researchers for many years. A brand can be defined as a name, term, sign, symbol, or design, or combination of them which is intended to identify the goods and services of one seller or group of sellers and to differentiate them from those competitors (Kotler, 2012, p. 263). It becomes an important tool for the marketer as the consumer uses it as a cue to infer certain product or service attributes. However, the recent technological advancements and lower financial entry barriers into the media industry have led to changes in practices of mass communication (Oyedeji, 2007). The current media environment is able to deliver specialized content to niche audiences in various formats through a large number of media channels (Goldstein, 2004). Not only the new media vehicles (e.g., blogs, satellite radio, podcasts, online video and news sources, etc.) but also traditional media types (radio, television, magazines, and newspapers) presently compete for audiences and advertising revenues, but also the competition among the traditional media vehicles has become more intense. As the result, media organizations found themselves forced to adopt strategic management decisions and practices that had been once commonly used for the marketing of consumer products (Oyedeji, 2007). Some television networks have long sought to differentiate their products on the basis of functional attributes such as content features and presentation. That is because 1

2 gaining competitive advantages based on only product attributes (e.g., news, entertainment and sports) has become harder due to the increase in media outlets and fragmentation of audiences. Consequently, the television networks have to find ways of building distinctive and meaningful brand images in the minds of news audiences (Chan-Olmsted and Cha, 2008). While brand consultants emphasize the importance of branding, television networks shift their focus from their earnings per share to long-term shareholder value. Branding has also become more important than programming, because the value of a successful brand lasts longer and is higher than a program (Ryan, 1999; Chan-Olmsted and Cha, 2007). According to Yang and Tso (2007, p. 19), affirm that In the field of media management, understanding consumer acceptance of media products is becoming a central issue in the face of audience fragmentation and media globalization. Prior research concluded that international television programs in general moved from more advenced and culturally dominant countries to developing or less developed countries (Chadha and Kavoori, 2000; Chung 2005; Yang and Tso, 2007). As one of developing countries, Indonesia is a great example of a market to study because of the rapid growth in the TV network industry. According to Afdal (as cited in Marketing, 2011), since these 15 years, the development of private television network in Indonesia experiences significant growth both in national and local region. At the first, there was only a public television network, TVRI, which firstly broadcasted its program on August 24, It followed by the first private television network, Rajawali Citra Televisi Indonesia (RCTI) that has existed since March 1, Nowadays, there are approximately more than 10 national private television networks (RCTI, SCTV, MNC TV, Global TV, Indosiar, ANTV, Trans, Trans7, 2

3 Metro TV, TV One, Kompas TV, etc). In Yogyakarta especially, there are 3 private local television networks. They are Jogja TV, RBTV Jogja (Cooperating with Kompas TV), and ADiTV. The rests are local television cable channels and community television networks. ADiTV itself is one of the new local private television networks in Yogyakarta that was established in 2009 and initiated by the one of the largest Muslim organization, Muhammadiyah. As a new player in television network business, ADiTV is still in the process in creating its strong brand image and positioning in order to be able to compete in its industry. According to Dr. Rangga Almahendra, S.T., M.M, the director of ADiTV, recently ADiTV sets its brand positition as the first shariah television network in Yogyakarta and chooses family (Mom and Kids) as its target audiences. It tries to build distinctive and meaningful brand images in the minds of audiences. Most of its programs are also related to family and muslim life style, such as Macapat Syafa at with Cak Nun (Javanese-Islamic song program with one of popular religious singer, Cak Nun), Cahaya Rabanni Tafsir (Discussion about Quran s meaning), Kultum (7 minutes speech about Islamic knowledge), Menapak Jejak Muhammad (Following the taught of Prophet Muhammad), Galeri Halal (Promote Halal Cullinary around Yogyakarta) etc. Besides that ADiTV also gives educative program for Childern such as selected cartoons, Kultum for children, and soon. Other programs and the daily schedule of ADiTV are shown in the appendix 9. As ADiTV wants to differentiate itself in that way, it already has a specific vision to be the best content provider of shariah in television network industry in The general vision and mision of ADiTV also can be seen through Table 1.1. ADiTV also consistently requires its women employees and talents to dress hijab in order to strengthen its position as shariah television. 3

