CHAPTER I INTRODUCTION

1.1 Review of the Research Object 1.1.1 Company Overview PT. Indofood CBP Sukses Makmur Tbk. (ICBP) is an establised and market leading producer of diverse consumer branded products providing everyday solutions for consumers of all ages. ICBP was established in September 2009 following the internal restructuring of the Consumer Branded Products (CBP) Group of its parent company, PT. Indofood Sukses Makmur Tbk. The business operations of Indofood’s CBP Group, comprising noodles, diary, snack foods, food seasoning, nutrition and special foods, and biscuits. (PT. Indofood CBP Sukses Makmur Tbk. Annual Report, 2015) Although ICBP was established as a seperate entitiy in 2009 and subsequently listed on the IDX on 2010, its various businesses have been operational under the CBP Group of its parent company, Indofood, since the early eighties. Today, many of ICBP’s product brands enjoy leading positions in their respective market segments. At early 1982 PT. Indofood Sukses Makmur started a noodles business and three years after started the nutrition and social food business. PT. Indofood Sukses Makmur continuously growing their busienss every year. (PT. Indofood CBP Sukses Makmur Tbk. Official Website)

1.1.2 Vision, Mission, and Value 1.1.2.1 Vision Statement “The Leading Consumer Goods Company” 1.1.2.2 Mission Statement a. To continously innovate, focusing on cosumers needs, delivering great brands with unparalleled performance. b. To deliver quality products which are loved by consumers.

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c. To continously improve our people, processes, and technologies. d. To contribute to the welfare of the society and environment in a sustainable manner. e. To continously improve stakeholders value.

1.1.2.3 Value Statement “With discipline as the basis of our way of life, we conduct our business with integrity, we treat our stakeholders with respect, and together we unite to strive for excellence and continuous innovation.”

1.1.3 Product Identity Sarimi is one of PT. Indofood CBP Product in noodles segment in competing with other instant noodle product. Figure 1.1 below will show Sarimi logo.

Figure 1.1: Sarimi Logo Source: http://id.wikipedia.org, cited on November 2015 Sarimi has a mascot which is a man with an arabian look a like that smiling and with his two thumbs up. The Sarimi’s mascot tells the consumer how great the taste of Sarimi noodle. Figure 1.2 below will show Sarimi mascot.

Figure 1.2: Sarimi Arabian Man Mascot Source: http://i.ytimg.com, cited on November 2015

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Indofood always developing Sarimi flavor selection year by year. Until now, Sarimi have 14 flavor selection, namely, Sarimi rasa sate ayam, Sarimi rasa pecel, Sarimi isi 2 ayam bawang, Sarimi isi 2 baso sapi, Sarimi soto koya gurih, Sarmi lime soto koya, Sarimi spicy soto koya, Sarimi rasa ayam bawang, Sarimi rasa baso sapi, Sarimi goreng rasa ayam, Sarimi rasa ayam, Sarimi besaar rasa ayam bawang, Sarimi besaar ekstra pedas, and Sarimi besaar rasa soto. The list of Sarimi flavor selection can be see in the table 1.1 below.

Table 1.1 : List of Sarimi Instant Noodle Product Flavor Variant Product Image

Product Name

Product Description

Sarimi Rasa Sate Ayam

Satay is one of the best Indonesian National Dish. Now you can enjoy this legendary satay delicacy with the authentic taste of Sarimi noodle in the new Sarimi Mi Goreng Rasa Sate Ayam. It is seasoning creates the real experience of enjoying satay. It comes with crunchy topping to give you the complete real satay experience. Easy to serve and now you can enjoy satay without the chared taste.

Sarimi Rasa Pecel

Pecel is a traditional Indonesian salad. The secret of pecel’s delicacy is in its authentic peanut sauce recipe. Now this authetic taste can be enjoyed in the new Sarimi Mi Goreng Rasa Pecel. It comes with the crunchy peanut topping to give you the complete real pecel experience. With Sarimi Mi Goreng Rasa Pecel, everyone now can enjoy the Indonesian salad in more simple way.

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Sarimi

isi

2

Ayam Table 2 pieces of noodles, mixed with

Bawang

a combination of chicken broth and garlic oil make flavor combination on savory and delicious.

Sarimi isi 2 Baso Sapi

Table 2 pieces noodles with meatballs already feel very familiar and favored.

