107 Journal of Public Diplomacy and International Studies www. grnjournal.us AMERICAN Journal of Public Diplomacy and International Studies Volume 02, Issue 01, 2024 ISSN (E):2993-2157 The Influences of Product Quality, Store Atmosphere and Membership Reward on Customer Loyalty of Kopi Kenangan In Manado City Through Customer Satisfaction as a Mediating Variable Kezia AS Lasut Master of Management Program, Faculty of Economics and Business Sam Ratulangi University, Indonesia Willem JF Alfa Tumbuan Master of Management Program, Faculty of Economics and Business Sam Ratulangi University, Indonesia Merinda H. Ch, Pandowo Master of Management Program, Faculty of Economics and Business Sam Ratulangi University, Indonesia Abstract: This research aims to determine the influence of product quality, store atmosphere, and membership rewards from consumers of memorable coffee on the level of customer loyalty through customer satisfaction as a mediator. The type of research used is descriptive research to describe or explain the relationship between variables using a quantitative approach. The sample taken for this research was 100 respondents. Samples were taken using nonprobability sampling technique and purposive sampling technique. The data collection instrument was a questionnaire administered via Google Form. Next, statistical testing uses SPSS Ver software. 29. The results of this research show the influence of product quality, store atmosphere, and membership rewards on customer satisfaction. Store atmosphere and membership rewards also have an influence on customer loyalty, while product quality has no influence on customer loyalty. The next result, through the mediating variable, is that product quality influences customer loyalty through customer satisfaction. The different results are that store atmosphere and membership rewards have no influence on customer loyalty through customer satisfaction. Keywords: Product quality; Store atmosphere; Membership rewards; Customer satisfaction; Customers loyalty. INTRODUCTION Background Currently consuming coffee has become popular among almost all ages, from young people to even 16 year olds who have started drinking coffee. This is proven by retail sales of ready-to- drink coffee in Indonesia always increasing from 2016 to 2018, Intan Kemala (2017). One of the successful coffee shops in Indonesia is Kopi Kenangan. Kopi Kenangan is a start-up operating in the food and beverages sector which was founded in 2017. Currently Kopi Kenangan has more than 500 outlets in 45 cities in Indonesia, this number has increased by 41% compared to 2020 and in the last year Kopi Kenangan has sold 40 million cups of coffee, Kompas.com (2021). In 108 Journal of Public Diplomacy and International Studies www. grnjournal.us 2021, Kopi Kenangan has become one of Indonesia's unicorns after successfully receiving funding of 96 million dollars or Rp. 1.37 trillion, where this funding makes the Kopi Kenangan company currently worth more than 1 billion US dollars, CNBC Indonesia (2021). Currently, quite a lot of coffee shop outlets have sprung up in Manado, which has created quite tight competition between these coffee shop business people. Kopi Kenangan always strives to improve product and service quality to maintain consumer loyalty. Product quality is an important thing and must be paid attention to because it will influence consumer decisions. In an effort to attract consumer attention, Kopi Kenangan must be able to create a comfortable atmosphere for consumers when shopping. By creating a store atmosphere that is attractive, fun and comfortable for consumers when they are in the Kopi Kenangan shop. Another factor that influences customer loyalty is membership rewards. A membership program is a loyalty program in the form of membership to offer several benefits to customers, for example discounts, cashback and special prices with certain conditions for each purchase. Research purposes The aim of this research is to determine the partial influence of product quality, store atmosphere, and membership rewards from consumers of memorable coffee on customer loyalty through customer satisfaction as mediation. LITERATURE REVIEWS Product Quality towards Customer Satisfaction Customer satisfaction is the key to creating customer loyalty. There are many benefits received by companies by achieving a high level of customer satisfaction, namely, apart from being able to increase customer loyalty, it can also prevent customer turnover, reduce customer sensitivity to price, reduce the costs of marketing failures, reduce operating costs caused by the increase in the number of customers, increase advertising effectiveness, and improving business reputation Fornell (1992). The results of research from Syahroni (2020), show that Product Quality has an influence on Customer Satisfaction at Keibar Pamulang Cafe. Store Atmosphere towards Customer Satisfaction Levy and Weitz (2019) explained that cafe atmosphere is the creation of an atmosphere through