Transformation of Digital Marketing in the 4.0 Industry Revolution: A Study on Batik MSMEs

The success of the business cannot be separated from an implementation and utilization of information technology encouraging the creation of a competitive business which can be seen from the effectiveness of its supporting system. Currently, many business owners are inspired to improve their business with digitalization. The 4.0 industry revolution does not only occur in the government environment but also transpires other businesses with traditional culture background. A unique custom contributes advantages to Yogyakarta Special Region (Daerah Istimewa Yogyakarta) which produces traditional hand-drawn batik. The batik pieces are then processed into kemben . This study aims to find out the role of customer satisfaction in order to improve competitiveness through product quality, service quality, and price. This study used a snowball sampling method of 200 respondents analyzed using SEM (Structural Equation Modeling). The result showed that product quality and price affect customer satisfaction through service quality. Eventually, the increasing product quality will provide benefits for Micro Small Medium Enterprises (MSMEs) of kemben in Yogyakarta Special Region and bring improvement for the local economy.


Introduction
Digital technology is one of the main drivers of world economic development. Almost all countries are competing to observe digital transformation quickly. It does not mean that the industry 4.0 is without challenges. Therefore, it must be observed and anticipated, especially by businesses where the millennial generation is predicted to take over the potential market in large number. This era is also referred to as Digital Journalism, Multimedia Journalism, Interactive Journalism or new media, using media, touches of computer technology, and internet networks. Multimedia journalism is a story or event which is presented online, including photos, videos, graphics texts and so on, characterized by information as the necessary capital in carrying out the activities. The enablers of the social enterprise ecosystem consistently hold various incubation activities, and acceleration for social entrepreneurs and investors to build networks and partnerships with various related parties. The increasing unemployment rate caused by the reduction in human services, increasing factory waste, and decreasing socialization are among the particular concerns of the community. This change brings us to the fourth wave industrial revolution or Industry 4.0, which is the latest trend in the world of such sophisticated technology. It is inevitable where technological changes reach all the activities of human life to make everything more effective and efficient in a relatively short period. The digital age begins to change where people are no longer interested in consuming bulk goods and services. The information about prices and testimonials from previous customers are readily available. Digitalization happens to all aspects, including business organizations, business processes, communication devices, and users. Everything goes toward digitalization, pursuing efficiency and effectiveness [1]. Presently, companies are starting to carry out a digital transformation from traditional marketing patterns to a sophisticated and virtual world where they can communicate to change the character and behavior of consumers. As a result, businesses must be brave to take risks in anticipating the wave of industry 4.0. The change in consumer behavior in addressing technological development also prevails in kemben product, i.e., a kind of simple traditional fabric produced in Yogyakarta Special Region (DIY) [8]. Yogyakarta is a unique province, visited by many domestic and foreign tourists. They come to Yogyakarta for its great creative industries. The increasing number of domestic and foreign tourists provides an opportunity for this province to introduce traditional hand-drawn batik as its local product. Batik industry is spread in 101 batik centers in the regions namely Yogyakarta city (Tirtodipuran, Panembahan, Prawirotaman, and Taman Sari), Kulonprogo Regency (Hargomulyo, Kulur and Sidorejo, Sapon, and Gulurejo), Gunungkidul Regency (Tancep, Trembono, Nitikan, Ngalang and Mengger), Sleman Regency (Nogotirto and Mororejo), Bantul Regency (Wijireja, Murtigading, Imogiri, Wukirsari, Pandak), and Sleman Regency, with a number of pattern reaching 400 variants. The scale of the business community is limited to MSMEs (infonawacita.com). To enter the ASEAN free market, batik industries in Yogyakarta required certification. Since then, batik exports from Yogyakarta continued to increase. Until the end of 2016, Yogyakarta batik exports reached USD 101.11 million (40% of the total export value of USD 252.78 million). The export value of batik commodity increases by at least 2% annually. The Ministry of Industry noted that the export value of batik and batik products reached USD 51.15 million in October 2017. This number increased by 29.8% from the achievement in the first semester of 2017 amounting to USD 39.4 million . The primary market  countries of Indonesian batik are Japan, Hong Kong, South Korea,  the  United  States  and  other European countries (https://infonawacita.com). One of the traditional batik fabrics produced by the Ngayogyakarta Sultanate is kemben, explicitly designed for courtiers in the Ngayogyakarta palace. The traditional and straightforward design came from a piece of traditional handdrawn batik resulting admiration. It was worn by palace dancers to welcome state guests. In detail, kemben is only wrapped around the body, added with accessories in the form of necklaces. Generally, kemben can be seen in young female dancers in welcoming guests or in wedding ceremonies. The batik design used contains specific meanings whether as court servants, dancers or receptionists. The color used is white combined with the black image pattern. The striking colors are not permitted to use. The transformation idea of traditional kemben was developed by almost all fashion designers by following the current fashion trends. This modified kemben is widely worn during certain fashion shows or events. The target markets are people who like fashion or famous artists with the above-average social status. The clothing industry continues to develop with models and designs transformed into a simpler and more comfortable one. The intervention of those designers transformed kemben into an elegant and luxurious dress. This kemben is not limited to the age, and the women may add various accessories and wear a strikingcolor dress. On the other hand, the modified kemben was unheard because not all women may wear it as Islam requires women to wear hijab. So, it is difficult for batik MSMEs to develop kemben because it is less attractive to most Indonesian women. The number of dancers wearing kemben in special occasion is relatively small. It may be potential for the international market. However, the lack of communication between countries is one of the issues hampering export. Product quality is not the only important factor which needs to be paid close attention by all parties for developing both traditional and modern kemben. Price also plays an important factor which needs to be considered by business such as MSMEs. The young designers designing modern and elegant kemben are also worth noting in the development of kemben. Also, service quality is a top priority, especially for designers who can give a new breath to the fashion world in Indonesia. It turns out that the traditional impression can be changed into something new with excellent service. The problem of customer satisfaction cannot be measured, but it has always been a crucial problem faced by crafters in Yogyakarta or other areas [9]. Based on those explanations, this study aims to examine the effect of product quality and price on customer satisfaction through service quality. This research uses a survey approach method to explore the simultaneous effect of kemben production in increasing MSMEs in Yogyakarta Special Region [2].

