International Journal of Business and Society, Vol. 23 No.

1, 2022, 19-34

UTILIZATION OF SOCIAL MEDIA AND ITS IMPACT ON

MARKETING PERFORMANCE: A CASE STUDY OF SMEs
IN INDONESIA

Berto Mulia Wibawa

School of Business, Monash University, Malaysia
Department of Business Management, Institut Teknologi Sepuluh Nopember, Indonesia

Imam Baihaqi
Department of Business Management, Institut Teknologi Sepuluh Nopember, Indonesia

Ninditya Nareswari§
Department of Business Management, Institut Teknologi Sepuluh Nopember, Indonesia

Rachma Rizqina Mardhotillah

Department of Management, Universitas Nahdlatul Ulama Surabaya, Indonesia

Faras Pramesti
Department of Business Management, Institut Teknologi Sepuluh Nopember, Indonesia

ABSTRACT

The role of social media has changed both producer and consumer behaviour worldwide. It connects
businesses and customers to communicate with each other seamlessly. Social media can bring many
advantages for SMEs, but many SMEs still have not realized it. Several SMEs have higher marketing
performance through social media channels, while most SMEs struggle to implement social media benefits
because of their limitation in technological knowledge. This study explores why and how SMEs use social
media and its impact on marketing performance by using an explanatory pilot study as a research method.
The qualitative data analysis were examined through thematic analysis. The findings of this study provide
nuance to explain the role of social media for SMEs in six main themes: (1) Branding, advertising, and
promoting; (2) Enhancing community interaction and content sharing; (3) Building trust and relationships;
(4) Reaching potential customers; (5) Digital marketing trends, and (6) Low-cost promotion and content
customization. Another notable contribution of this study is the importance of social media adoption to
improve SMEs' marketing performance through creative advertisement using lower marketing costs.

Keywords: Social media; social platform; SMEs; marketing performance; Indonesia.

___________________________________
1.

Received: 15 April 2020

Accepted: 21 December 2021
https://doi.org/10.33736/ijbs.4596.2022

§Corresponding author: Department of Business Management, Institut Teknologi Sepuluh Nopember, Kampus ITS Sukolilo
Surabaya 60111, Indonesia; Address: Jalan Raya ITS Sukolilo Surabaya; Tel: +6231-5994251; Email: [email protected]
20 Utilization of Social Media and Its Impact on Marketing Performance: A Case Study of SMEs In Indonesia

1. INTRODUCTION

1.1. Research Background

Social media refers to websites, computer or mobile applications, and platforms created to
connect and allow its users to share information or content easily in real-time. In today’s
business, social media can be considered the most strategic tool to increase company value
proposition, image, revenue, and competitive benefit (Aral & Weill, 2013). Therefore, it is
undeniable that most companies, including small, medium, and large enterprises, are forced to
utilize social media as their marketing programs and sales promotions. In addition, the role of
social media can be used for building trust and relationships, enhancing interactions and
transactions with current and potential customers.

The marketing performance of the small and medium enterprises (SMEs) in Indonesia is still
low. SMEs in Indonesia faced various constraints, such as limited capital, human resource, and
marketing. One of the most significant issues in the development of SMEs is the technology
aspect. Technology can be seen as an opportunity and challenge for SMEs. Therefore, the
application of technology should be implemented to improve SMEs performance, especially for
marketing. The application of technology allows SMEs to reach the potential customer that
cannot be captured before (Ghobakhloo et al., 2012).

According to O’Reilly (2005), connections between enterprises and the public are supported
using video/image sharing platforms, such as Instagram and YouTube, online networks as
Facebook and Twitter, and other social bookmarking websites, such as Pinterest and Snapchat.
Earlier studies has shown that social media is a recommended tool for enterprises to attract
customers and become more reputable (Agnihotri et al., 2016; He et al., 2014). Although social
media offers many benefits in doing business, many SMEs are not fully aware that social media
could help them boost their marketing performance. However, several SMEs have been identified
to be very successful in selling their products through social media channels. At the same time,
other SMEs still struggle to capitalize on social media benefits because of a lack of knowledge
and self-taught technique. Thus, the objective of this study is to explore why and how SMEs uses
social media and its impact on marketing performance.

