: Sistem Informasi Penelitian Universitas Kristen Satya Wacana J01537

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The International Journal of Organizational Innovation Vol 8 Num 3 January 2016

156

ANTECEDENTS OF FUTURE MARKET ANTICIPATION: A BETTER

UNDERSTANDING FROM THE FASHION INDUSTRY

IN INDONESIA

Roos Kities Andadari

Satya Wacana Christian University, Salatiga, Indonesia. roos.kities@staff.uksw.edu

Sony Heru Priyanto

Satya Wacana Christian University, Salatiga, Indonesia. Maria

Satya Wacana Christian University, Salatiga, Indonesia. Jony Oktavian Haryanto

Podomoro University, Jakarta, Indonesia

Abstract

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The International Journal of Organizational Innovation Vol 8 Num 3 January 2016 157

Keywords: batik, design model, human capital, competition, AEC, product price, future market anticipation

Background

Batik is acknowledged as a cultural product of Indonesia which is admired by people all over the world. Batik is not just cloth but this product is a manifestation of styles, patterns, and colors that reflect Indonesian cul-ture. Admiration was even given by UNESCO on October 2, 2009. There-fore, the government of Indonesia has decided that October 2 is National Ba-tik Day.

Recognition given by UNESCO is the result of a long struggle by the Indonesian government as other coun-tries (such as Malaysia) also consider batik as part of their culture. Malaysia has acknowledged that historically batik comes from Java. Malaysia also has patented batik they argue that they patented the patterns and motifs sepa-rately, which are different from Indo-nesian original batik motifs and pat-terns. Efforts to obtain admission to UNESCO basically are to anticipate other countries’ claims of the batik ownership in the future.

However, the appreciation from the world has not been responded pro-portionately by Indonesian consumers. Instead of increasing the number of purchases of real batik (handmade and stamped batik), printed batik sales that are actually not considered as batik have increased. The momentum of in-creasing international appreciation has not yet been able to switch to become

an incentive for entrepreneurs to take advantage of this situation. This is evi-dent from the stagnant sales of batik.

Previous work done by Haryan-to and PriyanHaryan-to (2013) has shown that future market anticipation plays a very important role for batik entrepreneurs. This future anticipation will create cus-tomer value as well as perceived mar-ket performance. However, their re-search has not shown the antecedents of future anticipation which is the cen-tral point of their findings. Since future market anticipation is very important for entrepreneurs, it is surprising that only a limited number of studies have analyzed future market anticipation, especially its antecedents.

This research intends to analyze the antecedents of future market antici-pation in the batik industry. Previously, in-depth interviews and focus group discussions were conducted with batik entrepreneurs in Solo, Lasem, and Pek-alongan, which are central locations for most batik producers in Indonesia. It is proposed that model design, alternative of raw materials, human capital, local competition, competition from the ASEAN economic community (AEC), and price of product are the anteced-ents of future market anticipation (see Figure 1).

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Figure 1: The Antecedents of Future Market Anticipation

Future Market Anticipation

Model E1

1

Alternative raw materials

E2 1

Human capital

E3 1

Competition E4

1

AEC E5

1

Price

E6 1

Research Issues Based on the above back-ground, several research issues can be arranged for later field tests. The re-sults are then summarized. Several research issues are:

1. Does model design positively in-fluence future market anticipation? 2. Do raw materials positively

influ-ence future market anticipation? 3. Does human capital positively

in-fluence future market anticipation? 4. Does competition positively

influ-ence future market anticipation? 5. Does competition within AEC

posi-tively influence future market an-ticipation?

6. Does price of product positively influence future market anticipa-tion?

Literature Review Future Market Anticipation

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anticipa-The International Journal of Organizational Innovation Vol 8 Num 3 January 2016 159

tion is also necessary for customer val-ue. According to Flint et al. (2008), customer value anticipation (CVA) is a driving factor for customer satisfaction and loyalty.