Literature Review
According to [6], product quality is the ability of a product to display its functions including durability, reliability, suitability, ease of use, product repair and other attributes. In [10] stated that consumers love the offered product if the company improves quality, performance, and characteristics to increase satisfaction. In [12] stated that there is a positive and significant effect of product quality on customer satisfaction. So, if the product quality increases, customer satisfaction also increase. The high-quality product increases customer trust to keep buying the product. The dimensions of quality performance, conformance, features, reliability, aesthetics, form, reparability, and style [5].
The effect of product quality (goods or service) on customer trust is supported in the research of [11] stating that product quality significantly affects customer satisfaction. According to [13], the price is a statement of the value of a product. Price is also the most flexible marketing mix, unlike product feature and supplier commitment. Price may change quickly [6]. In [14] stated that price has a crucial role in helping customers in making a purchase decision. According to [15], to attain high utility, the price should be fitted to the purchasing power of the customers. In [16] stated that price positively and significantly affects customer satisfaction. Affordability, suitability, and competitiveness are the basis in determining the price of a product [7]. Service quality is defined as the economic activity to create and provide benefits to customers in a particular time and place by realizing the wanted changes, so that the service may provide specific value [18]. In [17] stated that service quality has a positive and significant effect on the satisfaction of the customers of Sari Ater Hotel and Resorts. This result is in line with the dimensions of service quality proposed by [5] namely tangibility, empathy, reliability, responsiveness, and assurance. According to [19], satisfaction or dissatisfaction is a feeling of contentment or disappointment coming from the comparison between the real and actual quality of the product. Generally, customer satisfaction can be defined as the consistency of product quality and service received by customers. In [19] also stated that customer satisfaction affects repurchase intention and loyalty by creating word of mouth promotion benefiting two parties. This result is in line with [13] stating that the dimensions of customer satisfaction are the suitability of expectation, interest in revisiting or repurchasing, and willingness to recommend.

