“Evaluating customer perceived value of housing based on location factor and economic value”

ARTICLE INFO Elisabet Siahaan, Khaira Amalia Fachrudin, Magdalena Linda Leonita Sibarani and Iskandar Muda (2019). Evaluating customer perceived value of housing based on location factor and economic value. Problems and Perspectives in Management, 17(3), 196-206. doi:10.21511/ppm.17(3).2019.16 DOI http://dx.doi.org/10.21511/ppm.17(3).2019.16 RELEASED ON Wednesday, 21 August 2019 RECEIVED ON Tuesday, 30 October 2018 ACCEPTED ON Thursday, 24 January 2019


INTRODUCTION
puts forward the concept of basic needs for human beings, including clothing, food, and boards. The board in the concept is a place to live, a shelter for the weather and the environment. In the concept of need, everyone must have a place to live. In fact, the housing market is not as easy as the theory of residential needs. The theory suggested that everyone will be looking for a place to stay and try to have it. Yet, house is not everyone can easily afford to. Housing or residence is the most expensive component compared to other basic needs. Large investments are needed to generate housing or buy housing. In other words, not everyone is willing to buy housing offered by the developer. Studies conducted by Zrobek et al. (2015) indicate that there are personal influences such as preference in a person's decision to choose to buy a house. Preferences of someone will be different from other people. In these conditions it will be difficult for developers to produce housing in accordance with the preferences of everyone. In marketing a property and housing, it needs to raise the demand for housing itself. The demand relates to a person's preference for the product being offered (Siahaan, 2015). The ability of marketers in creating demand must be able to penetrate the prospective buyer's perception of the product offered. Value concept plays an important role in marketing and demand creation (Kotler & Keller, 2012). Residential products that have a large cost must be able to create a perception of benefits far greater than the cost to be incurred by those consumers. Appraisal Institute (2008) agrees on a commonly used tag-line element "location, location, and location" to help provide an assessment of reasonable

Value and perceived value
Utilization of the concept of customer perceived value today is increasingly and widely used by companies, particularly within the scope of sustained business. This concept is also considered as one of the key factors in achieving business success, reaching and retaining customers, in an era of increasingly fierce competition (

Social-related value
This dimension describes the benefits from the standpoint of social value obtained on the consumption made. Gallarza and Gil (2006) suggested social acceptance as perceived value in the basic needs theory. This value is based on the need for acceptance in social groups and the need for appreciation, which is derived from the concept of needs by Maslow (1943). The values were perceived based on social environment (Harris et al., 2005).

Value concept in housing properties
The supply point of view is formed by the scarcity and benefits of the housing itself. The combination of supply and demand forms the value of housing. Therefore, the value in this context is a function of desire, benefits, scarcity, as well as purchasing power (Oloke et al., 2013).

Factors that affect perception of value
Ge and Du (2007) argue that the essence of the value of a housing in the property market is determined by various factors. These factors, among others, are the age of the building, location, area, the characteristics of the environment, economic activities, transport, population, etc. (Joslin, 2005). Of the various concepts, two of the most instrumental factors in the assessment of a consumer's perspective are summarized in two concepts, namely the economic value and location

Location
Kotler and Keller (2012) state that the location is one of the forms of the marketing mix, place, where the choice of product marketing is made. In the context of the value of a housing, Appraisal Institute (2008) defined location as a function of 3L, 'location, location and location'. The first location is referred to easiness to access the given location. The second one refers to mobility aspect and the last one to public facilities. Willmore (2011) believes that location is a very important factor in shaping the value of a housing in the minds of consumers. In the 3L function, the location has three approaches.

Accessibility
The location in this case relates to the proximity of the residential location with the access to the main highway.

Mobility
The location in this case relates to the proximity between the location of daily necessities housing, e.g. workplace, children's school, market, etc.

Amenities
Location in this case relates to the proximity between locations with public facilities such as hospitals, terminals, and so forth. Lundgren (2013) added location elements of the surrounding environment as an important aspect of location assessment, particularly from the point of view of consumers (residency

Economic value
The concept of value is a different concept with the price. Values are constructs with multiple points of view and no single conception refers to a value (Sweeney, 1994). Economic value is an agreement between buyer and buyer, beyond the market equilibrium price (Willmore, 2011). Betts (2012) stated that real estate such as residential, has no intrinsic value. The value itself was derived from right and benefit. Betts also stated that economic value of housing is the development of the concept of the DUST (Desire, Utility, Scarcity, and Transferable) function. The function can be seen in the demand (desire, transferable) and supply (utility, scarcity) side.

