The Use of Digital Marketing in MSMEs in supporting Business Continuity in Indonesia
Bintang Andhyka1, Riska Yustisiana1*, Wasi Widayadi1
1 Faculty of Economics and Business, Pancasila University, Jakarta, Indonesia
*Corresponding Author: [email protected]
Accepted: 15 March 2023 | Published: 31 March 2023
DOI:https://doi.org/10.55057/aje.2023.4.1.3
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Abstract: During the Covid-19 pandemic, Indonesian government had to restrict economic and social activities, resulting in a decrease in income and people’s purchasing power. This restriction influenced negatively on various industrial sectors including MSMEs, in the forms of decreasing demand for the goods or services. This decrease in demand, then, reduced the operating profits, often leading to business closures. However, digital marketing may alleviate hese problems. The purpose on this research is to obtain an overview of the digital marketing application by MSMEs, assisted by an Indonesian state-owned company (BUMN). This overview, then, can be utilized to provide solutions for MSMEs, especially in the field of marketing of the products and services. The data used in this study are primary data obtained through structured interviews and observation, as well as, secondary data collected from the MSMEs profiles. The interviews and observations were conducted on 16 business people (informants) from the MSMEs assisted by a-state owned company. The results of this research are: (1) 56.25% of the MSMEs are in Java and Bali (56.25%); (2) Most of the MSMEs are in handicraft sector (31.25%); (3) 75% of the MSMEs have utilized digital marketing; (4) 43.75%
of the MSMEs update their social media contents everyday; (5) Half of those using digital marketing experiences the sales increase in the range of 10% to 50%. This study recommends training in digital marketing for MSMEs, starting from the use of the social media and chatting application to the creation of interesting contents for their social media.
Keywords: Covid-19, Marketing, Digital marketing, Micro, Small and Medium Enterprises (MSMEs)
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1. Introduction
The Covid-19 pandemic has affected various aspects of people's lives, including economy, in every country in the world. Indonesia's economic growth was in the range of negative figures (second quarter of 2020 to first quarter of 2021) after the announcement of the first Covid-19 case in Indonesia in March 2020. Then, Indonesian government responded by limiting community economic and social activities, resulting in a decrease in income and people’s purchasing power. The decrease also influenced various industrial sectors including MSMEs and startups in the form of decreasing demand for the goods or services they produce. The decrease in demand, then, reduce then operating profits which often leads to business closures.
Based on the data from the Central Statistics Agency (Biro Pusat Statistik, BPS) in 2021, the Covid-19 pandemic resulted in a reduction in income which was experienced more by Small Medium Enterprises (SME) compared to Large Medium Enterprises (LME), where 67.77%
Meanwhile, BPS data for 2021 states that the decrease in income at MSEs and UMB can be caused by several things, including a decrease in the number of sales (58.94%), difficulties in paying bills (29.18%), difficulties in paying debts (26.61%) of SME suffered a decrease in income until the third quarter of 2020, while only 57.29% of Medium Large Enterprises (UMB) underwent the same thing.
Meanwhile, BPS data for 2021 state that the decrease in income at MSEs and LME can be caused by several things: a decrease in the number of sales (58.94%), difficulties in paying bills (29.18%), difficulties in paying debts (26.61%), payment of material costs (25.38%), employee wages (23.66%), availability (20.84%), labor (10.9%) and rent (10.46%), payment of bills and lack of working capital (51.4%). Therefore, MSMEs need a good strategy in terms of additional funding, financial records and product marketing.
Sources: BPS 2021.
The decline in sales of products and services was the main factor causing a decrease in income for MSMEs amid the current pandemic, when many MSMEs still were having difficulties.
Furthermore, these MSMEs have not implemented digital marketing as a first step to compete in the digital era which is closely linked to the use of the internet and various social media.
Meanwhile, based on the data of 2021 E-Commerce Survey by the Central Bureau of Statistics (BPS), they show that as of December 31, 2020, 25.25% of business people were carrying out E-Commerce activities. The e-commerce activities then increased to 25.92% in June 2021, which is still relatively small. It was too low for business people who accept orders or sell goods/services via the internet in Indonesia. This also means that the majority of business people in Indonesia still run their business conventionally.
