ANALYSIS EFFECT OF PRODUCT INNOVATION THROUGH

PERFORMANCE MARKETING TO ACHIEVE COMPETITIVE ADVANTAGE

SUSTAINABLE (Case Study on Small and Medium Industry Batik Pekalongan)

Gina SUENDRO

Margister Faculty of Management, Diponegoro University, Semarang

ABSTRACTION

This study analyzes the factors that influence product innovation as an effort to
influence marketing performance to increase sustainable competitive advantage. Research
problems stem from two (2) things: the first is a research gap of Baker and sinkula (1999),
with han et al. (1998). The second problem comes from research problem is the lack of
product innovation (from pre-survey). The problems underlying this research, which is to
determine the factors that influence product innovation that will affect marketing
performance, and ultimately to the establishment of sustainable competitive advantage. In
this study developed a theoretical model of the proposed six hypotheses to be tested using
Structural Equation Model (SEM) using AMOS software 16. Respondents were used in this
study were taken from batik entrepreneur respondents totaled 114 respondents.

The results of data processing for the full model SEM has met the criteria of
goodness of fit as follows, the value of chi square = 170.190; probability = 0.067; GFI =
0.862; AGFI = 0.817; CFI = 0.979; TLI = 0.975; RMSEA = 0,040; CMIN / DF = 1.182. Thus
it can be said that this model is feasible to use. The results of this study indicate that the
product innovation can be enhanced by increasing customer orientation, competitor
orientation and coordination across functions. Furthermore, the higher product innovation
will affect marketing performance and further increase sustainable competitive advantage.

Keywords: customer orientation, competitor orientation, cross-functional coordination,

product innovation, marketing performance and sustainable competitive advantage

Background
Originally batik in Batik book Fabled Cloth Of Java, noted that batik has traded
in the archipelago began in 1840, but this possibility could be even earlier. Only since then, it
can be mentioned that in the archipelago batik trade has grown rapidly. Traders descent,
mainly Chinese and Arabic are many living in coastal areas are encouraged to make batik as
a commodity
trade. The development triggered by the loss of original fabric in India and the emergence of
new markets in line with the emergence of a new middle class in Indonesia as a result of the
implementation of the policy of forced cultivation (cultivation system) by the Netherlands.
Traders were initially only booked batik batik artisans who was widely spread in the villages.
Batik ordering practices by foreign descent among the craftsmen in the rural areas has been
going

since before the VOC. According Heringas and Veldhuisen a Dutch descent, coastal batik is
divided into eight models:
1. The coastal Batik traditional red-blue
2. Batik entrepreneur development results descent, particularly China and Indo European
3. Batik is influenced strongly by the Netherlands
4. Batik reflecting colonial rule
5. Batik modified Chinese entrepreneurs aimed at the needs of the Chinese
6. Cloth length
7. Batik result of the development of a model of a red batik blue
8. Cain customs

Up to this day known as the city of Pekalongan batik motif with the characteristics of
flora, fauna, and some geometric, colorful, batik design is not fixated with the standard, such
as batik Solo and Jogjakarta. The influence of Chinese culture, Arab, indo europe and how
natives find a new way to read the cultural Osmose Pekalongan batik produce cutting-edge
characteristics.
Solo Batik is famous for its traditional batik patterns and patterns in the cap and in
batik he wrote. The materials used for coloration are still a lot of wear materials in the
country such as Java soga that has been known since the first. The pattern remained among
other famous "Sidomukti" and "Sidoluruh".
The intensity of competition in the market to encourage companies to seek batik
high innovation in order to achieve a sustainable competitive advantage over its
competitors because it can produce optimal marketing performance, so that the innovation
can expand the local market base and enhanced for specific local preferences. Innovation
will
also affect the choice of a company's marketing strategy so that the company's products batik
batik to be better in terms of quality, quantity and brand name that will bring batik to the
company's sustainable competitive advantage in the end.competitive advantage a sustainable
value created by the company is able to consumers. Continuously.
This sustainable competitive advantage can be seen from the accuracy of the company
in providing the products market and response to consumer complaints as product quality,
customer needs mastery of new markets and innovation continuous product (Helmi Aditya,
2004: 311).
Customers generally want innovative products in accordance with their wishes. For
small and medium enterprises (SMEs), success in the development of new product
innovations mean that SMEs one step ahead of its competitors. This requires skill in
recognizing taste of SME customers thus developing product innovations that do, it is
ultimately in accordance with the wishes of its customers. Thus the development of product
innovation should be rigorously planned and carried out carefully. Of changes which occur in
Pekalongan batik industry of choice is the lack of product innovation it is derived from pre-
survey done by using 30 batik entrepreneurs it is in conformity with the normal distribution
that has been valid. The conclusion of the pre-survey the lack of product innovation as
follows:

