Journal
POLITIS P o l i ti c s & In te r n a t i o n al S tu d i e s
STRATEGIC MARKETING AND COMPETITIVE STRATEGY OF SMEs IN THE ERA OF ASEAN ECONOMIC COMMUNITY
Fahruddin Salim* Abstrak Globalisasi dan semakin meluasnya integrasi ekonomi kawasan (ASEAN) telah menciptakan tantangan baru bagi UKM (Usaha Kecil dan Menengah) dalam usaha mereka untuk mengembangkan bisnis dan dalam perjuangan mereka untuk bersaing di pasar yang lebih kompetitif. Hambatan dan tantangan eksternal dan internal serta keterbatasan kapasitas sangat mempengaruhi kelangsungan hidup UKM. Pendekatan keseimbangan diperlukan melalui perencanaan dan perancangan langkah-langkah strategis untuk meningkatkan daya saing UKM melalui pendekatan pemasaran strategis. Tujuan dari penelitian ini adalah untuk merancang pendekatan pemasaran strategis dan membangun daya saing strategis dalam menghadapi perubahan lingkungan bisnis agar UKM dapat mengembangkan kapasitas mereka dan memanfaatkan potensinya untuk melakukan bisnis mereka di pasar yang sangat kompetitif.
Abstract Globalization and widespread integrations of regional economies (ASEAN) have created new challenges for SMEs (Small- and Medium-sized Enterprises) in their efforts to develop their businesses and in their struggle to compete in a more competitive market. External and internal obstacles and challenges as well as the limited capacities greatly influence the survival of SMEs. A balance approach is needed through planning and designing strategic measures to improve the competitiveness of SMEs by way of strategic marketing approach. The objective of this study is to design strategic marketing approach and build strategic competitiveness in dealing with the changing of business environment in order for SMEs to be able to develop their capacities and exploit their potentials to do their businesses in a highly competitive market. Keywords: Globalization and Economic Integration, Strategic Marketing, Strategic Competitiveness
INTRODUCTION Trade liberalization within the framework of ASEAN Economic Community (AEC) opens a new chapter in the interrelationships between ASEAN countries both as a single market and a single production base that includes free trade area, elimination of tariffs on trade between ASEAN countries, free labor market and capital market, as well as the relaxing of import-export customs procedures between ASEAN countries. In dealing with ASEAN Economic Community (AEC), all kinds of enterprises both big enterprises and small-sized and
medium-sized enterprises (SMEs) need to be able to compete effectively and strategically in order to meet the demands of both domestic and global markets. Liberalization of ASEAN economic community will definitely intensify business competitions, including competitions faced by SMEs. SMEs need to be able to anticipate changes in their marketing environment and face their business challenges. SMEs developmental strategies should not only focus on production, but also need to orientate on marketing strategies. As is in common with SMEs phenomenon in Indonesia,
*Dr. Fahruddin Salim, MM is a senior lecturer at Graduate School of Management, University of Pancasila. The author’s email:
[email protected]
P O L I T I S domestic business enterprises in Southeast Asia are also dominated by SMEs operating in traditional sectors such as agricultural and service sectors. The majority of SMEs have no or little affiliation with multinational corporations. LITERATURE REVIEW Strategy is a long-term organizational directions and lay-outs to attain advantages through resources configurations in an ever-changing environment to meet both the market demands and the expectations of its associated parties (Johnson & Scholes, 1997). Meanwhile, Gary Hamel and C.K. Prahalad (1994) defined strategy as incremental and continual acts that are performed based on the future expectations of its customers. Kotler (1994) defined marketing strategy as a marketing logic and by using that logic business units are expected to be able to accomplish their marketing targets. The most important aspect in a marketing strategy is implementing the concepts of market segmentation, market targeting and market positioning. A survey by Wai-Sum Siu, Wenchang Fang & Tingling Lin (2007) on Taiwanese SMEs showed that well-performed SMEs give higher priority to their marketing activities in their business planning. A high-performed SME realizes the importance of strategic planning tools. The enterprise’s marketing principles does contribute to the success of Taiwanese SMEs. Strategic marketing becomes the main entrepreneurial activity for a business unit in order to sustain its business survival as well as to gain profits. The accomplishment of this strategy by a business unit is highly dependent upon its capability and capacity in its marketing activity. There are several important aspects that need to be incorporated in planning a good marketing strategy that includes product positioning activity, market segmentation, 20
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distributional and budgeting strategies, as well as implementing dispersal marketing strategy that incorporates strategies for pricing, distribution, products, promotions that are going to be executed. This strategic marketing plan will provide guidelines for the development of business enterprises as well as provide directions for all management functions. According to Corey in Fandy Tjiptono (2008) a marketing strategy comprises of five interrelated elements. Those five elements are market selection, product planning, pricing, distributional system and marketing communication. In essence, all business enterprises that are competing in an industrial environment have a desire to gain advantages and be superior over their competitors. Significant ingredients that are needed to gain competitive advantages are superiorities in terms of resources, competencies and innovations. Having those superiorities, a business enterprise can develop a competitive strategy that is more superior to its competitors. Porter (1990) explained that competitive advantages are the heart of marketing performance in dealing with competition. Competitive advantage is defined as a beneficial strategy of a business enterprise that builds collaborations to create a more effective competitive advantage for its market. This strategy needs to be designed in such a way so that it can deliver continuous competitive advantages for a business enterprise to be able to dominate its current and new markets. A number of indicators that can be used to measure competitive advantages are uniqueness, rarity, hard to imitate, irreplaceable, and competitive price. Product uniqueness is a product that has a unique and/or unparalleled quality that combines artful sense/value and customer taste. Competitive price is the capability of a business enterprise to adjust its product’s