Based on data from We Are Social in the Digital Report in 2021, Indonesia is actually a country with the most e-commerce users in the world. There are 88.1 percent of internet users aged 16- 64 in Indonesia using e-commerce to buy a product in the last few months. This is an opportunity especially for MSMEs to increase sales revenue by using e-commerce. This research was conducted to get an overview of the digital marketing application by MSMEs, assisted by a state-owned company (BUMN), in various regions in Indonesia related to the use, impact, constraints and strategies. This overview then can be utilized to provide solutions to the problems faced by MSMEs, especially in the field of marketing of the products and services.
2. Literature Review
2.1 Digital Marketing
According to Chaffey et al. (2009) in Febriyantoro and Arisandi (2018), digital marketing is the marketing of products or services using technology. One form of digital marketing is the use of electronic media or the internet (internet marketing). The characteristics of digital marketing are: the efforts to increase interactions and activities between businesses and customers that depend on the use of technology; the existence of interactive technology to access information for both business and customers; the efforts to use the internet for various business activities, such as, research, analysis and planning to find, attract and retain customers;
and, the efforts to increase the acceleration of buying and selling of goods and services, information and ideas via the internet.
Widiastuti et al. (2021) states that digital marketing is a marketing activity, including branding, using technology and social networks to support marketing goals to communicate on a global scope and change the way companies do business with their customers. Digital Marketing can be seen as an interactive and integrated marketing solution to facilitate interaction between producers, market intermediaries and potential consumers, where digital marketing helps business people to find information easily about consumers and, then, provide the solutions for their needs and wants. On the other hand, digital marketing helps consumers and prospects consumers in finding product or service information, as well as, purchasing them through the internet (Kusuma et al., 2022)
The concept of marketing has evolved. In the past, a promotion was only conducted in one direction where marketers provided messages and information to potential customers.
Nowadays, the marketing concept has evolved from the 4P marketing mix (Product, Price, Place, and Promotion) to 4C (Customer solution, Cost, Convenience Channel, and
Communication) which allows both parties, marketers and customers, to participate in marketing activities (Andhyka, 2020).
2.2 Micro, Small and Medium Enterprises (MSMEs)
According to Law of the Republic of Indonesia No. 20 of 2008 about MSMEs in Mavilinda et al. (2021), micro-enterprises are productive businesses owned both by individuals and business entities that have the characteristics of micro-businesses as stipulated in the law. Small business is a productive economic enterprise self-built by an individual or a business entity that is not a subsidiary or a branch of a company and not owned either directly or indirectly by a company, which meets the criteria as a small business as stipulated by law. Medium business is a productive economic enterprise created by an individual or business entity that does not have the status of a subsidiary or branch of a company and not owned either directly or indirectly by a company, which meets the criteria as a medium business based on the law with the amount of wealth or annual net sales regulated in the law.
The Covid-19 pandemic has had an impact on decreasing profits, especially for MSMEs in Indonesia. To achieve business sustainability, a company strategy is needed to market its products and services, so the sales and the operating profits will increase. Therefore, MSMEs need to recognize changes in consumer behavior so that they can meet the needs and desires of their consumers. Then, they can offer attractive products and services to customers, hopefully leading to the sales increase. Millennial consumers now prefer to make purchases online for various products and services they need or desire. However, most of the payments are still in the form of Cash on Delivery (COD) compared to other payment methods. This shows that digital marketing by business people, especially MSMEs, is crucial (Andhyka & Yustisiana, 2022).
2.3 Digital Marketing and MSME
Social media are the easiest digital marketing tools to use and utilize for online marketing for MSME business people. This can be used as a first step for the development and sustainability of MSME businesses. Apart from being low cost and not requiring special skills, social media are capable of interacting directly with potential customers (Hadi & Zakiah, 2021).
Business people, especially MSMEs, utilize various appropriate strategies in marketing including product/service design, quality, price and the use of digital marketing as an effort to win the competition. According to Widiastuti et al. (2021) the digital marketing strategy for MSMEs through the use of social media must have creative and interesting contents which can be the doors to interact with customers. This kind of contents can attract and educate customers so that they finally buy the products/services offered. Mobile marketing with its various forms of applications on many gadgets can be used as a multi-channel digital marketing strategy.
These application can be employed to acquire target consumers, provide information, interact with customers, expand market and increase sales. Another digital marketing strategy is the integration of digital marketing and sustainable marketing which combines various digital platforms with an emphasis on socially-and-environmentally-responsible marketing activities while meeting the needs of consumers and business people.
