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Analysis of the Impact of the COVID 19 Pandemic on Online Marketing at Small and
Medium Enterprises (MSMEs)
Shinta Dewi Herawati
1, Djoko Roespinoedji
2, Mohd Haizam Saudi
31Widyatama University 2Widyatama University 3Widyatama University 1Shinta.dewi@widyatama.ac.id
Article History: Received: 10 January 2021; Revised: 12 February 2021; Accepted: 27 March 2021; Published
online: 20 April 2021
Abstract:This study aims to analyze the impact of the COVID 19 pandemic on online marketing for Micro, Small and Medium Enterprises (MSMEs). The research method used in this research is descriptive analysis and is included in the type of library research. The output of this research is national and international journals. This research is expected to increase the growth of MSMEs through online marketing.The results of a literature review conclude that the corona virus pandemic has had a significant impact on business actors around the world, including in Indonesia. Most business actors are forced to stop their business activities, because of policies issued by the government. This situation has an impact on reducing turnover. But on the other hand there is a significant increase in online sales transactions so that it can become an opportunity for the growth of MSMEs by optimizing online marketing.
Keywords: Pandemic, online marketing, MSMEs
1. Introduction
The corona virus pandemic has had a significant impact on businesses around the world. Including in Indonesia. Most business actors are forced to stop their business activities, because of policies issued by the government. This situation has an impact on reducing turnover. But, on the other hand, there is a significant increase in online sales transactions. CNN Indonesia quoted the statement of the Minister of Cooperatives and Small and Medium Enterprises (UKM) Teten Masduki who said, online sales transactions increased by 350% amid the Covid-19 pandemic. According to the BPS report (2019), in 2019 as many as 15.08% of businesses in Indonesia were run online, the remaining 84.92% were still offline. However, based on the latest research results revealed by the Coordinating Ministry for Economic Affairs, during the Covid-19 pandemic, there was an increase in up to more than 300 thousand new entrepreneurs entering the online realm. This increase is quite reasonable, because the existence of social restrictions and reduced activities outside the home encourages people to be more consumptive in making transactions through digital platforms.
Ahmad M Ramli, Director General of Post and Information Administration (PPI) Kominfo, said that during the Covid-19 pandemic the number of online shop transactions increased by 400 percent and is predicted to continue in the new normal, the marketplace platform will get competition from big retailers to minimarkets which are also open online services to delivery. Meanwhile, Chairman of the Association of Indonesian Express, Post and Logistics Shipping Service Companies (Asperindo), Mohammad Feriadi, acknowledged that there was an increase in demand for goods shipments due to the shift in ordering goods via online platforms.
2. Literature Review 1. Definition of a Pandemic
A pandemic (from the Greek pan meaning all and demos meaning people) is an epidemic of a disease that spreads over a large area, for example several continents, or throughout the world. A widespread endemic disease with a stable number of infected people does not constitute a pandemic. Pandemic flu events generally exclude seasonal flu cases. Throughout history, a number of disease pandemics have occurred, such as smallpox (variola) and tuberculosis. One of the most devastating pandemics is the black death, which killed an estimated 75–200 million people in the 14th century (https://id.wikipedia.org/wiki/Pandemi).
A pandemic is a global disease outbreak. According to the World Health Organization (WHO), a pandemic is declared when a new disease spreads across the globe beyond borders. There have been many examples in history, the most recent being the COVID-19 pandemic. This flu-like pandemic was declared by WHO on March 12, 2020.
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The term pandemic according to the Big Indonesian Dictionary (KBBI) is interpreted as an epidemic that has spread simultaneously everywhere covering a wide geographic area. In the most classical sense, when an epidemic spreads to several countries or regions of the world. Disease outbreaks that fall into the pandemic category are contagious and have a continuous infection line. So, if a case occurs in several countries other than the country of origin, it will still be classified as a pandemic.
2. Overview of COVID 19
The corona virus is a type of virus that can infect mammals, various animals and humans. Actually, the corona virus has been found for a long time, but in 2019 a new type of Covid-19 outbreak was found in Wuhan City, Hubei Province and has quickly spread to China.