Innovation undercut by will cash (often happened the SMEs which are being designing
batik designs for very high cash needs then offered batik that no outside pekalongan between
Solo and Yogya so forwarding settlement made by a batik batik Solo and Yogya)

Purchase of raw materials in the last period could tempo long enough (2, 3, 4 months) but at
this time the manufacturer / wholesaler / distributor gives a fairly short time and often occurs
in cash (to be paid in cash) so it takes money to pay for it

The SME shackled by the same routines that continuously making it less innovation

The batik often left batik suit the tastes of the wishes of the owner of the funds

batik business owners do not dare to give concessions to the batik due to costs incurred is
too big

Prices of raw materials are relatively high lead batik and batik entrepreneurs are afraid
to innovate because the cost is quite expensive

Most of the batik knowledge gained from the legacy of parents not based education about
perbatikan

Formulation of the problem

The problem is the lack of product innovation research batik. The problem of this research is
what are the factors that can enhance product innovation to generate optimal marketing
performance that will achieve sustainable competitive advantage. Questions for research
gapnya: how customer orientation, competitor orientation and coordination of cross-functions
can improve marketing performance As for the formulation if spelled out in detail in the
research questions are as follows:
1) What is the customer orientation, competitor orientation and cross-functional coordination
can affect product innovation?
2) What is the effect on performance of product innovation marketing?
3) What is the effect on the marketing performance of sustainable competitive advantage?
Research purposes
The purpose of this study can be described as follows:
1. Analyze the effects of customer orientation towards product innovation.
2. Analyzing the effect of competitor orientation towards product innovation.
3. Analyze the effects of cross-functional coordination towards product innovation.
4. Analyze the effect of product innovation on the performance marketing.
5. Analyze the influence of marketing performance against sustainable competitive

Assessing Libraries And Development

Customer Orientation

Customer orientation (customer orientation) is defined as an adequate understanding

of the target buyer, so superior value can be given continuously, according to Narver & Slater
(1990) Understanding herein include understanding of the entire value chain of buyers, both
at the time of the current as well as on its development in the future which will come. A
thorough understanding of the value chain buyer can be achieved through the acquisition of
information about customers and knowledge of the political and economic obstacles faced by
all levels in the distribution channel, Narver & Slater (1990).

Thorough understanding like this make the seller (seller) to understand who the
potential customers, both now and in the future, what they want them at this time and at a
future time, and it makes them feel at this moment and what they might feel at the moment
will come, Dicky Imam Prasetya (2002). Slater & Narver (1998) suggests the difficulties
faced by a company that only focuses on existing customers (existing customers), in addition
to the tendency to be reactive and only have a short-term focus, but also what is called the
"tyranny of the served market" which reflects the tendency of managers to look at the world
according to customer glasses alone.