Methodology
This research uses a survey method. The survey was conducted by using questionnaire dissemination, distributed to the research sample. The population of this research is MSMEs in Yogyakarta Special Region, spread in several areas namely Wukirsari, Imogiri, Sragen, Bantul, and Sukoharjo. These areas are the centers for kemben production. The sampling technique in this research uses snowball sampling with the total of a sample of 200 respondents. The calculation was conducted using Lisrel 8.8 software.
Operationalization of variable is a specification of activities that will be used to measure variables. The operationalization of the variable is then described as the indicator used in each variable. Operationalization of the variable includes the dimensions of each variable. In this study, 19 parameters are consisting of eight product quality parameters, three parameter prices, five service quality parameters, and three customer satisfaction parameters. This assessment uses a Likert scale ranging from one to five. This study requires information from existing customers based on the dimensions of each variable.

Validity and Reliability Test
Validity and reliability test were conducted to measure the variables in the questionnaire. Validity test uses product moment correlation (validity index). The statement is valid if its correlation coefficient is ≥ 0.30 [3]. Reliability test uses the Cronbach Alpha approach, and the statement is valid if its reliability coefficient is ≥ 0.70. Validity test shows that the data are valid in measuring each variable. So, the further analysis could be done (Table 1). Also, the reliability coefficients are all above 0.70, stating that the questionnaire has the reliability in measuring each variable.

Descriptive Analysis Results
The average score of each answer provides a comprehensive description of the product quality, price, service quality, and customer satisfaction. Categorization was conducted using the distribution of inter-quartile ranges [20]. Product quality is measured using eight parameters, operationalized using eight statements. Based on the responses of 200 respondents, the average score of respondents' response to the product quality variable is 3.83, categorized into a good category because it is in the intervals 3 -4. Price is measured using three parameters which are operationalized into three statements. Based on the responses of 200 respondents, the average score of respondents' response to the price variable is 3.79, included in the category quite suitable (fair) because it is in the intervals 3 -4. Service quality is measured using five parameters which are operationalized into five statements. Based on the responses of 200 respondents, the average score of respondents' response to this variable is 3.73, included in a good category because it is in the intervals 3 -4. Customer satisfaction is measured using three parameters operationalized into three statements. Based on the responses of 200 respondents, the average score of respondents' response to customer satisfaction variable is 3.64, included in the category is high because it is in the interval 3-4.

Hypothesis Testing
To test the influence of product quality (X1) and price (X2) through service quality (Y) on customer satisfaction (Z), we conducted a quantitative analysis using structural equation modeling. There are two models formed in structural equation modeling. The first model is a measurement model explaining the variance proportion of each manifest variable (indicator), explained through latent variables. Through the measurement model, we will know which indicators are more dominant in reflecting latent variables. The second model is a structural model that will examine the effect of exogenous latent variables on endogenous latent variables.

The Result of the Research Model
Using the estimation method of robust maximum likelihood, we obtained a full model of path diagram of the effect of product quality and price on customer satisfaction through service quality as shown in Figure 1.

The Goodness of Fit Measures
This test was conducted to find out whether the obtained model has fulfilled the Goodness of Fit measures. The results of the test are shown in Table 3.

Measurement Model
Measurement model shows the relationship between latent variables and manifest variables. In this research, there are four latent variables and 19 manifest variables. The latent variable of product quality consists of eight manifest variables, while latent variable of price consists of three manifest variables. The latent variable of service quality consists of five manifest variables, and latent variable of customer satisfaction consists of three manifest variables. Based on Figure 1, it can be seen that the latent variable of product quality (X1) with indicator K7 and loading factor of 0.807 is the strongest in reflecting the latent variable of product quality. The latent variable of price (X2) with indicator H2 and loading factor of 0.786 is the strongest in reflecting the latent variable of the price. The latent variable of service quality (Y) with indicator KL3 and loading factor of 0.786 is the strongest in reflecting the latent variable of service quality. Lastly, the latent variable of customer satisfaction (Z) with indicator KP1 and loading factor of 0.737 is the strongest in reflecting the latent variable of customer satisfaction.
To know whether the indicators measuring each latent variable (product quality, service quality, and customer satisfaction) have a high degree of suitability, we conducted a calculation of construct reliability and variance extracted. The calculation results of the construct reliability and variance extracted for each indicator of the latent variable are shown in Table 4.