Sarimi Soto Koya Gurih Added with more tasty koya, makes the broth taste so delicious and different from the others. Sarimi Soto Koya Gurih, it is incredibly tasty until the last drop. Sarimi Soto Koya Jeruk This Sarimi product combines Koya’s Nipis

piquant sensation with fresh lime to shake both your plate.

Sarimi

Soto

Koya Makes a perfect meal for those who

Ekstra Pedas

like to wrestle ther tongues with extrahot spice, especially with the added delight of Koya powder melting in the soup and on your tongue.

Sarimi

Rasa

Ayam A classic Sarimi variant that guarantees

Bawang

you a pleasant dining experience from a sinple preparation.

Sarimi Rasa Baso Sapi

This tempting meatball flavor deserves a top mark when served with a bowl of tasty soup, giving the new meaning to the word “sublime”.

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Sarimi Mi Goreng Rasa Sarimi’s fried noodle with surely turn Ayam

anyone tasting it into an addict.

Sarimi Rasa Ayam

The delectable Sarimi chicken is made complete with a sachet of seasoning giving its incredible chicken soup taste.

Sarimi

Besaar

Rasa This perfect blend of chicken and onion

Ayam Bawang

becomes more heavenly with extra chili sauce. For those who think one is not enough, here is Sarimi Ayam Bawang in its jumbo size.

Sarimi

Besaar

Mi Big in quantity, big in quality! Add to

Goreng Special Ekstra that an extra-spicy effectn, and you won’t be doubting your craving!

Pedas

Sarimi Besaar Rasa Soto Now you can taste Sarimi Soto Mi’s Mi

Spicy, sweet, and sour in jumbo sensation.

Source: Official Indofood Website, cited January 2016

In 2011, the instant noodle segment in PT. Indofood CBP Sukses Makmur earned 13,59 trillion, with the percentage 68,8% of 100% total revenue. From the Sarimi instant noodle itself, it only earned 185,2 billion from the total revenue of instant noodle segment.. According to the data that acquired from the annual report of PT. Indofood Sukses Makmur in 2011, Sarimi have marketing cost with the total amount of 24,5 billion. Therfore the researcher, wants to research deeper about sarimi. Because the product contributes the smallest profit in this segment.

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1.2 Research Background Industrial sector is the major sector in economy of Indonesia. This sector is the largest contributor in the formation of the Gross Domestic Product (GDP) of Indonesia over the last 10 years. The data of Badan Pusat Statistik (2007) showed that in 2006 more than 28,05% of the GDP is from the industrial sector, while the agricultural sector only reached 12,90%. According to Indonesia’s Gross Domestic Product, consumption plays an important role. This means that, with the increasing number of people, then by itself Indonesia companies engaged in manufacturing, especially food, will enjoy an advantage over the rate of population growth. The composition of the population of Indonesia is dominated by the consumption of food consumption. The average consumption of the population for food is 50,24%, while for non-food consumption was 49,76%. This means that the majority of Indonesia’s population consumption is allocated for food. Table 1.2 will show the composition consumption of Indonesia population.

Table 1.2 : Composition Consumption of Indonesia Population Goods Group

Percentage (%)

Average

2007

2008

2009

2010

2011

2012

2013

Food

50,76

49,83

49,38

48,57

51,54

52,29

49,34

50,24

Non-Food

49,24

50,17

50,62

51,43

48,46

47,71

50,66

49,76

Total

100

100

100

100

100

100

100

100

Source: BPS (http://www.bps.go.id)

From many various industrial sectors in Indonesia, one of the rapidly growing industry is the food industry. The food industry ranks first in the industry structure of indonesia, and one of the companies engaged in this industry are PT. Indofood CBP Sukses Makmur Tbk. with one of their product which is Sarimi. Figure below will describe the Indonesia’s industry structure.

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Table 1.3 : Indonesia’s Industry Structure Percentage (%) Industry Sectors

