International Journal of Administrative Science & Organization, January 2017 Volume 24, Number 1 Bisnis & Birokrasi: Jurnal Ilmu Administrasi dan Organisasi

The Mapping of Internet Marketing Potential for SMEs Working on Indonesian Traditional Fabrics

PRIMA NURITA AND IXORA LUNDIA Faculty of Administrative Sciences, Universitas Indonesia [email protected], [email protected]

Abstract. Due to their rapid development, technology and internet are widely used in business, particularly for marketing. Internet marketing generates numerous benefits. This study illustrates and analyzes the potential of internet marketing for Smalland Mendium enterprises (SMEs) working on Indonesian traditional fabrics in three regions: Palembang, Solo, and Banjarmasin. The study focuses on the extent to which SMEs working on traditional fabrics in these districts apply internet marketing, mapping the potential, and providing recommendations related to a better preparation of internet marketing for SMEs to tackle competition on a global level. This study applies post-positivist paradigm by using qualitative methods. The data are collected through in-depth interviews with SMEs and the governments in the three regions. To analyze the internet marketing applied by SMEs working on traditional fabrics, this study applies the theory of Kotler and Armstrong (2012) whose indicators are: creating/designing an effective website, carrying out online promotion, creating/participating in marketing and web community, and using email. The findings can be categorized into technical and non-technical findings. Technical findings show that SMEs in these cities have not applied internet marketing or online marketing optimally. Several SMEs in Solo already have social media and websites but the majority of SMEs in two other cities simply use social media (Instagram and Facebook), BBM, and WhatsApp as media for promotion. Non-technical findings show several important elements to develop in order to achieve successful internet marketing in SMEs, namely human resources, the role of associations, the role of the government, and the value of traditional fabrics.

Keywords: internet marketing, social media, small and medium enterprises, Indonesian traditional fabrics

Abstrak. Perkembangan teknologi dan internet telah berkembang pesat sehingga banyak digunakan dalam bisnis, khususnya pemasaran. Banyak keuntungan yang dapat diperoleh dari pemasaran dengan menggunakan internet. Penelitian ini menggambarkan dan menganalisis potensi pemasaran internet bagi UKM kain tradisional Indonesia di tiga daerah; yaitu Palembang, Solo dan Banjarmasin. Kajian difokuskan sejauhmana UKM kain tradisional di tiga daerah tersebut telah menjalankan pemasaran dengan internet, memetakan potensi yang dimiliki, serta memberikan rekomendasi bagi UKM terkait pemasaran internet agar lebih siap menghadapi persaingan di tingkat global. Penelitian ini menggunakan paradigma post positivist dengan menggunakan metode kualitatif. Teknik pengambilan data melalui wawancara mendalam dengan para pelaku UKM dan pihak pemerintah di tiga daerah tersebut. Untuk menganalisis pemasaran internet UKM kain tradisional, penelitian ini menggunakan teori dari Kotler dan Armstrong (2012) dengan indikator: menciptakan/merancang situs web yang efektif, melakukan promosi secara online, menciptakan/ berpartisipasi dalam komunitas web dan pemasaran dengan menggunakan e-mail. Hasil penelitian dapat dikelompokkan dalam bagian yang bersifat teknis dan nonteknis. Hasil penelitian yang bersifat teknis menunjukkan bahwa para pelaku UKM di kota-kota tersebut belum melakukan pemasaran internet atau pemasaran online secara optimal. Beberapa UKM di Kota Solo telah memiliki website pemasaran dan media sosial tetapi sebagian besar pelaku UKM di dua kota lainnya hanya memanfaatkan media sosial (instagram dan facebook), BBM dan whatsapp sebagai media promosi. Hasil penelitian nonteknis menunjukkan adanya beberapa elemen penting yang perlu dikembangkan guna keberhasilan pemasaran internet pada UKM; antara lain pentingnya SDM, peran Asosiasi, peran Pemerintah dan kualitas nilai kain daerah.

Kata kunci: pemasaran internet, media sosial, usaha kecil dan menengah, kain tradisional Indonesia

INTRODUCTION choose and compare goods directly. In current modern times, marketing has shifted. In its development, internet has been used widely in The shift is marked with an offer of benefits of internet various fields. In the field of business, internet has been marketing. The benefits are to connect producers with commonly used for marketing. Internet usage in the customers directly, reduce the costs of intermediaries world of marketing brings new alterations compared to so that the prices of products are less expensive, and traditional/conventional marketing. Prior to the rapid generate interactive communication between producers development of internet, marketers rely on traditional and customers (in promotion) (Eid and Trueman, 2002). marketing. In traditional marketing, sellers and buyers Shopping via internet also provides convenience because meet in person physically, showrooms or stores (product it doesn’t have time limit and provides facility in ordering, display at stores) are required, promotional costs are payment and delivery, and two-way communication with relatively expensive, and customers are not capable to customers (Yazdanifard et al., 2011). NURITA AND LUNDIA, THE MAPPING OF INTERNET MARKETING POTENTIAL 15

