The Distribution of Cosmetics Products, Brand Trust and Promotion Impact on Purchase Decision during Live Streaming

Abstract

Purpose: Shopee, Indonesia's most frequently visited marketplace in November 2023, had 427.2 million visits. Supported by the live streaming feature, Shopee has become the most widely used online shopping platform, with an 83.4% market share in 2022. Several factors, such as brand trust and promotions, have significantly influenced Shopee's dominance and consumer purchasing decisions. This research aims to investigate the effect of cosmetic product distribution, brand trust, and promotions on purchasing decisions, considering gender and age as control variables. Research design, data and methodology: A quantitative approach using a survey research method was employed with a sample of 150 respondents, who were followers of the Shopee ESQA Cosmetics account, obtained through the Yamane formula. Data was collected via an online questionnaire. The data analysis technique used in this study was PLS-SEM with Smart PLS software. The results of this research indicate a significant effect of the distribution of cosmetics products, brand trust, promotions, gender, and age as control variables on the purchase decision variable. Conclusions: The distribution of cosmetic products, brand trust and promotions have a positive and significant impact on purchase decisions during live streaming on Shopee, and control variables (gender and age 36-45) have a positive and significant influence on purchase decisions.

1. Introduction

The rapid advancement of information and communication technology in Indonesia, particularly with the advent of the internet, (Gunawan, 2019), has greatly facilitated access to the internet via smartphones (Samra et al., 2015).

As of January 2023, internet usage in Indonesia stands at 212.9% of the total population, which is 77% (Wearesocial, 2022). The digital era has transformed the way customers engage in buying and selling transactions.

E-commerce is the process of buying and selling goods and services electronically or online. According to (Kotler & Amstrong, 2010), e-commerce is an online channel accessible to people through computers, used for business activities by entrepreneurs and by customers to gather information using computers, from providing information services to making choices. As explained by Turban et al. (2015), e-commerce refers to the use of the internet and intranet as a medium for purchasing, selling, transporting, or trading goods and services, involving three primary activities: order and payment, order fulfillment, and delivery of goods or services to customers..

The usage of e-commerce in Indonesia in 2023 has increased by 196.47 million users and is expected to continue to grow by approximately 24.53% until 2027, reaching 244.67 million users (Statista, 2023). Shopee is the e-commerce platform with the highest number of visitors in Indonesia in 2023, with 427.2 million users and an average of 169.2 to 761.1 million monthly visits (Semrush, 2023).

In the context of e-commerce, Shopee features live streaming, which can be used to facilitate online interaction with customers, aimed at capturing consumer interest and influencing purchase decisions. Live streaming is one of the communication strategies employed by brands to enhance interaction and conversion in buying and selling transactions between businesses and customers.

Within the live-streaming context, several critical elements affect consumer purchase decisions, namely brand trust and promotion. Brand trust, or consumer trust in a brand, is the belief consumers have in a brand. If a brand can meet consumers' expectations and needs, trust is established. According to Delgado dalam (Bakti, 2020), brand trust isthe sense of security that consumers have in their interactions with a brand, where consumers perceive the brand as trustworthy and responsible for their interests and wellbeing.

Promotion is one of the components of the marketing mix, commonly referred to asthe 4Ps (Product, Price, Place, and Promotion). It is a marketing mix element used to inform and persuade customers to purchase the offered products. Promotion involves activities aimed at communicating the benefits of a product and convincing customers to buy it. (Kotler & Amstrong, 2008).

In this research, ESQA Cosmetics is the object of study. ESQA Cosmetics is the first vegan cosmetics brand in Indonesia, established in 2016. ESQA Cosmetics offers luxury-brand products at drugstore prices. The company focuses on product innovation and quality, as evidenced by its products having received approval from the Food and Drug Administration (FDA) in the United States. This ensures they do not contain parabens, triclosan, sodium lauryl sulfate, or gluten.. ESQA Cosmetics has also won numerous awards, including the Sociolla Award for Best Makeup (Sociolla, 2022).

