1.1 The Research Background and Significance of the Subject

Association of South East Asia Nations or well-known as ASEAN, holding a futureprospect of big market as it promotes intergovernmental cooperation and facilitateseconomic integration amongst its member. Following the implementation of ASEANEconomic Community (AEC), many products of ASEAN countries are invading eachother which leaving the consumer with many options to purchase the same type ofproducts. It has become important to consider the relation between ASEAN EconomicCommunity implementation and consumer purchase intention to FMCGs in Indonesia,as Indonesia plays a prominent role in the ASEAN region due to the numbers; itspopulation alone exceeds about 240 million people, making it the fourth largest countryin the world in terms of its population after China, India, and the United States,meanwhile business in Indonesia should meet the needs of 65 million households.About 60% of Indonesia‘s population live on Java Island, the most densely populatedisland in the country. Those numbers also translate into a vibrant labour force of skilledand educated workers in the country.This condition was followed by global capital markets have recovered significantlysince the financial crisis of 2008. According to a recent Bloomberg article, Indonesia‘s240 million people are currently ―basking in a consumer and resources driven boom.There are tens of millions of households on the brink of making the leap into thebankable class, the report enthuses. These emerging middle income earners – said tonumber 35 million – are proving eager and discerning consumers, who will seek out andpay for quality. They are a key driver of the Indonesian economy, tipped to increase bymore than 6% this year. As Indonesian consumers saw economic conditions improve,they tended to adjust their purchasing habits, increasing their willingness to spendmoney or becoming more adventurous by buying in categories they had never beforeconsidered.

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1.2 Purpose of Research

The purpose of this research is to understand the impact of ASEAN EconomicCommunity on consumer purchase intention to fast-moving consumer goods inIndonesia. Moreover, it will also find out the relationship between the free flow ofgoods in ASEAN Economic Community and the consumer‘s purchase intention onfast-moving consumer goods. In addition, the research will also find out the significantfactor that affected the purchase intention in Indonesian consumers. Therefore, the keysobjective of this research as the following:(1) To study the impact of ASEAN Economic Community on consumerpurchase intention to fast-moving consumer goods in Indonesia.(2) To provide the information about the awareness and attitude towardsASEAN FMCGs products behind consumer purchase intention onFMCGs in Indonesia.(3) To provide the information about the perceived value towards ASEANFMCGs products between Indonesian consumers.

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Chapter 2. Structure of Theoretical Models

 

2.1Concept and content of variables

As the implementation of ASEAN Economic Community would certainly bringadvantages, including lower prices and better quality goods and services, howeverIndonesia‘s public awareness about the implementation of ASEAN EconomicCommunity remains low, which could have affected their purchase intention ofproducts from other ASEAN countries.Awareness is a term used to define―knowledge created through the interaction ofan agent and its environment — in simple terms  knowing what is going on‘[9].Awareness can be further defined by breaking it down into a set of characteristics:[21]  It is knowledge about the state of some environment  Environments are continually changing, therefore awareness knowledge mustbe constantly maintained  Individuals interact with the environment, and maintenance of awareness isaccomplished through this interaction.  It is generally part of some other activity – generally making it a secondarygoal to the primary goal of the activity.Concerning the question of awareness measurement, there are definitions as being"awake, alert, informed…"[10]. To be aware is to be conscious of all the information weare exposed to at the moment[22]. Within the environmental management context,awareness is posited as the initial phase of the learning process towardspro-environmental behaviour and is highly influenced by various internal and externalfactors[23]. From previous study, Awareness can also be lengthened to their knowledgeand consciousness about the latest news around ASEAN and ASEAN EconomicCommunity. Another study that was almost related to the use of awareness on consumerbehaviour was conducted by Grunert and Aachmann about consumer reactions to theuse of EU quality labels on food products. In their research it is said that awareness canbe regarded as a proxy to measure consumer perception, as it is results from perception[24].

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2.2Theoretical Model and Research Hypothesis

In this research there are six hypotheses to test the variables derived from theconsumer behaviour theories and the literature review on consumer purchase intentionand both ASEAN Economic Community and fast-moving consumer goods in chapter 1including purchase intention and consumer demographic that has role as mediatingvariables. Therefore derive the following hypothesis:The implementation of AEC in 2015 to promote the whole region as a singlemarket and production base, there will be an elimination of tariffs in the sense of havingfree flow of goods/services/investment capitals among ASEAN countries[25]. Forconsumer society, the implementation of AEC would certainly bring advantages,including lower prices and better quality goods and services. As Indonesian consumerssaw economic conditions improve, they tended to adjust their purchasing habits,increasing their willingness to spend money or becoming more adventurous by buyingin categories they had never before considered. Some consumers used products morefrequently or ―traded up to more premium versions of products they use[1]. Purchaseintention indicates that consumers will follow their experience, preference and externalenvironment to collect information, evaluate alternatives, and make purchase decision[26], which with the awareness of ASEAN and AEC, also the habits of purchasingimported products among Indonesian consumers, created multiple choices forIndonesian consumers which is will positively affected consumer‘s purchase intention.Hypotheses 1: Awareness of ASEAN and ASEAN Economic Community has directpositive impacts on consumer purchase intention.