In a relatively short period of time, Covid-19 has experienced a significant increase in the spread, so serious precautions are needed to slow the spread of the virus. Covid-19 has spread throughout the world so that, on January 30, 2020 the World Health Organization (WHO) declared the SARS-CoV-19 outbreak an international public health emergency.
In Indonesia, the first Covid-19 case was detected in Indonesia, namely on March 2, 2020. These two cases were found in Indonesian citizens domiciled in Depok who were suspected of having previously had interactions with Japanese citizens who were known to have suffered from the disease. Furthermore, day by day the increase in the number of cases of Covid-19 sufferers grew significantly in Indonesia so that President Joko Widodo officially designated the Covid-19 pandemic as a national disaster as stipulated in Presidential Decree (Keppres) No. 12 of 2020 concerning the Determination of Corona Virus Disease (Covid-19) Non-Natural Disasters.
3. Online Marketing
Online marketing according to Kotler (2002: 34) is a social and managerial process for individuals and groups. The process regulates these individuals and groups in obtaining their needs and wants by making, offering, and buying and selling. In principle, online marketing is almost the same as marketing in general, only differs in the marketing medium.
According to Boone and Kurtz (2005) online marketing is a component in e-commerce. Where e-commerce is an online buying and selling system. Online marketing as a component in e-commerce, namely as a strategy for production, distribution, pricing, and promotion through digital media. It can be interpreted that all kinds of marketing processes from a product or service to the buyer's hands all use digital media.
Armstrong and Kottler share a similar opinion with Boone and Kurtz regarding online marketing. They claim that online marketing is a part of e-commerce. From this opinion, Armstrong and Kottler (2004: 74; Peng et al., 2019) also add that online marketing is a form of company performance. Where the company's performance is in the form of promotion, sale of goods or services, and communicating via the internet.
Chaffey (2000) argues that online marketing is a supporter of a modern marketing concept. The concept is in the form of all kinds of promotions and sales of products or services via the internet. The use of the internet is a mainstay in online marketing through social media, advertising services, online shops, and many more. So in essence, online marketing is an effort made to promote a product or service using the internet.
Strauss and Frost (2001) expressed their opinion on online marketing. They argue that online marketing is the use of data and applications to plan the implementation of the concept of distribution, promotion and pricing. This concept aims to create a sale and purchase or exchange with its own satisfaction value for individuals and organizations. So in the opinion of Strauss and Frost, online marketing is more about the use of electronic applications in planning online marketing concepts.
4. Micro, small, and medium enterprises (MSMEs)
Micro, small, and medium enterprises (UMKM) is a general term in the realm of economics which refers to productive economic enterprises owned by individuals or business entities in accordance with the criteria stipulated by Law No. 20 of 2008.
Included in the criteria for a micro business is a business that has a net worth of IDR 50,000,000, excluding buildings and land on which the business is located. The maximum income from the sale of a micro business is
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IDR 300,000,000 per year. Small business is a productive economic business that stands alone, whether owned by individuals or groups and not as a branch business entity of the main company. Controlled and owned by and become part of both directly and indirectly from medium-sized enterprises
Included in the criteria for a small business is a business that has a net worth of IDR 50,000,000 with a maximum amount of IDR 500,000,000 needed. Annual sales revenue ranges from IDR 300,000,000 to a maximum of IDR 2,500,000,000.
Meanwhile, medium-sized enterprises are businesses in a productive economy and are not a branch or subsidiary of a central company and are a direct or indirect part of a small or large business with total net assets as regulated by statutory regulations. Medium-sized businesses are often categorized as large businesses with the criteria that the net worth owned by the business owner reaches more than IDR 500,000,000 to IDR 10,000,000,000 and does not include buildings and land where the business is carried out. Annual sales revenue reaches IDR 2.5 billion to IDR 50 billion.
3. Research methods
The research method used in this research is descriptive analysis and is included in the type of library research. This research was made by reviewing data sourced from secondary data, namely data obtained from other parties, not directly obtained by the researcher from the research subject.
