Relevance of Segmenting, Targeting, and Positioning to Stimulate

Product Performance of Traditional Woven Industry in North

Sumatera

Arlina Nurbaity Lubis, Marhayanie and Beby Kendida Hasibuan

Faculty of Economic and Business, Universitas Sumatera Utara, Medan, Indonesia

Keywords: Marketing Strategy, Segmentation, Targeting, Positioning, Woven Industry

Abstract: North Sumatra has experienced a decline in the number of craftsmen and entrepreneurs of traditional North

Sumatra woven industries. If this condition continues, the existence of this traditional distinctive fabric culture

will disappear. Many craftsmen and business people have shifted because of the low market appeal of

traditional woven industries products. This condition is debatable because other woven industries such as

Batik actually have a very high appeal in the market. This study aims to map the marketing strategies and

market performance of woven industries business players who still survive. A total of 300 traditional cloth

business and craftsmen participated in this study. Interviews were conducted to obtain data needed in the

study. The results indicate that there is a positive relationship between the implementation of marketing

strategies with market performance. Market appeal perceived to fade by the craftsmen, in this study, can be

improved through the application of a good marketing strategy. For businesses that have implemented

marketing strategies well, the potential and market demand for their products is maintained. This research

suggests that there is a synergy between academics, government, and business to strengthen marketing

strategies, maintaining markets and woven industries demand, and maintaining the existence of traditional

North Sumatra woven industries where academics and government help absorb and implement marketing

strategies from MSMEs.

1 INTRODUCTION

Indonesia has a diverse culture that has been passed

down from generation to generation. In its cultural

diversity, Indonesia has a variety of woven

industriess that are the main attraction of the local

area in the territory of Indonesia. This traditional

cloth is widely used in local cultural festivals,

especially cultural festivals that commemorate the

local cultural heritage. In North Sumatra, there are

many cultural activities that use woven industriess. In

addition to remembering culture, this activity also

aims to preserve cultural heritage to the next

generation.

The economic climate in Indonesia over the past

five years shows a good business climate and

encourages many industries to grow and develop. In

addition, the era of free trade in the Southeast Asia

region and the industrial revolution 4.0 made the

market more dynamic, full of opportunities and

challenges to develop businesses. The popularity of

batik as a traditional cloth from the island of Java has

increased significantly. Batik is well known to

various parts of the world. Unfortunately, despite the

improved climate, many of the woven industries

businesspersons, especially in North Sumatra, chose

to close their businesses and change the scope of their

businesses. The existence of the popularity of batik

beat the woven industries of North Sumatra. In fact,

many local traders choose to focus on selling batik

instead of local woven industries. This condition is

very worrying, especially for the preservation of

culture and the presence of woven industries,

especially in the North Sumatra region.

In the managerial economic concept, business

actors will choose to close their businesses when

prices are equivalent to marginal costs (Siahaan,

2015). This point is the threshold for obtaining

operating profit. In the long run, the company should

close down the business because it will cause

business losses. Many researchers state that one of the

reasons for closing a business is when there is no or

very little potential income that can be obtained from

the operation of the business (Amankwah-Amoah &

Zhang, 2015; Karakaya, 2000; Rahyuda, Indrawati,

Nurbaity Lubis, A., Marhayanie, . and Hasibuan, B.

Relevance of Segmenting, Targeting, and Positioning to Stimulate Product Performance of Traditional Woven Industry in North Sumatera.

DOI: 10.5220/0009202402650273

In Proceedings of the 2nd Economics and Business International Conference (EBIC 2019) - Economics and Business in Industrial Revolution 4.0, pages 265-273

ISBN: 978-989-758-498-5

265

Candraningrat, & Honor Satrya, 2017). This potential

income can be predicted by looking at consumer

interest and demand for products (Ajagbe, Olujobi,

Worlu, & Uduimoh, 2017). The lower the demand,

the smaller the potential income that can be obtained

from a business.

The level of demand for traditional North Sumatra

woven industriess is related to the marketing carried

out by these businesses. The main task of marketing

is to stimulate demand for products. Successful

marketing is marketing that is able to generate interest

in the product, and multiply it so that there is an

interest in buying from consumers (Hunt & Arnett,

2006; Ç. Karakaya, Badur, & Aytekin, 2012).