1.2. SMEs in Indonesia

Small and medium enterprises (SMEs) have an essential role in the business sector (Han et al.,
2018). In Indonesia, the number of micros, small, and medium enterprises (MSMEs) in 2017
reached almost 98% or around 62.9 million units of the total company, employed up to 97.02%
of the workforce. Also, they contributed to 60% of Indonesia’s gross domestic product (GDP) at
the current price in 2017 (Ministry of Cooperatives and SMEs Republic of Indonesia, 2018). This
means that SMEs have an important role in the Indonesian economy (Iqbal, 2015). Gamage
(2003) explained that SMEs criteria are defined based on the number of employees, capital
investment, annual turnover, and business characteristics.

According to Indonesian Law No. 20 (2008), the criteria for SMEs in Indonesia are specified
based on net worth capital (exclude land and buildings) and annual sales. Small enterprise has a
net worth capital of more than IDR 50 to IDR 500 million (around USD 3.300 to USD 33.000)
 Berto Mulia Wibawa, Imam Baihaqi, Ninditya Nareswari, Rachma Rizqina Mardhotillah, Faras Pramesti 21

(excluding land and buildings) and annual sales of more than IDR 300 million to IDR 2.5 billion
(around USD 20.000 to USD 166.000). Medium enterprise has a net worth capital of more than
IDR 500 million to IDR 10 billion (around USD 33.000 to USD 666.000) and annual sales more
than IDR 2.5 billion to IDR 50 billion (around USD 166.000 to USD 3.333.000). SMEs in
Indonesia are classified into nine economic sectors such as (1) agriculture, animal husbandry,
forestry and fisheries; (2) trade, hotels, and restaurant; (3) transportation and communication; (4)
manufacturing industry, (5) services; (6) finance, leasing, and corporate services; (7) building;
(8) mining and quarrying; and (9) clean water (MSME’s credit report, 2018).

1.3. SMEs and Social Media

The development of technology and information in the globalization era pushes small and
medium enterprises (SMEs) to adopt social media in their business. Entrepreneurs think they will
lose many opportunities if they do not adopt social media (Drury, 2008). Meske and Stieglitz
(2013) explained that the adoption of social media in SMEs is a way to communicate with
customers and support internal communication with employees. According to Ahmad et al.
(2018), the adoption of social media among SMEs has several impacts: creating better brand
awareness, better relationships with customers, increasing sales, improving information sharing,
superior to competitors, and creating effective communication tools between institutions and
customer. In addition, social media presence becomes an excellent opportunity for SMEs because
capital is not required when adopting social media platforms to promote products in the broader
geographic area (Srirejeki, 2016). The transition of conventional SMEs to digital SMEs in
Indonesia can increase Indonesia's annual economic growth by 2% (Deloitte Access Economics,
2015)

Based on Deloitte Access Economics (2015) survey, 64% of the SMEs already have online
capabilities to adopt social media. The participants emphasize that the benefits of digital
technology for SMEs are: (1) access to customers (50.20%), (2) increased sales (35.50%), (3)
access to foreign markets (33.70%), (4) more effortless transaction to supplier and customers,
and (5) lower promotional costs. In addition, based on a survey report by We Are Social and
Hootsuite in Digital Report (2019), Indonesia's entire internet and social media users have
reached 150 million or 56% of the total population. The most influential users of these social
media platforms are YouTube (88%), WhatsApp (83%), Facebook (81%), and Instagram (80%).
In addition, the most popular social media for SMEs to support their daily business operations are
WhatsApp (87.8%), Facebook (75.6%), Instagram (58.5%), Website or Blog (39%), and
YouTube (7.3%) (Priambada, 2017).