visuals, arrangement, light, music and aroma which can create a comfortable purchasing environment so that it can influence customers' perceptions and emotions when making purchases. Previous research conducted by Triandewo and Indiarto (2021) Store Atmosphere influences Customer Satisfaction of Kenangan Coffee in the City of Jakarta. Membership Reward for Customer Satisfaction Membership programs are the implementation of special strategies to build strong relationships with customers by offering many benefits Lee, Kim, Hwang & Cui (2021). In previous research conducted by Mahatma (2020), Membership Rewards had a positive effect on Starbucks Customer Loyalty. Product Quality towards Customer Loyalty Product quality is an important thing that a product must have, so producers are required to produce quality products in order to attract consumers' attention to buy and ultimately increase customer loyalty. Research conducted by Satria (2022) shows that product quality has a significant influence on customer loyalty at Coffee Shop Medan. Store Atmosphere towards Customer Loyalty Store atmosphere refers to the design of the environment through visual communication, flash, color, music, and aroma to stimulate and influence their purchasing behavior. Many retailers are realizing the added benefit of developing an atmosphere that complements other aspects of store design and merchandise. In previous research conducted by Puspita (2019), Store Atmosphere 109 Journal of Public Diplomacy and International Studies www. grnjournal.us had a positive effect and had a strong value on customer loyalty at Draja Coffee Kualanamu International Airport. Membership Reward for Customer Loyalty Membership is a program commonly carried out by companies. The company uses a membership system to offer several benefits to customers, for example, offering promos, discounts, cashback and special prices with certain conditions for every purchase at company outlets or other companies that partner with it. In previous research conducted by Mahatma (2020), member cards had a positive and significant influence on Starbucks customer satisfaction. Customer Satisfaction with Customer Loyalty According to Tjiptono and Chandra (2017: 57), in general, satisfaction provides two main benefits for companies, namely in the form of customer loyalty and word of mouth advertising or what is usually referred to as positive viral communication. Previous research conducted by Adiwiyah, et al (2023) Customer Satisfaction shows positive significance on Customer Loyalty Product Quality with Customer Loyalty through Customer Satisfaction Customer satisfaction occurs when customers receive quality products and services that match what they want and expect according to their needs. Customer satisfaction and company customer loyalty are closely related to the quality of products and services. A higher level of quality will result in higher customer satisfaction, while at the same time supporting high prices and often low costs. Therefore, improving quality will generally increase loyalty. Kotler & Armstrong (2018). In previous research conducted by Mahatma (2020), product quality and customer satisfaction had a positive influence on Starbucks customer loyalty. Store Atmosphere with Customer Loyalty through Customer Satisfaction Store atmosphere is the creation of an atmosphere with the aim of providing comfort and pleasure to consumers when making purchase transactions in a retail store. A good store atmosphere can make consumers enjoy the entire purchasing process offered by the retailer and make them feel at home in the store for a long time. Previous research conducted by Indiarto (2021) Store Atmosphere influences Customer Loyalty through Customer Satisfaction of Kopi Kenangan in Jakarta. Membership Reward with Customer Loyalty through Customer Satisfaction According to Kotler (2009; 155) two customer loyalty programs that companies can implement are frequency programs and club marketing programs (membership card programs). Highly satisfied customers usually remain loyal for longer periods, buy again when the company introduces new products and updates old ones, talk good things about the company and its products to others, pay less attention to competing brands and are less sensitive to price. offer product or service ideas to companies, and service costs are cheaper than new customers because transactions can become routine according to Kotler & Keller (2009: 140). This is supported by previous research conducted by Mahatma (2020) that Membership Rewards have a positive influence on Customer Satisfaction and also have a direct or indirect influence on Customer Loyalty. Research Model and Research Model Hypothesis In this research, based on the background and theoretical studies that have been discussed previously, namely the theoretical basis, as well as previous research, the researcher will explain the relationship between the influence of product quality, store atmosphere and membership rewards on the loyalty of