The Effect of Price, Promotion, Security and Service on Pharmacy Product Purchase Decisions at Conventional & Online Drugstore with Product Variation as Moderation

Valderama Tri Sadana¹, Soni Harsono²

¹ Department of Magister Management,Faculty of Economics and Business, Universitas Hayam Wuruk Perbanas, Wonorejo Utara St. No.16 Rungkut Surabaya

² Department of Management, Faculty of Economics and Business, Universitas Hayam Wuruk Perbanas,Wonorejo Utara St. No.16 Rungkut Surabaya

ABSTRACT: This study aims to determine the effect of price, promotion, security and service on purchasing decisions for pharmaceutical products at conventional drugstore and online drugstore with product variation as a moderation. The research sample of 200 respondents was determined using purposive sampling technique. Data were obtained from filling out a questionnaire with a Likert scale measurement that had been tested for validity and reliability. Data analysis used SEM PLS. The results showed that price and service had a significant positive effect on purchasing decisions at conventional and online drugstore. Promotion and security had no significant effect on purchasing decisions at conventional and online drugstore. Product variation did not moderate the relationship between price, promotion and purchasing decisions at conventional and online drugstore, product variation did not moderate the relationship between security and purchasing decisions at conventional drugstore, but moderated the relationship between service and purchasing decisions. In online drugstore, product variation moderated the relationship between security and purchasing decisions, but did not moderate the relationship between service and purchasing decisions. It is a serious concern for prices and services for conventional and online drugstore as a basis for consumer decision making, on the other hand, the promotion and security aspects need to find the right model so that they also have a positive impact and product variations can be considered as a differentiator from the goods offered.

KEYWORDS: Price, Promotion, Safety, Service, Purchasing Decisions, Product Type, Moderation, e-Pharmacy, Conventional Pharmacy.

INTRODUCTION

The development of technology, one of which is the internet, can connect the entire world limited by geography using only electronic devices such as mobile phones, laptops, and computers. In addition, the use of the internet can shorten time and expand accessibility. Philips Kotler (2019:48) explains that profitable marketing today involves using omnichannel marketing, where marketing is conducted by combining offline and online methods. Marketing through  internet media is very advantageous for producers, as the internet service system is highly efficient, practical, and can save time in marketing products and services where online stores can be accessed 24/7 by consumers (Muda, et al, 2016).

The pharmaceutical field is currently becoming increasingly competitive with the presence of competition between conventional drugstore and online drugstore. Both types of drugstore have their own advantages and disadvantages in terms of marketing pharmaceutical products. The rapid development of technology and the trend of online shopping have made online drugstore a more popular choice for consumers because they offer convenience and ease in shopping.

The rapid global spread of the coronavirus affects medication purchasing behavior, necessitating a public campaign to promote verified online drugstore and prevent the use of prohibited websites and the purchase of unregistered, substandard, and counterfeit drugs (Fittler, 2022). The Covid-19 pandemic marked the beginning of a surge in the fulfillment of pharmaceutical product needs online, where e-drugstore became an integral part of healthcare providers in developed countries (Fittler, 2022). The long-term post-COVID-19 attitude towards online pharmacy channels has improved with the increase in online medication purchases. Therefore, the e-pharmacy market has experienced accelerated growth due to the pandemic and has made pharmaceutical e-commerce an integral part of healthcare regulations (International Pharmaceutical Federation, 2021).

Drugstore that also operate online have several advantages, one of which is more economical prices compared to offline drugstore (Chiu, 2019). Online drugstore also offer more promotions and discounts, as well as flexible payment methods (Espinoza, 2021). In addition, online drugstore can also deliver medications directly to customers’ addresses, which simplifies the purchasing and delivery process.