According to Masamma and Tahir (2021) in Sanjaya et al. (2021), the use of social media platforms has a role in developing MSMEs for promotional activities through social media, especially Instagram by using Instagram features (Instagram stories, Instagram feeds, mentions and highlights). Currently, many people use social media for their various activities, including their shopping activities.
Zebua and Sunaryanto (2021) researched the use of digital platforms as an alternative for business people to survive the Covid-19 pandemic. They find that product promotion on social media has a positive impact as indicated by an increase in income for MSMEs compared to offline promotions. Online sales promotions on social media also reduce promotional costs such as advertising costs. In addition, the use of social media is beneficial for MSMEs because they can reach more target consumers. For these reasons, MSMEs need to master the use of social media applications and be creative to create interesting content on the social media so that they can attract more potential customers (Sanjaya et al., 2021)
3. Methodology
3.1 Research Data
The data used in this study are primary data obtained through structured interviews and observation. In addition, this study also uses secondary data of the profiles of actively-operating MSMEs fostered by a state-owned company PT. Angkasa Pura I.
3.2 Sampling Techniques
The sampling technique used was purposive sampling where the samples were selected based on certain criteria from the existing population (Sugiono, 2016 in Astutir and Lestari, 2019).
The criteria for the informants used in this study were MSME business people assisted by a state-owned company PT. Angkasa Pura I, operating in Indonesia and was still active during the Covid-19 pandemic. The total informants involved in this study were 16 (sixteen) MSME business people assisted by a state-owned company PT. Angkasa Pura I from all regions in Indonesia.
3.3 The Research Framework
The Covid-19 pandemic that has hit Indonesia since the beginning of 2020 has forced businesses to switch to digital platforms in marketing their products and services. Business people who have not used technology in business processes, especially in marketing activities, tend to experience a decline in sales so that the use of digital marketing is quite urgent.
Therefore, it is necessary to conduct research through interviews with MSMEs regarding the use of digital marketing. From the results of the interviews and observations, a profile of the use of digital marketing by MSMEs obtained. Then, a strategy to increase the competence in the use of technology and digital marketing for MSMEs is developed. This strategy will improve business processes of MSMEs, especially in the field of product marketing, they will increase the sales and maintain their business continuity. The research framework is shown in Figure 1 below.
Figure 3: Research Framework The Urgency of MSMEs Using
Digital Marketing in Indonesia
The Profiles of MSME Using Digital Marketing Assisted by A State-Owned
Company PT. Angkasa Pura I
To Become MSMEs Surviving in the New Normal Era by Using and
Optimizing Digital Marketing
The Strategies to Increase the Competence of Using Digital Marketing
in MSMEs Assisted by A State-Owned Company PT. Angkasa Pura I
4. Result and Discussion
This research was conducted on 16 (sixteen) MSMEs assisted by a state-owned company PT.Angkasa Pura I, located in various regions of Indonesia as shown in Table 1. Out of the sixteen informants, 4 (four) came from DKI Jakarta (25%). Only 1 (one) informant or 6.25%
came from the Special Region of Yogyakarta (DIY). The Informants coming from Central Java (Solo, Semarang) were 2 (two) or 12.5%. The informants from East Java (Surabaya) was 1 (one) or 6.25% as well as the informant from Bali. Hence, the informants from Java and Bali are 56.25% or a total of 9 (nine). On the other hand, the informants from areas outside Java and Bali were from Makassar, Manado, Kupang, Ambon, Lombok and Banjarmasin. There were 7 informants or 43.75%.
Table 1: The Data of Informants Based on The Business Areas
No Business Names Business Areas
1 Wahana Jaya Handicraft Jakarta
2 Galeri Busana Anggraini Jakarta
3 Sanggar Kaligrafi dan Wayang Jakarta
4 Sinar Mas Jaya Permata Bali
5 Arti Collection Surabaya
6 Mutiara Upiq Makasar
7 Shalfa Silk Makasar
8 Daffa Silver Yogyakarta
9 Toko Pelangi Batik Manado
10 Kios Mbak Zan Solo
11 Kios Agustina Kupang
12 R3 Art Accessories Ambon
13 UD Nirwana Brass Semarang
14 Yanti Boutique Lombok
15 CV. Adhy’s Putra Jakarta
16 Permata Antara Banjarmasin
Sources: Processed Data, 2022.
