Single Origin: The Potential of Market Innovation for Increasing the Competitiveness of SMEs in Chocolate Industry in Indonesia

Abstract

As the fourth largest cocoa producer in the world, Indonesia has the opportunity to be the center of processing industry and production of chocolate. An effort to increase the competitiveness on the whole chocolate business chain, from upstream to downstream industry, is not yet optimal as seen from the low productivity of agricultural product of national cocoa plantation in addition to intermediate industry and the end product which are still dominated by the foreign company. The development of consumer preference-based product is necessary to ensure the new product developed will meet customer satisfaction. This study was aimed to increase the competitiveness of innovation-based small medium enterprises (SMEs) chocolate downstream industry. Innovation consists of four typologies, namely product innovation, process innovation, market innovation, and organizational innovation. Product innovation and process innovation are characterized as technical innovation, while market innovation and organizational innovation are included in non-technical innovation. Analysis result through analytical hierarchy process (AHP) shows that the priority for the development of chocolate industry is the market with the weight of 0.477. Market innovation consists of six alternatives, those are: marketing, distribution, branding, promotion, e-marketing potential, customer relationship management-CRM, and single origin. This value indicates that the development of downstream industry that produces end product in the form of chocolate is no longer focused on product innovation with its different kinds and varieties produced all the time, yet the aspect of the market is strategically responded by the producer.