As time goes by, consumer satisfaction in making purchase transactions can have a significant impact on increasing revenue, consumer loyalty, and influencing other consumers to buy from both conventional and online drugstore. In addition to the influence of consumers on drugstore, consumers who purchase from drugstore are also affected by (1) the location of the pharmacy (2) price (3) customer service (4) payment methods (5) purchasing methods (6) other factors that influence consumers’ selectivity in buying pharmaceutical products. The purpose of this research is to determine the influence of price, promotion, safety, and service on the purchasing decisions of pharmaceutical products at conventional drugstore and online drugstore, with product variation as a moderation factor.

RESEARCH METHOD

The research method used is the quantitative method to test the hypothesis with the survey method. By using this method, researchers can measure the extent of the influence of price, product variety, promotion, safety, and service on consumer decisions in purchasing pharmaceutical products at conventional drugstore and online drugstore in Surabaya.

The population of this study is consumers who purchase pharmaceutical products. Meanwhile, the sample of this study consists of consumers who purchase pharmaceutical products at conventional and online drugstore in Surabaya. The sampling technique used is purposive sampling, which is a sampling technique conducted deliberately and selectively by considering certain criteria. In this case, the criteria used are (1) consumers who made purchases at drugstore both offline and online within the last 3 months in the Surabaya area. (2) consumers aged 17-50 years (Pratiwi, 2022) (3) Consumers who can access a mobile phone to fill out the online questionnaire via Google Form. Because the population size in this study is unknown, the sample size was determined using the Slovin’s formula, resulting in a minimum of 96 respondents.

The validity and reliability tests of the instrument were conducted, and the result showed that decision indicator 3 was not valid while all variables were declared reliable. After that, a large sample underwent convergent and discriminant validity tests as well as reliability tests. Three indicators were declared invalid and removed from the model, and all variables were declared reliable. For hypothesis testing, data analysis was conducted using the Partial Least Squares Structural Equation Model (PLS-SEM).

III.  RESULTS

The results of the data analysis were conducted by testing the feasibility of the research variables using SPSS 16 before the evaluation of the measurement model. From the results, it was found that all the variables used in this study were valid except for decision variable 3, which was declared invalid, so this variable was excluded from the data processing for the measurement model evaluation. In the feasibility reliability test, the Cronbach’s Alpha value for 29 variable indicators in the questionnaire survey was obtained to be > 0.6, thus concluding that the 29 variable indicators in the questionnaire are reliable/consistent.

Table 1 Average Variance Extracted (AVE)

The analysis of the validity test results in Table 1 above shows an average value (AVE) above 0.5 for all constructs contained in the research model. Thus, the AVE values for the five variables meet the requirements for discriminant validity.

Reliability Test

Reliability testing can be seen from the results of the composite reliability and Cronbach’s alpha values, which must be 0.7.

Table 2 Average Variance Extracted (AVE)

From the data in table 4.7, it can be concluded that the composite reliability values of the four variables are >0.7, which means they can be considered reliable. Meanwhile, if we look at the Cronbach’s alpha values for the indicators of the variables security, service, and decision making, the results are >0.7, indicating they are reliable. On the indicators of the price, promotion, and variety variables, the Cronbach’s alpha value is <0.7, thus they are declared unreliable. On the other hand, according to Hair et al. (2014), the composite reliability value must be > 0.70, but a value of 0.60 is still acceptable, so the indicators for the price, promotion, and variety variables can still be considered reliable.

Evaluation of Structural Model

In this study, the research results were processed by conducting hypothesis testing using WarpPLS to determine the effect of exogenous variables on endogenous variables with their moderating variables.

(See in PDF File)

Figure 1 Display of SEM Analysis Results on Online Drugstore 

Source: Results of processed data from the WarpPLS 7.0 application

(See in PDF File)

Figure 2 Display of SEM Analysis Results on Conventional Drugstore

Source: Results of processed data from the WarpPLS 7.0 application

Hipothesis Test

Table 3 Summary of Online Drugstore Hypothesys Testing

Table 4 Summary of Offline Drugstore Hypothesys Testing

DISCUSSION

The Influence of Price on Purchase Decisions

The price variable has a positive and significant influence on purchasing decisions at conventional drugstore. The path coefficient of 0.18 indicates that when prices increase, purchasing decisions also tend to increase. In addition, with a p-value of 0.03, these results indicate that the influence of price on purchasing decisions is statistically significant.