Structural model
The structural model is a model connecting the exogenous latent variable with an endogenous latent variable. Based on data calculation, the tested structural equations are shown in Table 5. R-square value of 0.716 shows that product quality and price affect service quality of 71.6%, and R-square value of 0.879 shows that product quality and price, as well as service quality, affect customer satisfaction of 87.9%.  Table 5 shows that t-statistic of product quality (4.866) is higher than the t-critical value (1.96). So, in the error level of 5%, it can be concluded that product quality affects service quality. Table 5 shows that t-statistic of price (4.660) is higher than the tcritical value (1.96). So, in the error level of 5%, it can be concluded that price affects service quality. Table 5 shows that t-statistic of product quality (1.999) is higher than the t-critical value (1.96). So, in the error level of 5%, it can be concluded that product quality affects customer satisfaction. This result evidences that the better the quality of a product is, the higher the customer satisfaction becomes. Product quality directly affects customer satisfaction by 5.5%.

Influence of Price on Customer Satisfaction
T-statistic of price (2.991) is higher than the t-critical value (1.96). So, in the error level of 5%, it can be concluded that price affects customer satisfaction. This result provides empirical evidence that the better the price of a product is, the higher the customer satisfaction will be. Price directly affects customer satisfaction by 11.8%. Table 5 shows that t-statistic of service quality (2.645) is higher than the t-critical value (1.96). So, in the error level of 5%, Ho is rejected, and Ha is accepted. Thus, based on the test result, it can be concluded that service quality affects customer satisfaction. This result provides empirical evidence that the better the service quality is, the higher the customer satisfaction will be. Service quality affects customer satisfaction by 23.1%.

Fig. 2: Structural Equation Model
Subsequently, we performed a Sobel test to test whether product quality and price affect customer satisfaction through service quality. This test was conducted to see the mediating effect of service quality. The significance test of the indirect effect was conducted using Sobel t-statistic. Using the Sobel test calculator for the significance of mediation (accessed through www.danielsoper.com/statcalc3/calc.aspx?id=31), we obtained the results as shown in Table 6.  Table 6 shows that t-statistic of product quality (2.3235) is higher than the t-critical value (1.96). So, in the error level of 5%, Ho is rejected, and Ha is accepted. Thus, based on the test result, it can be concluded that product quality significantly affects customer satisfaction through service quality. Through service quality, product quality affects customer satisfaction by 23.9%. Table 6 shows that t-statistic of price (2.2999) is higher than the tcritical value (1.96). So, in the error level of 5%, Ho is rejected, and Ha is accepted. Therefore, based on the test result, it can be concluded that price considerably affects customer satisfaction through service quality. Through service quality, price affects customer satisfaction by 23.8%.

Conclusion
Business transformation in 4.0 industry revolution towards digitalization has not been reached entirely. Although this transformation has been widely applied in large-scale companies, the different case happens in MSMEs where the operation is still conventional. Some customers get more satisfaction by making a direct purchase in a store. Nevertheless, a large number of customers coming to a store results in high overhead cost. The development of modification of traditional kemben is stagnant without the support of the designers who reform the quality of traditional product to be a modern one, without losing the true identity of kemben. The price is set based on the service quality cost provided. MSMEs could not adequately fulfill the wants of the customers, resulting in the inability to reach potential customers. Product quality and price cannot be synergized appropriately through service quality, resulting in less optimum customer satisfaction. The industry revolution 4.0 may facilitate businesses to improve sales through online media because it is more efficient for not allocating costs for renting, employees, electricity, water. Also, the sales will be effective since the process is relatively more straightforward. Although online sale allows businesses to have an easier transaction, they should pay attention to the product quality because the online sale is different from offline sales. Pricing in online media should be adjusted to the anticipation effort for preventing bankruptcy which can be done by selling other accessories.
Increasing service quality can be done through collaboration with designers and expanding marketing network can be done by attending a fashion show, both domestically and internationally. At the same time, they may reintroduce the traditional kemben in a modern version to specific groups in the international market. Customer satisfaction, formed by product quality, price, and service quality is needed to develop business toward digitalization welcoming 4.0 industry revolution by utilizing the cutting edge technology [4].