Internet marketing can be explained from the scope Armstrong, 2012): (1) Creating a website and designing of its existence. Electronic marketing (e-marketing) is an effective website, (2) Carrying out online promotion derived from the perspective of e-commerce (Electronic (3) Creating or participating in a community web, and (4) Commerce). From an online perspective, Kalakota and Using email. Those four points are used in an integrated Whinton (1997) state that e-commerce provides the ability manner. A website is not only designed as interesting to sell and buy products and information through internet as possible but should contain product information as and other online networks. In further development, detailed as possible as well to introduce the products e-commerce provides an opportunity for the emergence properly to customers. A website also contains the of e-marketing, e-purchasing, e-finance, and e-service. philosophy of the company, the address of the company, The development of e-commerce marks a new era where manufacture of products, distributor, and secure payment marketing can be carried out physically and virtually with method. In terms of function, website is used to connect broader marketing reach and more efficient time. the companies or products to customers as well as to ask Electronic marketing, also known as digital marketing, questions and share experiences related to products of web marketing, online marketing or internet marketing interest among customers. (i-marketing), is the means used to introduce products/ A website plays an important role in applying online services via internet as well as a new means of global marketing. A website should be designed attractively to marketing to reach the worldwide market (Yazdanifard create web traffic of visitors in cyberspace and simple et al., 2011). Furthermore, Chaffey et al. (2000) defines steps for transaction. Trust is also an important factor e-marketing as the application of internet and digital because marketing via internet is vulnerable to fraud technology to achieve marketing objectives. Technologies (cybercrime) (Newsletter KAP, Syarief Basir and Co). such as internet, cables, satellite, hardware, and software Internet marketing offers several benefits to are required for reaching the goals of internet marketing. the new marketing world because it does not have Kotler and Armstrong (2012) define internet marketing limitation between producers and customers. Internet with the term of online marketing, namely the efforts of marketing can even accelerate global or international companies to market their products and services and build marketing. The benefits can be adopted not only by customer relationships through internet. major companies, but also by Micro Small Medium Furthermore, the areas of online marketing can be Enterprises (MSMEs). MSMEs are community grouped into four (Kotler and Armstrong, 2012), namely: businesses obtaining special attention from various (1) Business to Customer (B2C), selling goods and parties, namely the government, academia, and private services online to end users; (2) Business to Business sectors. Based on the Law No. 20 of 2008 on Micro, (B2B), using B2B websites, email, online product catalog, Small and Medium Enterprises, MSMEs aim to grow online trade networks and other online resources to reach and develop business in order to build a national new business customers; (3) Customer to Customer economy based on equitable economic democracy. (C2C), an online exchange of goods and information MSMEs contribute to the strengthening and stability among end users; (4) Customer to Business (C2B), an of national and regional economy. Based on the AEC online exchange where customers seek sellers, learn Blueprint published by the ASEAN Secretariat (2015), about deals, initiate the purchase and sometimes drive the SMEs are the dominant actors in the economy of terms of the transaction. ASEAN countries. It is evident by the contribution of The application of online marketing is designed by MSMEs in Indonesia and other ASEAN countries as paying attention to the following matters (Kotler and shown in Table 1: Table 1. Contribution of MSMEs to the Economy of ASEAN Countries Contribution of MSMEs to all Contribution of Contribution of Contribution of No. Countries existing business MSMEs to GDP MSMEs to the MSMEs to Export actors Employment 1. Brunei Darussalam 98.2% 23.0% 58.0% - 2. Cambodia 99.8% - 72.9% - 3. Indonesia 99.9% 58.0% 97.2% 16.4% 4. Laos 99.9% - 81.4% - 5. Malaysia 97.3% 32.7% 57.4% 19.0% 6. Myanmar - - - - 7. Philippine 99.6% 36.0% 61.0% 10.0% 8. Singapore 99.4% 45% 68.0% - 9. Thailand 99.8% 37.0% 76.7% 29.9% 10. Vietnam 97.5% - 51.7% - Source: ASEAN SME Policy Index 2014: Towards Competitive and Innovative ASEAN SMEs (2014) 16 International Journal of Administrative Science & Organization, January 2017 Volume 24, Number 1 Bisnis & Birokrasi: Jurnal Ilmu Administrasi dan Organisasi