memorable coffee customers in Manado. And you can see that the framework for thinking is as follows: 110 Journal of Public Diplomacy and International Studies www. grnjournal.us Figure 1. Research Framework Source: Data processing results, SPSS 2023 Hypothesis Based on the research framework and research model, the research hypothesis is: H1 : Product quality has a significant direct effect on customer satisfaction Memorable coffee in Manado H2 : Store atmosphere has a direct and significant influence on customers satisfaction Memorable coffee in Manado H3 : Membership rewards have a direct, significant effect on customers satisfaction Memorable coffee in Manado H4 : Customer satisfaction has a significant direct effect on customers loyalty Memories coffee in Manado H5 : Product quality has an influencedirectly significant to Coffee customer loyalty memories in Manado H6 : Store atmosphere has a significant direct effect on customer loyalty Memorable coffee in Manado H7 : Membership rewards have a direct and significant effect on customer loyalty Memorable coffee in Manado H8 : Product quality has a significant effect on customer loyalty through customers satisfaction Memorable coffee in Manado H9 : Store atmosphere has a significant effect on customer loyalty through customers satisfaction Memorable coffee in Manado H10 : Membership rewards have a significant effect on customer loyalty through customer satisfaction Memorable coffee in Manado RESEARCH METHODS This research method uses descriptive analysis. Descriptive research is research conducted to determine the value of independent variables, either one or more (independent) without making comparisons, or connecting them with other variables (Sugiyono, 2008). Descriptive research in this study is used to describe or explain the relationship between the influence of Product Quality (X1), Store Atmosphere (X2) and Membership Reward (X3) on Customer Loyalty (Y2) through Customer Satisfaction (Y1) of Kopi Kenangan in Manado. A quantitative approach is used to obtain research results in numerical form which are then interpreted in narrative form and to 111 Journal of Public Diplomacy and International Studies www. grnjournal.us obtain objective and generalizable results. Data Collection Method Primary Data In this research, the questionnaire serves as the main data source. In this research, questionnaires were distributed online via Google form to people in the respondent's city who met the sample criteria. Secondary Data This research also uses secondary data to support the collection of main supporting data, namely from literature studies, data from the internet, and previous research. Research Population and Sample Population is a generalization area consisting of: objects/subjects that have certain qualities and characteristics determined by researchers to be studied and then conclusions drawn (Sugiyono, 2016). The population of this research is the people of Manado City who have purchased Kopi Kenangan products. The number of population members is unknown. According to (Sugiyono, 2019) the sample is part of the number and characteristics of the population. This research uses a non-probability sampling technique because the number of members of the population is unknown, and purposive sampling as the sample determination technique. Data analysis The data analysis techniques used in this research are the validity and reliability test of the research questionnaire, classical assumption tests (normality test, heteroscedasticity test and autocorrelation test), path analysis (Path analysis), and coefficient of determination (𝑅2). Data analysis was carried out using the SPSS 29 program. Research Instrument The research instrument is a questionnaire with Likert scale model scoring which is filled in by respondents on the distributed questionnaire. The Likert scale is used to measure attitudes, opinions and perceptions of a person or group of people about social phenomena (Sugiyoni 2016: 93). RESEARCH RESULTAND DISCUSSION Research result Research Instrument Test Validity Test Table 1. Validity Test Variable Items Rcount Table Information X1 (Product Quality) X1.1 0.822 0.1966 Valid X1.2 0.674 0.1966 Valid X1.3 0.736 0.1966 Valid X1.4 0.706 0.1966 Valid X2 (Store Atmosphere) X2.1 0.895 0.1966 Valid X2.2 0.875 0.1966 Valid X2.3 0.881 0.1966 Valid X2.4 0.854 0.1966 Valid X3 (Membership Rewards) X3.1 0.895 0.1966 Valid X3.2 0.875 0.1966 Valid X3.3 0.881 0.1966 Valid X3.4 0.854 0.1966 Valid Y1 (Customer Satisfaction) Y1.1 0.810 0.1966 Valid Y1.2 0.815 0.1966 Valid Y1.3 0.815 0.1966 Valid 112 Journal of Public Diplomacy and International Studies www. grnjournal.us Y1.4 0.847 0.1966 Valid Y2 (Customer Loyalty) Y2.1 0.814 0.1966 Valid Y2.2 0.704 0.1966 Valid Y2.3 0.845 0.1966 Valid Y2.4 0.858 0.1966 Valid Source: Data processing results, SPSS 2023 Data from table 1 shows that all items are valid because they have a calculated R value greater than the R table, namely 0.1966. Reliability Test Table 2. Reliability Test