MSMEs: Key Player in Indonesia’s Economy

Hello, OptiMIST People!

Back at it again with KaMIST! Your weekly dose of insights into the latest marketing trends. In this week’s KaMIST we’ll dive more into how MSMEs affect Indonesia’s economy.

MSMEs make up the largest group of businesses in the Indonesian economy and have shown to be resistant to various sorts of economic crisis shocks. According to Law Number 20 of 2008, Micro Enterprises are profitable companies owned by people or legal organizations that adhere to the law’s definition of a microbusiness. A small business is an independent, profitable enterprise operated by a person or a business entity that is not a branch of a company owned and controlled directly or indirectly by medium-sized businesses or large businesses that meet the criteria of Small Businesses as referred to in this Act. Medium Enterprises are independent, productive economic activities run by people or companies that are not owned, controlled, or joined, directly or indirectly, with Small Businesses or Large Businesses, with a total net worth or annual sales proceeds that meet the requirements of this Act.

MSMEs play a significant number of crucial roles in maintaining the stability of Indonesia’s economy. According to data from the Ministry of Cooperative Spaces and Small-to-Medium Enterprises, it has identified 64.2 million MSMEs in the first quarter of 2021. These MSMEs have contributed to around Rp. 8,573 trillion or 61.07% of the country’s GDP. In addition, the COVID-19 pandemic shifted consumers’ purchasing behavior from offline to online and has helped MSMEs to gain more traffic than before. However, the pandemic also exposed certain areas where MSMEs need to improve, such as digital technology adaptation, utilizing digitization properly, and effective product marketing.

Effectively utilizing digitization properly can lead to many new opportunities for MSMEs. One, in particular, has showcased a number of remarkable outcomes, e-commerce. The adoption of e-commerce has become more crucial than ever for MSMEs. It has helped businesses in various aspects such as sales growth, cost efficiency, improved service, etc. According to the Ministry of Communication and Information, only 7.4% of all MSMEs in Indonesia, or 4.7 million of them, used digital platforms in 2017. Although few MSMEs have adopted e-commerce, the rate of growth of e-commerce adopters is impressive. In 2018, this figure increased by 104.4 per cent to 9.61 million. These numbers show that MSMEs are very eager to connect online and conduct business.

In the upcoming years, inclusive growth will continue to be significantly influenced by the global digital economy. Digital tools can increase access to the market, and customers’ preferences, including employment for better efficiency and services – since almost 60% of the population is connected through the internet. Adopting digital tools in their business strategy will increase productivity and enhance socioeconomic results. According to research conducted by the World Economic Forum, Indonesia’s digitalization could boost national productivity to $120 billion by the year 2025.

Wanna get more insights on marketing? Tune in every Thursday for more KaMIST!

You can reach us at:
LINE: @mistfebui
Instagram: @mistfebui
Twitter: @mistfebui
Facebook: MIST FEB UI


The idea of delivering the most value for the consumer has evolved over the years. As we know, the best marketing strategy is cetera desunt for adaptive future-leader mindset that uncertainly evolved over decades. Companies began to use various promises in effort to persuade and attract customers. The fiercely increasing conditions of competition added the popularity of the concept of “brand” and “advertisement” by adopting the concept of neo-marketing and elaborate them with psychological terms. Albeit, all emotion influences consumers personal relationships, business choices, and buying decisions. The emotion itself has situational and reactive qualities, as well as satisfaction and expectations formed over lifetimes of experiences and interactions.

When a boy goes to an ice cream parlor or restaurant, he will feel befuddled. Choosing what he is going to get, that’s the thing that he despises. Would chocolate chip or strawberry ice cream please him better? Cheeseburger or fried chicken? He feared that what he selected will not give him as much pleasure as the other option would give. What he doesn’t choose could provide a higher sense of pleasure than the one he chose. One interesting finding utilized by neuromarketing is that people really don’t want to lose out. People are just as worried about what they might lose as to what they might gain.
In the meantime, one of the biggest challenges that marketers deal with is customers’ expectations in the pre-purchase phenomenon where the consumers haven’t fixed their buying decision yet. To tackle the challenge, many companies are competing to build relationships with their customers, with the expectations that they will be able to provide the best customer experience for specific individuals. Therefore, the company must be customer-centric to carry out a successful marketing strategy in order to be noticed by consumers and to forge a brand identity.

According to McKinsey (2019), by making a fundamental change of mindset of focusing on the customers, companies gained significant enhancement on several aspects. Along with operational and IT improvements, companies generate 20 to 30 percent uplift in customer satisfaction, a 10 to 20 percent improvement in employee satisfaction, and economic gains ranging from 20 to 50 percent of the cost base addressed in the various journeys.

To overcome these challenges, companies have to understand consumers’ behavior and expectations. Hence, companies should put a bigger concern towards consumers’ buying-cycle from awareness to its advocacy. By implementing the concept of Neuromarketing, stereotypes of the communication matters of the marketing basis will be integrated with taste of individual market itself. The more personalized the promotion, the higher the probability that the advertisement will work. It could be done by using big data to allow the company for this huge aggregation of all consumers personal information that they’ve ever revealed to build a precise representation of who they are, now, more than ever before. Data and insight are not delivered to consumers as a whole but individually by delivering the most value to the customers with a very specific scope based on how they think.

In order to win in today’s marketplace, companies must be customer-centered, to the point that ideally, each individual customer’s values are taken into an account to derive the value that they are truly seeking. In essence, by generating consumer reactions, and treating them not as reactionary receptacles of marketing strategies, but as each their own person with differing individual values. Therefore, reinforcing belief is a very important matter for marketers that influences consumers experience. They must deliver superior value to their target customers traditionally and digitally with knowledge of neuroscience marketing strategies combined. Neuromarketing will surely strengthen customer’s contentment of a product itself.