2. LITERATURE REVIEW

2.1. Social Media Marketing

Social media marketing is the marketing activity that equips social media platforms to build
relationships with customers, introduce products or services, improve brand, increase sales, and
provide other business detail information. Social media is an essential tool for marketing activity
22 Utilization of Social Media and Its Impact on Marketing Performance: A Case Study of SMEs In Indonesia

because it allows businesses to listen and learn from their customers in a way they have never
been able to before (Jones et al., 2015). In addition, it allows the firm to capture the customers
without being constrained by time and location. Social media marketing can be viewed as a new
field and a new business practice that involves marketing activity via online social media using
either one way or two-way communication or both. Thus, the positive impact of social media
marketing can support effective and intensive communication and uniform perception between
marketers and customers.

Marketing activities via social media have several benefits. First, social media enables a firm to
improve innovation. Second, information obtained from social media enables the firm to forecast
the future sales of the products more accurately (Kim & Ko, 2012). Third, social media increase
awareness and build the loyalty of consumers (Hanaysha, 2017). Finally, social media can also
support the growth of the business. On the other hand, it is possible that social media marketing
may lead to misrepresentation and misinformation about both product and firm, that could spread
around the world in real-time and influence public perception negatively (Dwivedi et al., 2018).

2.2. Social Presence Theory

Social presence theory is a social interaction between two parties through media. Social presence
is vital due to its impact on social interaction. Studies have shown that social presence is related
to various positive communication outcomes, such as persuasion and attraction (Oh et al., 2018).
In addition, social presence can bring advantages to the firm, such as higher exposure, lower
marketing costs, increased customer base, and developed brand image, which leads to greater
purchase intention.

In line with social presence theory, to build an interpersonal connection between the firm and the
prospective consumers, social media require trustworthy and accurate information because trust
is essential when working in a virtual environment (Germain & McGuire, 2014). Information
quality is the accuracy, validity, and availability of information about a particular product or
service. Therefore, a firm should improve the quality of information to build a consumer's trust.
Furthermore, an effective way to increase social presence is by increasing interpersonal
interaction and participation (Croes et al., 2016). Nowadays, social presence can be developed
from social media. Based on Aritz et al. (2018), the technological collaboration tool can facilitate
the social interaction between two parties. Therefore, the prospective consumer still can feel the
marketer's presence via social media. Thus, the development of social media will bring a
competitive advantage to the company.

2.3. Word of Mouth

Word of mouth (WOM) is defined as a technique that generates natural communication and
information exchange about product, promotion, or firm between consumer and a friend,
colleague, or other acquaintance. WOM is two-way communication that allows consumers to
have the same understanding of information. WOM publicity also has a significant impact on the
customer decision (Haryani et al., 2015). Therefore, WOM is one of the most effective tools in
marketing communication. Nowadays, WOM can be applied in e-commerce or other online
business by using the extension model, namely electronic word of mouth (e-WOM).
Technological development makes e-WOM more effective than traditional WOM.
 Berto Mulia Wibawa, Imam Baihaqi, Ninditya Nareswari, Rachma Rizqina Mardhotillah, Faras Pramesti 23

There are several reasons why e-WOM is more effective than traditional WOM. First,
information exchange can be spread immediately and continuously updated. Second prospective
buyers can find the recommendation actively via the internet faster and easier. Third, e-WOM
can be easily accessed, and the user's data history is always saved on the internet. Fourth,
consumers can give any comment more honestly because they can hide their identity. Fifth, e-
WOM can push a more significant snowball effect than traditional WOM. Finally, consumers
will depend on consumer reviews of products or services available online (Gligorijevic & Luck,
2012). Therefore, social media can be used to support e-WOM marketing. Based on Pescher et al.
(2014), marketers can actively send their promotional campaigns to create WOM. To develop
viral marketing, WOM is a first step that should be implemented, supported by massive
promotional campaigns. In the second step, marketers should optimize peer to peer
communication to encourage promotional activity in the broader social network..