Future market anticipation or many times just referred to as future anticipation is customer perception about all the activities undertaken by producers who are trying to provide solutions for customer needs and re-quirements in the future. However, not much research about future market anticipation has been conducted and literature on this topic is limited. In order to discuss the theoretical frame-work of future anticipation, the author used a futuristic approach or futurolo-gy, which is the science that studies the future. It is currently continuing to grow and gain in-depth attention from academics (Mello, Bhadare, Fearn, Galaviz, Hartmann, and Worrel, 2009). Although this science can provide enormous implications in the world of marketing, research and theories about the future are still rarely discussed in the realm of marketing science.

Focusing on the future necessi-tates an understanding of the dynamic environment and requires an under-standing of the various factors, both short term and long term, which will have an impact on businesses and mar-kets. To achieve the aim of maintaining growth and market leadership, it re-quires a strong future orientation and willingness to make long-term com-mitments to key stakeholders such as customers, employees, suppliers, part-ners, shareholders, the public, and the community. Organizational planning

should anticipate many factors such as customer expectations, new business opportunities and partnering opportuni-ties, increasing the global market, de-velopments in technology, the increas-ing e-commerce environment, new customers and new market segments, development regulations, public expec-tations and the community, as well as strategic moves conducted by competi-tors. Strategic objectives and resource allocations need to accommodate these various influences. Focusing on the future includes developing employees and suppliers, creating innovation op-portunities, and anticipating responsi-bility to the public.

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The future is an activity related to the awareness of alternative mater-ials, social, and political environment. Social concerns are related with a lot of people to predict what will happen in the future (De Roo, 2009). Regarding the material, it requires a lot of funds needed by the company to identify trends in the future. It is said to be po-litical because the company actually wants to dictate the market to greater competitiveness. Although the future is a very complex matter to study, this does not mean that the future cannot be predicted. Many corporate leaders in multinational companies such as Pizza Hut or United Colors of Benetton have conducted research by doing in-depth talks and even by living together for a few days with the younger generation to understand their current needs as well as to try to understand their pref-erences in the future (Ebert & Griffin, 2010). They do so in order to try to understand the future. By comprehend-ing the future, they can carry out a se-ries of anticipations to get the benefits out of them (Adam, 2008).

Chang, Hung, and Ho (2007) introduced the process of finding po-tential customers through a needs anal-ysis in the future. This process begins with the profile determination of loyal customers, continued with a search of potential customers that leads to poten-tial customer searches through predic-tions about their needs in the future. It shows the importance of identifying sales patterns for core products and customer background to understand the profile of loyal customers. It is also necessary to analyze the potential buy-ers who have never made a purchase,

along with their characteristics to un-derstand the buying opportunities that exist. The last part is to use existing data to understand buying opportunities in the future resulting in a projection for potential customers.

For SMEs, this analysis is im-portant as SMEs rarely identify the pattern of their sales and customer pro-files (Haryanto, 2007). SMEs need to understand patterns of sales and cus-tomer profiles, combined with antici-pated future needs and desires. The opportunity to gain market potential will become large, which means an increase in the performance of the SME marketing.

Product Characteristics Product characteristics are dis-tinctive characteristics from the prod-ucts which differentiate them from the competitors and could be offered to the markets to fulfill the customer needs

" B ? B &

Brown, 1998). Thus, every product has its own characteristics which make it different from its competitors. Market-ers try to develop products with their own unique traits, in order to gain spe-cific perceptions from customers. This later concept is called positioning strat-egy (Kotler & Keller, 2006). A product which is unique, competitive, and diffi-cult to imitate by competitors will fa-cilitate service providers to have a competitive advantage.

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its specific competencies will differen-tiate the product from its competitors. Three important product characteristics in this research are model design, alternative of raw materials, and price of product (Solomon, 2007).

In accordance with the product characteristics, Levin and Paige (2003) conducted a research to prove that product choices are influenced by the specific characteristics of those prod-ucts. Previous research has shown the relationship between product character-istics on the intention to consume

(Lev-? C ) ' ..8

Gruner & Homburg, 2000). Customers are very concerned about the product characteristics when they want to buy or consume the products (McNeal, 1992).