Some experts argue that the position of customer orientation as important as any
other component of market orientation, the orientation of the competitors and coordination
between functions. market orientation a culture's organizations which have the characteristics
to always provide superior value (superior value) to customers (Raharso, 2006). Prakosa
(2005) states that the market orientation but not significant positive effect on the performance
permasaran. However, in these studies revealed that customer orientation significant effect on
the performance of marketing, through product innovation as an intervening variable. Given
in market orientation there is also the customer orientation and innovation including product
innovation, it can be submitted first hypothesis in this study presented as follows:
Hipothesis 1:

Competitor Orientation

Competitor orientation means understanding who owned the seller in understanding

the forces of short-term, the weaknesses, the capabilities and good long-term strategies of
major competitors (Day adan Wensley, 1988, Potter 1980, 1985). Therefore, salespeople
must try to gather information on competitors and divide the information to other functions
within the company and discuss with the leadership of the company competitors' strengths
and strategy of how they are doing. Has also developed the basis of deep research and states
that managers identify the competitors are not individually, but by putting themselves in a
competitive category (Wirasati, 2005, p. 282). Still rests on the opinion of Han et al. (1998)
which states that competitor orientation but not significant positive effect on company
performance. However, in these studies revealed that competitor orientation significant effect
on marketing performance, through innovation as an intervening variable, so in this study
will be tested the second hypothesis, namely:

H2: Orientation competitor has a positive influence on product innovation.

Traffic Coordination Function

Many studies examined the successes and failures of the product development which
states that the level of coordination between marketing to R & D will affect the success rate
of product development. The product development process will be more successful if the
relationship between the marketing department with research and development in harmony,
meaning that each part respect to one another, equally convinced that each section has
competence in their share, both feel mutually dependent with one another, and each section
must be trusting and open with each other (Sitorus, 2004).Based on previous research that has
been described above, the third hypothesis proposed is:

H3: cross-functional coordination has a positive influence on product

innovation. Product innovation

Nelly et al (2001) argued bhawa product innovation show on the development and
introduction of new products or developed successful in marketing. Product innovation can
be changes in design, components and product architecture. Drucker (1954, in Berthon et al
1999) suggest that product innovation is one thing that the potential for creating ideas and
imajiinasi people who ultimately create a customer. According Dourgerty (1996) product
innovation is an important way for companies that still can adapt to the market,
technology, and competitivnes.
 Wahyono (2002) proposed a two conceptions of innovation, namely 1) keinovatifan
and 2) the capacity to innovate. Keinovasian is about openness of mind to new idea as a
corporate culture. Meanwhile, the capacity to innovate is a company's ability to use or apply
ideas, processes, or new products successfully.Based on the limitations of this study that
discusses the innovation of new products, the conception of the proper use of innovation is
the capacity to innovate, more specifically on technical innovation. Technical innovation has
a strong and positive influence on the performance permasaran (Wahyono 2002, p 30).
Similarly, research Prakosa (2005: 51) proves that in order to gain a competitive advantage,
permasaran performance is influenced by market orientation, learning orientation and
innovation. Innovation can also act as an intervening variable of market orientation and
learning orientation on firm performance.Based on the results of previous studies, the
hypothesis is:

H4: Product innovation has a positive effect on performance

marketing. performance Marketing

Performance marketing is a concept to measure the performance of the marketing of a

product (Permadi, 1998).

Hypothesis 5:

Competitive advantage according to the way met if customers receive a consistent

difference in the most important attribute of the product than its competitors, where the
difference is a direct result of gaps / capability between manufacturers and competitors.
Companies that perform continuous innovation is seen as a source of competitive advantage
(Prakosa, 2005)

Measurement of competitive advantage in research Day and Wensley (1988) stated

that there are two foothold in achieving competitive advantage, the first is the primacy
resource consisting of excellence expertise and excellence in the raw materials, then the
second is excellence position consists of the cost advantage of relatively low and excellence
value for customers. Referring to the Day and Wensley 1988) and Bharadwaj (1993), the
indicator used sustainable competitive advantage is worth, in contrast to the other and not
easily replaced. Theoretical Framework based on the literature has explained that
penggembangan new product innovations are influenced by customer orientation, competitor
orientation and coordination across functions. Where product innovation penggembangan
This will affect marketing performance, then teroitis framework can be described as follows:
Data Collection Methods

Data collection methods used in this study was a questionnaire (questionnaire).

