Building an Attractive Renting of a Simple Flat House in the City of

Medan and Binjai

Elisabet Siahaan, Khaira Amalia Fachrudin, Hilma Tamiami Fachrudin

Department of Management, Universitas Sumatera Utara, Jl. Prof. T.M Hanafiah, SH, Kampus USU, Medan, Indonesia

Keywords: Facilities, Environment, Price, Attractiveness

Abstract: A comfortable, clean, healthy and decent place to live is a basic human need. Simple Flats (Rusunawa) is a

low-rent apartment for low-income people. The government of Medan and Binjai City have built simple flats

to improve the scarcity of residences, and also manage to minimize the use of property land in the city area.

This research aims to study and analyze the main attractions of simple flats for renting. This research involved

tenants of simple flats in two cities, namely Binjai City and Medan City. The research samples taken were

145 respondents. The data obtained by observing, interviewing and collecting research questions about simple

tenants. The results showed that the most important and dominant attraction of tenants in simple flats was that

the results of this study showed that 97% of the tenants' considerations for living in simple flats were price,

environment and facilities. In particular, price is the most dominant factor to attract simple-flat tenants,

because many tenants are low-income people who are very attentive and sensitive to prices in simple rental

homes. The low price and healthy and pleasant environment are significant factors in attracting tenants to rent

simple flats.

1 INTRODUCTION

The attractiveness of the souvenir market, especially

cullinary in the city of Medan is increasingly popular

and growing rapidly. This attraction has made many

new firms to open their businesses within this sector.

Business competition is getting tougher as more and

more firms enter the market. In this case the

competition to get customers is also rapidly

increasing. Companies need to consider the factors

that influence consumer behavior, especially on

purchase intention and purchasing decisions that are

very important in actualizing the purchases of the

products it offered. Issues that are developing in the

world of marketing in this case include halal issues,

social media marketing, and marketing by reference.

Halal appeal has developed rapidly and has

produced a concept called halal appeal where the

concept of halal is an attraction as well as a

distinguishing identity of similar products or

competitors (Salehudin and Mukhlish 2012). In the

context of marketing, the halal appeal is discussed

and studied in more depth. The concept of halal is

developing very rapidly, especially in the fields of

tourism and hospitality, financial services, health,

education, beauty, and even housing (Sitalakshmi et

al. 2011). Referring to the World Halal Forum, the

development of demand for halal products is

increasing rapidly to 25% per year. Although

synonymous with Moslems, the development of the

issue of halal products also continues to develop

rapidly in non-Moslem regions (Ireland 2011).

Indonesia has a majority Moslem population

which makes exposure to the issue of halal very

important in economic and social life. Halal in a

religiously meaningful concept is permitted or

allowed which indicates the necessity for a Moslem

to consume halal products. Previous research (Aziz

and Chok 2013) indicated a large growth in demand

for halal products worldwide. In general, the Moslem

community will look for halal products that indicate

the positive attitudes and influences of halal on the

behavior of Moslem societies (Lada, Tanakinjal, and

Amin 2009).

The souvenir industry is one of the leading forms

of industry in the Medan City area. Souvenirs,

especially in the form of food, have become an iconic

product attached to the Medan City area. The visitors

who want to return to their home region will generally

buy these souvenir products to give or share with

friends or family. Halal issues in this matter are

covered in the hospitality industry that provides

Siahaan, E., Fachrudin, K. and Fachrudin, H.

Building an Attractive Renting of a Simple Flat House in the City of Medan and Binjai.

DOI: 10.5220/0009198900620068

In Proceedings of the 2nd Economics and Business Inter national Conference (EBIC 2019) - Economics and Business in Industrial Revolution 4.0, pages 62-68

ISBN: 978-989-758-498-5

comfort for visitors to the City of Medan.

Unfortunately, not all terrain souvenirs have halal

certification. Unique conditions show that products

that are not halal certified by the Indonesian Ulema

Council remain a very popular souvenir among

visitors, both Moslem and non-Moslem visitors. This

condition raises fundamental questions related to the

importance of halal in the souvenir industry.

The decision to buy souvenirs is a complex one,

not only based on halal issues (Khaniwale 2015).

Consumer behavior in making purchasing decisions

is greatly influenced by the marketing element carried

out by the producer (Victor et al. 2018). In addition,

the presence of third parties such as recommendations

from others will also influence the purchase decision.

This study aims to evaluate the three variables in

shaping buying interest and their impact on

purchasing decisions for the product.