The main focus of this research is on two key variables, brand trust and promotion, which will be the subjects of examination to determine the extent of their effect on the purchase decisions of Shopee users during live-streaming shopping sessions. This research aims to provide a deeper understanding of how consumer trust in a brand and the effectiveness of promotions can affect purchase decisions in the continuously evolving online shopping environment. The findings of this research will offer valuable insights to stakeholders for developing marketing and brand management strategies in the context of live-streaming shopping on the Shopee platform. By understanding the relationships between these variables, it is hoped that companies can be more effective in attracting and retaining customers and improving their sales performance in the increasingly competitive e-commerce landscape.

2. Literature Review

2.1. Literature Review

In this article by (Nurhasanah et al., 2020) the authors explain the factors affecting purchasing decisions on the Tokopedia online shopping site. The research utilizes a quantitative approach and gathers data through a survey method. The research results indicate that brand trust positively and significantly affects purchase decisions.

In this article by (Prasetyono et al., 2021) elaborates on the effect of promotional activities and pricing on purchasing decisions within the Shopee application. The research adopts a quantitative approach, utilizing data collected through questionnaires. The findings of this research indicate a positive and significant effect of both promotion and price on the decision variable.

In this article by (Verrelie & Agustiono, 2022) discusses the impact of price and promotion on the purchase decisions of offline fast fashion brands during COVID-19. The research employs a quantitative approach and uses SmartPLS to analyze statistical data. The findings indicate that price does not significantly affect purchase decisions. In contrast, promotions have a significant positive effect on purchase decisions.

In this article (Suleman et al., 2023a) the authors elaborate on the use of social media as a channel for digital marketing and its effect on brand ambassadors and brand trust in relation to purchase decisions. The research employs a quantitative approach with a Structural Equation Modeling data analysis technique, utilizing the AMOS software. The findings indicate that brand ambassadors and brand trust significantly affect consumer purchase decisions. It was also discovered that brand ambassadors have the most significant impact on brand trust.

In this article by (Wijaya, 2023) the author explains the impact of brand image and trust on purchase decisions related to buying from TikTok Shop. The research employs a quantitative approach and conducts correlation and regression analyses. The findings indicate that brand image and trust have a positive and significant effect, emphasizing their crucial role in shaping consumer purchase decisions within the context of TikTok Shop.

In their research (Hasanah et al., 2021a) explain the impact of product quality and promotion on purchase decisionsfor local instant coffee "Lanang Suhang" in Talang Agung Village. The research utilizes a quantitative approach and employs SPSS for data analysis. This research findings indicate a positive and significant effect of promotion on purchase decisions. However, the product quality variable does not have a significant effect on purchase decisions.

The authors of this article (Abdel Wahab et al., 2023), explain how consumer decision-making styles affect fashion product involvement. The article employed a quantitative approach, using data collected through questionnaires. The findings indicate that consumer decision-making styles significantly impact fashion product involvement. Other findings suggest a significant effect of gender and age variables on consumer purchasing decisions in the context of fashion products. Regarding the age variable, younger individuals tend to be more involved in purchasing fashion products compared to older individuals. As for gender, females are more likely to be involved in purchasing fashion products than males.

In an article by (A. Nag & Gilitwala, 2023), the authors explain the effect of social media on purchasing behavior. The article employs a quantitative approach by collecting data from questionnaires and utilizing SEM analysis. The results of this article indicate that social media significantly impacts purchase decisions. Other findings reveal that gender and monthly income, considered as control variables, do not significantly affect purchase decisions.

In this article, (Qu et al., 2023), the authors explain the effect of scarcity-triggered sales promotions in direct trade. The relationship between impulsive buying tendencies and scarcity-triggered purchase decisions was examined by investigating the mediating role of anticipatory emotions. This article used a quantitative approach, collecting data through online questionnaires and utilizing SEM analysis. The findings of this article indicate that viewer frequency and anticipatory emotions fully mediate the relationship between past purchases and future purchase decisions. Additionally, the results show that control variables such as age, gender, and education do not significantly impact purchase decisions.

2.2. E-commerce & Live Streaming

The advancement of information and communication technology in marketing has given rise to e-commerce. E-commerce is a trend where individual sellers are connected online. E-commerce refers to using the internet and the web to buy, sell, transport, or trade goods and services, involving three main activities: order and payment, order fulfillment, and delivery of goods orservicesto customers (Turban et al., 2015).

