APPLICATION OF THE HOWARD’S MODEL ON CONSUMER BEHAVIOR IN BUYING INSURANCE POLICY

This research intends to predict factors that drive consumer to buy insurance policy, based on consumer behavior model by Howard. In main variable used is buying decision. In addition, this study also includes information, brand image, confidence and attitude as the control variables. The analysis units are exclusive policy insured in Malang region. The data was collected using questionnaire. The t-test in simple regression models are used to test hypotheses. The research finds about: first, insignificant information to influence confidence and attitude, but statistically significant to influence brand image. Second, brand image are statistically significant to influence buying decision.


Introduction
Recently, more companies have been established as service companies, and one of them runs its business in insurance service. Insurance, actually, guides the society to be discipline in managing their economy (especially in financial aspect). Laws number 2 in 1992 stated three kinds of insurances, such as social insurance, loss insurance, and life insurance.
Some items that will be assessed in relation to the offered insurance services are as follow: product, time, price, and services. Those four items are attributes which attach to the offered insurance products in which attitude and confidence play important roles in establishing the consumer behavior in selecting and deciding to buy the scholarship insurance policy, whether it is viewed from the individual behavior or the individual behavior in group.
It is important to understand those attributes, but without any obvious information (promotion), the consumers will not be able to understand them more clearly. Therefore, it is expected that information will be able to establish an understanding that concern to those attributes so that it will create specific attitude and confidence of the consumer to buy the intended insurance policy. Nevertheless, such understanding has been established long beforehand the dissemination of such information. Therefore, it requires a detail review in order to get a certainty whether the dissemination of information affects the establishment of understanding, attitude and confidence of the consumer, or not, in selecting and deciding to buy the insurance policy of the exclusive scholarship.

