THE EFFECT OF THE PRICE AND QUALITY OF SERVICE ON CUSTOMER SATISFACTION AND CONSUMER LOYALTY IN DCK

Dr. Daniel Kurniawan. Ciputra UniversityTeddy Saputra, S.E., M.B.A.Ciputra University. ...................................................................................................................... Manuscript Info Abstract ......................... ........................................................................ Manuscript History Received: 12 August 2018 Final Accepted: 14 September 2018 Published: October 2018

The increase of public awareness in the importance of maintaining the well-designed homes and business places, causing a rise in the growth of production value of furniture sector belonging to small industries. DCK is one of those small furniture industries. This growth makes the competition among furniture businesses is also increasing. This is why this research is being done by the researchers. This study aims to identify and analyze the variables affecting marketing performance such as price, service quality, customer satisfaction, and customer loyalty. Each of these variables is formed by several indicators where in price's variables, there are indicators such as flexibility, customization, differentiation, and promotion. While for service quality variables, there are tangible, reliability, assurance, responsiveness, and empathy indicators. For customer satisfaction, there are complaint, referral, repurchase likelihood. As for the loyalty of consumers, the variables are brand loyalty, consumer retention, and demand growth. This research uses purposive sampling method to attain the sample. The sample in this study are all DCK consumers who buy DCK services with nominal minimum 15 million rupiah and above, and live in Surabaya, also who have bought DCK services at least a year ago. This research is also a type of quantitative explanatory where there is an explanation between the influences of the variables present in it. The results of this study show that price and quality of service have a significant effect on customer satisfaction. In addition, in this study also indicated that consumer satisfaction has a significant effect on consumer loyalty.

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Over time, people are increasingly aware of the importance of maintaining the good appearances of homes and places of businesses. That is why there are turnover and production amount of DCK that increasing from year to year. The Central Bureau of Statistics publishes an official report on the growth of production value of the furniture sector belonging to small industries, which in 2012 totaled 2.59 trillion rupiah, increasing to 20.2 trillion rupiah in 2013 (BPS, 2014). Therefore, the chance of DCK to continue in developing the business must be done. It is to maintain the trend of increasingly complex needs of the community related to the field of business.
Although DCK is experiencing high turnover growth, it does not necessarily bring gross margin increase for DCK. From the review of the existing data, in the last five years, the average increase by 25% per year in turnover. The increase in the speed of internet access since the last 5 years, has brought a new landscape competition, because consumers can easily and quickly assess, compare the price of design services of companies with one other company. The tight competition in the price between interior design company services and the increasing price of raw materials production, making the gross margin decreased. Every year the price of raw materials has increased significantly, causing the HPP (cost of goods sold) to be higher, and consequently gross margin obtained by DCK also decreased.
With the presence of more competitors in Surabaya, the price of services offered to the market is increasingly competitive, and sometimes DCK gets little profit margin to compete in the market. With this phenomenon, research is needed to determine whether the price of services offered to consumers has been in line with the target market segment. With the creation of the correct Price, it will increase the competitiveness of DCK compared to business competitors in the future. The competitiveness of a company is indicated "increasing" if the price of the product is no longer become the customer's main objection before making a purchase decision (Hawkins & Mothersbaugh, 2011).
In addition, based on company data, about 50% of the total number of consumers is included in household segment (46 of 90 orders). This shows that the opportunity to improve the company's marketing performance in the future is still very big. In addition, there are also data comparing prices offered by DCK companies with several other competitors. That is one purpose of this research is running to assess the perception of consumers who have bought DCK services, whether the price of services purchased is the same with the wishes and expectations of consumers.
An important factor besides the price and quality of products that DCK consumers are looking for is the quality of service. Currently DCK still does not have a high and strong service standards, and still get criticism from consumers, especially related to the problem of delivery and installation of furniture on site. This research also aims to determine whether the quality of service affects the satisfaction of DCK consumers.
At this time, other problem in DCK is consumer satisfaction, because this factor is the way that the company differentiates itself compared to other companies. In general, consumers looking for a good quality products but on the other hand, the desired price is very low. Therefore, DCK can not only emphasize the price alone, but in terms of service quality and customer satisfaction, in order to convince consumers and make consumers continue to loyal and repeat to buy from time to time.

Research Problems
Based on the background that has been described, then the research problems created are: 1. Does Price Affect Consumer Satisfaction? 2. Does Service Quality Affect Consumer Satisfaction? 3. Does Consumer Satisfaction Affect Consumer Loyalty?

Literature Review
Singh (2013) conducted a study that aims to determine the impact of service quality on consumer loyalty. The population of this study is all major supermarket consumers in India. The sample of research taken is as many as 600 consumers, obtained from 7 large supermarkets coming from different districts in India. The research variables used are service quality, customer satisfaction and loyalty. The analysis used is descriptive statistic and one way ANOVA. The results showed that if the quality of service is considered well by showing a positive and significant results on consumer loyalty.