200

Averag e

2006

2007

15,9

15,8

17,2

17,2

18,6

2

2

6

7

3

Tobacco

9,61

9,85

7,76

7,63

7,00

8,37

Textile

7,30

6,57

4,35

5,40

4,61

5,65

Apparel

3,76

3,54

3,33

3,44

3,32

3,48

Leather and leather goods

2,02

1,57

1,76

1,68

1,66

1,74

2,84

3,01

2,37

2,17

1,65

2,41

5,97

5,44

5,22

5,86

5,14

5,53

1,26

1,26

0,88

1,02

0,98

1,08

Coal, oil, and gas, and nuclear fuel

1,03

0,53

0,55

0,33

0,31

0,55

Chemical and goods made from

11,3

13,3

17,0

16,6

13,4

2

3

0

8

4

5,80

5,75

5,94

5,28

5,69

5,69

Non-metal excavated items

3,68

4,02

3,62

3,79

3,76

3,77

Basic metal

3,91

4,14

4,45

3,63

3,45

3,92

Goods made from metals and tools

2,43

2,45

2,95

3,39

3,07

2,86

Machine and equipment

1,75

1,57

2,01

1,94

5,08

2,47

0,02

0,04

0,04

0,04

0,04

0,04

2,10

2,02

3,13

2,55

2,58

2,48

3,57

2,06

2,03

2,41

2,30

2,67

0,42

0,31

0,27

0,20

0,27

0,29

Food and Drink

Woods, goods made from woods, and webbing Paper and goods made from paper Publishing,

printing,

and

reproduction

chemical Rubber and good made from plastic

Office supplies, acountancy, and data processing Other electrical machine and the equipment Radio,

television,

and

communication tools Doctors

tools,

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2009

201 0

16,98

14,35

measuring

instrument, navigation, optic, and watch

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Automotive

9,01

6,84

6,75

7,14

9,58

7,86

Other transportation equipment

3,61

6,33

6,39

6,19

5,33

5,57

2,53

2,46

1,92

1,93

2,11

2,19

0,11

0,11

0,0

0,02

0,01

0,05

100

100

100

100

100

100

Furniture and othe processing industry Recycle Total Source: BPS (http://www.bps.go.id)

One example of the Indofood CBP product is instant noodles. BSP noted that 98% market share in the Indonesian noodle is instant noodle market. Table 1.4 below will decribe the percentage of noodles consumption based on type.

Table 1.4 : Percentage of Noodles Consumption Based on Type Food Type

Percentage (%)

Average

2002

2003

2004

2005

2006

2007

Instant Noodle

96,27

97,21

96,91

98,20

98,63

98,14

97,56

Wet Noodle

0,06

0,03

0,04

0,04

0,03

0,01

0,04

Dry Noodle

1,68

1,08

1,59

1,14

0,90

0,85

1,21

Bihun

1,99

1,68

1,46

0,62

0,44

1,00

1,19

Total

100

100

100

100

100

100

100

Source: Data processed from BPS (http://www.bps.go.id) and company data.

The level of consumption of instant noodles due to the assumption that these foods as a staple food substitute for rice. Another cause is the increased consumption of instant noodles acceptable taste than other types of food which are cereals and crackers. Based on an increase on consumption, instant noodle market also increased. Instant noodles business turnover until year 2007 is estimated to reach Rp. 11 Trillion. (SWA Magazine) That sitation makes the competition in the instant noodles business become more thight. It force company to think harder to sell more of their product to the consumer. One of the product that is struggling in competing with other is Sarimi. Since 2002 until 2011 Sarimi always get the lowest market share compared to the

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competitor. Figure 1.3 will show the instant noodle market share results from 2002 until 2011.

100% 90% 80%

76%

74%

69%

68%

70%

66%

67%

21%

22%

76%

75%

15%

14%

16%

71%

72%

17%

60% 50% 40% 30% 20%

10%

11%

11%

10% 0%

12% 7%

5%

4%

5%

5%

4%

4%

6%

4%

4%

3%

2%

1%

1%

1%

1%

1%

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Indomie

Mie Sedaap

Supermi

Sarimi

Figure 1.3: Instant Noodles Market Share Source: Processed data from http://duniaindustry.com, cited on November 2015

Based on figure 1.3, we can see that Sarimi always get the lowest market share. Which means Sarimi product is not demanded by counsumer. Cited from Top Brand Award, Sarimi only get 2,2% of Top Brand index, which will be shown in table 1.5 below.