Kampamba (2015) states that one of the marketing

tools used to achieve effective marketing is the

Segmenting, targeting, and positioning (STP)

strategy. Applying the right marketing strategy will

encourage business performance (Kartawinata &

Wardhana, 2013). In general, studies on the

marketing strategy are carried out in more mature

urban areas in implementing these strategies.

However, the situation in urban and regional areas

cannot be combined considering their different

characteristics (Sarkar, Kundu, & Chaudhuri, 2016).

In addition, the perceptions of these business actors

also experience differences and can be influenced by

demographics (Hasibuan & Lubis, 2017).

Market segmentation is the process of dividing

markets into several groups of buyers, based on

certain characteristics (Trinh, Dawes, & Lockshin,

2009). This grouping will facilitate the application of

the marketing mix to meet the needs and desires of

consumers who have been specifically grouped.

Many researchers claim that this segmentation is very

important in achieving effective marketing (i.e.

Anesbury, Winchester, and Kennedy 2017or Hassan

and Craft 2012). The main reason is that grouping

buyers based on the same characteristics will

facilitate marketing activities and achieve marketing

targets that are more appropriate for the group.

Consumer behavior towards a product tends to be

different so the approach that must be taken is also

different (Anesbury et al., 2017; Lubis, 2018).

Market segmentation is done by grouping broad

heterogeneous markets into more homogeneous

segments. Targetting activities are essentially

choosing among more homogeneous market

segments by assessing the attractiveness of the

segments and selecting the segments to be targeted as

buyers (Barton, 2011). The results of the targeting

activity will be used as a basis for positioning so that

the product and / or company are well known to

consumers. This series of marketing activities is an

STP activity that helps in stimulating the request.

This study aimed to evaluate the application of

STP in traditional woven industries in North Sumatra.

This evaluation aims to map the application of STPs

from MSMEs as well as evaluate its correlation with

product performance which showed market

attractiveness toward the business.

2 LITERATURE REVIEW

2.1 Traditional Woven in North

Sumatera

2.1.1 Ulos

Ulos, in language means blankets, blankets that warm

the body and protect themselves from cold air. The

Batak people believe that there are three sources of

warmth for humans, namely Sun, Fire, and Ulos. Ulos

is considered a source of warmth that is comfortable

and familiar with human daily life.

The art of weaving Ulos is inherited from

generation to generation, especially to the Batak

people. Many traditional activities were carried out

using Ulos cloth. The variety and style of Ulos itself

has its own meaning for society. The process of

making Ulos generally uses looms instead of

machines. However, along with the development of

technology, Ulos print motifs have now begun. The

meaning of Ulos began to shift from weaving to

motif.

Ulos is a symbol of warmth for the Batak people.

Although at first this meaning came from the need for

warmth to protect from the cold temperatures of the

mountains which are now no longer widely used, the

meaning of Ulos as a symbol of warmth is still held

by the community. The warmth grows into a strong

sense of kinship attached to the community. Ulos

cloth is now being developed by craftsmen, not only

limited to the shawl cloth used in traditional events,

but has been widely used as a basic material for

clothing, laptop bags, tablecloths, and so on.

2.1.2 Batik Gorga

Gorga Batak Toba is carved or chiseled art which is

usually found on the exterior (exterior) of traditional

Toba Batak houses and art tools (drums, cymbals,

lutes), and so on. Gorga is a sculpture or painting that

is used by using three basic colors that are

characteristic of Batak, namely Black, White and

Red.

Gorga Batik is a work by displaying various

carvings on cloth. The manufacturing process is

generally combined with the handwriting method,

while colors use natural colors. Even so, now a lot of

gorga batik circulating in the market is printed by

using a stamp. It was usually using the colors Red,

EBIC 2019 - Economics and Business International Conference 2019

266

Black and White. These three types of colors are

called Sitiga Bolit. The three colors also have special

meaning and symbolism according to Batak religious

beliefs, namely:

1. White as a symbol of purity, truth, honesty

and sincerity.