In online drugstore, the hypothetical results of the price variable show a path coefficient value of 0.17, which means the price variable has a positive impact on purchasing decisions in conventional drugstore and a p-value of 0.04, which means the price variable is significant to the purchasing decision variable. So it can be concluded that price has a positive and significant effect on purchasing decisions at online drugstore. This is in accordance with the results of research by Hardiatmodjo (2019) which states that price perception has a significant influence on online purchasing decisions.

The Influence of Promotion on Purchase Decisions

In conventional drugstore, the results of the promotional variable hypothesis show a path coefficient value of 0.10, which means the promotion variable has a positive impact on purchasing decisions in conventional drugstore and a p-value of 0.13, which means the promotion variable is significant on purchasing decision variables. So it can be concluded, promotions have a positive and significant effect on conventional purchasing decisions.

In online drugstore, the results of the promotional variable hypothesis show a path coefficient value of 0.17, which means the promotion variable has a positive meaning on purchasing decisions in conventional drugstore and a p-value of 0.03, which means the promotion variable is significant on purchasing decision variables. So it can be concluded that promotions have a positive and significant effect on purchasing decisions at online drugstore.

The Influence of Security on Purchasing Decisions

In conventional drugstore, the hypothesized results of the security variable show a path coefficient value of 0.11, which means that the security variable has a positive impact on purchasing decisions in conventional drugstore and a p-value of 0.11, which means that the security variable is not significant on purchasing decision variables. So it can be concluded that security has a positive and insignificant effect on conventional purchasing decisions.

In online drugstore, the hypothesized results of the security variable show a path coefficient value of 0.09, which means the security variable has a positive impact on purchasing decisions in conventional drugstore and a p-value of 0.18, which means the security variable is not significant to the purchasing decision variable. So it can be concluded that security has a positive but not significant effect on purchasing decisions at online drugstore. This is not in accordance with the statement in the journal Arasu (2011) which states that security in online transactions has a significant influence on purchasing decisions. This disparity is because online transactions are currently something that is commonly done by several groups and there are many official websites or marketplaces that carry out online buying and selling, so the security factor is not one of the considerations for consumers when buying pharmaceutical products online.

The Influence of Service on Purchasing Decisions

In conventional drugstore, the hypothesized results of the service variable show a path coefficient value of 0.32, which means the service variable has a positive impact on purchasing decisions in conventional drugstore and a p-value of <0.01, which means the service variable is significant to the purchasing decision variable. So it can be concluded that service has a positive and significant effect on conventional purchasing decisions.

In online drugstore, the results of the service variable hypothesis show a path coefficient value of 0.18, which means the service variable has a positive meaning on purchasing decisions in conventional drugstore and a p-value of 0.02, which means the service variable is significant on purchasing decision variables. So it can be concluded that service has a positive and significant effect on purchasing decisions at online drugstore.

The Influence of Price on Purchasing Decisions Moderated by Product Variation

In conventional drugstore, the hypothetical results of the price variable that is moderated by product variations show a path coefficient value of 0.11, which means that the price variable that is moderated by product variations has a positive meaning on purchasing decisions in conventional drugstore and the p-value is 0.12, which means that the price variable is moderated by product variations. not significant to the purchasing decision variable. So it can be concluded, price moderated by product variations has a positive and insignificant effect on conventional purchasing decisions.

In online drugstore, the hypothetical results of the price variable that is moderated by product variations show a path coefficient value of 0.08, which means that the price variable that is moderated by product variations has a positive meaning on purchasing decisions at online drugstore and the p-value is 0.19, which means that the price variable is moderated by product variations. not significant to the purchasing decision variable. So it can be concluded, price moderated by product variations has a positive but not significant effect on online purchasing decisions.