Table 2 shows that the informants from the MSME assisted by a state-owned company PT.
Angkasa Pura I, have several types of business sectors. Of the 16 (sixteen) MSME informants, 31.25% or 5 (five) MSMEs run businesses in the handicraft sector, while there are 2 (two) MSMEs in the jewellery sector or 12.5%. Then, in the fashion sector there are 6 (six) MSMEs (37.5%) while in the food and beverage sector there is only 1 (one) MSME or 6.25%. Finally, there are 2 (two) MSMEs (12.5%) run business in the other sectors.
Table 2: The Informant Data Based on Their Business Sectors
No Business Names Business Sectors
1 Wahana Jaya Handicraft Handicraft
2 Galeri Busana Anggraini Fashion
3 Sanggar Kaligrafi dan Wayang Handicraft
4 Sinar Mas Jaya Permata Jewellery
5 Arti Collection Handicraft
6 Mutiara Upiq Food
7 Shalfa Silk Woven fabric
8 Daffa Silver Silver craft
9 Toko Pelangi Batik Batik
10 Kios Mbak Zan Fashion
11 Kios Agustina Groceries
12 R3 Art Accessories Handicraft
13 UD Nirwana Brass Door Handles
14 Yanti Boutique Fashion
15 CV. Adhy’s Putra Reptile-skin Bag
16 Permata Antara Jewellery Gems
Source: Processed Data, 2022.
It can be seen from table 3 that there are 4 (four) MSMEs or 25% not using digital marketing in their business operation. The remaining, 75%, have used digital marketing with a various different platform to support their business processes. The use of digital marketing is divided into 3 (three) categories: social media, social chat and marketplace. Of all the informants using digital marketing in their business processes, the number of MSMEs using social media Instagram, Facebook and YouTube was 37.5% each. On the other hand, those using WhatsApp social chat were 68.75% and Line were 31.25%. For MSME informants using the Shopee marketplace, it was 37.5% and Tokopedia was 37.5%.
Table 3: The Use of Digital Marketing in MSME Business
No Variable Total Percentage
1 Media Social : - Instagram - Facebook - YouTube
6 6 6
37,5%
37,5%
37,5%
2 Social Chatting : - WhatsApp - Line
11 5
68,75%
31,25 3 Marketplace :
- Shopee - Tokopedia
6 6
37,5%
37,5%
4 Not Using Digital Marketing 4 25%
Source : Processed Data, 2022.
Most informants from MSMEs assisted by a state-owned company PT. Angkasa Pura I regularly update the information and the content on their social media and the social chat to support their product marketing. However, there are also 5 (five) MSMEs or 31.25% who have never updated the information or the content on their business social media or social chat. For those updating their social media or social chat, 43.75% updates everyday, 6.25% updates every week, and 18.75% updates every month.
Table 4: The Frequency of Information Updates
Information Update Frequency Total Percentage
Every hour 0 0
Every day 7 43,75%
Every week 1 6,25%
Every month 3 18,75%
Never updates 5 31,25%
Source: Processed Data, 2022.
Meanwhile, the use of digital marketing in the marketing and business processes of MSMEs has different impacts on each MSMEs. There are 6 (six) MSMEs or 50% that do not experience
an increase in sales, but the other 6 (six) MSMEs experience an increase in sales. The sales increase varies from 10% to 50% as shown in table 5 below:
Table 5: The Increase Sales (%)
No Informants The Increase Sales (%)
1 WJH 15%
2 GBA 0%
3 SKW 40%
4 SMJP 0%
5 AC 30%
6 MU 50%
7 SS 10%
8 DS 25%
9 TPB 20%
10 KBZ 50%
11 KA 0%
12 RAC 0%
13 NB 0%
14 YB 0%
15 AP 0%
16 PA 0%
Source : Processed Data, 2022.
The results of the interviews obtained from informants from MSMEs in various regions in Indonesia assisted by a state-owned company PT. Angkasa Pura I was conducted on the base of 4C approach (Cost, Customer, Convenience and Communication). The results of these interviews were validated by combining the results of the interviews and the observations.