Regardless of their contribution in economy, particularly those related to capital, marketing, and MSMEs in Indonesia have experienced various limited human resources in terms of numbers and skills. obstacles and constraints. Several of them are limited As noted previously, the findings of one of the studies capital for business, human resources, and marketing. state that internet can connect producers directly with These constraints should be overcome because the customers so that the price of the product becomes less development of SMEs according to ASEAN Policy expensive (Eid and Trueman, 2002). Therefore, it can be Blueprint for SME Development (APBSD) 2010-2014 said that the issue of capital to carry out promotion can is directed at five goals, namely: (1) Human resource be overcome with internet usage. development and capacity building, (2) Enhancement Internet usage should be optimized by MSMEs as a of SME marketing capabilities, (3) Access to finance, marketing medium. However, the findings by Gilmore, (4) Access to technology, and (5) Creation of conducive Damian, Gallagher and Henry (2007) state that internet policy environment (ASEAN Strategic Action Plan for usage by SMEs does not provide significant influence SME Development 2016-2025, 2015). because it is used as merely an inexpensive promotional One of the biggest issues in the development of SMEs media (to move the product catalog online) and not as in ASEAN countries lies in the policies to encourage a medium to develop the image of the company, build technology and technology transfer. Technology relationships, interact actively with customers, and seek becomes an opportunity and challenge for the growth of new markets. It is in line with the findings of the study MSMEs. Information technology can help operational by Nir kshetri Dholakia (2004) that 51% of SMEs have activities of MSMEs, ranging from planning, stock websites, but only 15% uses the website to sell products management, finance, to the promotion and sale of and provide services to customers. products. It is time for MSMEs to be prepared to This study will analyze internet marketing applied by adopt information technology (Ghobakhloo, 2012) in SMEs working on Indonesian traditional fabrics, namely order to improve marketing ability. The application SME of woven fabrics in Palembang, SME of Batik in of information technology (Internet technology) can Solo, and SME of Sasirangan fabric in Banjarmasin. be adopted by MSMEs, for example in the form of This study will identify the potential of applying information about new product, maintaining good internet marketing of SMEs in the three regions related relations with customers (relationship marketing), and to the available resources. It is considered important sales promotion through social media. MSMEs can also as a recommendation that internet should be used as provide more detailed information to customers via blog a creative medium for marketing world of SMEs in and website. Indonesia. The findings of other studies also show that This study presents analytical findings from three e-marketing brings a positive influence on the business regions of Indonesia (Palembang, Solo and Banjarmasin), activities in order to be competitive in global market. carried out simultaneously in May-November 2016. By However, the strategy of internet marketing should be carrying out the analysis simultaneously and collecting able to identify and integrate other components such primary data trough in-depth interviews with SMEs and as human resources, information, and technology the government representing the respective regions, the (Chong et al., 2010). Previous studies also reveal that in study is expected to obtain sufficient information about carrying out online transactions, trust and quality of the the differences, potential and constraints in the three website can increase customer loyalty (Lynch, Robert, regions in applying internet marketing. The findings of and Srini, 2001). It can be concluded that e-marketing this study are expected to provide theoretical and practical can bring progress for business actors and companies significance. Related to practical significance, this study if managed properly. In terms of business, SMEs of is expected to provide enrichment in the context of Indonesia generally market products with local content SMEs working on traditional fabrics that have their own (Indonesian culture) such as SMEs engaged in culinary, uniqueness. In general, internet marketing can be applied agribusiness, automotive, and fashion. One of the SMEs in many businesses, nevertheless it is necessary to carry working in the field of fashion with local content is out some adjustments related to products, infrastructure/ traditional fabric. Indonesia has a lot of cultural richness capabilities, and existing cultures in the region. Practical in the form of traditional fabrics. Every region in significance of this study is that internet marketing can Indonesia has different types of traditional fabrics such be applied to help the development of SMEs of fabrics as batik, woven fabric, and songket. Batik of Indonesia in Indonesia. is officially included in 76 intangible cultural heritages by UNESCO (www.kompas.com, 2009). In addition to RESEARCH METHOD batik, Indonesia has other traditional fabrics as cultural heritage that can still be developed and grouped in This study applies post-positivist paradigm by using centers of Sasirangan, embroidery, and woven fabrics qualitative methods. This study applies post-positivist (Bank Indonesia, 2015). Each of these traditional fabrics paradigm based on the theory of Kotler and Armstrong has their distinctive characteristics and local cultural (2012) to find new perspectives outside the theory. wisdom of each region that should be well preserved. The selection of qualitative method is emphasized on The obstacles encountered should be addressed properly; the process of data collection and analysis. Qualitative NURITA AND LUNDIA, THE MAPPING OF INTERNET MARKETING POTENTIAL 17