Purchasing decisions as a concept of consumer

behavior are closely related to the success of

marketing activities. The presence of the internet of

things in the 4.0 industrial revolution brought changes

to marketing activities (Almada-Lobo 2016). Social

media also develops into the daily lives of the people

who gave birth to the era of netizens where the role of

social media is the daily lives of individuals. In this

development, marketing activities develop and utilize

social media as a marketing medium that is relatively

more effective and efficient for marketers.

This souvenir-related study is also very

interesting to study in a sample room for students

outside the area who are studying in Medan.

Periodically students will return to their respective

regions and bring a number of souvenirs. In this

situation, students become very interesting objects

related to the context of souvenir marketing under

study.

2 LITERATURE REVIEW

Halal certification is a guarantee of security for a

Moslem consumer to be able to choose foods that are

good for him and in accordance with religious rules.

Food products that have a halal certificate are

products that in the processing process meet standards

in safety and hygiene (Lada, Tanakinjal, and Amin

2009). Halal certification is a guarantee of security for

a Moslem consumer to be able to choose foods that

are good for him and in accordance with religious

rules. The halal element can be used as a marketing

tool in promoting halal products (Baharuddin and

Kassim 2015). In this case halal certification is one of

the factors that can influence consumer buying

interest. Halal exposure is evaluated based on

whether or not a Moslem understands what is halal,

knows the correct slaughtering process, and

prioritizes halal food for their consumption. Based on

the above understanding, it can be concluded that

halal awareness is a Moslem's knowledge of halal

concepts, halal processes, and considers that

consuming halal food is important for him. Therefore,

referring to the prior art,

Hypothesis 1: Halal Appeal has a positive and

significant effect on Purchasing Interests and

Purchases Decisions of Medan City Souvenir

Products

Social media marketing is a form of direct or

indirect marketing that is used to build awareness,

recognition, memory, and actions for brands,

businesses, products, people, or other entities and is

carried out using tools from social web such as

blogging, microblogging, social networking, social

bookmarking, and content sharing. Social media

marketing is a process that encourages individuals to

promote through their website, product, or service

through online social channels and to communicate

by utilizing a much larger community that is more

likely to do marketing than through traditional

advertising channels (Weinberg 2009). Social media

marketing is a form of online advertising that uses the

cultural context of social communities including

social networks, virtual worlds, social news sites and

social sharing sites to meet communication objectives

(Tuten 2008). According to the literature study,

Social Media Marketing has a significant effect on

Purchasing Decisions. Therefore,

Hypothesis 2: Social Media Appeal has a positive

and significant effect on Purchase Interest and

Purchasing Decisions of a Special Souvenir Product

in Medan City

Recommendations from other parties, or also

known as word of mouth, communication about

products and services between people who are

considered independent of the company that provides

products and services, in a media that is considered

independent of the company. Word of mouth is an

effort to provide a reason for people to talk about

brands, products and services and make the

conversation easier. O'Leary and Sheehan (2008) add

that word of mouth is the process of exchanging

information, especially recommendations about

products and services, between two people in an

informal way. According to (Ulumi, Rusli, and

Building an Attractive Renting of a Simple Flat House in the City of Medan and Binjai

Suharmini 2014), word of mouth is known as a

powerful tool to market or promote products or

companies at no cost or with very little cost. In

addition, word of mouth is also the most powerful,

inexpensive, effective promotional strategy that can

be used in business. From this description it can be

concluded that, word of mouth is basically

information in the form of oral messages about

products or services, even the company itself, which

has been experienced by buyers who are then

delivered to others in an informal way. Therefore,

Hypothesis 3: Recommendations have a positive and

significant effect on Purchasing Interests and

Purchasing Decisions of Medan City Souvenir

Products

Consumer buying interest is basically a driving

factor in making a purchase decision on a product

(Kotler and Keller 2012). buying interest is

something that is related to consumers' plans to buy

certain products, as well as how many units of

product are needed in a certain period (Trinh, Dawes,

and Lockshin 2009). buying interest is something that

is related to the consumer's plan to buy a particular

product, as well as how many units of the product are

needed in a certain period in response to an object that

shows the customer's desire to make a purchase.

3 RESEARCH METHOD

3.1 Data

This study uses a semi-quantitative approach where

the measurement of variables is based on the quality

of respondents' perceptions of the proposed variables.

The quality of perception is then translated in

quantitative form in order to carry out a quantitative

analysis approach in an effort to answer the research

hypothesis. Each research variable was measured

using a Five-Point Likert Scale.