E-commerce has created new opportunities and trends in the business world. One innovative method to enhance interaction and conversion is through Live Streaming Shopping. Live-streaming shopping is a transactional activity conducted in real-time through live-streaming broadcasts to capture consumer interest and affect purchasing decisions. In the business context, live streaming involves a streamer or broadcaster who streams video and audio in real-time, sharing content related to video games, talent performances, daily life, or any other topics they wish to share. (Hu et al., 2017). Live broadcasts integrate various elements such as text, images, sound, and other expressions into the stream to make the experience more intuitive, clear, authentic, and interactive (Tong, 2017). In live streaming, viewers or audiences watching the broadcast can also comment and communicate with each other through text-based chat features (Hu et al., 2017). Live streaming has proven to be a highly effective tool in e-commerce. This feature provides valuable opportunities for sellers to interact directly with potential buyers. Through live streaming, sellers can showcase their products, explain their features and benefits, and respond to customers' questions in real time. This direct interaction allows sellers to build trust and convince consumers of the quality of their products. Furthermore, live streaming allows sellers to express their authenticity and confidence in their business, which can enhance their attractiveness and boost sales. Thus, live streaming has established itself as a powerful tool for connecting sellers with consumers, creating a more interactive and engaging shopping experience, and enabling significant sales growth.

2.3. Brand Trust

Brand trust is the confidence that consumers have in a brand. When a brand meets consumers' expectations and needs, trust is established. According to Delgado, as cited in Bakti, (2020), brand trust is the trust that customers have in their interactions with a brand based on the perception that the brand can be relied upon and held accountable for attracting and satisfying customers. According to Lau and Lee, as cited in (Nasir et al., 2020), brand trust is defined as customers' willingness to rely on a brand with the risks they face because their expectations of the brand will lead to positive outcomes.

The dimensions of brand trust are as follows (Chaudhuri & Holbrook, 2001):

1. Trust

Consumers trust a product or service through the brand.

2. Rely

The level of trust in a product or service that can be relied upon due to the brand's characteristics.

3. Honest

The level of trust in the brand is that it is honest.

4. Safe

The level of safety that consumers believe in the brand.

2.4. Promotion

Promotion, or marketing promotion, is one of the components of the 4P marketing mix (Product, Price, Place, and Promotion). It is designed to persuade customers to purchase products by using various marketing techniques to capture their interest and influence their purchase decisions. Promotion is the activity aimed at conveying the benefits of a product and convincing customers to buy the products being offered (Kotler & Amstrong, 2008). To achieve sales targets, companies prioritize communicating with customers through the products they offer. Additionally, promotion is a critical factor in the success of a marketing program.

The dimensions of promotion are as follows (Kotler & Amstrong, 2010):

1. Coupons

Certificates that offer discounts for the purchase of specific products. The discount value is determined, and the coupon is presented when consumers make a purchase.

2. Price Bundling

Offers for consumers to save on the regular price of a product as indicated on the label or packaging.

3. Direct Price Reductions

Quantity discounts or volume payment reductions from the list price with the aim of attracting consumers' interest in buying more of the offered products.

2.5. Purchase Decision

The purchase decision is a process through which consumers go through five stages: problem recognition, information search, alternative evaluation, purchase decision, and post-purchase behavior. This process begins long before the actual purchase is made and has lasting effects afterward. Based on the quote above, it can be concluded that a purchase decision is the buying behavior of final consumers that occurs after evaluating alternative choices with the goal of selecting one among those options (Keller & Kotler, 2012).

The Purchase Decision process consists of five stages, as outlined by (Keller & Kotler, 2012):

1. Problem Recognition

This is when buyers recognize a problem or need. Needs can be triggered by internal stimuli when regular needs arise, or they can be prompted by external stimuli.

2. Information Search

Consumers search for information related to their needs. They may search on the web, use social media, consult with friends and family, and gather information through various means.

3. Alternative Evaluation

Consumers look for information about various brands and go through various alternative buying processes, depending on individual consumers and specific purchasing situations.

4. Purchase Decision

Consumers may form an intent to purchase based on expected income and anticipated product benefits, but unexpected events can change this intent. The purchase decision involves buying the brand that is most needed and appealing.

