The effect of social media and electronic word of mouth on trust and loyalty: Evidence from generation Z in coffee industry

Abstract

Coffee shops have now evolved into an integral part of the modern lifestyle embraced by today's youth, especially by Generation Z. This study aims to understand the role of technology, specifically through Social Media Usage (SMU) and Electronic Word-Of Mouth (eWOM), and how trust as a mediator affects purchase intention and subsequently impacts customer loyalty. This study involved 282 respondents from diverse backgrounds. The sampling technique employed both snowballing and random sampling methods. For analysis, the Structural Equation Modeling (SEM) technique was utilized. In the study, several relationships were tested for their significance. The relationship between SMU and Trust was found to be significant. However, the relationship between eWOM and Trust was not significant. Trust significantly influenced Purchase Intention and Customer Loyalty. The direct relationship between Purchase Intention and Customer Loyalty was not significant. Moreover, the mediated relationships of SMU through Trust to Purchase Intention were significant, while the mediated relationship of eWOM through Trust to Purchase Intention was found to be non-significant. This investigation illuminates the distinct confluence of age-old values and contemporary digital interactions in sculpting consumer behavior within Indonesia. It accentuates the imperative for coffee shop enterprises to discern and synergize with these trends to guarantee enduring prosperity.