Objectives of this Research are
 To prove the significant influence between dissemination of information and understanding toward the attribute of exclusive scholarship insurance in the positive direction.  To prove the significant influence between dissemination of information and the consumer behavior toward the attribute of exclusive scholarship insurance in the positive direction.  To prove the significant influence between dissemination of information and confidence toward the attribute of exclusive scholarship insurance in the positive direction.  To prove the significant influence between understanding toward the attribute and the consumer behavior toward the exclusive scholarship insurance in the positive direction.  To prove the significant influence between understanding toward the attribute and the consumer confidence toward the exclusive scholarship insurance in the positive direction.  To prove the significant influence between the consumer attitude and the decision to buy the insurance policy of exclusive scholarship in the positive direction.  To prove the significant influence between the consumer confidence and the decision to buy the insurance policy of exclusive scholarship in the positive direction.
The technological development has brought about an impact on the environmental changes as well as on the economy environment which is marked by the emergence of various kinds of products in the marketplace. Along with this development, the consumer behavior has changed. Therefore, the marketing management is demanded to recognize what the consumers need and want.
According to Swastha (Triatmanto, 2003:135), consumer behavior is the individual activities which directly involved in gaining and utilizing goods and services that include decision-making process and preparation as well as determination of these activities. This definition consists of two important elements, activities which have been done directly in order to obtain as well as utilize the goods and services, and the decision-making process to determine activity through buying process or activities to obtain goods and services which are really needed. The consumer behavior often changed in relation to continuous environmental changes. Therefore, the management should make an effort to get closer to its consumers as well as to recognize their needs.
It needs to be understood that the consumer behavior has been influenced by some factors and each consumer is influenced by different factor. Those factors comprise of both internal and external factors. Internal factors include motivation, perception, learning, personality and attitude, while the external factors include culture, social class, social group, and referential group as well as family.
Motivation is the individual's support which is directed to specific objective in order to achieve satisfaction. Therefore, motives of buying to satisfy what the consumer need and want are differentiated into two parts, such as; first, motive of primary buying is a motive that leads the behavior to buy common categories on a product. Examples of such motive are desire for enjoying pleasure, curiosity, and desire for affiliation with others. While, motive of selective buying is a motive that influences decision about models and brands of the product classes, such as, status, security, and prestige. Second, rational motive is a motive which is based on fact that is shown by a product to the consumer. Factors which should be considered are the economy factors such as offering, demand, and price. Whereas, the emotional motive is a buying motive which relates to individual feeling and emotion, such as, expression for feeling of love, security, pleasure, and health. This motive is subjective; therefore, it is difficult to determine the relationship among products which are being bought.
Perception is a process in which the consumer will realize and interpret the environmental aspects. These could influence someone to behave. Perception is highly influenced by experiences of the previous behavior and attitude of the individual.
Learning is defined as behavioral changes as a result of experience. Those behavioral changes are permanent and flexible and the buying process, which is performed by the consumer, is a learning process and it has been a part of the consumer's life.
Personality includes habitual attitude and characteristic, typical character and feature to determine different behavior of each individual and they will develop if anyone makes a relationship with others. According to Swastha and Handoko (1982:86), personality is an individual characteristic pattern which could determine how to response and to behave.
Definitively, attitude means physical and mind conditions, which have been prepared to respond any organized objects through experience. Swastha and Irwan (1984:62) stated that attitude is a tendency which has been learnt to respond any offering of good or bad product consistently. Therefore, the consumer will show positive or negative response to specific product.
Stanton (Swastha and Handoko, 1982:66) stated that culture is symbol and complex facts created by human being and handed down from one generation to the next as determinant to organize human behavior in society. Therefore, any company should recognize the implication of local culture.
In an organized community, there is a social stratum system as an organized and proper characteristic. Sorokin (Swastha and Handoko, 1982:66) defined the social stratum as differentiation of population or society into multilevel classes that comprise of higher, medium, and lower classes. Such social stratum, which has divided into classes, is relative as it is difficult to be definitely quantified. This stratification is based on levels of income, housing, and residential location.
Two causes which lead human being lives in group within the community are their desires to interact with others as well as with environment. This condition makes the social groups could not live alone. Social group is a social unity where these individuals interact to each other's (Swastha and Handoko, 1982:3).
Family is a place which is established at the first time and in fact, it buys more. Each of the family members plays different role in buying activity according to kinds of goods he/she buys. Each of the family members has different taste and desire, therefore, the marketing manager should be able to recognize the family member who takes the initiative, which would influence buying decision, who buys and who use the product.
Besides internal and external factors, marketing mix has also affected it as well (Kotler, 1997:172). In relation to the problem, Howard (1989) stated that promotion or dissemination of information is one of the marketing mixes which highly determine the consumer behavior in making a decision to buy a product. Concerning with this, Howard suggested a behavioral model as depicted on Figure 1.  Figure shows that promotion or dissemination of information (F) has directly influenced the consumer attitude (A) and confidence (C) to make option (I) in buying product (P), but promotion or dissemination of information (F) could establish brand recognition (B) that would influence attitude (A) and confidence (C) of the consumer in making any option (I) to buy (P).
All factors which influence the consumer behavior as described above are really complex if they are observed one-by-one especially in analyzing to the process of buying decision. It is obviously that the consumer behavior can be viewed from many facets, whether from marketing mix, psychological facet, as well as from external facet. Therefore, in order to direct the understanding toward this research, the author used a model presented by Howard. Definition of the concept presented by Howard can be described as follows: Information (F) includes advertisement or dissemination of information which is intended to convince the costumer to the offered product. Brand recognition (B) is visible thing that could influence the consumers to find out their categories, but not to evaluate or compare them with other products. By doing so, the consumer behavior, both attitude and confidence, will be measured by various attributes of brand recognition. Consequently, some questions asked to the consumer (the insurance attendant) have only related to those attributes that will be analyzed in relation to buying decision.
Attitude (A) is the second part of brand image, something that can be measured and expected by the consumer. Attitude is a tendency that can be learnt to respond the offered product. The consumer responses lie on good or bad things, and etc. Confidence (C) is the consumer confidence level in making the right choice over the offered products. Most of the prevailing consumer assessment process is oriented cognitively, which assumes the consumer to assess the product. At this stage, the consumer usually tends to relate weight in the importance of attribute and tends to develop a set of brand belief, a confidence on position of the right order for each brand of each attribute. A set of confidence, which concerning with certain brand, is so-called brand image. Intention (I) is a reflection of mental attitude of the consumer to select a product immediately. The obtainable information will help the consumer to assess alternatives. Therefore, the marketer should recognize how the consumer processes the information till achieve the assessment level to choose the product (intention).
Purchase decision (P) is a condition in which consumer decide to buy or not, after selecting (choosing) the items. Purchase decision means that the consumer will buy the most desirable goods. But, there are some factors that influence one's behavior in making an assessment which concerning with purchase decision. Other person's attitude could also influence consumer to buy the goods or not, in which the influence rate depends on relationship between consumer and the person, whether it is close enough or not. Consumer might call off his/her desire to buy if unexpected situation emerged. The consumer decision to change or call off his/her decision to buy is highly determined by the approximated risks, and the risk level itself depends on uncertainty of the product feature, as well as the consumer confidence.
In relation to this research, in which the observation focus is only on a specific product (exclusive scholarship insurance), it means that it offers only one product. So that there is no intention toward the other one, and intention or reflection to select will be united together with decision to buy. Therefore, model by Howard is modified to conform to the analysis needs as shown on Figure 2.  The Proposed Hypotheses are as Follow  There is significant influence between dissemination of information and understanding toward the attribute of exclusive scholarship insurance in the positive direction.  There is significant influence between dissemination of information and the consumer behavior toward the attribute of exclusive scholarship insurance in the positive direction.  There is significant influence between dissemination of information and confidence toward the attribute of exclusive scholarship insurance in the positive direction.  There is significant influence between understanding toward the attribute and the consumer behavior toward the exclusive scholarship insurance in the positive direction.  There is significant influence between understanding toward the attribute and the consumer confidence toward the exclusive scholarship insurance in the positive direction.  There is significant influence between the consumer attitude and the decision to buy the insurance policy of exclusive scholarship in the positive direction.  There is significant influence between the consumer confidence and the decision to buy the insurance policy of exclusive scholarship in the positive direction.