5. Post-Purchase

This stage involves determining whether the purchase was satisfying or dissatisfying based on the relationship between consumer expectations and perceived product performance.

2.6. Research Framework

In this study, two hypotheses explain the relationship between relevant variables in purchase decisions. H1 posits that brand trust affects purchase decisions. Meanwhile, H2 suggests that there is an effect of brand promotions on purchase decisions. In this context, brand trust consists of several factors that affect purchase decisions, such as trust, reliance, honesty, and safety. H3: On the other hand, brand promotions involve various factors that impact purchase decisions, including coupons, bundling packages, and price reductions..

Figure 1: Research Framework

H1: There is an effect of brand trust on purchase decisions.

H2: There is an effect of brand promotions on purchase decisions.

H3: There is an effect of gender on purchase decisions.

H4: There is an effect of age on purchase decisions.

3. Research Methods

The research method is an approach used to obtain answers to research problems. In this study, a quantitative approach with a survey method was employed. Survey research is conducted by sampling a population to examine phenomena within a specific group or individual behavior. (Creswell & Creswell, 2018). Typically, surveys utilize questionnaires as a data collection tool and employ Likert scale measurements. The Likert scale used ranges from 1 as the lowest score to 6 as the highest score, indicating levels of disagreement from "strongly disagree," "disagree," "somewhat disagree," "somewhat agree," "agree," and "strongly agree."

The research population consists of Shopee ESQA Cosmetics followers. This population was chosen because the majority of live-streaming shopping viewers are followers of Shopee accounts. The sample size was determined using Taro Yamane's formula, given a population of 943,800 ESQA Cosmetic account followers. Therefore, the sample size for this study is 150, rounded up using data analysis techniques with SEM-PLS (Structural Equation Model-Partial Least Square).

Data collection was carried out through primary and secondary data sources. Primary data for the study were obtained directly through questionnaires distributed to respondents, specifically live-streaming shopping viewers selected based on predefined criteria set by the researcher.

Table 1: Questionnaire

4. Results and Discussion

4.1. Respondents Attributes

The demographic characteristics of the respondents in this study reflect diversity in terms of gender, age, and geographic background. Out of the 100 respondents who completed the questionnaire, the majority were female (89%), while males contributed only about 11% of the sample. The most common age range of the respondents was 17-25 years, with the majority of them being students. This indicates that the study garnered insights from the younger generation actively participating in live-stream shopping. Geographic location also played a significant role, with the majority of respondents residing in Tangerang. Additionally, variations in monthly income and monthly cosmetic purchase expenses illustrate the economic diversity among the respondents. The demographic data collected are represented in Table 2, which reflects the diversity and relevance of the respondents in the context of this research.

Table 2: Demographic Characteristics of Respondents

4.2. Validity and Reliability Analysis

Validity and reliability play a crucial role in evaluating research instrument measurements. Reliability refers to the level of consistency or stability in the results of measuring instruments, while validity pertains to the accuracy of the interpretations made based on the instrument's measurement outcomes. (Christensen & Johnson, 2014).

There are two ways to measure validity, namely convergent validity and discriminant validity (Hair et al., 2017).

Convergent validity is used to determine the validity of indicators. In convergent validity, validity can be assessed by looking at the outer loadings. If the outer loading value is ≥ 0.70 per indicator item, that indicator is considered valid (Hair et al., 2017). The results of this study, as shown in Table 3, indicate that the values for each indicator are ≥ 0.70, which means that all the indicators are valid.

Table 3: The Result of Convergent Validity Measurement

On the other hand, discriminant validity is used to assess the validity of variables. This validity can be determined by examining the Heterotrait-Monotrait Ratio (HTMT) values. If the HTMT value isless than 0.90, it can be considered that the variable is valid (Hair et al., 2017). The results of this study, as presented in Table 4,show that the values are below 0.90, indicating that the variables are valid.

Table 4: The Result of Discriminant Validity

Reliability is a measure that indicates the consistency of a measurement instrument in assessing the same phenomenon. It refers to the level of consistency or stability in the results of the measuring instrument. (Christensen & Johnson, 2014). A measurement instrument is considered reliable if it consistently provides the same results or responses to a particular phenomenon, even when used repeatedly.