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Chapter 3. Data Collection and Analysis.............20

3.1. Selection and Measurement of Variables .............20

3.2. Survey Research Design......22

3.2.1. Questionnaire Design............22

3.2.2. Data Compilation and Samples Introduction .........23

3.2.3. Questionnaire Pretest ............25

3.3. Data Analysis............25

3.4. Verification and Explanation of Hypotheses ........32

3.5. Chapter Summary.....43

Chapter 4. Discussion of Hypothesis Testing Results & Suggestions............44

4.1. Discussion of Hypothesis Testing Results............44

4.1.1. The Awareness of ASEAN and ASEAN Economic Communitycondition analysis.......44

4.1.2. Perceived Value mediating role analysis.....45

4.1.3. Discussion on consumer demographics‘mediating role..............45

4.2. Theoretical Contribution .....46

4.3. Practical Recommendation.............47

4.4. The Research Limitations and Outlook.....48

4.5. Chapter Summary.....48

 

Chapter 4 Discussion and suggestions

 

4.1 Discussion of Hypothesis Testing Results

This research mainly studies the impacts that awareness of ASEAN and ASEANEconomic Community has towards the Indonesian consumer purchase intention of otherASEAN fast-moving consumer goods, while at the same time adding two more factorsto deepen the study about awareness. As five of six hypotheses proved, this chapter willdiscuss more and analyzed about the findings of research.From the research findings, awareness has a small percentage of impacts towardsconsumer purchase intention. This small percentage are mostly made from neutralanswer in Likert‘s scale, even though many of respondents familiars with ASEAN andASEAN Economic Community, most of them have little concerned towards the ASEANand ASEAN Economic Community. But despite of this, they have positively neutralattitude towards the ASEAN and ASEAN Economic Community, as most of them alsohave experienced of purchasing the fast-moving consumer goods from other ASEANcountries.This findings also strengthen the statement of Indonesian Institute of Sciences(LIPI) ASEAN team in May 2015 as one of LIPI senior researcher Tri Nuke Pudjiastutisaid that based on the survey, the level of public understanding toward the ASEANEconomic Community was only 25.90 percent, while the awareness level amongbusiness players and traders stood at 27.80 percent[2].Other interesting findings about awareness of ASEAN and ASEAN EconomicCommunity are that this awareness is significantly influenced by consumerdemographics. While other variables have a negative correlation with consumerdemographics, awareness have a positive correlation, which means the higher level inconsumer demographics also means the higher the awareness. This also imply that someof the Indonesian with lower level of consumer demographics including, lowereducational background, younger age, and lower monthly income, are lack of awarenesstowards the ASEAN and ASEAN Economics Community.In the result of this research it is possible to say that awareness of ASEAN andASEAN Economic Community has influences on consumer purchase intention.

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Conclusions

 

This research has combined literature reading and questionnaire survey, also usedthe combination of theoretical and empirical research, has investigated research modelsand theoretical hypotheses of this thesis from the qualitative and quantitative points ofview.From this study the researcher can draw the following conclusions:

1) Awareness of ASEAN and ASEAN Economic Community has directpositive impacts on consumer purchase intention. Having awarenessshould possess basic understanding of the ASEAN, feelings of concern,skills and motivations to solve and eventually, participate in ASEANimprovement programs. From the findings, awareness has a smallpercentage of impacts towards consumer purchase intention. This smallpercentage are mostly made from neutral answer in Likert‘s scale, eventhough many of respondents familiars with ASEAN and ASEANEconomic Community, most of them have little concerned towards theASEAN and ASEAN Economic Community.

2) In this research also found that perceived value and consumer purchaseintention are significantly correlated. Perceived value also fit to mediatebetween awareness of ASEAN and ASEAN Economic Communityvariable and consumer purchase intention, as the findings showed thatwhen mediated by perceived value, the percentage of dependent risenalmost 300%. Perceived value significantly influenced the relationsbetween awareness of ASEAN and ASEAN Economic Community, andconsumer purchase intention, also that consumer purchase intention isgreatly influenced by perceived value.

3) The last, this research found that consumer demographics have negativecorrelations with two variables, which are perceived value and consumerpurchase intention towards the fast-moving consumer goods from otherASEAN countries among the Indonesian consumer, which also strengthenthe point of previous study by Siringoringo and friends made in theirresearch about imported products market in Indonesia, which is mostly Asian products target middle and lower class, while the upper classconsumer choose imported products from Europe and USA.

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References (abbreviated)