If entrepreneurs are able to cre-ate an up-to-dcre-ate model design, then customers will perceive this as future anticipation. Entrepreneurs who think about the future will also seek alterna-tive raw materials to make their prod-ucts become better and cheaper. Hence, raw materials and price of product play a significant role in building future anticipation. On the other hand, entre-preneurs will always look for better human capital to be perceived as fu-ture-oriented and will think beyond the competition. In a more formal frame-work, the following hypothesis can be devised:

H1: Model design positively influences future anticipation.

H2: Alternative raw materials positive-ly influence future anticipation.

H3: Human capital positively influ-ences future anticipation.

H4: Competition positively influences future anticipation.

H5: AEC positively influences future anticipation.

H6: Price of product positively influ-ences future anticipation.

Research Method

The Type of Research and Location

This research was conducted in three areas known as large batik pro-ducers in Pekalongan, Lasem, and Solo in Central Java. Those three locations were selected because in these regions there are many batik SMEs, both ex-porters and non-exex-porters.

Data Sampling and Data Processing

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Results

By using SEM and Lisrel 8.8, a suitability test is obtained of the overall structural model, which produces a

suitability value or GOF. In full, the conformity values are displayed in Ta-ble 1.

Table 1: Suitability Value of the Overall Structural Model

GOF Indicator Value Expected

Estimation

Results Findings

GFI GFI > 0.90 0.83 Marginal fit

RMSEA RMSEA < 0.08 0.039 Good fit

NNFI NNFI > 0.90 0.96 Good fit

NFI NFI > 0.90 0.87 Marginal fit

RFI RFI > 0.90 0.86 Marginal fit

IFI IFI > 0.90 0.97 Good fit

CFI CFI > 0.90 0.97 Good fit

Source: Primary Data, 2014

Based on the Table 1. above, in general it can be concluded that the research model has a good level of fitness. This is shown by the estimated value that is dominated by the value of good conformity (good fit).

Hypothesis Testing Results The results show the value of the subsequent coefficients and t │

│value. When the structural trajectory has a value of t ││≥1.96, then the path coefficient is significant. Then if

│ t │≤ 1.96, it is concluded that the coefficient of the path is not significant (Hair et al., 2010).

Based on the results above, it is found that model design does not posi-tively influence future market anticipa-tion. This is seen in the value of │ t │ in Table 2, which is in accordance with the predetermined statistical

require-ments (│ t │≤ 1.96), so it is not con-firmed that the hypothesis in this data is supported. An up-to-date model design is perceived as the company effort to increase sales. Customers do not appreciate this up-to-date model because other competitors do the same thing.

Based on the results above, it is discovered that raw materials have no positive effect on future anticipation. This is seen from the value of │ t │in Table 2, which is in accordance with the predetermined statistical terms (t │

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because only batik uses this material. However, due to the increasing number of batik entrepreneurs, it has made the price of gondurukem become high, as it is now sold in US dollars. Batik

en-trepreneurs are reluctant to find new alternative materials, because they think that new materials are not genu-ine for batik.

Table 2. Hypothesis Testing Results

Hypotheses t-value (Not) / Supported

H1: Model design positively influences future market anticipation.

-0.27 Not supported H2: Alternative raw materials positively influence

future market anticipation.

-0.28 Not supported H3: Human capital positively influences future market

anticipation.

-0.02 Not supported H4: Competition positively influences future market

anticipation.

2.13 Supported

H5: AEC positively influences future market anticipa-tion.

-1.94 Not supported H6: Price of product positively influences future

mar-ket anticipation.