Consumer Loyalty
Consumer loyalty is the expectation of each company, this is able to make the company survive for a long time. It is better to get consumers who buy not too much, but loyal for the long term, compared to consumers who buy products with large amounts but only for short-term course (Tetu, et al., 2013). Consumer loyalty can be created if the company has been able to provide quality products and services consistently and make consumers always satisfied from time to time.
The dimensions of consumer loyalty used in this study are the dimensions developed by Tetu, et al. (2013), namely Brand Loyalty, Consumer Retention, and Sales Increase. Here is an explanation for each of these dimensions: 1. Brand Loyalty: the degree to which a consumer is involved in a product brand or company name. This implies that a consumer who is loyal to a brand will not easily move his purchase to another brand, whatever happens with the brand. 2. Consumer Retention (Consumer Retention): the circumstances in which consumers want to keep in touch with the company on an ongoing basis. 3. Demand Growth: the degree to which consumers will repeat purchase more in the future.

Consumer Satisfaction
Consumer satisfaction and dissatisfaction has a function of increased disconfirmation of the difference between past expectations and current product performance (Rawson, et al., 2013). Satisfaction is a process of consumer evaluation where consumers act by comparing actual performance and performance expectation. Consumer satisfaction or dissatisfaction with the services offered at the time depends on the perceptions of existing performance and the perception of the gap between expectations and reality.
The dimensions or indicators of consumer satisfaction used in this study are the dimensions developed by Jayasankar & Kumar (2012), namely Complaint, Referral, and Repurchase Likelihood. Here is an explanation for each of these dimensions: 1. Complaint: the degree to which the consumer is not satisfied with the quality of the product or service provided by the company. Indicators that contradict the consumer satisfaction are intentionally used for the company to understand directly what the actual satisfaction factor sought by consumers. The higher the degree of complaint, the lower the level of satisfaction those consumers perceive. 2. Referral: the degree to which consumers willingly refer associates or others to buy products from the same company, without being promised more incentives or benefits from the company. 3. Repurchase Likelihood: the degree to which the consumer has great potential to buy again the same product or different product from the same company in the future.

Price
Price is one element in the marketing mix that is able to generate revenue. While other marketing mix elements result in cost spending. Price is the most easily-modified element according to the market needs compared to other elements, such as product features, distribution channels, promotional programs that generally take longer to implement. Pricing to create a quality perception is the most favored by companies, because consumers tend to be more price-sensitive than other elements.
Price dimension used in this research refers to research conducted by Alptekinoglu & Corbett (2012), that is flexibility, customization, differentiation, and price promotion. Here is an explanation for each of these dimensions: 1. Flexibility (flexibility): the price created from the way payment will be made by consumers. Consumers can choose whether the payment method is by term or cash. Companies may apply different prices for different payment methods. 2. Customization: it means that the pricing on one customer to another may differ depending on the type of quality and raw materials demanded to make the product, thus the consumer will think that the price of the product is relative, depending on the type of demand and their needs. 3. Differentiation : meaning that nthe price can also be created for all types of customers served, the amount of purchase volume, and when the order occurs. 4. Price Promotion: is one way of price creation that aims to increase the number of sales turnover in the short term. Price promotion is an effective strategy to influence consumer purchasing decisions immediately.

Quality of Service
Consistency of the company in providing quality services, is the company's competence to fulfill the promise given to the consumer through the media campaign that is used. It is related and reflects the company's credibility in service issues. Good service deals with the conditions under which the company performs its functions to the maximum within a certain period of time, and under certain conditions. The success rate of the company to do business can also be judged from the responsiveness in immediately overcoming the failure professionally, then can create a positive perception of consumers on the quality of service, resulting in consumer confidence and confidence (Rust & Huang, 2012).
The service quality dimension used in this study is the dimensions developed by Parasuraman in Chabbra (2013), namely Tangibles, Reliability, Responsiveness, Assurance, and Empathy. Here is an explanation for each of these dimensions: 1. Tangibles: the degree of the company's ability to demonstrate its existence to external parties. This capability is manifested in the appearance and capabilities of the company's physical facilities and infrastructure and the environment. 2. Reliability: the degree of ability of the company to provide services as promised accurately and reliably. 3. Responsiveness: the degree of the company's ability to help and provide quick and precise service to consumers, with clear information delivery. 4. Assurance: the degree of the company's ability to grow consumer confidence in the company. 5. Empathy: the degree of ability of a company to give a genuine and personal attention, given to the consumer by trying to understand the consumer's wishes one by one.