If the value of Cronbach's Alpha is > 0.6, then the research instrument is considered reliable (Taber, 2018). Based on the results of this study, as shown in Table 5, all instruments have values > 0.6, indicating that the research instrument is considered reliable.

Table 5: The Result of Cronbach's Alpha

4.3. Hypothesis Analysis

Based on the results from Table 6, the path coefficients for the research hypotheses are examined. The significance of these values is determined by the magnitude of the t-statistic and p-value. (Hair et al., 2017). It can be observed that the effect of brand trust on purchase decision is 0.312 with a t-statistic of 3.319, and the effect of promotion on purchase decision has a value of 0.312 with a t-statistic of 6.691. The p-value for the effect of brand trust on purchase decision is 0.001, and the p-value for the effect of promotion on purchase decision is 0.000. Since both p-values are less than 0.05, it can be inferred that brand trust and promotion have significant impacts on purchase decisions.

Table 6: Path Coefficient

In this study, gender is used as a control variable, with females coded as 0 and males coded as 1. Based on the original sample value of 0.068, a t-statistic of 2.384, and a p-value of 0.017, it is indicated that gender has a significant and positive effect on purchase decisions. Therefore, gender coded as 1 has a higher impact than gender coded as 0. This means that males have a significantly higher effect on purchase decisions compared to females.

For the age control variable, with age categories of 17-25 years as a reference point, 26-35 years, and 36-45 years, it can be observed that the original sample value for the effect of the age group 26-35 years on purchase decisions is -0.011 with a t-statistic of 0.290 and a p-value of 0.772. Meanwhile, the effect of the age group 36-45 years on purchase decisions has an original sample value of 0.396 with a t-statistic of 7.422 and a p-value of 0.000. Therefore, the effect of the age group 26-35 years tends to be lower compared to the reference group (17-25 years) on purchase decisions, while the effect of the age group 36-45 years tends to be higher than the reference group. This can be interpreted as follows: the age group 26-35 years does not have a significant negative effect on purchase decisions compared to the reference group (17-25 years), whereas the age group 36-45 years has a significant positive impact on purchase decisions compared to the reference group.

This implies that the results strongly support the research hypotheses, suggesting that brand trust and promotion are crucial in affecting consumers' purchasing decisions. Additionally, the control variable indicates that males play a larger role than females in influencing consumers to make purchasing decisions. Furthermore, it indicates that the age group 36-45 years has a higher role than the age group 17-25 years in affecting consumers' purchasing decisions.

Figure 2: Path Model

4.4. Discussion

4.4.1. Brand Trust on Purchase Decision

Based on the research findings, it is evident that brand trust exerts a positive and significant impact on purchase decisions. When consumers feel secure and comfortable with a brand, their level of trust in that brand increases, leading to more customers deciding to purchase ESQA Cosmetic products during live-streaming shopping on Shopee. This is reflected in the highest scores for the brand trust instrument, particularly X1.7 with the statement "I feel safe when using ESQA Cosmetics" and X1.8 with the statement "I feel comfortable when using ESQA Cosmetics.”

These results align with previous research, such as (Nurhasanah et al., 2020), who found a positive and significant effect of brand trust on purchase decisions for Tokopedia users. These findings are consistent with (Suleman et al., 2023b), who highlighted the significant impact of brand ambassadors and brand trust on consumer purchase decisions. It was also discovered that trust has the most substantial effect on brand trust.

Discussing the impact of brand trust on purchase decisions in the context of live-streaming shopping on Shopee reveals significant findings According to respondent assessments, brand trust is crucial in motivating social media platform users to shop during live-streaming shopping sessions on Shopee. These results underscore the importance of consumer trust in the brand and its products. Trust not only creates a sense of security and satisfaction but also provides a positive incentive for consumers to make purchase decisions. Therefore, brand trust plays a crucial role in shaping consumer purchase decisions, with strategic implications for brand development and marketing in the live-streaming shopping environment In conclusion, these results affirm that in the face of increasing competition in the e-commerce world, building and maintaining consumer trust in the brand is a critically vital factor.