Materials and Methods
Process of the research is divided into three steps, such as; first step, performing bibliography study in order to obtain theoretical foundation which will be used in analysis. This theoretical foundation is derived from literature, magazines, scientific papers and other relevant papers concerning with the problem which is going to be observed. The second step is divided into two parts, (1) preliminary research is badly needed to determine location/object of the research as well as to obtain initial data and description about the observable location/object, and proceed to licensing arrangement of the research. Initial data and description of the observable location/object is derived from company through interview with the company management that concerning with numbers of the exclusive scholarship insurance policy holders in Malang, the amount of financial burden, the amount of premium that should be paid according to contract, and attributes that attach on the insurance themselves. Initial data is required to arrange questionnaire which will be distributed to the respondents (policy holder), (2) objective of the main research is to collect data from all respondents by using questionnaires as instrument of the research. Third step, the collected data will be processed, analyzed, and constructed in a research report. Of course, the data analysis is based on theories derived from bibliography study which will be applied in the real situation. Location of the research was focused on area of Malang and Life Insurance Company of BumiAsih Jaya (AJBAJ) as object of the research. The reason was because the insurance activity which was used as the research object located in Malang, and the object was chosen due to this exclusive scholarship insurance is the product of Life Insurance Company of BumiAsih Jaya (AJBAJ). The observable target (sample) is directed to the insurance policy holders of this exclusive scholarship that comprise of 120 persons.
Variables of this research have been described clearly in the framework of thoughts that comprise of dissemination of information (F), understanding to the attribute (B), consumer attitude (A), consumer confidence (B), and decision to buy the exclusive scholarship insurance policy (P). All of these variables are measured using some indicators which are based on attribute attached on the exclusive scholarship insurance that comprises of product, service, price, and duration of time.
The intended product is not seen from physical appearance, but utility of the related product for the policy holder. The intended service means ability of the company in providing service guarantee and realizing the promise. The intended price is the amount of financial burden and the amount of premium that should be paid according to its classification. The intended duration of time means the agreed time to pay the insurance premium in installment as well as term of the related insurance contract.

Technique of Analysis
The causal relationship analysis of the related variables uses simple regression equation, that is (Husaini and Purnomo, 1995:216):

Y = a + bX
Where: Y = dependent variable, X = independent variable, a = intercept value (constant), b = coefficient of regression course.
Coefficient Analysis of Determination describes the extent variation of the independent variables toward the dependent variables. If result of the calculation shows that the value is one, it means that the independent variable has been able to describe the dependent variable perfectly. The formulation is as follows (Levin and Rubbin, 1998:667): Hypothesis testing on this research uses t-test on the significant level ( = 5%) by two-direction test. Husaini and Purnomo (1995:204) found the t-test formulation as follow: Where: t = t count value,  0 = regression coefficient, SE = standard error