4 Table 1.1 The Vision and Missions of ADiTV Vision "Being a Top Local TV and Featured in Yogyakarta that broadcast programs for families Educating and Interesting, Especially Children and Mothers" Mision - Broadcast ProgramTV with Soul, Breath and Feel Islam and Spirit of Muhammadiyah - Becoming Top Alternative Work for the television footage - Running a Business Unit Self-Oriented benefits with professionalism and passion for the Modern Struggle Propagation Society Brighten whole. (Source: accessed on October 2013) The reason to be the first of shariah television network is not only because it was initiated by Muhammadiyah but also the consideration of the population in Yogyakarta Province is majority moslems. It can be seen from Table 1.2 that in 2012, most of populations in Yogyakarta embrace Islam as their religion. More than 90% of Yogyakarta Province populations are Muslims. Based on that consideration, ADiTV is sure that those majority populations can be targeted as the potential audiences. Moreover, in these days, shariah trend is now booming (dw.de, 2013). There are not only banks that using shariah tagline but also insurances, fashions, and hotels business. As the increase of purchasing power of population in Indonesia, they are literally "consuming" all of Islam's in a "very visible way" (Fealy, 2013). That is also becoming one of the reasons why ADiTV proudly declares itself as shariah television 4

5 network. It can facilitate people (especially Moslem people) who need more knowledge and information about Islam. Table 1.2 The Percentage of Population s Religion in Yogyakarta Province (In percentage (%), N= people) Region Religion (%) (%) Islam Christian Catholic Hindu Budha Khong Hu Chu Other Total Kulon Progo Bantul Gunung Kidul Sleman Kota Yogyakarta Province of Yogyakarta Source: Badan Pusat Statistik, 2010 Besides positions its brand strongly in shariah label, ADiTV develops its business through targeting 2 sided markets. There are divided into upstream and downstream market. For upstream market, it includes the agencies that interested in publishing their advertisements in ADiTV. On the other hand, downstream market focuses on the event organizers that want to team up with ADiTV, so that ADiTV can be the media partner and broadcast their events. Besides that, in these days, ADiTV intensively conducts researches in order to observe customers wants, so that ADiTV can serve them well. Refering on how brand is really important to be built as a new local television channel, the researcher wants to measure the brand equity of ADiTV through its measurement (brand awareness, perceived quality, brand loyalty, brand image, brand association, and organizational association). Those variables are going to be tested 5

6 whether they have significant direct effect on brand equity of ADiTV or not. Besides that, the researcher also wants to know which one of the consumer based brand equity measurement that give the strongest influence to ADiTV s brand equity, so that it can be optimalize. Moreover, it can be used as well to increase other measurements which have less influence in ADiTV s brand equity. 1.2 Research Problem ADiTV is one of the television networks in Yogyakarta that positions itself as the shariah television network. As ADiTV is a new player in its business field, it still wants to assure that their existing customers have a good perception in their mind through superior quality in its service, social esteem ADiTV provides for them, trust in ADiTV as shariah television channel and their self-identification with ADiTV. The researcher wants to investigate it through customer-based brand equity (CBBE). In this research, the measurements of CBBE (brand awareness, perceived quality, brand loyalty, brand image, brand association, and organizational association) are going to be tested whether they have significant direct effect on brand equity of ADiTV or not. 1.3 Research Questions Therefore, in order to sum up the research problem in this study, here are some questions that researcher wants to examine about ADiTV s brand equity. a. Does brand awareness have a significant positive direct effect on brand equity? b. Does perceived quality have a significant positive direct effect on brand equity? c. Does brand loyalty have a significant positive direct effect on brand equity? d. Does brand image have a significant positive direct effect on brand equity? e. Does brand association have a significant positive direct effect on brand equity? 6