2.4. Viral Marketing

Viral marketing is a marketing tool with network effects of pushing customers to spread the
information product among their social networks (Serrano & Iglesias, 2016). Viral marketing is
based on disseminating a phenomenon that influences many parties to feel a sense of belonging
to a new group or product (Dwivedi et al., 2021). Kaplan and Haenlin (2010) identify two
elements of viral marketing. First, growth in delivery message. It means everyone who received
the message will spread it to more than one person. The second element is a social media
application. Social media enable the firm to deliver the marketing message to many people. The
dissemination process via the internet is fast, like spreading a virus (Sela et al., 2018). In addition,
the viral process will directly impact the financial aspect through sales. The content of viral
marketing is easy to perceive by a prospective customer, so the content creator has to make a
simple but easy-to-understand and touch their heart (Ho & Dempsey, 2010). The content must be
recognized and attached to the people. The creator can make some campaign, humour, or meme
to spread the product’s information. Therefore, viral marketing is cheaper than other marketing
techniques such as promotion, advertisement through mass media (Fadil, 2015). Viral marketing
also can reach a large number of prospective consumers.

3. RESEARCH METHODS

This study uses exploratory pilot research. It was chosen because it is in line with the research
objective, and it is a critical step in assessing the appropriateness and value of progressing to
effective research (Hallingberg et al., 2018). This study utilizes a qualitative approach using
personal in-depth semi-structured interviews. This method was chosen to support seeking an in-
depth understanding and gaining insights into social phenomena about how and why social media
play an important role and impact SMEs' marketing performance. As previous researchers have
demonstrated, this method effectively elaborates on the underlying reasons behind the
complicatedness and complexity behaviours (Strauss & Corbin, 1990).

Indonesia is chosen as the country context in this study due to its position as the largest country
in South-East Asia and the rapid pace of technological adoption in the last ten years. Most SMEs
in Indonesia have realized the importance of a marketing strategy, including social media
24 Utilization of Social Media and Its Impact on Marketing Performance: A Case Study of SMEs In Indonesia

marketing, but few have the capability and resources to manage it properly (Wibawa &
Nareswari, 2019).

Nine selected SMEs was obtained after the screening process from the SMEs database given by
Entrepreneurship and Small Medium Enterprises Laboratory (ESME Lab), Institut Teknologi
Sepuluh Nopember, Surabaya, Indonesia. The participants purposively collected considering
SMEs social media activity consisting of Instagram, YouTube, Facebook, Twitter, and
WhatsApp. Today, the company uses various types of social media to enhance marketing activity
such as Instagram for Business, Facebook Fan Page, YouTube, Website/Blog, and WhatsApp for
Business. Therefore, only SMEs that routinely and actively use all the social media mentioned
were selected as participants (Table 1).

Table 1: SMEs profile

Year of
Name of Classification Subsector Year of Social Active Social
SMEs of SMEs of SMEs Establishment Media Media Channel
Initiated
Instagram,
Company Food and Facebook,
Small 2009 2009
A beverage Youtube, website,
WhatsApp
Instagram,
Company Creative Facebook,
Medium 2008 2013
B industry Youtube, website,
WhatsApp
Instagram,
Company Food and Facebook,
Small 2001 2007
C beverage Youtube, website,
WhatsApp
Instagram,
Company Food and Facebook,
Small 2014 2014
D beverage Youtube, website,
WhatsApp
Instagram,
Company Food and Facebook,
Small 2010 2014
E beverage Youtube, website,
WhatsApp
Instagram,
Company Facebook,
Small Fashion 2013 2013
F Youtube, website,
WhatsApp
Instagram,
Company Food and Facebook,
Small 2015 2015
G beverage Youtube, website,
WhatsApp
Company Medium Food and 2017 2017 Instagram,
 Berto Mulia Wibawa, Imam Baihaqi, Ninditya Nareswari, Rachma Rizqina Mardhotillah, Faras Pramesti 25

Year of
Name of Classification Subsector Year of Social Active Social
SMEs of SMEs of SMEs Establishment Media Media Channel
Initiated
H beverage Facebook,
Youtube, website,
WhatsApp
Instagram,
Company Facebook,
Medium Photography 2016 2016
I Youtube, website,
WhatsApp