Results Reliability Statistics Cronbach's Alpha N of Items ,926 20 Source: Data processing results, SPSS 2023 FromThe results of the reliability test in table 2 above show that the Cronbach's alpha value is 0.926, where the value is >0.6. Thus, the variables Product Quality, Store Atmosphere and Membership Reward can be said to be reliable or reliable. Classic Assumption Test Multicollinearity Test The multicollinearity test aims to test whether the regression model finds a correlation between independent variables (Ghozali, 2013). To detect multicollinearity, it can be seen in the VIF value, if the tolerance value is > 0.100 and VIF < 10 then there are no symptoms of multicollinearity. Table 3. Multicollinearity Test Results Coefficients Model Collinearity Statistics Tolerance VIF 1 Product Quality ,418 2,390 Store Atmosphere ,415 2,407 Membership Rewards ,604 1,656 Customer Loyalty ,619 1,615 a. Dependent Variable: Customer Satisfaction Source: Data processing results, SPSS 2023 Based on the results of data analysis in table 3, the four variables show a tolerance value > 0.100, and a VIF value < 10. So it can be concluded that there are no symptoms of multicollinearity. Normality test The method used to test normality is to use Kolmogrov-Smirnov with the criterion if the Asymp value. Sig. (2-tailed) >0.05 then the data is normally distributed. Table 4. Normality Test Results One-Sample Kolmogorov-Smirnov Test Unstandardized Residuals N 100 Normal Parameters, b Mean .0000000 Std. Deviation 1.40091495 Most Extreme Differences Absolute ,074 Positive ,048 Negative -.074 113 Journal of Public Diplomacy and International Studies www. grnjournal.us Statistical Tests ,074 Asymp. Sig. (2-tailed) c ,200 Monte Carlo Sig. (2-tailed)d Sig. ,194 99% Confidence Intervals Lower Bound ,184 Upper Bound ,205 a. Test distribution is Normal. b. Calculated from data. c. Lilliefors Significance Correction. d. Lilliefors' method based on 10000 Monte Carlo samples with starting seed 299883525. Source: Data processing results, SPSS 2023 The normality test results in table 4 above show where the Asymp value is. Sig. (2-tailed) is 0.200 where the value is >0.05. Thus it can be concluded that the data is normally distributed. Heteroscedasticity Test The heteroscedasticity test aims to test whether in the regression model there is an inequality of variance from the residuals of one observation to another. If the variance from the residual from one observation to another is constant, it is called homoscedasticity and if it is different it is called heteroscedasticity (Ghozali, 2013). The method used to test heteroscedasticity uses the Glejser test with the requirement that if the significance value is > 0.05, it can be concluded that the research data does not have symptoms of heteroscedasticity. Table 5. Glejser Test Results Coefficients Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) 2,429 ,679 3,580 <.001 Product Quality ,035 ,058 ,091 ,605 ,547 Store Atmosphere -.140 ,054 -.393 -591 ,183 Membership Rewards ,007 ,038 .023 ,182 ,856 Customer Loyalty ,015 ,034 ,055 ,440 ,661 a. Dependent Variable: ABS_RES Source: Data processing results, SPSS 2023 The results of the heteroscedasticity test (Glejser test) in the table show that all variables have a significance value of > 0.05 and thus the test results above show that there are no symptoms of heteroscedasticity in this study. Path Analysis Test Path analysis is an extension of multiple linear regression analysis, path analysis is the use of regression analysis to estimate causal relationships between variables (causal) that have been previously determined based on theory. Path Coefficient ModEl1 Table 6. Model 1 Regression Results Coefficients Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) 2,746 1,150 2,387 .019 Product Quality ,420 ,098 ,410 4,299 <.001 Store Atmosphere .211 ,085 ,221 2,498 .014 Membership ,238 ,061 ,296 3,898 <.001 114 Journal of Public Diplomacy and International Studies www. grnjournal.us REdward a. Dependent Variable: Customer Satisfaction Source: Data processing results, SPSS 2023 The results of the path analysis for model 1 in the table above obtained respective significance values, namely X1 = <0.001, X2 = 0.014, and Regression Analysis and Equation 1 Figure 2. Regression Analysis Source: Data processing results, SPSS 2023 Equation 1 Y1 =β1X1 +β2X2 +β3X3+e1 = 0.410X1 + 0.221X2 + 0.296X3 + 0.606e1 Model 2 Path Coefficients Table 7. Model 2 Regression Results Coefficients Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) -.077 2,078 -.037 ,971 Product Quality -.285 ,187 -.202 - 1,523 .131 Store Atmosphere ,547 .153 ,414 3,565 <.001 Membership Rewards ,249 .116 ,223 2,152 ,034 Customer Satisfaction ,398 ,179 ,289 2,223 ,029 a. Dependent Variable: Customer Loyalty Source: Data processing results, SPSS 2023 The regression results of model 2 are that the variables X2, X3, and Y1 have a significant effect on Y2 and the variable 115 Journal of Public Diplomacy and International Studies www. grnjournal.us