The Effect of Promotion on Purchasing Decisions Moderated by Product Variation

In conventional drugstore, the hypothetical results of the promotional variable moderated by product variation show a path coefficient value of -0.02, which means the promotional variable moderated by product variation has a negative impact on purchasing decisions in conventional drugstore and the p-value is 0.44, which means the promotional variable is moderated by product variety. This is not significant for the purchasing decision variable. So it can be concluded that promotions moderated by product variations have a positive and insignificant effect on conventional purchasing decisions.

In online drugstore, the hypothetical results of the promotional variable moderated by product variation show a path coefficient value of -0.01, which means the promotional variable moderated by product variation has a negative impact on purchasing decisions in conventional drugstore and the p-value is 0.46, which means the promotional variable is moderated by product variety. This is not significant for the purchasing decision variable. So it can be concluded that promotions moderated by product variations have a negative and insignificant effect on conventional purchasing decisions.

The Effect of Security on Purchasing Decisions Moderated by Product Variety

In conventional drugstore, the hypothetical results of the safety variable moderated by product variations show a path coefficient value of 0.22, which means the safety variable moderated by product variations has a positive impact on purchasing decisions in conventional drugstore and the p-value is <0.01, which means the safety variable is moderated by product variations. significant to the purchasing decision variable. So it can be concluded, security moderated by product variations has a positive and significant effect on conventional purchasing decisions.

In online drugstore, the hypothetical results of the safety variable moderated by product variations show a path coefficient value of 0.07, which means the safety variable moderated by product variations has a positive impact on purchasing decisions in conventional drugstore and the p-value is 0.23, which means the safety variable is moderated by product variations. not significant to the purchasing decision variable. So it can be concluded, security moderated by product variations has a positive but not significant effect on conventional purchasing decisions.

The Influence of Service on Purchase Decisions Moderated by Product Variety

In conventional drugstore, the hypothesis results of the service variable moderated by product variation show a path coefficient value of 0.05, which means the service variable moderated by product variation has a positive significance on the purchasing decision in conventional drugstore, and a p-value of 0.30, which means the service variable moderated by product variation is not significant to the purchasing decision variable. Therefore, it can be concluded that service moderated by product variation has a negative and insignificant effect on conventional purchase decisions.

In the online pharmacy, the hypothesis results of the service variable moderated by product variation show a path coefficient value of 0.15, which means the service variable moderated by product variation has a positive significance on the purchase decision in the online pharmacy, and a p-value of 0.05, which means the service variable moderated by product variation is significant to the purchase decision variable. Therefore, it can be concluded that service moderated by product variation has a positive and significant effect on online purchasing decisions.

CONCLUSION

This research was conducted to examine the influence of exogenous variable indicators on endogenous variables, as well as those modified by product variations. From the results of this research, it can be concluded that (1) The more accurate the price determination, the more it increases consumer purchasing decisions both at conventional drugstore and online drugstore. (2) The more promotions there are, the higher the purchase decisions, both at conventional drugstore and online drugstore. (3) The better the quality of service, the more it will influence consumer purchasing decisions at both conventional and online drugstore. (4) The more assured the shopping security, the more it will increase consumer purchasing decisions at conventional drugstore. However, in online drugstore, the security variable also affects purchasing decisions but is not the main factor that consumers need to consider, as the security guarantee for online purchases is currently assured. (5) High product types increasingly moderate the relationship between the security variable and purchasing decisions in both online and conventional drugstore. (6) The type of product does not moderate the variables of price, promotion, and service in relation to the purchasing decision in both conventional and online drugstore.

ACKNOWLEDGMENTS

The authors thank the Administration and the Research and others for financial support and their colleagues moral support.

VII.  DISCLOSURE

The author reports no conflicts of interest in this work.

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