Prior to the interview, each SME represented by their business owner/manager is asked to read
the list of questions and make sure they all agree with the research terms and conditions,
including answering as accurately as possible. While financial data may be difficult to
crosscheck, perceptual responses on marketing performance are allowed (Woodcock et al., 1994).
Two or three days before the interview, the participants were provided with a list of questions to
prepare the answer. The face to face interviews lasted about one to two hours and was recorded
with the participants' permission. After the interview, a transcript will be prepared immediately
and thoroughly evaluated by all authors. Furthermore, thematic analysis is equipped to recap,
identify, examine, and generate patterns formed from the data (Braun & Clarke, 2006). Refers to
Ahmad et al. (2018), the following coding process was done by four steps: (1) assigning word by
word, (2) finding keywords, (3) grouping and highlighting quotes, and (4) determining the final
theme based on the codes and quotes.

4. RESEARCH FINDINGS AND DISCUSSIONS

4.1. Themes and Categories of Social Media Utilization

This study explores how SMEs in Indonesia utilize and adopt social media marketing to increase
marketing performance. The defined theme was formulated based on the interview of nine
selected SMEs business owners/managers (Table 2).

Table 2: Themes and Categories

Themes Categories
Promotional media, promoting products/services, organizing activities Branding,
(Company A); Improving brand position, brand awareness, brand advertising, and
visibility (Company B); publishing information, branding (D); promoting
disseminating information about new product, brand awareness
(Company E); promotional media, advertising (Company F);
Promotional media, customer interaction (Company G); promotional
media, improving brand position (Company H); improving brand
position, advertising, promotional media (Company I).
Discussion with public, sharing content (Company A); sharing stories, Enhancing
sharing content, live interaction (Company B); faster information community
26 Utilization of Social Media and Its Impact on Marketing Performance: A Case Study of SMEs In Indonesia

Themes Categories
access (Company C); customer engagement (Company D); improving interaction and
interaction (Company E); sharing content (Company F); customer content sharing
feedback, sharing content, live interaction (Company G); improving
interaction, information sharing (Company H); customer engagement,
sharing content (Company I)
Customer trusts, reputation, good relationships (Company A); Building trust and
understanding customer insights (Company B); Reputation, relationships
connectivity (Company C); Reputation (Company D); Connectivity,
sharing interaction (Company E); Connectivity, good relationships
(Company F); Social interactions, customer trusts (Company G);
Company image, reputation (Company H); Customer attention,
reputation, trust, image (Company I)
Reaching new customers, expanding new market (Company A); Reaching potential
market expansion, reaching wide range of potential customers customers
(Company B); Reaching new customers (Company C); expanding new
market, broader area of customer demand (Company D); Reaching
wide range of potential customers (Company E); Expanding new
market, reaching new customers (Company F); reaching new
customers, reaching new area (Company G); market penetration,
market expansion (Company H); Easily reach new potential market,
expanding new market, market expansion (Company I)
Modern SMEs, digital trend (Company A); modern SMEs, digital era Digital marketing
(Company B); long-term digital trends, open-minded SMEs (Company trends
C), Modern SMEs, digital trends, technological era (Company D);
technological era, SMEs 4.0 (Company E) SMEs 4.0, technological era
(Company F); digital marketing, technological era, modern SMEs
(Company G); Digital marketing, technological era, SMEs 4.0
(Company H); technological era, modern SMEs (Company I);
Low-cost promotion, free to develop content (Company A); no need to Low-cost
pay extra cost (Company B); easy to utilize, low cost, anywhere promotion and
anytime (Company C); low-cost promotion, customization (Company content
D); low-cost promotion (Company E); cheap price, free to develop customization
content (Company F); cheap price, easy access, unlimited post
(Company G); Unlimited post, low cost (Company H); Low-cost
promotion budget, customization (Company I)

The findings reveal that the most dominant social media platform used by SMEs in Indonesia is
Instagram, followed by Facebook, Twitter, and YouTube. This is aligned with the number of
Instagram users in Indonesia that reach no less than 45 million monthly active users (Adi &
Hidayat, 2018) and successfully become social media’s largest market in the Asia Pacific.