Data collection was carried out using a research

questionnaire that was arranged in a structured

manner based on the study and adjusted to the

conditions on the research object. This questionnaire

has passed validity and reliability test which were

conducted on 30 college students in Medan City. The

results of the validity and reliability test indicate the

questionnaire has met the validity and reliability

criteria.

3.2 Population and Sample

The population in this study were college Muslim

students in Medan from outside Medan. This

population is specified in order to obtain answers to

the research problems studied. The population of this

study is an infinite population.

The sample of this study was 100 Muslim students

from various universities in the city of Medan.

Analysis using SmartPLS does not require a very

large number of samples to estimate (Hair et al.

2014). Therefore, the number of samples included in

this study is sufficient for the estimation of cause and

effect. This study has requested the willingness of the

respondents to be involved in the research.

3.3 Research Variable

3.3.1 Independent Variable

This study uses three independent variables as

predictors to evaluate buying interest and purchasing

decisions. The variables used in this study are halal

appeal, social media marketing, and

recommendations. These three variables are

measured based on the level of exposure received by

students on each of these variables, namely how

perceptions of halal attributes, the role of social

media, as well as recommendations received before

buying souvenirs.

3.3.2 Dependent Variable

The dependent variable in this study was the purchase

decision for the Medan City souvenir product. This

variable is the quality of the purchase decision for the

product, related to the regret of shopping.

3.3.3 Mediation Variables

The intermediate variable in this study is the creation

of buying interest in the products offered. Interest in

buying does not always mean going to buy, or vice

versa. Interest is related to the desire to buy or

consume the product.

3.4 Data Analysis Method

This research uses structural equation modeling

regression method - partial least squares. Data

analysis was assisted by using the SmartPLS

application (Ringle, C. M., Wende, S., and Becker

2015).

EBIC 2019 - Economics and Business International Conference 2019

4 RESULT AND DISCUSSION

This study uses a single-item construct so that the

values of AVE evaluation, Composite Reliability, and

Fornell-Lacker Criterion will be fulfilled.

Nevertheless, this model will be evaluated based on

R-Square, f-Square, HTMT Ratio values for

discriminant validity, and statistical collinearity

variables.

Table 1. Quality Criteria

Purchase

Intention

Actualizati

Purchase Intention 0,137

Halal Appeal 0,061 0,023

Social Media

Appeal

0,022 0,101

Recommendation 0,046 0,088

R-Square 0,242 0,496

The table above indicates that the model in this

study is able to explain 24.2% of the situation at the

level of buying interest that arises in students, as well

as being able to explain as much as 49.6% the

situation of student purchasing decisions. More

specifically, the ability of each variable is relatively

weak (0.02 ≤ f-square <0.15) in measuring

purchasing interest and purchasing decisions (Cohen

1988; Hair et al. 2014).

Table 2. Heterotrait-Monotrait Ratio (HTMT)

Halal

Appea

Actual

izatio

Purchase

Intention

Recom

mendati

Social

Media

eal

Halal

Appeal

Actualizat

ion

0,505

Purchase

Intention

0,426 0,545

Recomme

ndation

0,326 0,464 0,337

Social

Media

eal

0,578 0,547 0,377 0,305

HTMT ratio values less than 1 indicate that the

discriminant validity of the model in this study has

been fulfilled. The lower the HTMT ratio, the

stronger the validity of the model.

Table 3. Inner VIF Value Model

Purchase

Intention

Recommendation

Purchase

Intention

1,319

Halal Appeal 1,560 1,654

Social Media

Appeal

1,537 1,571

Recommendation 1,145 1,198

The level of colinearity permitted in the analysis

was with a VIF value <5 (Hair et al. 2014). The table

above indicates that there is no multicollinearity

problem between the predictor variables in the

proposed model. Thus, this research model can be

forwarded to the analysis of the influence between

variables. Evaluations of the research model are

summarized in Figure 1 and Table 4 below.

Figure 1. Research Models Quality Evaluation

Table 4 provides information that on the

evaluation of direct influence, there are two effects

that are not statistically significant, namely the

influence between halal appeal on purchasing

decisions and also social media appeal on buying

interest. However, the indirect effect created by halal

appeal on purchasing decisions through buying

interest has a significant effect. In total, the effect of

halal appeal on purchasing decisions from students

becomes statistically significant.

The effect of halal appeal from Medan City

souvenir products directly influences the buying

interest of Muslim students at Medan City colleges.