4. Results and Discussion
1. Impact of the COVID 19 Pandemic on the Economic Sector in Indonesia
In Indonesia, the impact of the Covid-19 pandemic is very clear, one of which is in the economic sector. Many people have been affected by the economic impact of the Covid-19 pandemic. Among them are businesses owned by the community which have drastically decreased their sales level. As we know, the business world is one of the pillars of driving economic growth.
Economic activity in shopping centers, hotels, restaurants and other sectors has decreased due to the power of several general factors. First, the decline in international trade and investment in all countries is also seen in decreasing levels of production and services.
International investment and trade are the main factors affecting economic growth. As a result, the level of public consumption has also decreased. This is what causes market economic activity to weaken. Second, people's purchasing power has decreased due to unstable economic activity so that many people have lost their jobs.
Such as company employees who are affected by Termination of Employment (PHK). This is also the impact of the downturn in the world economy in the first point. Third, there are activities such as social distancing, regional quarantine or lock down. With this lock down, community mobility does not run normally or is restricted. People are also required to stay at home to break the chain of spreading Covid-19. So automatically, the level of interaction among humans will decrease.
2. Positive Lessons for the COVID 19 Pandemic
Behind the negative impact of the Covid-19 pandemic, there are also positive lessons that can be taken from this event. Some businesses that sell through online media have increased turnover. One of them is the increase in turnover of vegetable traders who open online stalls. This is what can be used as an alternative for traders to keep their sales levels stable amid this pandemic.
Synergy between the community and the government is needed to break the chain of the spread of Covid-19. The community must follow the rules or protocols that have been determined by the government. There are many ways that people can do to help the government, one of which is by staying at home or not leaving the house if there is no urgent need.
The government as a public servant should be fully responsible for everything that happens to its society. Especially during the Covid-19 pandemic, the government must show its caring attitude towards society through strategic steps. People need concrete solutions from the government so that inequality amid this pandemic can be
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immediately resolved. Of course, this solution is expected to have a positive effect that can help the community, especially those affected by the Covid-19 pandemic.
3. Community Empowerment Amid the COVID 19 Pandemic
One example of community empowerment in the midst of the Covid-19 pandemic that can be done by the government is to empower small communities such as making homemade masks which will later be distributed to other communities.Of course, this is what society really needs. Not only people who lose their jobs will feel the benefits, but also the products produced can be useful for other general public.
There are people who experience a decrease in income so that it is still too difficult to fulfill their daily needs. But there are also people who have incomes that still tend to be stagnant so that they can still afford to meet their daily needs. This means that people who have sufficient or more income, must care and help other people who are experiencing shortages to meet their daily needs.
4.Technology Utilization in the Middle of the COVID 19 Pandemic
The use of technology is a huge potential for the people's economy in the midst of the Covid-19 pandemic. But the obstacle is that there are still many people who don't understand how to use technological tools such as gadgets and smartphones. Technology is one of the best alternatives to market people's products. The sellers and buyers also do not interact directly.
By utilizing technology as a sales and marketing medium, the public can already assist the government in implementing the Covid-19 health protocol and can maintain the stability of business income and expenditure.
Many MSMEs that have not used virtual sales methods have now turned into "online merchants." The reach of sales and marketing is also broader than using the offline layout. A lot of data says that online sales turnover has increased, even significantly. It's not only small businesses that feel the good impact of online sales, even large companies are doing it too.
5. Constraints for MSMEs and their Solutions
However, there is an obstacle, namely whether all people, especially the small community, understand how to use online sales, understand how to operate gadgets and applications as a medium for online sales and marketing? Then an idea emerged which was made by one of the community activists, namely Babe Haikal Hasan. The idea is one aid one. People who understand how to use and operate an online business teach people who do not understand how to operate the online business, at least one person is assisted.
So the one-to-one movement has a broad meaning and method, not only narrowed down and limited with the help of money, but also something other useful things that may be needed and not all people have and control it. Especially in situations like the Covid-19 Pandemic, people are required to be more creative in everything. Find solutions in the face of an economic downturn.