4.2. Branding, Advertising, Promoting

The findings reveal that the attitudes of business owners/managers of SMEs in using social media
centred on their mindset and perception of the social media benefits. Most SMEs agree that social
 Berto Mulia Wibawa, Imam Baihaqi, Ninditya Nareswari, Rachma Rizqina Mardhotillah, Faras Pramesti 27

media has been routinely used to assist and promote their products/services, introduce
companies, communicate and interact with customers, and easily share news or information
about companies or products/services. Furthermore, all marketing tasks and campaigns can be set
up faster at a lower cost because social media admins can post, share, and chat with customers
anytime and anywhere without significant barriers.

Another notable finding from this theme is that SMEs brand awareness improved greatly to viral
marketing techniques. In addition, customers can forward SME advertising, messages, and
something interesting directly to their followers quickly and in real-time, and significantly impact
the increase of social media traffic. Singh and Sonnenburg (2012) similarly reviews that social
media was revealed as an essential marketing platform for advertising, branding, and promotional
methods, allowing firms to decide their concept with minimal cost. Advertisement content too
plays a major role. If the content is interesting, it can build consumer awareness, and vice versa,
so content in branding, advertising and promoting is the key to increasing consumer attention.

4.3. Enhancing Community Interaction and Content Sharing

The findings of this study suggest that social media can enhance community interaction and
sharing content. Through social media, SMEs have better communication to support the traffic of
information sharing and perform two-way conversations with the audience. Using social media
platforms makes it easy for social media admin to interact with a lot of potential customers
without being constrained by time and place. Marketing managers can easily know and
understand the impact of recent posts or promotions only by utilizing the social media dashboard
page. It contains information about data recap regarding the numbers of the audience who reacted
to the post. For instance, the Instagram business account provides insights into overall account
performance with four key metrics: impressions, reach, new followers, and new posts. Therefore,
social media admin can make more intentional choices through posts that enable the
customers/community to respond and convey important information to their inner circle. A recent
study by Ahmad et al. (2018) stated that new connections between consumer and company or
between consumer and consumer could be established when they exchange their thoughts and
stories with other consumers in the comment column or threads.

Social sharing often happens by content sharing from a social media site. SMEs could gain a
better position in the branding aspect if the content is exciting and accessible. The social media
favourites, such as Facebook insights, Twitter analytics, or Instagram dashboard, can measure
how effective sharing content from social media posts that have been previously displayed is.
The conducted interview indicates that content sharing using email subscriptions is not preferred
in Indonesia. Some potential problems of using email for Indonesian SMEs include slower
responses by admin, email display being less attractive, limitation of email marketing skills and
techniques, spam, and difficulty measuring action effectiveness. Indonesians tend to ignore
promotional emails they receive and use other social media platforms to find information related
to products or companies. In conclusion, SMEs can choose which social media account will
benefit from enhancing community interaction based on the type of social media user in
Indonesia.

4.4. Building Trust and Relationships

28 Utilization of Social Media and Its Impact on Marketing Performance: A Case Study of SMEs In Indonesia

Nowadays, SMEs in the modern era are expected to have powerful social media to educate
consumers to build trust and long-term relationships. Companies' profiles, bio, and details about
product/service are vital as a first impression when the connection between consumers and
companies is established. Companies can easily listen to what the audience is saying about the
company and learn what customer insights, trusts, and expectations about the product offered.
This situation may serve as a basis for improving the current product by understanding valuable
customer feedback. In addition, the SMEs should not over promise and under deliver their
product. For example, a toothpaste company offers a marketing slogan "whiten teeth at home in
one day", which is almost certainly impossible. The impact of its campaign can affect consumer
decisions not to buy the product but also lose faith in the company image based on consumers'
minds.