Those results show that MSME business people believe that the use of digital marketing could help them carry out the product marketing process. Currently most of the prospective and target consumers come from the millennial generation and generation Z. They use technology in its various activities including selecting, comparing and buying a product or service. Digital market is the bridge to build relationships, and communicate with customers as well as providing convenience in shopping. Moreover, the use of digital marketing is considered by MSME business people to minimize promotional costs but still reach out to more potential consumers. However, these MSME business people still have difficulty using technology and digital marketing in marketing their products. The difficulties for MSMEs in optimizing their digital marketing are the lack of creativity and skills in using the applications to create good social media content which can attract consumers
Table 6: The Interview Results
Informants Interview Results Conclusion
WJH The use of social media is quite helpful in communicating with customers so they can repurchase without having to come to the store.
Communication, Convenience
GBA So far, we haven't used social media to promote, so customers have to come to the store to buy something.
We always promote to customers coming to the store
Cost, Customer Relationship
SKW We always update products and provide information on social media and actively use WhatsApp to facilitate promotions. It would be easier for customers to buy our products.
Communication, Convenience
SMJP In using WhatsApp, it doesn't need much cost to post on social media, we just create a story on WhatsApp so that customers can immediately see it and order the products sent via delivery services or they can come directly to the store.
Cost, Customer Relationship
AC We update information every day in the forms of discount promotions and others. Social media makes it very easy for us to promote and connect with marketplaces. It is easy and convenient for customers to buy our products.
Communication, Convenience
MU Most customers visiting the store are the people who often see our posts on social media. The customers who are satisfied with our products often promote our products by reposting our content on social media, so that it helps to market our products
Communication, Convenience, Customer Relationship
SS The social media that we use does not always provide information about our products because we only update social media content once a month. Therefore, the social media we use is less effective for consumers. We also have technical problems in posting the contents on social media.
Communication, Convenience, Customer Relationship
DS We use many channels to introduce our products, starting from Instagram, WhatsApp’s and Facebook.
We update the content every day. We also use the marketplace to facilitate transactions and expand the reach of our marketing.
Communication, Customer Relationship
TPB We use several social media. Every month We update the contents containing the information on promotions, discounts and new products. Social media allow us to promote and introduce our products easily. We also use the marketplace so customers can buy our products easily. The marketplace provides a sense of comfort in buying our products, too.
Communication, Convenience
KBZ By using WhatsApp stories, we can provide information about our products, so the customers feel to us. This kind of promotion only need a credit quota.
Communication, Customer Relationship
KA We use WhatsApp to interact and communicate easily with customers.
Customer Relationship
RAC WhatsApp has increased our sales because consumers can easily ask us directly and get solutions from the products that consumers buy. The consumers can contact us at any time.
Convenience, Customer Relationship
NB We use WhatsApp so the consumers can buy our products easily and they inquire about our products directly.
Convenience
YB We only communicate face-to-face with consumers in stores. We have problems using social media.
Communication, Convenience, Customer Relationship AP So far, we have not used social media to market our
products. We only wait for consumers to come to the store to see and buy the products.
Cost, Customer Relationship
PA Currently we only rely on in-store marketing and hope to convince consumers personally to buy our products in stores.
Communication, Customer Relationship Source: Processed Data, 2022.
5. Conclusions and Suggestions
From this research, it can be concluded that digital marketing is urgent to be utilized by business people, especially MSMEs in Indonesia. Trends and lifestyle evolve continually, plus
Covid-19 pandemic, so that technology is one of the important factors to support the success of a business. Today's biggest target market, most of which are millennials and Gen Z, makes business people to follow the habits of these circles to attract their attention and market the products and services. Digital marketing easily builds relationships and communicate with customers. It also provide convenience in shopping, minimize promotional costs, and reach more potential consumers. However, the difficulty for MSME business people is the lack ability to use the technology and the digital marketing in marketing their products. Moreover, for those who have used the digital marketing, they lack the creativity and skills to use the applications to create good content on social media to attract consumers.
Hence, it is recommended for the government, ministries and universities to provide trainings of digital marketing for MSMEs throughout Indonesia. This training is complemented with trainings to increase the ability to use technology and applications of digital marketing.
Furthermore, a training is needed to improve skills in creating interesting digital-marketing- promotional contents so that they can attract the attention of potential customers and increase the sales of products and services. These kinds of training will help MSME business people to market their products and services more easily, and simplify products and services according to the needs and desires of consumers. Digital marketing can attract more potential customers, increase MSME sales, and sustain the continuity of the MSME business.
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