Research design
The nature of this study was explanatory research. Sekaran (2003) suggested explanatory research to evaluate and explain the logical relationship between variables. The study employed a mixture of qualitative and quantitative approaches. The perceptions were converted to each of their numerical value to be analyzed furthermore. Table 1 summarizes the operational definition of research variables.

Sample and data collection
There were numerous upper-middle class residential in Medan, North Sumatera, Indonesia. This study asked permission to conduct study to the developers. As the permission granted, the study was conducted at Citra Garden, Citra Wisata, White House Garden, Tasbih Housing (I  & II), Royal Monaco, Gatsu Indah, Asoka Raya Regency and Johor Regency, Medan, Indonesia. A data pool was created based on developers data. The sample was taken randomly based on the pooled data. The selection of random samples can be done in the ongoing process, when the population of the sample frame is not yet available. By using random samples, selected samples tend to be more widespread in the entire population. Therefore, the sample is considered more representative of the population. A number of 240 samples participated in this study. Inferential statistical analysis was used to answer the research hypotheses by using Partial Least Square method using SmartPLS 3.0 (Ringle et al., 2017). The advantage of using SmartPLS is the ability to process data for both formative and reflective SEM models. Formative SEM models have characteristics including latent variables or constructs constructed by indicator variables where the arrow leads from the construct variable to the indicator variable. Reflective SEM model is an SEM model where the construct variable is a reflection of the indicator variable so that the arrow leads from the indicator variable to the latent variable. Statistically, the consequence is that there will be no error value in the indicator variable.

Instrument reliability
Reliability test was done in Bumi Miraj Permai housing. Instrument reliability was measured using Cronbach's Alpha. The instrument reliability test results are summarized in Table 2.  Table 2 indicates that the instances used in this study had been consistent in measuring the answers of the study respondents. Cronbach's alpha value > 0,7 indicated good reliability of the research instruments.

Location variables
Location could be a factor of consideration for consumers in choosing a suitable residence for themselves. The Global Appraisal Institute carried out the three "L" placements of location as the accessibility of the premises for the user, the location as the mobility of the user, and the location as the availability of the facility essential to the user as a determinant of the fair value of a residence.

Accessibility constructs
Location factor of accessibility relates to how easily the location is reachable by the owner or owner-related. The higher the accessibility level of a place was, usually the higher the value of the location got. The results of descriptive statistics for accessibility construct are summarized in Table 3.  Table 3 indicates that the majority of respondents (18%) still stated that their residential location was a bit difficult to reach by car. As many as 16% of respondents also considered that the location of housing was still less close to public transport trajectory.

Mobility construct
The results of the descriptive statistics on mobility construct are summarized in Table 4.  Table 4 indicates that in general the housing owned has an average score of 4.06. This indicated that proximity to the work site was more ruled out in the choice of shelter when compared to the location of schoolchildren and the market for shopping for daily needs.

Facility construct
The evaluation results of descriptive statistics to facility construct are summarized in Table 5.  Table 5 provides information that in general the facility was already perceived quite well by the respondents with an average score of 3.98. In general, the housing projects had been perceived as close to both hospitals, shopping centers, parks or beautiful scenery, as well as downtown.

Environment construct
The environment construct evaluation is summarized in Table 6. Generally, Table 6 indicates that environmental construct in location variable was already in a very good perception.

Economic value variable of housing
The economic value of a product was based on the DUST function, which was a combination of desire, utility, scarcity, and transferable. The classic example that was often given in the learning of Economic Value was why the Diamond was much more expensive than water which was the basic human's need.

Desire construct
Descriptive statistical evaluation of desire construct is summarized in Table 7.  Table 7 indicates that housing owned or occupied by the respondent was housing that was really interesting with the average value of the desire construct of 4.52.

Utility construct
Descriptive statistical evaluation of utility construct is summarized in Table 8.  Table 8 indicates that the utility of housing owned by the respondent was optimal. Occupied house was a house that was able to provide all the housing needs of its owner.