7 f. Does organizational association have a significant positive direct effect on brand equity? 1.4 Research Objectives There are some points that need to be achieved in this research in order to answer those several research problems regarding how each of dimension in brand equity influences brand equity of ADiTV. a. To investigate whether brand awareness has a significant positive direct effect on brand equity or not. b. To investigate whether perceived quality has a significant positive direct effect on brand equit or not. c. To investigate whether brand loyalty has a significant positive direct effect on brand equity or not. d. To investigate whether brand image has a significant positive direct effect on brand equity or not. e. To investigate whether brand association has a significant positive direct effect on brand equity or not. f. To investigate whether organizational association has a significant positive direct effect on brand equity or not 1.5 Research Scope This research is held in the field of marketing. Specifically, it discusses the issues of consumer-based brand equity in the television network industry. This research discussion focuses on investigating the brand equity of ADiTV s from its customer point of view. In the literature, brand equity has been measured with 7

8 multiple dimensions such as brand awareness (Aaker, 1991), perceived quality (Aaker, 1991, 1996, Yoo et al., 2000), brand loyalty (Yoo et al., 2000; Yoo and Donthu, 2001), brand image, brand association, brand personality (Aaker, 1997), and organizational association (Aaker, 1996). Through the survey-based study, the research model and hypothesis were tested to 180 respondents who live in Yogyakarta, in the range of age older than 14 years old, and familiar with ADiTV or ever experienced enjoying ADiTV s programs. The questionnaire consists of 38 questions that using a five-point Likert-type. The questionnaire was designed to analyze the effect of each brand equity measurement to the brand equity. 1.6 Research Contribution This research can give the contribution both for the researcher and practitioners in television network industry. For the researcher, this research gives the opportunity in applying the theoretical knowledge especially about consumer-based brand equity. This research also can be the literature of the following research that can be beneficial for other researchers in the field of marketing, especially about brand equity. However, this research also can give the contribution to practitioners in television network business, especially the management of ADiTV. It can help the decision making process in strengthen its brand. This can be useful for achieving a good perception and feedback from customers that can lead to satisfaction and loyalty as every business purposed to. Generally, it can help ADiTV in understanding audiences thought about ADiTV s brand awareness, perceived quality, brand loyalty, brand image, brand association, and organizational association also their effect in the 8

9 brand equity in order to strengthen ADiTV s brand. Moreover, this research can assist ADiTV in designing competitive marketing mix strategy, especially communication strategy, in order to be more competitive in media and creative industry. 1.7 Writing Structure This research writing structure consists of 5 chapters. The first one is Chapter 1 titled Introduction. This chapter provides descriptions about the background of this research, problem statements, research purposes, research scope, research contribution, and writing structures of this overall thesis. Then it is followed by Chapter 2, which is Literature Review and Hypotheses Development. It contains relevant theoretical overview which is used by the researcher to sustain this research. It comprises the literature review and previous study of consumer-based brand equity, previous research overview, and consumer-based brand equity in service industry. In this chapter consists the hypotheses development and theoretical framework which applied in this study as well. It covers brand awareness, perceived quality, brand loyalty, brand image, brand association, organizational association and brand equity. Third, this research has Chapter 3 which discusses about Research Method. This chapter explains about the methods of this research. It consists of research variables and definition operational variables, type and source of data, sampling design, data collection method, research instrument, validity and reliability test, and data analysis method. Forth part of this research report is Chapter 4 with the title of Data Analysis. Data has been collected through the chosen sampling method and processed using SPSS 19. Then, those are interpreted in this chapter. The last part of this research report is Chapter 5 titled Conclusion. This chapter provides conclusion regarding the results of this research by answering the questions in the problem statements, describing the research limitations, explaining possible managerial 9

10 implication, and suggesting some useful recommendations for the next researchers to build a better research. 10

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