Dr. Fahruddin Salim, MM., Strategic Marketing and Competitive Strategy of SMEs in the Era of ASEAN Economic Community
P O L I T I S price in accordance to the usual market price. DISCUSSION The methodology of the study is begun with the understandings of business environment factors that are faced by SMEs, and followed by formulating a marketing strategy to gain competitive advantages. The choice of a marketing strategy will determine the competitive strategy used by SME in dealing with competition. The starting point for strategic planning must be put in the framework of dealing with the changing of business environment by considering the characteristics of their customers, competitors and business enterprises. The aim of a strategic planning is to help a business enterprise to be able to gain competitive advantages over its competitors. In a competitive world, a business enterprise must be able to comprehend the characteristics of its customers, its close competitors that are also able to cater the same customers, and the capability of a business enterprise to deal with the competitions. An appropriate strategic planning is performed by continually monitoring and adjusting marketing environment against an ever-changing business environment. This strategy is, in practice, an approach to exploit resources as an effort to deal with a variety of competitive challenges and ever-changing environment in order to attain the predetermined set of objectives (Hayden, 1986). SMEs’ successes in developing their strategic orientations are depended upon their capabilities to identify markets opportunities and challenges within a marketing environment. A marketing environment consists of external and internal organizational (SMEs) factors. The capability to understand marketing 21
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environment must be accompanied with an understanding over “what business are we in”. Both marketing and strategic orientations will help SMEs to understand their business operations, their market demands, the advantages and disadvantages of their competitors, and their bargaining. SWOT (strength, weakness, opportunity, threat) analysis is needed as part of a marketing environmental analysis. A marketing environmental analysis comprises of external and internal analyses. External analysis is needed to gain insight about factors that are outside of an organization and cannot be controlled by that organization. The purpose of external analysis is to identify both opportunities and threats against organizations. External factors that need to be analyzed are, among others, political and governmental factors, laws and policies, socio-economic, cultural and technological factors, and so on. Internal analysis is needed to gain insight about the whole internal aspects of an organization that can be controlled by the organization. Internal analysis is also needed to measure both the organizational advantages and disadvantages. The parameters for measuring both the organizational advantages and disadvantages are key result area, functional management, and balanced scorecards. Meanwhile, industrial analysis is also needed to gain insight about the intensity of the competition in order for a business enterprise to be able to gain profitability. According to Porter (1990), a strategy will be useless unless it is focused on the capability of a business enterprise in dealing with competition. Business enterprises need to identify their competitive strategies effectively in order for them to gain competitive advantages. Porter (2000) identifies five set of forces in
Dr. Fahruddin Salim, MM., Strategic Marketing and Competitive Strategy of SMEs in the Era of ASEAN Economic Community
P O L I T I S an industrial competition, namely: threats from newcomers, competitions among the existing enterprises, threats from substitute/alternative products, buyer’s bargaining power, and supplier’s bargaining power. A competitive strategy is an approach intensively used by a business enterprise to win business competitions. According to Porter (2000) a competitive strategy can be distinguished based on the existing competitive advantages and the target market, namely cost leadership, differentiation and focus. Within the framework of Porter’s generic competitive strategy, it is suggested that to be able to compete effectively a business enterprise need to focus on one of these aspects, either on all-in cost competitive strategy or on differentiation strategy. Meanwhile if the target market is relatively limited thus the strategy employed will become a focus strategy. CONCLUSION SME marketing strategy to gain competitive advantages in dealing with AEC, based on SWOT and industrial analyses, is to implement efficiency strategy by developing and strengthening their existing internal factors that their competitors don’t have. SMEs need to implement developmental strategies and create market expansions via product developments and innovations as well as diversifying their product packages and product choices. And last but not least, SMEs also need to develop their competitive advantages by way of distributional advantages to secure their existing market in order not to be seized by their existing and new competitors.
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Hamel, Gary & C.K Prahalad, 1994. Competing for the Future, USA : Harvard Bussiness School Press Hayden, Catherine, 1986. The Handbook of Strategic Expertise. New York: Free Press Johnson. Gerry, and Scholes, Kevan. 1997. Exploring Corporate Strategy, 4th ed. New York: Prentice Hall Keskin, Halit, (2006) "Market orientation, learning orientation, and innovation capabilities in SMEs: An extended model", European Journal of Innovation Management, Vol. 9 Iss: 4, pp.396 – 417 Kotler, Philip, 1994. Marketing Management; Analysis, Planning, Implementation and Control (8 th ed), International Edition, Englewood Cliffs, Prentice Hall, New Jersey Michele, O'Dwyer; Audrey Gilmore, David Carson, (2009) "Innovative marketing in SMEs", European Journal of Marketing, Vol. 43 Iss: 1/2, pp.46 – 61 Narver, J.C., & Slater, S.F. (1990). “The Effect of Market Orientation on Product Innovation”. Journal of Marketing. p.2035. Porter, Michael, E. 1990. Competitive Strategy. The Free Press. New York,p.20. -------- (2000). Location, Competition, And economic Development: Local Clusters In A Global Economy; Economic Development Quarterly, Feb 2000, Vol. 14 Issue 1, p15, 20p, 4 diagram Siu, Wai-Sum, Wenchang Fang & Tingling Lin. Strategic marketing practices and the performance of Chinese small and medium-sized enterprises (SMEs) in Taiwan, Journal Entrepreneurship & Regional Development, An International Journal Volume 16, 2004 - Issue 2 Tjiptono, Fandy, 2002. Strategi Pemasaran, edisi kedua, Penerbit Andi : Yogyakarta
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Dr. Fahruddin Salim, MM., Strategic Marketing and Competitive Strategy of SMEs in the Era of ASEAN Economic Community