DETERMINANT INFLUENCING FACTORS FOR CUSTOMER PREFERENCES IN LOCAL FRAGRANCE PRODUCT (CASE STUDY: MULTITUDE FRAGRANCE)

Pascal Yudha Ginting¹, Dina Dellyana²

Institut Teknologi Bandung

Pascal_ginting@sbm-itb.ac.id dina.dellyana@sbm-itb.ac.id,

Abstract

Significant changes have occurred in Indonesian business lines, including the types of local perfume businesses in Indonesia. Even today, Indonesia is one of the world's leading producers and consumers of perfume. According to the Indonesian Perfume Industry Association, Indonesia became Southeast Asia's second largest perfume market in 2019. (AIPI). In recent years, the use of perfume products has increased rapidly in Indonesia, particularly for native perfume items. Technological advancements that make it easier to produce and market regional perfume goods have aided the growth of Indonesia's local perfume sector. Local perfume manufacturers can use technology to improve product quality, streamline production, and simplify marketing and promotion. consumers This study seeks to determine the factors that influence consumers before they decide to purchase a local perfume product. After identifying the factors that influence these preferences, researchers use the AHP (Analytical Hierarchy Process) method to determine the priority of each of these criteria. The researcher also attempted to categorize this research based on five main criteria that were generated based on the experiences of perfume users, namely price, aroma, design quality, marketing promotions, and influence from others. The qualitative analysis method, which was presented descriptively from the results of interviews, and qualitative analysis, which was analyzed using the AHP method and surveys in general, were used by researchers. The results of the AHP analysis are used to influence the purchase of local perfumes after they have been evaluated. This study was carried out for Multitude Fragrance, a local perfume company in Jakarta, Indonesia. The proposed solution is based on the findings of AHP and interviews, and it attempts to address the issues identified in each factor that influences customer preference in selecting local perfume products.

Keywords: Local perfume, Analytical Hierarchy Process (AHP), Business, Customer preference

background

Local product brands are continuously expanding, and several new brands are developing. According to the Indonesian Ministry of Industry, the national perfume industry rose by 20% in 2017, which is four times the national economic growth rate (Kementerian Perindustrian Republik Indonesia, 2020). Because of the promising future of the Indonesian fragrance industry, the government has designated the perfume industry as a trustworthy sector in the National Industrial Development Master Plan (RIPIN) 2015-2035 (Kementerian Perindustrian Republik Indonesia, 2021). Until now, the total number of fragrance goods approved for distribution in Indonesia by the Food and Drug Supervisory Agency (BPOM) during the previous five years has reached 204.497 until the time of data access on September 28, 2021. This figure is the highest when compared to other categories such as medications and dietary supplements. Some of these indicators point to fierce rivalry in the local perfume product market. The Indonesian BPOM defines perfume as "a material or preparation designed for use on the exterior portions of the human body (epidermis, hair, nails, lips, and external sexual organs) or on the teeth and mucous membranes of the mouth." Specifically, for cleansing, perfuming, altering appearance, and/or improving body odor, as well as protecting or maintaining the body in excellent condition (Badan Pengawas Obat dan Makanan Republik Indonesia, 2015). Perfume, according to this definition, are not designed to treat or heal, and they are not drugs. According to the Regulation of the Minister of Health of the Republic of Indonesia Number: 045/C/SK/1977 dated January 22, 1977, the classification of cosmetics based on their use is divided into 13 groups, namely preparations for babies, such as baby oil, baby powder; preparations for bathing, such as bath soap. The growing number of local cosmetic brands has resulted in increased competition for local brand players, which can have an influence on their sales. Multitude Fragrance, a local brand of perfume, has been in business for a year, but sales have fallen short of expectations in the last three months. As a result, they seek out new marketing methods in order to reach the Go to Market strategies. The Indonesian fragrance market generated $394 million in revenue in 2020. According to Statista's Consumer Market Outlook, this income will reach over $500 million by 2025. The Indonesian perfume market is expected to develop at a compound annual growth rate of 3.6%, driven by rising disposable income and a young demographic base. The female perfume category is the largest and most popular in terms of value and volume, and it is expected to expand the quickest in the future years (Holbrook, 1994). According to research, mass-marketed scents outsell premium fragrances in all three fragrance categories (Davis, 1999). Furthermore, department stores are regarded as the primary distribution route for fragrance items. HMNS, an Indonesian indigenous business, was allowed to submit their items to Paris Fashion Week in 2022. As a result, they will be the first Indonesian fragrance brand to make a worldwide debut. They would sell their fragrances for IDR 2.5 million for their international presence and IDR 495 thousand for local buyers. The HMNS team noted that this was achievable since the scent entry was authorized by the Paris Fashion Week team, as well as consistency and enthusiasm. During the projection period of 2021-2026, the fragrances and perfumes market is expected to grow at a CAGR of 5.5%. Despite the COVID-19 epidemic, trends that were already affecting the industry are anticipated to be amplified by the expansion of the global middle-class population and the usage of e-commerce. Because the growth of the The fragrance and perfume industry are mostly impacted by unpredictable and shifting fashion trends, which prominent market participants focus on.