Social media provides new opportunities for SMEs to build trust and create relationships.
Companies can start to find out who likes or dislikes their products, marketing campaign, or
social media posts. Knowing negative aspects in consumers' minds allows SMEs to convert
current customers to become loyal customers. For instance, after many passengers posted
complaints on Facebook and went viral, Qantas Airlines improved their service in musical
instruments luggage by changing their policy in just a few moments (Tonedeaf, 2013). This
action shows that Qantas Airlines cares about customers' voices and proves the company's
flexibility as long as it does not violate existing regulations. The connectivity then arises, some
customers would be happy if their complaints are followed up by direct action from the company.
This study observation reveals that SMEs should empathize, offer a solution, execute the
solution, and directly follow up to handle complaints and build a long-term relationship. Social
media can also display SMEs information that consumer needs. Park and Kang (2003) claimed
that communication was a key driver of active online communities and that consumers who
shared experiences and information were more likely to trust online businesses.

4.5. Reaching Potential Customers

The greater SMEs social media account reach may improve the brand awareness on potential
customers' minds. Reach, in social media means the number of users that viewed what users post
on any given day. Expanding reach in social media means companies hope to gain more
consumers and new markets from active users. Not only reaching, but it is also possible to do
social media analysis that aims to find out user impressions and engagement rate. Impressions
mean the total number of times the content has been seen, while engagement rates visualize how
social media users engage with the content published during the selected period. This finding
related to social media reach aligns with previous research by Felix et al. (2017), which argues
that social media potentially creates important value for current and potential customers by using
reach strategy. As a company starts engaging with a new audience, the content should not focus
only on the sales or promotion of the product. The best way to reach an audience in social media
is to focus on the potential customer segments and people or stakeholders around the company's
inner circle. Reaching potential customers can be initiated by interacting with employees, the
family of employees, suppliers, or the community around the company.

Most social media, such as Instagram, Facebook, WhatsApp, and Twitter, provides service for
users to share a photo or video content and interact with their audience in creative ways. For
 Berto Mulia Wibawa, Imam Baihaqi, Ninditya Nareswari, Rachma Rizqina Mardhotillah, Faras Pramesti 29

example, Instagram for Business, as the most popular social media equipped by SMEs in
Indonesia, offer several advertising types: photo, video, carousel, stories, and canvas. Social
media managers can choose the right way based on companies' customer segments to create a
wider area of customer demand or increase market penetration by classifying based on
geographical area/radius per kilometres, sex, age, and likes. Kaplan and Haenlein (2010) indicate
that people in the future will spend more of their time on online activity. Indeed, today social
media is one of the best ways to increase marketing performance for SMEs.

4.6. Digital Marketing Trends

As everyone in the world changes digitally, digital marketing triggered business owners and
managers to some significant behaviour changes. They believe that the use of social media in
business can support digital marketing aspects, which increases the company's credibility and
becomes part of the company's modernisation. SMEs managers believe digital marketing as one
of the most effective ways to reach a prospective customer using very effective and efficient
techniques. Modern SMEs, or SMEs 4.0, are identical to those who apply technological aspects
to their business continuity, including digital marketing. There are several reasons why digital
marketing is essential. First, customers can easily and quickly reach products and services and
have an opinion about them by comparing similar products, and therefore, speed up the
purchasing process. Second, digital marketing is a powerful marketing vehicle for building a
successful brand (Yamin, 2017). Third, digital marketing campaigns can build a relationship and
trust with customers because it allows SMEs to get consistent touch with prospective buyers.
Fourth, digital marketing provides freedom for the firm to make a change for the content
whenever a need arises without taking too much time.

Digital marketing is also related to open-mindedness in business. Open-mindedness in a business

environment refers to openness to new ideas and development. It also means the intention to
consider and appraise the existing routines in the firm (Calantone et al., 2002). As a result, the
company also actively improves new knowledge and ideas (Soto-Acosta et al., 2018). In
business, especially for SMEs, open-mindedness should be implemented in the long term and
sustainably, in line with technological development. It also impacts the effectiveness, efficiency,
and productivity of the firm. Therefore, by using digital marketing, SMEs will have a more
chance to get new ideas and improvements from society.