This result indicates that the halal status of the

product still influences the buying interest of Muslim

students. The higher the halal exposure received, the

greater the buying interest in the product, especially

the food souvenir category (Borzooei and Asgari

2013; Nurhasanah and

Building an Attractive Renting of a Simple Flat House in the City of Medan and Binjai

Table 4. Direct, Indirect, and Total Effect

Direct Effect Indirect Effect Total Effect

Coeffici

ent

Statisti

Value

Coeffici

ent

Statisti

Value

Coeffici

ent

Statisti

Value

Halal Appeal -> Purchase Intention 0,268 2,045 0,020 0,268 2,045 0,020

Halal Appeal -> Purchase

Actualization

0,138 1,478 0,070 0,081 1,726 0,042 0,219 2,266 0,012

Social Media Appeal -> Purchase

Intention

0,161 1,320 0,094 0,161 1,320 0,094

Social Media Appeal -> Purchase

Actualization

0,283 2,878 0,002 0,049 1,487 0,069 0,332 0,969 0,000

Recommendation -> Purchase

Intention

0,200 1,860 0,031 0,200 1,860 0,031

Recommendation -> Purchase

Actualization

0,231 2,060 0,020 0,061 1,108 0,134 0,291 2,729 0,003

Purchase Intention -> Purchase

Actualization

0,302 2,728 0,003 0,302 2,728 0,003

Hariyani 2017). Unfortunately, halal appeal

cannot directly control purchasing decisions (sig>

0.05). Halal appeal does not directly affect a person's

buying decision. Ansari and Mohammed (2015) in

their research showed that this effect occurred due to

halal perception which was quite low in the

community. Halal perception for the community is

not just an approach that the product is halal certified,

but what they think about the halal status of the

product. Many people consider a halal product based

on personal perception so that without any real

indication of the halal product itself, consumers still

make a purchase decision. Although not significant,

the existence of halal appeal itself still has a positive

influence. A good purchasing decision will be

reached if halal appeal is able to stimulate buying

interest from Muslim students. These results confirm

that the phenomenon of souvenir purchases that do

not have a halal label occurs in Medan City.

The influence of social media appeal from

souvenir products in Medan greatly influences the

purchasing decisions of Muslim students in Medan.

The influence of social media on product buying

interest in this study was not statistically significant

(sig> 0.05). However, the purchase decision for the

product is strongly influenced by social media

(Akhtar, Tahir, and Asghar 2016; Sharma 2018;

Admiral 2018). Students who buy souvenirs will

generally feel satisfied and happy with the purchase

of souvenirs if the product has a strong image on

social media, regardless of the student's buying

interest.

The recommendation variable in this study has a

large influence on both buying interest and

purchasing decisions. Recommendations have an

important role in shaping buying interest from

souvenirs and making these decisions better (Chen

2012; Sharifpour et al. 2016). These results indicate

that students as objects in this study are very

concerned about recommendations and public

considerations for the purchase of souvenirs that will

be done. Recommendations are one source of

reference for souvenirs. In conditions where students

have not yet determined what souvenirs they will

bring, recommendations from others are important

factors that shape the shopping behavior of these

students (Roudposhti 2018; Khan et al. 2015).

This study also indicates that buying interest has

a positive and significant effect on purchasing

decisions. In theory, buying interest in a product does

not mean that there will be a purchase of the product.

This research provides empirical evidence that

although it does not always mean a purchase, a good

purchase decision will occur on high buying interest.

Therefore, the role of marketing in economic

activities has an important role in encouraging buying

interest and demand for the product so that good

purchasing decisions occur and will be able to

produce post-purchase behavior in accordance with

expectations.

5 CONCLUSIONS AND

SUGGESTIONS

Halal appeal in the product marketing approach has

its own appeal, especially in the formation of buying

interest and purchasing decisions from consumers.

This research shows that although halal appeal has a

big role on Muslim consumers in controlling their

behavior, halal is not a determining factor in souvenir

buying behavior. In addition to the halal approach,

marketing activities through social media also

EBIC 2019 - Economics and Business International Conference 2019

become a consideration that builds consumer

purchasing decisions. Social media has an important

influence on consumer purchasing decisions. The

influence of social media can even lead to impulsive

behavior over souvenir purchases. Social media does

not significantly influence buying interest, but can

encourage consumers to make purchases.

Recommendations are very important good factors

that can influence buying interest and purchasing

decisions. Recommendations in this case become an

important role holder for consumer buying behavior.

Businesses require to achieve these condition because

it can bring changes in consumer behavior that leads

to the purchase of the product. Unfortunately, it worth

a challenge to achieve these recommendation.

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