Questionnaires can be open-ended question which includes the identity of the respondent and
closed questions with alternative answers. although respondents lived choose one of the
alternative answers (Sugiyono, 1999, p.40).

Respondents were asked to fill out the questionnaire answers by giving a check
mark () on a scale of measurement are listed below according to the most correct assessment
perceived by the respondents on statements in the questionnaire. The scale of measurement
used in the questionnaire that scored between 1-7 on the grounds of this assessment has been
commonly used by people in Indonesia. In this study population the object of this study is all
in Pekalongan batik entrepreneurs, both small and medium industries which amounted to 690
companies. The reason for choosing batik entrepreneurs as respondents because batik
entrepreneurs are people who know the working direction and policies as well as the person
responsible for all activities batik business.
Sampling by using purposive sampling method. Purposive sampling method is
based on the sampling technique with a certain considerations, where the sample is selected
with the terms deemed to have essential features that are relevant to the research (Soeratno
and Arsyad L, 1999). Thus, from a selected sample of eligible namely batik, printed batik,
batik printing, batik combination.
According to Hair et al (1995) the number of samples that are ideal for SEM is
between 100-200 so that the minimum sample size is as much as 5-10 observations for each
indicator. Thus, if the estimated indicator amounted to 19, the number of samples is 114
samples consisted of 22 samples of batik, batik 26 samples, 22 samples of batik printing,
batik combination of 22 samples. The respondents selected the batik / person who has the
authority to take decisions.
Results

Goodness Cut-off Hasil Evaluasi

of Fit Olah model

Value
Index Data

Chi- <173,004 170,190 Baik

Square

Probability >0,05 0,067 Baik

RMSEA 0,08 0,040 Baik

GFI 0,90 GFI 0,862 Marjinal

<1,0

AGFI 0,90 AGFI 0,817 Marjinal

<1,0

CMIN/DF <2,00 1,182 Baik

Hypothesis 1 has a positive influence on product innovation.

Based on the data from the data processing is well known that C.R (Critical Ratio) for
influence between the variables of customer orientation is at 3.219 with a P value
(Probability) of 0.000. Both of these values showed a qualified, that is above 1.96 for C.R
(Critical Ratio) and under 0:05 for grades P (Probability). So it can be concluded that the first
hypothesis in this study may be accepted.

Hypothesis 2 Orientation competitors have a positive influence on product innovation

Berdarsarkan data from the data processing results and note that the value C.R (Critical
Ratio) for the relationship between the orientation of the competitors with product innovation
is at 3.994 with a P value (Probability) of 0.000. Both of these values showed a qualified, ie
above 1.96 for C.R (Critical Ratio) and below 0.05 for the value of P (Probability). So it can
be concluded that the second hypothesis in this study may be accepted.

Hypothesis 3: a cross-functional coordination has a positive influence on

product innovation.

Based on the results of data processing is well known that C.R (Critical Ratio) for influence
between the coordinator of cross-functional product innovation is at 7.367 with a P value
(Probability) of 0.012. Both of these values showed a qualified, that is above 1.96 for C.R
(Critical Ratio) and below 0.05 for the value of P (Probability). So it can be concluded that
the third hypothesis in this study may be accepted.

Hypothesis 4: Product innovation has a positive effect on performance marketing.

Based on the results of data processing is well known that C.R (Critical Ratio) for influence
between product innovation with marketing performance is at 7.367 with a P value
(Probability) of 0.000. Both of these values showed a qualified, that is above 1.96 for C.R
(Critical Ratio) and below 0.05 for the value of P (Probability). So it can be concluded that
the hypothesis IV in Studies accepted.

Hypothesis 5: Performance marketing has a positive effect with a

sustainable competitive advantage

Based on the results of pengolahandata note that the value C.R (Critical Ratio) to the
influence of marketing performance with sustainable competitive advantage is at 7.467 with
a P value (Probability) of 0.000. Both of these values showed a qualified, that is above 1.96
for C.R (Critical Ratio) and below 0.05 for the value of P (Probability). So it can be
concluded that the hypothesis V in this study may be accepted
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