4.7. Low-Cost Promotion and Content Customization

Social media marketing is a low-cost solution for businesses to target prospected customers.
While traditional promotion typically costs a lot, social media marketing allows businesses to
save money and communicate with their customers intensively (Durmaz & Efendiouglu, 2016).
According to the research finding, one of the main reasons for social media marketing use by
SMEs is the cost, because it is free and instant to make an account and share any information.
However, the most critical question is whether social media marketing can work effectively at a
low cost. The answer is that not all social media marketing can work at a low cost. For example,
the use of social media marketing will not become effective if the content is not interesting for
the prospective customer. Furthermore, social media marketing does not always reach many
people, especially for the new SMEs that are currently established. If SMEs want to reach many
people faster, SMEs need to pay extra to the social media developers, such as Facebook ads and
30 Utilization of Social Media and Its Impact on Marketing Performance: A Case Study of SMEs In Indonesia

Instagram ads. However, compared to traditional marketing campaigns (television, radio, or print
media), social media marketing offers unlimited reach anytime and anywhere at a low cost.

Another finding showed that using social media gives SMEs freedom to make content. One of
the social media marketing results will come from investing time in creating and publishing
content so that social media content is vital to attract prospective buyers. In fact, not all SMEs
can make engaging content. As a result, there are many new job vacancies in Indonesia and other
countries associated with social media marketing activity. Several positions are available: content
creator, copywriter, professional photographer, and web developer for product or company.
Consequently, SMEs need to pay extra costs to make social media marketing works effectively.

5. CONCLUSIONS AND RECOMMENDATIONS

The decisions of SMEs to utilize social media were also affected by the switching behaviour in
Indonesian consumers, especially among the millennials, who prefer to use social media rather
than traditional media such as TV, radio, or conventional print media. This situation leads SMEs
to utilize social media as one of their marketing channels. An empirical finding shows that social
media for SMEs have an essential role which is divided into six categories: (1) Branding,
advertising, and promoting; (2) Enhancing community interaction and content sharing; (3)
Building trust and relationships; (4) Reaching potential customers; (5) Digital marketing trends,
and (6) Low-cost promotion and content customization. However, that role can be achieved to
improve SMEs marketing performance with special conditions if social media marketing has
been implied effectively and consistently. Of course, the use of social media does not necessarily
guarantee a significant impact on company sales or brand value. However, at least social media
can help SMEs increase marketing activities through a creative campaign, which can be done for
free or at a low budget.

Most SMEs have limited resources, especially in marketing. For SMEs, utilization of social
media has been a blessing. By using free social media platforms such as Instagram, Facebook,
Twitter, and YouTube, SMEs can easily connect to their audiences or reach their specific target
market in more personal ways. However, SMEs must keep their efforts manageable and make
sure their social media accounts are active. Business owners or managers must consider social
media marketing as their powerful tools to reach potential customers and branding and build
company reputation on digital media. The findings of this study recommend that SMEs hire a
professional social media team, responded by creating content that makes the company look
more professional and reliable viewed from the social media page. This study also suggests that
SMEs start defining and considering a target market’s profile, such as age, gender, location, and
interests, before applying a more detailed marketing strategy using social media advertising or
optimization. Specifically for YouTube, the SMEs must have exciting and interactive videos.
Video content must have high-quality images and sounds, an interesting story, and highlights the
product benefit. While Instagram, Facebook, and Twitter can publish a post with multiple media
such as images, videos, stories, according to SMEs preference to achieve their social media
marketing goals.

This study has some limitations that can be considered for future research improvement. Firstly,
this study only involved nine SMEs; it would be more interesting to observe more information,
 Berto Mulia Wibawa, Imam Baihaqi, Ninditya Nareswari, Rachma Rizqina Mardhotillah, Faras Pramesti 31

especially from some other SMEs sectors (e.g.: healthcare, IT-based firm, construction,
agriculture, service, education, tourism, etc.). Secondly, method bias may occur because every
SME is only represented by one key participant, the business owner/manager of selected SMEs.
Future research may use quantitative techniques where the level of validity and reliability can be
clearly measured by appropriate statistical analysis. Lastly, it would be great to examine similar
research in different countries or geographical areas to understand any similarities and
differences between SMEs' social media adoption and its impact on marketing performance.

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