2. Red as a symbol of strength and courage.

3. Black as a symbol of the authority and

leadership

Figure 1. Sample of Gorga Woven

2.1.3 Uis Karo

The traditional Karo traditional cloth (Uis Karo) is a

traditional dress used in Karo tribal cultural activities

as well as in everyday life. Uis Karo has colors and

motifs related to its use or with the implementation of

cultural activities.

Uis Karo is made of cotton material, spun and

woven manually and uses natural dyes (not using

manufacturer chemicals). But there are also some of

them using fabric fabrication that is dyed (colored)

with natural dyes and made into Karo custom cloth.

Some of the Karo Adat Uis are already scarce because

they are no longer used in everyday life, or are only

used in cultural ritual activities that are related to

animistic beliefs and are not being done anymore.

In general, Karo traditional clothing can be

divided into three groups, namely: daily wear, clothes

for parties, and traditional clothes. The clothes that

are commonly used by men are clothes with long-

sleeved Chinese scissors, headgear called tengkuluk

or bulang and sarong, while for women consists of

round neck kebaya, sarong (abit), headgear (tudung),

and custom cloth named Uis Gara is slung.

Figure 2. Sample of Uis Karo

Festival clothes are almost the same as everyday

clothes. However, festival clothes are cleaner or new

and worn properly, so that they look more polite.

Traditional clothing consists of clothing with

complete accessories and is used only at parties, such

as weddings, entering new homes, death ceremonies,

and art parties.

2.2 The STP as Marketing Strategy

Kotler & Keller (2012) as marketing experts provide

keywords for marketing success can be concluded

based on the STP strategy, namely segmenting,

targeting and positioning. The essence of this

approach is that the overall market concept consists

of various market segments. Each market segment

has different needs and wants characteristics. By

focusing on specific market segments, marketing can

be done more effectively (Anesbury et al., 2017).

The main note for this approach is that this strategy

requires actors to focus on certain parts of the market

and sacrifice other parts (Andres, 2009).

The main reason is that there is a very strong

difference between one segment and another that

requires a different marketing approach (Szolnoki &

Hoffmann, 2014). Nevertheless, the STP strategy can

be carried out in several segments with different

approaches.

Market segmentation is the initial stage of STP by

focusing on identifying homogeneous segments in the

sub-market by grouping the group criteria. Jaman

(2012) suggests how important it is to identify

potential buyers. Failure in this identification is the

same as failing to reach consumers and product sales.

Camilleri (2018) revealed that market segmentation

is an activity oriented to prospective buyers so that

this activity will strongly support these buyer-based

marketing activities. In doing this grouping,

marketers generally look for similar characteristics,

such as the common needs, interests, lifestyle, or

Relevance of Segmenting, Targeting, and Positioning to Stimulate Product Performance of Traditional Woven Industry in North Sumatera

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certain demographics. In this stage the market

segments are given a profile and information that

gives the difference between one segment with

another segment. Market segmentation is generally

done based on five categories, namely demographics,

geography, psychographic, behavior, and product-

related factors.

After the market segmentation is complete, the

next step is to choose the target market. There are

three types of strategies that can be taken in selecting

a target market, namely undifferentiated marketing,

differentiated marketing, and concentrated

marketing.

Determination of target markets will help

companies optimize the use of available resources.

Therefore, the selection of targets from market

segmentation is not only the most lucrative market

problem, but must be in accordance with the

company's ability to process the segment.

Positioning is an effort made by a company or

business actor in order to be able to offer a potential

buyer and obtain a place in the mind of the

prospective buyer. Positioning activities are related to

differentiators that make the company or its products

unique to the eyes of the buyer (Swerdlick, 2007).

Consumers will always make comparisons between

products or services as an alternative to meeting their

needs. Therefore, businesses do the right positioning

in order to perform better than others in the minds of

these consumers.

3 RESEARCH METHOD

3.1 Research Time

The study was conducted in Medan and Samosir from

April to July 2019.

3.2 Participant

Traditional woven industries generally take the form

of micro, small and medium enterprises (MSMEs).

Most of these businesses tend not to be clearly

registered either at the statistical center or the local

trade office. Therefore, this study was conducted with

a non-probability sampling method where sampling

as participants in this study was determined by

stratified sampling from two main regions, namely

developing regions such as Medan City and

undeveloped areas including Samosir Island, Kaban

Jahe, and Brastagi. A total of 300 MSMEs

participated in this study, with 150 craftsmen and

enterprisers in the Medan area and 150 craftsmen and

enterprisers from Samosir, Kabanjahe, and Brastagi.