method is applied in the study as the means to obtain The total informants interviewed from each region are further data and analysis. as follows: six informants from Palembang, including The data are collected qualitatively through in-depth four informants from SMEs; eight informants from interviews with several informants consisting of: (1) Solo, including five informants from SMEs; and six SMEs in Palembang, Solo, and Banjarmasin, (2) the informants from Banjarmasin, including five informants Head of the Department of Cooperatives and SMEs of from SMEs. The informants are requested to provide Palembang, (3) the Department of Industry and Trade adequate information related to the preparedness of Palembang, (4) the Department of Cooperatives of SMEs and the government in applying internet and SMEs of Solo, (5) the Department of Industry and marketing for traditional fabrics. Trade of Solo, (6) the Chairman of the Association of In-depth interviews are carried out using operational Artisans of Batik Laweyan Solo, (7) The staff of the guidelines for online marketing concept as follows. Department of Cooperatives and SMEs of Banjarmasin. Table 2. Operationalization of Online Marketing Concept Concept Indicators Indicator Description Online Marketing Creating/designing an effective The website should contain: context, content, community, website customization, communication, connection, and commerce Carrying out promotions online Online advertising is designed attractively by including animations, video, audio, and interaction. Marketers can use content sponsorship (the name of the company is displayed on internet by sponsoring special news/information on various websites) or viral marketing (word-of-mouth marketing on the internet). Creating/participating in the web Utilizing web forums and blogs allowing the members (cus- community tomers) to gather and share ideas about their common interests. Using email Business actors offer marketing via email. The offer can be de- signed creatively by including animated and interactive mes- sages and streaming audio and video. Source: Kotler and Armstrong (2012) This study is a descriptive study illustrating the In data analysis, this study applies data triangulation extent of internet marketing applied by SMEs working strategy, namely the process of crosscheck between data on traditional fabrics in three regions in Indonesia sources. As noted by Irawan (2007), in the process of (Palembang, Solo and Banjarmasin). From this triangulation, the author can check the data by comparing illustration, the potentials are mapped. This study data sources, methods and theories. Qualitative data selects three regions in Indonesia, namely Palembang, analysis is carried out in three stages, namely: (1) data Solo and Banjarmasin, because these three regions have reduction, (2) data presentation, and (3) conclusion or traditional fabrics, namely tenun (woven) fabrics from verification (Miles and Huberman, 1984). Palembang, Batik from Solo, and Sasirangan fabrics from Banjarmasin. Based on the classification by Bank RESULT AND DISCUSSION Indonesia, the profile of MSMEs engaged in Indonesian traditional fabrics can be divided into three (3) groups, The findings of the study map the potential of online namely Batik, Tenun, and Sasirangan fabrics (Profile marketing by the three regions using online marketing Data of MSMEs, bi.go.id). concept. The mapping is based on the following criteria: Table 3. Operationalization of Online Marketing Concept No. Criteria 1 SMEs carry out online sales 2 SMEs have website 3 SMEs have blog/social media 4 SMEs use email in applying online marketing 5 SMEs have human resources managing the website/blog/social media/e-mail 6 SMEs manage or design a website/blog/social media (in relation to time and content of the message) 7 The Government provides online marketing training 8 The presence or absence of association involvement of MSMEs in these three regions Source: data processed by the author (2016) 18 International Journal of Administrative Science & Organization, January 2017 Volume 24, Number 1 Bisnis & Birokrasi: Jurnal Ilmu Administrasi dan Organisasi

The followings are the findings of the study related Offline Business to Business (B2B) and Business to to internet marketing applied by SMEs of Tenun fabrics Customer (B2C) marketing should be carried out online in Palembang, Batik in Solo, and Sasirangan fabrics to be more effective. Kotler and Armstrong (2012) state in Banjarmasin. First, the findings of the study in that online Business to Business (B2B) marketing can Palembang. Songket is one of traditional woven fabrics use B2B website, email, online product catalog, online of Palembang having high artistic taste and reflecting trade network, and online resources to reach new types the social status of the wearer. The social status of of customers, serve customers more effectively, and the wearer is reflected from the patterns, fabrics and achieve purchasing efficiency and better price. prices of Songket. Songket are made by simple looms. SMEs of other woven fabrics carry out offline Currently, the manufacture is carried out with modern marketing and promotion through exhibitions organized machines because simple looms spend a long production by the government and private sectors (Bank) and word- time and considerable cost. This study emphasizes on to-mouth communication. An SME named “Sentra SMEs of Songket by simple looms. Tenun Tanjung” uses WhatsApp, BBM, and Instagram Despite manufacturing similar Songket, a merely as tools. WhatsApp and BBM are used to manufacturer and others commonly have different further communicate with customers met earlier in the characteristics, such as motifs, types of fabric, and the exhibitions, while Instagram is used as necessary (rarely quality of thread. Therefore, this woven fabric has varied updated). It is stated in the following interview: “... We market share. SMEs of Songket largely market their do not update even when we are online. The customers products in traditional way (offline). The producers have are people who have been shopping here previously. a place of business and store to market their products, so We only use WhatsApp to connect with people who that the customers purchase products by going to the have been here and met us at the exhibitions ... We have place of business. There are also SMEs that do not have Instagram, but we do not update.” stores and use their residence as the place of business. It As a relatively young SME, Sentra Tenun Tanjung is due to the lack of capital or the producers have loyal understands the usage of social media; but in practice, customers to order exclusively. For those SMEs, offline social media (Instagram) is used as necessary due to marketing provides benefits without the needs to apply the limited time. Limited human resources to manage online or internet marketing because their names have SME are another factor because marketing is managed been known by numerous customers from generation by merely one person. to generation. Another factor is SMEs working on The government of Palembang has provided online traditional fabrics in Palembang are located in several marketing training, as stated by the Head of the locations where there are many songket artisans. Department of Cooperatives and SMEs of Palembang: Therefore, it is easier for customers to visit the location “...We no longer provide technical training because directly. One of them is the area of Tuan Kentang as they (SMEs) are better at it. Training is emphasized on stated by the Head of the Department of Cooperatives financial accounting and information technology about and SMEs of Palembang: good accounting, online marketing, and online media. “... The location for this type of business cannot Currently, we enforce e-commerce until they can create be organized. There is a rather ‘dirty’ area (poor their own website”. However, SMEs in Palembang neighborhood), yet it has nice products. There was a have not obtained any information related to online plan to reorganize the location, but they refuse because marketing training organized by the Government. The they make a profit there. They carry out their business assistance provided by the Government is promotion under wooden houses in the area of Tuan Kentang. Most through exhibitions inside and outside Palembang. people from upper middle class of Palembang own their SMEs in Palembang haven’t applied online marketing businesses there.” as stated by Kotler and Armstrong (2012). They do not Average artisans carry out Business to Business create a website, carry out online promotion, create a web (B2B) marketing to retailers and Business to Customers community, and use email. SMEs only use electronic (B2C) marketing to end customers because they already hardware (phone) as a supporting tool. The owners of have loyal customers. Both B2B and B2C marketing SMEs apply internet marketing merely on social media are still carried out offline. A 63-year-old artisan and (Instagram). Social media in online marketing should an actor of SME named Kemas Muhammad Ali carries pay attention to content and two-way communication out his business these ways. After producing the fabrics, (Kotler and Armstrong, 2012). Therefore, social he sells them to loyal retailers with a mutual agreement. media should be designed in such a manner so that the Sales to customers are carried out offline as well, ordering system and customer service can be integrated where customers purchase the products directly at the online (via social media). The function of social media place of production or by phone for customers living is allowing the users not only to communicate, but also in other cities. Communication via telephone is also participate in sharing and presenting content easily carried out to receive complaints from the customers. (Mayfiled, 2008). Customers living in other cities usually recognize Another constraint in Palembang related to online the quality of ordered songket fabrics in advance. In marketing is human resource. This issue is related to the this case, the promotion is carried out from word-to- limited number, old age, and the lack of understanding mouth communication, as told by Mr. Kemas Ali: “... of proper marketing via internet or social media. In Customers from Jakarta have already known the best e-marketing, SMEs should be able to identify the songket”. components of internet marketing strategies consisting NURITA AND LUNDIA, THE MAPPING OF INTERNET MARKETING POTENTIAL 19