4.4.2. Promotion on Purchase Decision

Based on the research findings, promotion has a positive and significant impact on purchase decisions. The more discounts and voucher discounts offered, the greater the number of people deciding to purchase ESQA Cosmetic products during live streaming shopping on Shopee. This is evident from the highest instrument values in the promotion section, specifically X2.10 with the statement, "I buy ESQA Cosmetics products during Shopee live streaming when there are discounts," and X2.3 with the statement, "ESQA Cosmetics' discount coupons during Shopee live streaming affected my purchasing decisions."

These results align with previous research, such as (Prasetyono et al., 2021), whose research explains that both Promotion and Price variables, both partially and simultaneously, have a significant positive impact on purchase decisions. Furthermore, this research is consistent with (Hasanah et al., 2021b), whose findings illustrate a positive and significant effect of promotions on purchase decisions.

Discussing the impact of promotions on purchase decisions in the context of live-streaming shopping on Shopee reveals important results. Respondent assessments indicate that promotions significantly entice social media platform users to shop during live-streaming sessions. These findings underscore the importance of promotions as an effective tool in influencing consumer behavior. Promotions not only create awareness but also affect the level of interest among viewers in the products or services offered during live-streaming shopping sessions. Therefore, promotions can be a key factor in shaping consumer purchase decisions, a critical element in the marketing strategy of live-streaming shopping on Shopee. These results highlight the importance of effective promotion planning in creating an engaging and profitable consumer shopping experience.

4.4.3. Gender on Purchase Decision

Based on the research findings, gender has a positive and significant impact on purchase decisions. Gender, considered as a control variable, illustrates how gender differences can affect consumer purchasing decisions..

The results indicate similarity with the study by (Abdel Wahab et al., 2023) where the control variable gender has a positive and significant impact. However, in the research conducted by (A. Nag & Gilitwala, 2023) their findings explain that the control variable gender does not have a significant impact on purchase decisions.

The discussion on the effect of gender reveals a significant difference in how men and women process product information when factors such as functional requirements, aesthetic value, and brand impact are considered.

This discussion offers detailed insights into the psychological dynamics influencing purchasing decisions based on gender, contributing significantly to understanding consumer behavior. Brands can enhance the effectiveness of product campaigns by considering the distinct preferences of men and women, targeting consumers more specifically based on gender differences. This research underscores the importance of understanding the complexity of social factors, such as gender, when designing comprehensive and effective marketing strategies.

4.4.4. Age on Purchase Decision

Based on the research findings, age has a positive and significant impact on purchase decisions. As a control variable, age highlights how age differences affect consumer preferences and motivations in the context of product purchases.

The results indicate similarity with the study by (Abdel Wahab et al., 2023) where the control variable age has a positive and significant impact on purchase decisions. However, in the research conducted by (Qu et al., 2023) their findings explain that the control variable age does not have a significant impact on purchase decisions.

The discussion on the effect of age reveals that different life stages and experiences play a crucial role in shaping consumer preferences. Consumers of various ages tend to evaluate products based on their unique needs and preferences. Besides, different technological aspects and current trends also play a significant role in decision-making, especially among specific age groups. This research provides valuable insights for marketers to align their strategies with diverse age groups' specific preferences and needs. The practical implications suggest that by considering these aspects, marketers can design more effective and relevant marketing campaigns, ensuring that products and marketing messages effectively meet consumers' expectations from various demographics. This approach helps in meeting overall expectations.

5. Conclusions

Brand trust has a positive and significant impact on purchase decisions, implying that a positive brand trust in the product can motivate consumers to choose to shop during live streaming on Shopee. Promotions have a positive and significant effect on purchase decisions, indicating that the more promotional offers are presented, the more viewers decide to purchase ESQA Cosmetic products during live-streaming shopping on Shopee. Additionally, the control variables of gender and age (36-45 years) demonstrate a positive and significant effect on purchase decisions.

While this research provides valuable insights, it has limitations, such as a limited number of respondents. Furthermore, other variables, such as hedonic shopping, motivation, and impulsive buying, could be subjects of further research in the context of live-streaming shopping. Therefore, further research will be needed to better understand the factors affecting consumer purchase decisions in the live-streaming shopping environment and to extend the generalizability of these findings to a broader population.