The consent of our participants were taken and they

were agreed to participate in this study.

3.3 Data Collection Method

This research was conducted with structured

interviews with craftsmen and traditional woven

enterprisers in both regions. The interviews

conducted focused on implementing effective

marketing through the STP strategy of the craftsmen

and business people. This study also asks about the

potential of traditional typical fabric businesses from

the viewpoint of craftsmen and business actors as

well as their plans in managing the business in the

future

3.4 Data Analysis Method

The data obtained in this study are tabulated and

analyzed in the form of correlation and concurrent

model analysis of the practice of marketing strategy

preferences applied by business actors.

4 RESULT AND DISCUSSION

4.1 Characteristics of Research

Respondents

Characteristics of respondents in this study are

presented with the aim of seeing a general picture of

the research sample. Characteristics of the

respondents in this study were grouped based on

business groups, genitals of business actors, the last

level of education, and approaches to the formation of

strategies. A summary of the reꜱpondent points is

presented in Table 1.

Table 1. Characteristics Rspondents

N Percentage

Classification 300

Micro enterprises 258 86,00%

Small enterprises 42 17,00%

Medium enterprises 0 0,00%

Sex 300

Male 109 36,33%

Female 191 63,67%

Educational Attainment 300

Post-graduate 0 0,00%

Undergraduate 23 7,67%

Senior High School 145 48,33%

Junior High School 121 40,33%

Elementary School 11 3,67%

No Schooling 6 2,00%

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Table 1 provides information that the

characteristics of traditional typical fabric business

actors are generally micro and small businesses. This

classification is difficult to justify because there is no

clear record of the finances of the business actors so

that this data is based on the estimated turnover and

asset value of the business actors. This classification

is based on Law No. 20 of 2008 concerning Micro,

Small and Medium Enterprises. In terms of business

actors, in general business actors are female. In

general, in Indonesia the approach applies that men's

duty is to make a living while women focus on

helping the household. Many of the woven industries

business people make their business as a side business

behind their duties to help in the household.

Especially in the Samosir area, men work to work the

fields while women work weaving traditional cloth in

their spare time. This makes the participation of

women greater than men. In terms of recent

education, business people are generally high school

or junior high school graduates. Education that has

not been evenly distributed to the end of the samosir

makes many business people only finish their final

studies at the high school and junior high levels.

Local scholars also prefer other more promising

professions than continuing the traditional woven

industries business.

4.2 Segmentation, Targeting, and

Positioning Practice in the

Traditional Woven Industries

Research that has been conducted using open

questionnaires that can be filled out by traditional

craftsmen and traditional cloth sellers and not

required to fill them with regard to segmentation

practices, targets, and positions applied by traditional

craftsmen businesses and traditional cloth sellers in

North Sumatra .

4.2.1 Segmentation

Marketing experts say that in an era of increased

competition, an era of information that is spreading

rapidly and increasingly educated buyers and demand

and market tastes that are changing rapidly, has urged

companies to pay attention to the issues and practices

of market segmentation. If a business craftsman is not

able to see the segmentation of prospective buyers

clearly, then it is very possible that the business

craftsman missed the sales opportunity and the

prospective buyer. Segmentation is basically

classified into three main categories; i.e.

segmentation based on behavior, psychography

(lifestyle), and buyer profile. The categories are then

divided into more specific segments that cover

aspects of the prospective buyer. The application of

market segmentation which is generally carried out

by the traditional craftsmen and traditional cloth

sellers in North Sumatra is summarized in Figure 1.

Figure 1. Segmentation Practices

This research involved one hundred craftsmen and

traditional cloth sellers in North Sumatra. Figure 1

summarizes the application preferences of traditional

typical fabric market segmentation practices.

Previously it has been said that this market

segmentation is increasingly important along with

market developments and consumer behavior. Figure

1 indicates that in general, the practice most often

applied in segmentation is the occasional segment,

which shows that segmentation is more often done

based on specific uses of traditional typical fabrics,

for example for traditional or wedding activities.