of hu m a n re sou rce s, i n for m at ion a nd t e ch nolog y (C hong, as well. The potential of internet marketing of Songket et al., 2010). Thus, in order to apply internet marketing Palembang can be mapped as follows: properly, human resources should be recruited properly Table 4. The Mapping of Internet Marketing Potential of Songket Palembang Name of Fabric Technical Potential Non-technical Potential Songket Palembang A minority of SMEs use application The cultural value of Songket (BBM, WhatsApp) and social media (Facebook and Instagram) as marketing tools Source: data processed by the author (2016) Second, the findings of the study related to internet characteristics of social media (Mayfield, 2005) is two- marketing carried out by SMEs of Sasirangan fabric in way conversation. In applying marketing on Instagram, Banjarmasin. Similar to Songket and Batik, the study in SME Katuju should provide information, exchange Banjarmasin focuses on marketing carried out by SMEs information, and carry out discussion in the social of traditional Sasaringan fabrics (not printed Sasirangan media to create two-way communication as well as fabric made by factories). encourage the formation of a community. Artisans and actors of SMEs of Sasirangan fabric in SME Nida Sasirangan has blog, Facebook, and Banjarmasin carry out Business to Business (B2B) and Instagram. Social media used more frequently for Business to Customer (B2C) marketing as practiced internet marketing is Instagram. Similar to SME by SMEs in Palembang. However, SMEs working on Katuju, SME Nida Sasirangan displays photos of the traditional fabrics in Banjarmasin are more active in products and descriptions of the materials, while further using internet (social media) to offer their products communication with customers is carried out through compared to SMEs in Palembang. Several SMEs know Line or BBM. The owner of the SME explains: “... We the benefits of using social media and update in the post photos and materials, but we do not post the price. social media. It is as described by Firdaus Sasirangan, The customers simply comment through Line and BBM an owner of an SME who feels the benefits of using and the customers are redirected to our location ... We social media of Instagram to reach resellers outside reply comments on Instagram when we hold the hand the District (Banjar Baru). This SME displays favorite phone.” products of the customers on Instagram: “... We only Social media has another characteristic, namely display new products and we update if there are new connectedness (Mayfield, 2005), emphasizing the products ... mostly veils because veils for teens is the relationship between one object and other objects, by current trend.” providing links that can connect the audience to specific In this case, the SME owned by Firdaus Sasirangan webs. Social media owned by SME Nida Sasirangan do has considered the contents that should be displayed on not provide links to their blog or Facebook, yet they Instagram, although it only shows the latest product of provide their online number to allow them to connect every production process without further explanation with customers. Marketers should be able to carry out about the product. Kotler and Ar mstrong (2012) state that engagement in using social media. It means that they the contents of a website consist of text, image, audio, should be capable of engaging customers to participate and video. The SME owned by Firdaus Sasirangan in social media so that customers are willing to provide has displayed one of the elements of the contents on their time and energy (Evans and McKee, 2010). Such Instagram, namely image. understanding may mean that marketers should be able Other SMEs of traditional Sasirangan fabrics use to make the customers participate actively and take their social media as well. Although the marketing activities time to be more involved in social media. It implicates still integrate offline and online marketing activities, that the marketers also should have sufficient time to offline marketing is more dominant than online make social media more attractive, featuring the latest marketing. Two of these SMEs, namely SME Katuju information, serving customers well, and not being Sasirangan and SME Nida Sasirangan also apply used as a merely complementary tool. internet marketing using social media (Instagram). The involvement of the Municipal Government of Those two SMEs display the products as well as other Banjarmasin in helping the marketing of traditional explanations. SME Katuju Sasirangan states: “... It is fabrics is providing exhibitions and establishing UKM faster using Instagram than Facebook ... We usually Center. Both are the programs of the Department of display photos of new motifs on Instagram... with Cooperatives and SMEs of Banjarmasin as stated in the related explanations such as they type of fabric, namely following interview: cotton, and the width of the fabric. We do not display the “ ... The Department of Cooperatives also establishes price. In return, they will call us later.” the program of Banjarmasin Fair. The Fair is the In applying marketing using social media, the exhibition to celebrate the anniversary of Banjarmasin. SME still applies one-way communication, limited to SMEs are involved in the exhibition. We can help them providing photos and descriptions. In fact, one of the market their products that way.... In addition, we also 20 International Journal of Administrative Science & Organization, January 2017 Volume 24, Number 1 Bisnis & Birokrasi: Jurnal Ilmu Administrasi dan Organisasi have a small minimarket in Menara Pandang named related to internet marketing. UKM Center. It is built to sell their products. They do Average SMEs working on traditional fabrics in not have to pay rental cost ... We provide free place, Banjarmasin have social media and they use social shopkeepers, and cashiers.” media better than SMEs of Songket in Palembang. It is Trainings provided for SMEs are trainings of related to the relatively young age of human resources bookkeeping and financial statements. It is different in SMEs in Banjarmasin. Based on the interviews, their with the information provided by the artisans and actors social media accounts are generally managed by their of SMEs in Banjarmasin. They are frequently invited children whose age range is between 20-30 years. The to attend the trainings of dyeing/coloring and designing potential of internet marketing of Sasirangan fabrics of motifs. The Government has not provided any training Banjarmasin can be mapped as follows:

Table 5. The Mapping of Internet Marketing Potential for Sasirangan Fabrics of Banjarmasin Name of Fabric Technical Potential Non-technical Potential Sasirangan Banjarmasin The majority of SMEs use social media The involvement of the Department of (Facebook, Instagram) as marketing Cooperatives and MSMEs is limited tools to providing general trainings. Online marketing training has not been provided.

SMEs provide simple content (photos The human resources managing social of products) on social media media of SMEs are relatively young (productive age) Source: data processed by the author (2016) Third, the findings in Solo. The focus of this study is SME Batik Pandono is one of the SMEs combining internet marketing applied by SMEs of traditional batik, traditional marketing through word-of-mouth known as handmade batik (not stamp batik). Several communication and Internet marketing through improvements in awareness and capabilities related to Facebook. However, the percentage of the use of social the use of internet marketing, though not optimal, are media is lower than traditional marketing. Word-of- found in several artisans and SMEs of Batik in Solo. mouth communication is created by frequently attending Similar to SMEs of Sasirangan in Banjarmasin, several exhibitions. In fact, word-of-mouth communication is SMEs admit that they are facilitated with social media not only manifested in conventional form (offline - using but they only use social media when they have time; a person), but also in social media (online). Marketers one of them is SME Tahta Batik, using Facebook and can easily use web tools such as blogs, forums, ratings, Instagram. The contents displayed in both social media sites, and social networks that allow people to be open are related to the type and size of batik, but the price and honest in giving opinions and thoughts as well as of the fabric is not included. Communication applied engaged in discussions for frequently-used products is one-way communication. If the customers are (Hassan, 2010). interested, they can contact the SME directly by phone SME Batik Pandono once experienced distrust in as listed in the social media. the use of internet for transaction. It was associated The majority of SMEs have website, blog, Facebook, with improper product ordering and payment terms and Instagram. However, the many social media leading to a loss by the SME as described in the activated generates another issue. SME Puspa Kencana following interview: “... In fact, the customer had ever has website, blog, and social media, but it does not been here. His father had as well. He ordered uniforms. have specific human resources to manage the accounts The price was about 40 million and the down payment intensely. It has been an issue, as noted in the following was 9 million. I had sent the uniforms. He said the interview: “ ... We still do not have one particular person disbursement of fund took longer due to management to manage our social media.” process. However, we do not get the rest of the payment The lack of human resources to manage internet until now.” media becomes an issue in SMEs in these three Kalyanan and McIntyre (2002) state that one of the regions. The problem should be overcome considering elements of e-marketing is the function of security that is that internet marketing also has one similar function highly important for transactions via internet. Security as traditional marketing, namely customer service. involves two things: (1) security for transactions carried According to Kalyanan and Mclntyre (2002), customer out on the website, and (2) security for data collection service is one of the needs and required activities to and storage about customers and visitors. Internet support functions in transactional situations. Therefore, marketing using social media should be designed with a it can be concluded that internet marketing requires fast security system to provide a sense of trust and comfort and responsive customer service. for both marketers and customers. NURITA AND LUNDIA, THE MAPPING OF INTERNET MARKETING POTENTIAL 21