6. Community Economic Empowerment with an Economy Based on Mutual Cooperation
An economy based on mutual cooperation must also be presented to help and empower the community's economy during the Covid-19 Pandemic. Cultivating awareness with mutual concern is our responsibility as Muslims. The community must be committed to helping other communities and be more sensitive to the surrounding conditions.
If the community and elements of government can integrate well, then the opportunity to empower the community's economy will be more wide open. The government must also establish closer communication with the community, so that they will know the condition of the people in their environment, especially the fate of people who are unemployed because they have been cut off from work by the company or agency they work for.
Therefore, economic empowerment for the community is urgently needed in the situation of the Covid-19 Pandemic. For the sake of the economic revival that is currently declining, synergy and collaboration to work together in the people's economic concern must be instilled in us. Hopefully our economy can bounce back over time.
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7. Several Online Marketing Strategies that can be applied during the COVID-19 period. a. Take advantage of social media as the main channel of marketing.
In the midst of this condition where people are urged to meet face to face and go out of the house, social media can be a way of promoting the products or businesses that you have if you haven't tried them. Many SMEs in Indonesia are currently helping each other's business, starting from actively telling stories about your product or business, giving promos, to asking friends for help in promoting your business.
Nowadays, digital communication media is an effective and efficient choice for communicating with the community. Therefore, changes in patterns and use of communication media used by the community need to be well understood before the steps of delivering messages are carried out.
b. Re-plan revenue and cut budget costs.
Looking back at the budget plan is crucial at this time. Business owners must be able to sort out which budget items are priority and make budget adjustments to current conditions to keep the business running with anticipated risks. The Budgeting feature will help business owners create income and expense budget items as a reference when diatarizing sales and operating expenses, so that profit margins can be controlled. Meanwhile, through the Profit and Loss Report feature, business owners can analyze income and expense reports, so that in the future it will be easier to make decisions on items that cost a lot and need to control their expenses.
c. Pay attention to stock conditions.
Check the status of inventory items regularly and in real time. Using the Inventory feature, a business owner not only calculates the inventory of goods, but also knows the average buying and selling price, and informs the stock availability right away. The inventory monitor is also needed to obtain references, for example, which products are most in demand and less desirable, which products will expire soon, stocks are empty, and so on.
d. Community Marketing
Community based marketing takes advantage of the social values that exist in each individual and uses them to create better business opportunities. In addition, this strategy has a focus on finding new opportunities based on the different needs of each member of the community who are members of the community.
During the COVID-19 pandemic, communication patterns will be divided into 2, namely communication patterns during the crisis and post-crisis, supported by messages and different communication media for each stage. Companies in this case can use various approaches depending on the situation that develops in the community. For example, the use of the Shoppers Marketing approach after it is known that the public is still shopping offline for their basic needs, meaning that there is still a flow of consumers who come to ordinary retail stores which means that there is still an opportunity for companies / brands to have special communication strategies. For example, strategies for sales teams or visual merchandising. This strategy is carried out to ensure their products remain relevant in the current situation.
e. Update and align Government Policies
The government runs stimulus from both producers and consumers. From a producer perspective, it is tax relief and business credit for MSMEs. And consumers get a stimulus from PPH and subsidies taxes related to assistance. Thus online marketing can develop because people still have high purchasing power, as well as company relief in producing their goods. Producers can also get capital assistance so that the cash flow is still there.
5. Conclusion
The results of a literature review conclude that the corona virus pandemic has had a significant impact on business actors around the world, including in Indonesia. Most business actors are forced to stop their business activities, because of policies issued by the government. This situation has an impact on reducing turnover. But on the other hand there is a significant increase in online sales transactions so that it can become an opportunity for the growth of MSMEs by optimizing online marketing.
References
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Merchants’ acceptance of the mobile payment in Malaysia. International Journal of eBusiness and eGovernment Studies, 12(2), 136-150.
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