Market segmentation based on socioeconomic

conditions is also often carried out by craftsmen and

businesspersons of traditional typical fabrics in North

Sumatra, especially in ulos and gorga batik products.

Segmentation based on socioeconomics pays

attention to social aspects and people's purchasing

power. Craftsmen and sellers must understand

appropriate social areas accompanied by adequate

economic conditions for the products produced.

Segmentation based on demographics is a

segmentation strategy that classifies markets based on

age, income, purchasing power, ethnicity,

occupation, and so on. The advantage of this

demographic based segmentation practice, besides

being easy to apply in terms of quality and quantity

of data, is being able to create a suitable segmentation

profile. In this case the marketing strategy can be

more specifically prepared by business actors.

However, it should be noted that this does not mean

that all consumers in certain demographic segments

have the same needs and desires for the product. The

practice of segmentation based on demographics is

very widely applied by ulos and gorga batik

entrepreneurs.

Market segmentation based on geography is

essentially a broader segmentation practice than

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269

demographics. This segmentation is based on the

region where the consumer is located, for example,

market segments outside North Sumatra, or more

specifically the Jakarta market segmentation. This

segmentation is done to penetrate the market in an

area. However, many marketing experts say that

based on geographical segmentation is a mistake,

because from that segmentation the profile of market

needs and desires is still unclear. Figure 1 shows that

Gorga Batik has more applied this segmentation

strategy compared to Ulos Fabric and Uis Karo.

Lifestyle market segmentation is a fairly complex

segmentation where the emphasis is not based on the

quality of the best products a business has, but rather

on the emotional condition of potential buyers.

Although not the best product, this practice is very

effective in attracting the attention of consumers

because it is directly related to the condition of

prospective buyers. Craftsmen and sellers create

segments that match the tastes of the lifestyle of

prospective buyers. For example, ulos cloth is

combined with formal clothes into semi-ulos clothes

which is precisely for some interesting people. This

segmentation is still rarely applied by businesses

today.

Segmentation based on loyalty is done by paying

attention to the intensity of the purchases from the

buyers. This classification can be done to provide the

best service to loyal customers to the company. Loyal

buyers will continue to be maintained with marketing

and product development strategies that will

increasingly make consumers loyal and remain

sustainable as customers of the store. This

segmentation strategy is difficult to do because the

attention of buyers is still lacking in business

attention in the North Sumatra region. This

segmentation is based more on the memories of the

sellers, while a few others provide member cards as a

form of loyalty practice.

Segmentation based on usage relates to how to

encourage the intensity of the use of woven

industriess that are more common. This segmentation

is applied to see potential segments to require and

utilize traditional distinctive fabrics. Business people

consider this practice difficult because even though

clothing products are a basic necessity, a lot of

substitutions can be made for these woven

industriess.

4.2.2 Target Practice

In marketing science, there is no requirement that the

practice of segmentation must be considered by

business actors. The approach is more towards a

strategic approach. However, in determining target

market activities, segmentation becomes a necessity.

Evaluation in the selection of targets must be based

on two criteria, namely the attractiveness of the

segment and the ability of the company. This

evaluation is very dependent on internal conditions

and external evaluations of each company.

Nevertheless, in general the determination of targets

can be based on several references. The survey results

related to the target practices in this study are

summarized in Figure 2.

Figure 2. Targetting Practice

Figure 2 provides information that the practice of

targeting the craftsmen and entrepreneurs of woven

industriess in North Sumatra is quite good in terms of

the target market preference. Many business actors

apply a combination of market appeal, such as

segment size and segment growth accompanied by

business capabilities such as the brand image of the

products produced by the company.

Targeting based on segment size is directly

related to the number of prospective buyers from the

market segmentation. In general, the larger the

segment size, the greater the number of prospective

buyers which indicates the greater segment appeal.

The concept of economic of scale encourages

effectiveness and efficiency if the company takes

targets in this market segment. The problem with

large market segments is that the appeal is too large

so that it attracts many competitors to take advantage

of the market share.

Targeting based on segment growth is essentially

the same as segment size, where large segment

growth will attract the attention of competitors and

increase competition. Nevertheless, it cannot be

denied that good segment growth will be the main

target of business actors. Figure 2 confirms the

statement mentioned earlier.