SME Batik Marin Laweyan is better in using internet with tourism, industry, and Regional Development as a marketing medium. This SME owns website and Planning Agency (Bappeda). Our community also has social media (Facebook and Instagram). There is no a community named Solo Creativity. We are included issue in the management of the website because it is in the Certificate of the Municipal Government to managed by a specific person. The consumers know discuss tourism. We are also included in the Certificate about SME Batik Marin Laweyan from two other of Bappeda to join economic development forum and websites, namely the web of Batik Village (joint web regional research council. In governance, we once with other artisans) and the web of SME Batik Marin. helped in cultural heritage.” It is stated by the SME: “... Currently, the majority of The government, the Association and SMEs have a customers know about us from the website. My name is high cohesiveness such as in regular meetings by the also included on the personal web and the web of Batik Association, SMEs, and the Department of Cooperatives Village.” and SMEs, either organized by the Department or vice Kotler and Armstrong (2012) state that online versa. It is as told by the Department of Cooperatives marketing creates two types of webs, namely corporate and SMEs: website and marketing website. Even though the web “They routinely join our activities. We gather of Batik Village is a joint website owned by other batik them when there are coaching activities. However, artisans, SME Batik Marin Laweyan assumes that the they also have routine forums. For example, Laweyan web is a corporate website. Forum holds internal meetings and invites various Designing a website should pay attention to the departments. We have routine socialization and we content. SME Batik Marin Laweyan displays their always include them. However, we are the one setting latest products. Companies have to keep updating their the schedule. We have carried out socialization or sites to create a new, fresh and useful look (Kotler and coaching about cooperatives seven times in a year.” Armstrong, 2012). In addition to display photos of their The Department of Cooperatives and SMEs of Solo newest products, the website of this SME provides actively assists the development of SMEs of Batik in tagline “Your Exclusive Batik Choices”. It is useful as Solo by involving SMEs to participate in exhibitions in an identity that can be communicated to customers. Solo, outside Solo and abroad and providing trainings Furthermore, the SME uses website and Instagram collaborating with several partners. The trainings as tools to determine the condition of the market and provided are trainings of dyeing/coloring, financial competitors. It is described as follows: “... If fashion management, financial statement, and online marketing. continues to develop, we also need to follow the market... Online marketing training organized by the Department by carrying out a research and frequently visiting other of Cooperatives and SMEs specifically involves several websites or Instagram.” related partners, such as telecommunications companies This SME understands the dynamic business and online buying and selling media, as presented in competition and use social media as tools to determine the following interview: “... Online marketing training the competitors. Through internet and data access, the is not held each year. Sometimes we hold the training conditions of the market and the competitors can be without planning and we collaborate with other parties identified faster. such as PT XL, Elevenia, and Tokopedia.” SMEs of Batik in Solo, particularly in Laweyan, The collaboration generates benefits for all parties. are aided by the presence of the association of Batik SMEs obtain benefits in the form of knowledge related Laweyan. This association has its own structure of to online marketing while buying and selling media can management and membership. It is recorded to have seek prospective customers from SMEs. 80 members until 2016 (based on the interviews with The role of the Government is not only carried the Chairman of the Association of Artisans of Batik out by the Department of Cooperatives and SMEs, Laweyan, 2016). They communicate with each other but also by the Department of Industry and Trade of to discuss the issues encountered by SMEs of Batik, Solo. The Department of Industry and Trade provides particularly in Laweyan, and design work program. assistance to SMEs of Batik in the form of equipment One of their work programs is to actualize the village and assistance related to trainings of production of batik. The information regarding the draft of work techniques, packaging, and design. Based on the program is conveyed through website and Facebook to interviews, it is shown that the Department of Industry be accessed by general public. holds internet marketing training. This training is a The existence of the Association is considered form of collaboration with TELKOM. The active role important because it can be a connecting bridge of the Government in Solo can be used as the potential between the government and SMEs. The Association to develop internet marketing of SMEs of Batik in also has the role in designing programs or policies in Solo, particularly with the provision of theoretical and Solo, as noted by the Chairman of the Association: practical (technical) internet marketing training. The “... Our partners are the Department of Cooperative potential of internet marketing of batik of Solo can be and the Department of Industry ... We are also partnering mapped as follows: 22 International Journal of Administrative Science & Organization, January 2017 Volume 24, Number 1 Bisnis & Birokrasi: Jurnal Ilmu Administrasi dan Organisasi

Table 6. The Mapping of Internet Marketing Potential for Batik of Solo Name of Fabric Technical Potential Non-technical Potential Batik Solo SMEs have Facebook and Instagram and the The minority of SMEs have specialized human majority of SMEs have a business website and resources to manage websites intensely blog SMEs display simple content (type and size of The human resources managing SMEs are relatively batik) on their website and social media young (productive age) SMEs update their content in their business SMEs realize the importance of internet as a website and social media continuously (if there marketing tool is a new product) There are SMEs having a tagline on the website The association of SMEs actively coordinate with as a business identity SMEs and the government to create work programs There are SMEs using social media as tools of The Department of Industry provides internet survey of market and competitors marketing training by collaborating with TELKOM The Department of Cooperatives and SMEs provides online marketing training in collaboration with telecommunications companies and online buying and selling media (Elevenia and Tokopedia) Source: data processed by the author (2016)