Path Analysis and Equation 2 Figure 3. Path Analysis Source: Data processing results, SPSS 2023 Equation 2 Y2 =β1X1 +β2X2 +β3X3+β4Y1+e2 = −0.202𝑋1 + 0.414𝑋2 + 0.223𝑋3 + 0.289𝑌1 + 0.767𝑒2 Table 8. Effect of Mediating Variables H Variable Direct Influence Influence Nopeimmediately Condition Remarks H8. X1 against Y2 through Y1 -0.202 0.118 PTL >PL Significant H9. X2 against Y2 through Y1 0.414 0.063 PTL >PL No Significant H10. X3 against Y2 through Y1 0.233 0.086 PTL>PL No Significant Source: Data processing results, SPSS 2023 Sobel Test Table 9. Sobel Test Calculation Results Product Quality Statistical Tests P-Value Conclusion a 0.420 1,973 0.048 Significant Influence b 0.398 Sa 0.098 SB 0.179 Store Atmosphere Statistical Tests P-Value Conclusion a 0.211 1,656 0.097 Not significant b 0.398 Sa 0.085 SB 0.179 Membership Rewards Statistical Tests P-Value Conclusion a 0.238 1,931 0.053 Not significant b 0.398 Sa 0.061 SB 0.179 Source: Data processing results, SPSS 2023 CLOSING Conclusion Based on the results of research and discussion, the following conclusions can be drawn: 116 Journal of Public Diplomacy and International Studies www. grnjournal.us 1. The statistical test results show that Product Quality (X1) has a significance value of <0.05, namely 0.001, with these results indicating that Product Quality (X1) has a positive and significant effect on Customer Satisfaction (Y1), so that H1 is accepted. 2. The statistical test results show that Store Atmosphere (X2) has a significance value of <0.05, namely 0.014, with these results indicating that Store Atmosphere (X2) has a positive and significant effect on Customer Satisfaction (Y1), so that H2 is accepted. 3. The statistical test results show that Membership Reward (X3) has a significant value <0.05, namely 0.001. This means that Membership Reward (X3) has a positive and significant effect on Customer Satisfaction (Y1), so that H3 is accepted. 4. The statistical test results show that Customer Satisfaction (Y1) has a value of <0.05, namely 0.029, with these results showing that Customer Satisfaction (Y1) has a positive and significant effect on Customer Loyalty (Y2), so that H4 is accepted. 5. The statistical test results show that Product Quality (X1) has a significance value of >0.05, namely 0.131. This means that Product Quality (X1) has no effect on Customer Loyalty (Y1), so H5 is rejected. 6. The statistical test results show that Store Atmosphere (X2) has a significance value of <0.05, namely 0.001, these results indicate that Store Atmosphere (X2) has a positive and significant effect on Customer Loyalty (Y2), so that H6 is accepted. 7. The statistical test results show that Membership Reward (X3) has a significance value of <0.05, namely 0.034, with these results indicating that Membership Reward (X3) has a positive and significant effect on Customer Loyalty (Y2), so that H7 is accepted. 8. In the Path Analysis test results, the direct influence value is -0.202 and the indirect influence value is 0.118, so it can be concluded that there is a significant influence of Product Quality (X1) on Customer Loyalty (Y2) which is mediated by Customer Satisfaction (Y1), so that H8 is accepted. 9. In the Path Analysis test results, the direct effect value is 0.414 and the indirect effect is 0.063, so it can be concluded that there is no mediation effect. Thus, Customer Satisfaction (Y1) cannot mediate the influence of Store Atmosphere (X2) on Customer Loyalty (Y2), so H9 is rejected. 10. In the Path Analysis test results, the direct effect value is 0.233 and the indirect effect is 0.086, with these results indicating that there is no mediation effect. Thus, Customer Satisfaction (Y1) cannot mediate the influence of Membership Reward (X3) on Customer Loyalty (Y2), so H10 is rejected. Suggestion Based on the findingsand the conclusion of this research, there are several suggestions that can be useful for companies and for further research. The suggestions are as follows: 1. Kopi Kenangan Manado must maintain its existing product quality and even improve it further because this can greatly influence customer satisfaction and customer loyalty. 2. Kopi Kenangan Manado continues to maintain the store atmosphere in its shop so that customers who visit will always feel comfortable, because store atmosphere is one of the factors that customers take into account to gain satisfaction so they can become loyal customers. 3. It is hoped that Kopi Kenangan Manado will continue to provide and increase benefits for customers when using this membership, such as promos, discounts, cashback and special prices to maintain customer satisfaction and loyalty. 4. To compete among the many local coffee shops, Kopi Kenangan Manado must improve product quality, maintain store atmosphere and continue to provide membership rewards and 117 Journal of Public Diplomacy and International Studies www. grnjournal.us prioritize customer satisfaction in order to build customer loyalty. 5. 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