Price sensitivity can affect the level of

profitability of a business. In general, a low level of

price sensitivity is the main attraction for business

actors, because prices can be determined by business

actors without significantly influencing the level of

demand. In this study, Ulos Kain business actors

appear to have paid the least attention to the issue of

price sensitivity.

Bargaining power can be a determinant of interest

in market segments. At the level of consumer

EBIC 2019 - Economics and Business International Conference 2019

270

bargaining power that is too high, business actors

cannot do much to attract the attention of consumers

so that business growth and development becomes

difficult to achieve. Barrier to entry and competition

in the segment are important factors to see the

viability of the segment to be chosen. The barrier is

related to the regulation of whether a business can run

its business in the relevant segment. A strong barrier

can also be considered where competition will be

weaker with fewer players in the barrier. The level of

competition is crucial as a choice whether the

company wants to take the segmentation. Blue ocean

and Red ocean strategy are choices in seeing the

competition, whether they want to play in a market

segment that is still blue or that has many competitors

and becomes a red sea.

The other three segments from Figure 2 are

sourced from the capabilities of a traditional typical

fabric business. The considerations made are based

on image, cost advantage, and technology. Many of

the business actors obtain cost advantage from the

ownership of raw materials or the scale of their

production so that production costs become cheaper.

In a price-sensitive market, cost advantage can be an

important weapon to attract the attention of segments.

Technology can support competitive advantage that

makes the competitive power of business actors

increasingly large.

4.3 Positioning Practices

Positioning is an effort made by a company or

business actor in order to be able to offer a potential

buyer and obtain a place in the mind of the

prospective buyer. Positioning activities are related to

the differentiator that makes the company or its

products unique in the eyes of the buyer. Consumers

will always make comparisons between products or

services as an alternative to meeting their needs.

Therefore, businesses do the right positioning in order

to perform better than others in the minds of these

consumers.

4.4 Correlation as a Basic Evaluation

Model

The model of the marketing strategy on the product

performance of this typical woven industries, the

research data are evaluated based on correlation

analysis. The results of data processing are

summarized in Table 2.

Table 2. Correlation Analysis

Correlations

Segmenta

tion

Targetti

Positioning Market

Perform

ance

Segmentation

Pearson

Correlation

Sig. (2-tailed)

300

Targetting

Pearson

Correlation

,500

Sig. (2-tailed) ,000

300 300

Posotioning

Pearson

Correlation

,420

,776

1 ,918

Sig. (2-tailed) ,000 ,000 ,000

300 300 300 300

Market

Performance

Pearson

Correlation

,618

,925

,918

Sig. (2-tailed) ,000 ,000 ,000

300 300 300 300

**. Correlation is significant at the 0.01 level (2-tailed).

Table 2 provides information that there is a

significant relationship between the practice of

segmentation with targets and positioning. Targeting

also has a strong relationship with product positioning

in the market. These results indicate that the research

model should not be evaluated based on multiple

linear regression, because between the proposed

independent variables have a strong relationship with

each other. These results indicate structural analysis

or path analysis will be better able to explain the

conditions experienced by business operators when

compared with multiple regression.

Correlation analysis provides information that a

good market segmentation will help in the

implementation of a better target market. This is

indicated by a positive and significant correlation

between the two. Segmentation is also important in

influencing product positioning and performance.

Thus, there is a mutually influential flow of marketing

strategies on the performance of these products

5 CONCLUSION AND

RECOMMENDATION

The study concluded that woven industriess still have

promising potential for business people / craftsmen.

Previously, many businessmen left the market

because they felt that the attractiveness and potential

of woven industriess had fallen from the market and

were perceived as unable to compete with other

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271

fabrics. This research shows that the problem is not

the decreasing appeal of traditional woven industries

products, but the inability of business actors /

craftsmen to implement appropriate promotional

strategies to create demand for these products. In this

case, mistakes in determining market segments and

the inability of marketing communication can make

the potential for woven industriess decrease.

ACKNOWLEDGMENTS

The authors gratefully acknowledge that the present

research is supported by Ministry of Research and

Higher Education. The support is under the research

grant PDUPT for year 2019

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