-1.10 Not supported

Based on the analysis above, it is determined that human capital has no positive effect on market future antici-pation. This is viewed from the value of │ t │ in Table 2, which is in accord-ance with the predetermined statistical terms (t ││≤ 1.96 this means that hypothesis 3 is not supported by the data. In hypothesis 3, testing results found that human capital, i.e. employ-ees do not play a significant role in developing future anticipation. Most of the employees in batik are older per-sons with old-fashioned technology. They do not want to adapt to or learn from new technology. In Lasem and Pekalongan, most of them are part-time worker, so loyalty and commitment is questioned here. This provides an

ex-planation as to why human capital does not positively influence future anticipa-tion.

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them to copy or duplicate other pro-ducers’ designs. On the other hand, this competition comes from batik entre-preneurs who have limited funding. Every weekend, these entrepreneurs have to pay their employees. If they have no money on that weekend, then they will sell their batik below the market value in order to obtain cash. This has resulted in price wars among the batik entrepreneurs. However, this competition also pushes the batik en-trepreneurs to think about a new way to anticipate the future. They are expand-ing their market abroad or to other is-lands in Indonesia, in order to cope with the competition on Java Island.

Based on the analysis above, it is found that AEC has no positive ef-fect on future anticipation. This is proved by the value of │ t │ in Table 2, which is in accordance with the pre-determined statistical terms (t ││≤

.& !%

supported by the data. In the hypothe-sis 5 testing results, it is discovered that batik entrepreneurs in Solo, Pekalon-gan, and Lasem do not think about the competition in AEC. They think that batik is an Indonesian heritage. Even though Malaysia also has batik, they consider this to be very different. On the other hand, most of the batik entre-preneurs are not university graduates. This low educational background makes them incapable of thinking about global competition. Research conducted by Andadari (2014) found that almost half of SMEs do not know about the plan of ASEAN economic community implementation in 2015.

Based on the analysis above, it is determined that price of product has no positive effect on future market an-ticipation. This is proved by the value of │ t │in Table 2, which the value t ≤ 1.96, so the hypothesis is not supported by data. In the hypothesis 6 testing results, it found that price is something to be considered as being determined by batik entrepreneurs. They perceive that the competition has decreased the price of the batik. On the other hand, the cost of raw materials has increased because they have to import most of the materials from China. Thus, batik entrepreneurs are not seeking a strategy to cut their costs as a form of future anticipation.

Conclusion & Recomendations Conclusion

Future market anticipation is customer perception about all the activ-ities undertaken by producers who are trying to provide solutions for custom-er needs and requirements in the future. Future market anticipation is important for marketing performance improve-ment. However, not much research about future market anticipation has been conducted and literature on this topic is limited. More study on future market anticipation is needed.

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mar-The International Journal of Organizational Innovation Vol 8 Num 3 January 2016 165

ket anticipation. This means all efforts taken by businesspeople are not related to future anticipation except in consid-ering competition.

Recomendations

As future anticipation is im-portant for marketing performance improvement, the entrepreneurs need to make strategic plans regarding fu-ture anticipation.

1. How that can be done is to do an analysis of what has been done so far related to the com-pany's marketing strategy. Also note the strengths and weak-nesses of a company that has been there all along. Then need to analyze recent consumer be-havior and projections about future consumer behavior. Combination of these things are used to formulate future strate-gies anticipation.

2. Need to set up a special team. The team will continue to work to audit specific consumer be-havior and condition of the company, which is then used as the basis for future strategy. This team could be formed from the marketing and produc-tion divisions.

3. To be competitive, businesses need to understand that they

can take advantage of a variety of ways such as modify the de-sign of the model, look for al-ternatives other than the use of current raw materials that in-crease the quality of a product and lower the cost, improve human resources, as well as price of product. Some of these variables are important in creat-ing the uniqueness of the prod-ucts.

4. With the enactment of the AEC, SMEs in Indonesia are mostly unaware of the opportunities and threats that they may face. Most firms do not know or even do not care about the imple-mentation of this agreement. This is because most of them are still busy with their internal problems. Socialization of the AEC needs to be intensified and improved. Also, SMEs should be encouraged to try to take advantage of opportunities and avoid threats that may be faced.

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