Table 1.5 : Top Brand Index for Instant Noodles Category Brand

TBI

TOP

Indomie

75,9%

TOP

Mi Sedap

15,9%

TOP

Supermi

2,27%

Sarimi

2,2%

Source: Top Brand Award (http://www.topbrand-award.com)

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As seen on the table 1.5 above, Sarimi also get the lowest percentage compared to the other competitor. According to Kotler (2012:500) advertising is any form of presentation and promotion of ideas, goods, or non-personal services by an identified sponsor. Through advertising, company can introduce their product or services that they provide, describe the product or services the provide, and build brand image to the consumer. Advertising can make customer remembering the company and its product. At the time when the needs that related to the certain product or services comes, customer will remember the advertisement and stimulate customer purchase decision. Refers to Shimp (2003), advertising has five functions, which are informing, persuading, reminding, adding value, and assisting. Promotion on advertising should be related to the market behavior, market needs, and market segment. Through that concept hopefully company can get a sustainable purchase from the customer. There are several types of media advertising that can be used by companies for promotional purposes. According to Kotler (2012:535) major types of media are newspaper, television, direct mail, radio, magazines, outdoor, yellow pages, newsletters, brochures, telephone, and internet. With a good promotional word and easy to understand content, the purpose and product description will be well understood by the customer. Afterward, customer will comes up with a perception from the ads and also the product and the company itself. As quoted from Boyd – Walker – Larecche in Morrisan (2010) television is the best in the imagery and symbols in communication that able to demonstrate the use of product and consumer reaction. Television advertising in indonesia become more attractive to be used as a tools for promoting product or service. From the figure below, television ad spending in Indonesia is increasing every year.

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Spendung in million U.S. dolar

7.000

6.058

6.000 4.855

5.000

4.071 3.477

4.000 3.000 2.000

1.603

1.825

2008

2009

2.289

2.798

1.000 0 2010

2011

2012

2013

2014

2015

Figure 1.4: Television Ad Expenditure in Indonesia Source: Processed data from http://www.statista.com, cited on December 2015 As we can see from the above figure 1.4, television ad spending in indonesia is increasing every year since 2008 with 1,6 million U.S dollar to 6 million U.S dollar in 2015. That figure above shows that many company spend their promotional cost in television advertising. In addition, television advertising played an important role in shaping a positive public opinion againts the product, and develop public trust in the product and company that produce them. In overall result, media consumption either in cities based on java island or outside java island shows that television still be the primary medium that consumed by Indonesia citizen with the result of 95% (cited on September 2016 from www.nielsen.com) . Based on the description above, the author interested in conducting research with the title, “ THE EFFECT OF TELEVISION ADVERTISING TOWARDS PUCHASING DECISION PROCESS ( a Study on Sarimi Instant Noodle Product )

1.3 Problem Identification 1.3.1 Problem Formulation Based on the research background, the author formulate the problems that exist, which are, Sarimi instant noodle market share decreasing every year and get the lowest market share in instant noodles market. Based on that, the author wants to know and analyze whether there is any influence of television advertising on customer purchase decision process. Several studies that have been published and

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related to the analysis of the influence of advertising on the purchase decision is not related to Sarimi Instant Noodle the product of PT. Indofood CBP Sukses Makmur Tbk.

1.3.2 Research Question Based on the problem formulation above, the research question of this study are: 1. How is the customer’s assessment of Sarimi instant noodle advertising on television media? 2. How is the customer purchasing decision process on Sarimi instant noodle product? 3. Whether Sarimi’s television advertising have an effect towards customer purchasing decision process?

1.4 Research Objectives Based on the research question above, the research objectives are described below: 1. To discover customer’s assessment of Sarimi instant noodle advertising on television. 2. To discover customer purchasing decision process of Sarimi instant noodle product 3. To discover the effect of Sarimi instant noodle advertising on television towards customer purchasing decision process.

1.5 Research Function 1.5.1 Theoretical Aspect The result of this research hopefully can give useful information and used as a reference for the others in constructing undergraduate thesis in the field of marketing management that related to the impact of advertising.

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1.5.2 Practical Aspect The result of this research hopefully can give a good contribution for the company for choosing the best advertisement to promote their product and services, so they can get maximum feedback from their promotional advertisement and can be used to improve business knowledge.

1.6 Final Project Systematic The writing structure of this research are divided into five chapters as follows: 1. Chapter I: Introduction This chapter is describing the review of the research object, research background, problem formulation, research objective, research function, and scope of research.

2. Chapter II: Literature Review In this chapter, the author will describe the theoretical basis, research framework, and hypotheses.

3. Chapter III: Research Methodology In this chapter, the author will describe about the description about research variables, sample determination, data size and source, and data analyze method.

4. Chapter IV: Results and Discussion In this chapter, the author will tell about the result of the research in systematic and then analyze with research methodology that has been established and held for further discussion.

5. Chapter V: Closing This chapter will contains conclusion of the research, research limitations and suggest based on the result of the research.

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