Scarcity construct
Descriptive statistics of scarcity construct is summarized in Table 9.  Table 9 indicates that the presence of similar housing was quite rare with an average value of 4.09.
In general, similar housing was already difficult to find and generally was full.

Transferable constructs
Descriptive statistical analysis of transferable aspects is summarized in Table 10.  Table 10 summarizes that in general the respondents occupied housing which was easily transferable. In addition, respondents perceived that the resale price of housing was also promising. Nevertheless, as many as 7% of the respondents did not agree with it.

Customer perceived value variable
The essence of the value was the difference between benefits gained and the sacrifice that should be done by someone.

Product-related value
The perceived value of the product was related to the user's functional evaluation of the product itself. Descriptive statistical evaluation for the value perception dimension is summarized in Table 11.  Table 11 indicates that the perception of consumers in terms of the value of its existing home was in excellent condition with the average value of 4.27.

Social-related value
Descriptive statistical evaluation dimension of perceived value from a social perspective on houses that had been purchased is summarized in Table 12.  Table 12 indicates that the average perception of the value of changes in social values that the respondent felt quite well is with the average value of 4.05. The fewest social change happened to the respondent was a change of social status in the eyes of the family or relatives with an average score of 3.60, which is in the range under a proper category.

Personal-related value
Descriptive statistical evaluation for the dimension of perceived value from a personal standpoint on a house that had been bought is summarized in Table 13. to the intended construct rather than loading factors to other constructs (see Figure 1). Figure 1 indicates that all the indicators of research were appropriate in describing each variable construct in the study. The limit value used in this study was 0.6. All the indicators had a loading factor > 0,6 which indicated that the indicator was explaining the model shown in Table 14 and Table  15.  Table 14 and Table 15 conclude that the model proposed in this study met the criteria of reliability and validity in the PLS model conformity test.

Evaluation model
Evaluation model is summarized in Figure 2. Figure 2 provides that in terms of location, accessibility and mobility overall played an important role for the location factor.

Hypotheses testing
The results of the bootstrap evaluation is summa-rized in Table 16. Table 16 indicates that both research hypotheses were accepted. There was a positive and significant effect of the location factor on consumer's perceptions of the value of housing (sig = 0.042 < 0.05). Furthermore, the economic value factor of housing had a positive and significant influence on consumer's perceptions of the value of housing (sig = 0.000 < 0.05).

CONCLUSION
The economic value of this research acted as a dominant variable in driving consumer value perception. The developers should ensure that the main function of the home is a comfortable refuge from the weather. Customer perceived value is predominantly explained by the ability of the product to meet consumers' expectations. Consumers will highly evaluate the economic value of the housing units offered by the residential. The price offered will be very sensitive to the perceived value of the product. From the social perspective of the housing offered, it should be able to give a classy impression that can increase consumers' interest. The study showed that both locational and economic values have a positive and significant effect on the customer perceived value. A better locational aspect would increase the perceived value. It is more likely for a customer to purchase a house within strategic location. It is important to select a location with good accessibility and mobility aspect. Economic value acted as a dominant aspect to create customer perceived value (Demirgunes, 2015;Heskett, 2009). The perceived value will be improved as customer had a better perceived house economic value. Determining the location and how to manage the site and explain the benefits of the location of a housing to prospective customers is an important factor in building value in the minds of consumers. Aspects most preferred by consumers are the mobility on routine household expenditures and the child mobility. The location chosen and built should be close to the highway and able to be easily accessed by car. The economic value of the housing is the dominant factor in building the value in consumer's mind. It should be noted that the utility of housing offered must be aligned to or be greater than consumers' expectations. Consumers pay a huge attention to the product issue, namely the housing unit itself. The practical implication of this research is the need for the provision of funds from the government in the form of the procurement of toll road infrastructure and the construction of public facilities such as water and gas electricity that support housing. Social implications in the form of characteristics of home buyers and income factors can be influential in this study.

ACKNOWLEDGMENT
The authors would like to thank the Universitas Sumatera Utara, which fully funded this research. This research was funded by PNBP Talenta USU 2017 under the Basic Research scheme.

Hypothesis Path coefficient Significance Decision
Location factor of housing positively and significantly affects consumer's perceptions 0.114 0.042 Accept Economic value factor of housing positively and significantly affects consumer's perceptions 0.344 0.000 Accept