Research Model
Based on the background and the research problems, the following is a picture of this research model:

Hypothesis
Based on literature review, theoretical study and conceptual framework, then prepared the research hypothesis as follows: 1. Price has a significant effect on customer satisfaction (H1) 2. Quality of service significantly influence consumer satisfaction (H2) 3. Consumer satisfaction has a significant effect on consumer loyalty (H3) 1095

Research Design
This research uses quantitative approach so it takes some hypothesis that has been formed and tested from previous research. In the end the hypothesis shows a level of significance when analyzed with statistical tools. This study aims to analyze the causal relationship between independent variables, intermediate variables and variables dependent simultaneously in a model.
This research includes quantitative research, so the primary data is collected by distributing questionnaires to the predefined respondents then the data is processed by means of statistics in the research laboratory. The unit of analysis refers to the level of aggregation of data to be collected for research. This study uses an individual analysis unit. Time Horizon this study is data collected in one time only, perhaps in periods of days, weeks, or months aimed at answering research questions (Sekaran, 2010: 164).
Based on the classification, this research is included in the type of quantitative research. Quantitative research in this research is used for explanatory purposes, for example to explain the influence between variables or causal relationships between variables through hypothesis testing. Furthermore, because information or data on price, consumer satisfaction, and consumer loyalty is obtained based on views, responses, perceptions or assessments from DCK consumers, this research is also included in perception research, also referred to as opinion research. By using Slovin method to draw the required number of samples, the population of 96 consumers (N = 96) requires a sample of 30 consumers (n = 30). Therefore, a selection of 30 people will be selected, which will be sampled in the study.
The types of data used in this study are as follows: 1) nominal data, such as respondent's name, gender, purchase purpose of furniture products; 2) Ordinal data, such as respondents' educational background; 3) Interval data, ie all respondent's perception questions will be price variables, product quality, service quality, customer satisfaction and loyalty; 4) Data ratio, such as age of respondent, long to be a consumer, nominal purchase of products that have been done.
Sources of data used in this study there are 2 kinds, namely the primary data source, taken from the questionnaire answered by the respondents who will be collected in this study. Total respondents 30 consumers who have bought DCK services with nominal 15 million rupiah and above. While other data sources are secondary data sources for example data from government agencies such as BPS related to the sale of furniture regionally. This data serves as a reference development of market trends that occur.
Technique of collecting data is using a questionnaire method. After the questionnaire was made, then the respondent who had been contacted earlier to make an appointment, was given time to answer all questions in the questionnaire. Researchers will wait and provide the necessary explanation when filling questionnaires conducted by respondents.

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All indicators that make up the latent variables in this study use an interval scale that is an indicator that states something is abstract. Price variables, product quality, customer satisfaction, and customer loyalty in this study were measured using Likert scale or summated ratings method and the measurement result was data with interval scale.
The research instrument is a tool used to collect and process data. When developed by the researchers themselves, the instrument must be tested in order to achieve high reliability and validity. If the instrument used can be adapted to other instruments, the reliability and validity index of the adaptation results should be mentioned. Data processing instrument using Partial Least Square (PLS) method run by SmartPLS program. Similarly, data analysis, also using the PLS method. Here are the steps of analysis with Partial Least Square method:  The value of cross loading for each indicator in the table above is still there which is worth when the cross-loading value between indicator and respective construct is higher than correlation with other construct. This means that this value has sufficient discriminant on the intended construct, which should be larger than the loading value with the other constructs.
Another method to view discriminant validity is to look at the square root value of average variance extracted (AVE). The recommended value is above 0.5 (Gaston in Yamin, 2011). Here are the values of AVE in this study: The value of the count Q2 = 0.629; Means still higher than the required threshold value that is Q2> 0. The Q-square value greater than 0 (zero) indicates that the model has predictive relevance value, while the Qsquare value less than 0 (zero) indicates that the model lacks predictive relevance (Gaston in Yamin, 2011).

Discussion:-
In this study, the outcomes are all the same as the hypotheses made. Here is the explanation. Table 6 shows that the relationship between Price and Satisfaction is significant with T-statistics of 2,230 (>1,96). The value of path coeficient is positive that is equal to 0,339indicating that direction of relationship between Price and Consumer Satisfaction is positive. Thus the hypothesis H1 in this study which states that 'Price has significant effect on consumer satisfaction' is acceptable.

Price Influence on Satisfaction
The results of this study prove that the Price significantly and positively affect the consumer satisfaction. Agree with Shi & Smith (2012) that under normal circumstances, prices have a positive relationship to customer satisfaction. The intent of normal circumstances or not is based on the macroeconomic conditions occurring within a country. If in a state of crisis, high prices will still be purchased and provide satisfaction because the number of products available very small. Table 6 also shows that the relationship between Quality of Service and Consumer Satisfaction is significant with Tstatistics of 5,287 (> 1,96). The value of path coefficient is positive that is equal to 0.588 indicating that the direction of relationship between Quality of Service with Consumer Satisfaction is positive. Thus the hypothesis H2 in this study which states that 'Quality of service has significant effect on consumer satisfaction' is acceptable.

Effect of Service Quality on Consumer Satisfaction
The results of this study prove that the excellent service quality needs to be done company to assist the products or services sold to consumers. Because if the company is not able to provide good service quality, then consumers will move to another company easily, because it will affect consumer satisfaction. This study supports the findings of