Results
Reliability and validity testing is intended to examine validity and reliability of instrument used in the research. This testing is performed using statistical program (Minitab) and the results are presented on Table 1.  The fact shows that critical value is smaller than the entire calculation, which means that the instrument is valid. Then its reliability should be tested as presented on Table 2. As with the validity test, the critical value (r ii table) is smaller than r ii count. Therefore the entire instruments of the research are reliable as well convincing that the screened data using the instrument can be used for analysis and hypothesis testing.
According to data which has gone through both validity and reliability tests, it will be analyzed systematically using simple regression model to measure the influence of related variables as presented in the theoretical model of this research.  ) on  = 5%, two-direction test = 1,980 Source: primary data has been processed The above table informs that; first, information has positive influence toward understanding on attribute which is proved by positive regression coefficient of 0,518. It means that dissemination of information has influence in establishing the consumer (policy holders) understanding that concerning with deciding to buy the exclusive scholarship insurance policy. In other words, the more increasing dissemination of information, the consumer understanding toward attribute attached on the exclusive scholarship insurance will also increase as well. If it is seen from the determinant coefficient, variable of information dissemination could describe variations in understanding variable as much as 33, 3% and the rest as much as 66, 7% will be described by other variable out of the model.
Second, variable of information has, in fact, negative influence toward consumer attitude as much as -0,084 and its ability to describe variation in attitude variable is very weak (very small), 0,7%. It means that the rest, 93%, will be described by other factor out of the model. Inability of information influencing the consumer attitude has been proved by smaller t count value than its critical value, -0, 89< 1,980. It means that information has insignificant influence toward the consumer attitude.
Third, variable of information has, in fact, negative influence toward consumer confidence. It has been proved by negative value of the regression coefficient (-0,058). This influence is weak and it has been proved by its determinant coefficient as much as 0,4%. It means that variable of information is able to describe variation on the consumer confidence as much as 0,4% and the rest as much as 96% will be described by other variable out of the model. Inability of the information variable in influencing the consumer confidence is marked off by smaller t count value than its critical value (-0,68< 1,980). It means that information has insignificant influence toward the establishment of consumer confidence to buy the exclusive scholarship insurance policy.
Fourth, variable of understanding has, in fact, positive influence toward consumer confidence which has been proved by positive regression coefficient value as much as 0,732. It means that when the consumer understanding has been improved, the confidence to make a decision that concerning with buying the exclusive scholarship insurance policy will be improved as well. Ability of the understanding variable in describing variation on the consumer confidence variable as much as 60,9% and the rest as much as 39,1% has been influenced by other variable out of the model. It means that understanding has strongly influenced the consumer confidence, and it has been proved that the ability is quite significant in which t count value is much higher than its critical value (13,55> 1,980).
Fifth, in relation to the consumer attitude, the understanding variable has positive influence toward the consumer attitude, which has been proved by positive regression coefficient of 0,738. It means that when the consumer understanding has been improved, the attitude forming to make a decision that concerning with buying the exclusive scholarship insurance policy will be improved as well. This influence is quite enough due to its ability has achieved 49,8% and the rest as much as 50,2% will be described by other variable out of the model. The ability is quite significant as t count is much higher than its critical value (10,81> 1,980).
Sixth, regression coefficient of confidence variable toward buying decision has positive value of 0,856 and it means that when the consumer confidence has been improved concerning with the exclusive scholarship insurance policy, it makes clear that the consumer decides to buy the insurance policy. It has been proved by the determinant coefficient of 59,9%. It means that the attitude and buying decision toward positive direction. Therefore, the sixth hypothesis has been proved. Seventh, consumer attitude has partially positive and significant influence toward buying decision. It means that there is a causal ratio between attitude and buying decision toward positive direction. Therefore, the seventh hypothesis has been proved.
Based on the above description, the empirical model that conforms to the analysis is presented on Figure 3. The empirical model is different from the established theoretical model (Figure 2), because it empirically proves that dissemination of information has insignificant influence toward confidence and consumer attitude. It is obvious due to confidence and attitude will be formed if the consumer has recognized attributes attached on the exclusive scholarship insurance. Such recognition or understanding has been established by itself based on the obtainable information, and from such understanding consumer will more convinced and obvious in attitude that concerning with decision to buy the insurance policy.  In such condition, it can be assured that dissemination of information should be more concerned in order to establish the consumer understanding. Without obvious understanding toward the attributes, consumer will be doubtful and could not able to strike attitude and confidence to buy the insurance policy. Therefore, if the dissemination of information is used as strategy to attract more candidates of policy holders, it should be done transparently by focusing on brand recognition, not on the establishment of attitude and confidence.

Conclusions and Recommendations
Based on result of the analysis and discussion, some conclusion can be drawn that the entire variables in this research have passed the validity and reliability testing. But, based on the significance testing, it shows that dissemination of information has insignificant influence toward the establishment of consumer attitude and confidence in deciding to buy the exclusive scholarship insurance policy. In other word, information has indirect significant toward the establishment of attitude and confidence, but through understanding attribute first, such understanding the attribute will form attitude and confidence in deciding to buy the exclusive scholarship insurance policy or not.