The findings of the study related to internet such as their short history, price, how to care/wash marketing of traditional fabrics in three regions the products, testimonials from satisfied customers, (Palembang, Solo, and Banjarmasin) are divided into order information, secure payment system, as well as two parts, namely (1) technical findings, reviewed by complete information of the history and the identity using indicators of online marketing concept by Kotler of SMEs (address, telephone number, and others). If and Armstrong (2012), and (2) non-technical findings SMEs have more than one website, it is recommended that have an important role in online marketing by to link them. The link will encourage effective internet SMEs. First, technical findings are reviewed by using marketing, improve the promotion, and facilitate the online marketing concept by Kotler and Armstrong customers to find the products of SMEs. (2012). From four indicators presented, several SMEs After SMEs understand and apply the first indicator, only apply the first indicator, namely creating/using the marketers can carry out online promotion, create a website or social media. SMEs have not carried out web community and carry out transactions by email. online promotion, created a web community and used Based on the interviews, the exchange of information email in the transaction. has never been carried out by email. The order is Related to the first indicator, namely creating/ processed using WhatsApp, Line, or BBM because using website/social media, the majority of SMEs they are considered faster. In fact, email is an official uses websites/social media less optimally. Websites/ and safer electronic mail to trade, particularly for social media are used as necessary. Most websites/ transactions in large amounts. Websites need to include social media merely display photos of the products web forums to create a community where customers and related descriptions. The websites/social media are can exchange ideas and share experiences about their not continuously updated and linked to other websites. common interests. In social media, customers carry out According to Kotler and Armstrong (2012), creating activities to choose, filter, and give feedback or describe marketing web should pay attention to the contents existing content so that they will review the content and displayed. A website should be able to engage visitors the review will help other customers as consideration in an interaction that will mobilize them closer to direct for purchasing (Evans and McKee, 2010). purchase. Therefore, the visitors should be able to see all Related to technical findings, SMEs in Solo are better categories of products, learn about the products further, in applying internet as a marketing medium. Several read reviews of the products by the experts, understand SMEs have had social media and websites, although how to order online easily, as well as understand the there are still shortcomings in their application. SMEs transactions related to the purchase of the products. in Banjarmasin rely on social media (Instagram) as Another important point is that the websites/social a supporting promotional media. Many issues are media should be continuously updated so that they are encountered because SMEs in Banjarmasin merely always new, fresh, and useful. It will encourage the display photos of the fabrics in social media and rarely customers to follow the updates. The websites/social update them. Meanwhile, only a minority of SMEs in media also need to be linked to other sites. Referring Palembang has social media and it is not used optimally. to the theory, the recommendations that can be given to Other SMEs merely use WhatsApp and BBM as a SMEs is to display all types/categories of products as medium of further communication after traditional well as the detailed explanations related to the products (offline) transaction. NURITA AND LUNDIA, THE MAPPING OF INTERNET MARKETING POTENTIAL 23

Second, non-technical findings show that there are is no role of associations; and there is a lack of role some key elements for SMEs to optimize internet as of the Government, particularly in providing online a marketing medium, namely human resources (HR), marketing training. The artisans and the actors of SMEs the role of the Association, the role of the government, of Songket in Palembang rely more on offline marketing and the value of fabrics. HR plays an important role in and they carry out further communications related to applying internet marketing. Based on the interviews, transactions through WhatsApp, Line, and BBM; there the majority of SMEs have an issue of limited human is no role of associations, and there is a lack of role of resources to operate internet in particular. In this the Government related to marketing. The additional case, the employee should be able to maintain the value of Palembang lies in Songket that has been flow of communication with customers, carry out widely known as a fabric with high artistic taste. This updates of data and information on the website, and advantage should be processed in such a manner with integrate website and social media owned. In Solo and the help of internet marketing so that it can compete Banjarmasin, the application of internet as a marketing with other traditional fabrics at national and global level medium is better because it is managed by the children in the future. or younger siblings of the owners of SMEs. The role of the association of artisans in Solo is a good example ACKNOWLEDGEMENT for Palembang and Banjarmasin. The Association may represent any complaints, issues, and suggestions from This study is based on research grant of sub-cluster SMEs to local governments. The Government plays of the Department of Business Administration Science an important role, particularly in providing online led by Dra. Novita Ikasari, M.Comm., Ph.D. The author marketing training so that SMEs can understand and would like to express gratitude to all parties who operate internet skillfully. In this case, the Government have been interviewed, including SMEs working on of Solo has carried out its role in involving several traditional fabrics, the Government (the Department of potential partners. The selection of partners also needs Cooperatives and SMEs, the Department of Industry to be carefully considered to generate a mutually and Trade) in Palembang, Solo, and Banjarmasin, as beneficial relationship for all parties. well as the Association of Artisans of Batik Laweyan, Palembang has another potential, namely the value Solo. of the traditional woven fabric (Songket). Songket has high artistic taste so that the fabric has already known REFERENCES publicly as the image of Palembang. However, SMEs in Palembang need to apply internet marketing and gain The ASEAN Secretariat. 2015. ASEAN Strategic the support of the Association and the Government so Action Plan for SME Development 2016-2025. that Songket can compete better in national and global Jakarta: The ASEAN Secretariat Public Outreach markets. and Civil Society Division. Chaffey, et al. 2000. Internet Marketing: Strategy, CONCLUSION Implementation and Practice. England: Prentice Hall. The findings of the study show that SMEs working on Chong, Woon Kian, et al. 2010. B2B e- Marketplace: traditional fabrics in Palembang, Solo, and Banjarmasin An e-Marketing Framework for B2B Commerce. have not applied internet marketing optimally. SMEs Marketing Intelligence & Planning, Vol. 28, No. 3, tend to apply offline marketing, while internet is merely pp. 310-329 used as a supporting tool. 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