The following are the aims of this thesis, as stated by the author: 1. To Analyze the business situation in the local perfume Industry in Indonesia 2. To identify the customer preferences factors to choose the Local Perfume product 3. To determine the influencing factors of the customers preference to choose product

Metod

In this study, primary data will be collected directly from consumers and providers through the use of online questionnaires and in-depth interviews. This will allow us to gain a better understanding of the preferences of local perfume users in Indonesia and to assess these preferences using the analytical hierarchy approach (AHP).

AHP can be used to compare two elements in a variety of ways (Triantaphyllou & Mann, 1995). However, the relative importance scale proposed by Saaty (SAATY, 2005) between two alternatives is the most widely used. According to Saaty (2008), the analytic hierarchy process (AHP) is a methodical strategy for organizing and analyzing complex decisions that is founded on both mathematics and psychology.

It relies on the opinion of experts in order to identify priority scales among the available possibilities. When conducting comparisons, a scale of absolute assessments is used to represent the degree to which one component dominates another with relation to a particular quality. The priority scales are generated by multiplying each node by the priority of its parent node and then adding up the results for each of these nodes individually. In order to eliminate inconsistencies in ideas regarding health studies, the AHP has been implemented. It is necessary, as a result, to offer interview data in the quantitative form, which the AHP employs to generate stability in the results. Statements made in qualitative interviews may contain bias.

Figure III.1 Analytical Hierarchy Process

The online questionnaire will be designed to gather quantitative data on the preferences of local perfume users. This will involve asking questions about the various factors that influence their purchasing decisions, such as the type of perfume, the brand, the price, and the packaging (Khraim, 2011). The results of this questionnaire will be analyzed using AHP, which is a mathematical method that allows us to prioritize different factors based on their importance to the consumers (Aghdaie, Piraman, & Fathi, 2011).

In addition to the online questionnaire, we will also conduct in-depth interviews with providers of local perfumes in Indonesia. These interviews will be focused on understanding the challenges and opportunities facing the local perfume industry, and will provide us with valuable insights into the preferences of local perfume users. The interviews will be conducted one-on-one, in order to allow for a more in-depth discussion and to gather more detailed information.

Overall, this study will provide us with valuable information that can be used to develop a business plan for the Multitude Fragrance company. By understanding the preferences of local perfume users in Indonesia and the challenges and opportunities facing the local perfume industry, we can design a business plan that is tailored to the specific needs of the market. This will enable us to optimize the business side of the local perfume industry in Indonesia and to increase the company's chances of success.

Results and Discussion

Analysis

In this chapter, the author does a number of different analyses to see what aspects of this research lend credence to it. The author additionally provides an analysis of the business environment as well as an analysis of the business industry in order to supplement and bolster the arguments surrounding this research.

Also, The suitable method would be used to analyze the qualitative and quantitative results of the main data collection. To identify the main themes of the interview results, content analysis will be used to examine qualitative data from in-depth interviews with 20 respondents. The factor values of the hierarchy are based on quantitative data from online questionnaires completed by 120 respondents. The Analytic hierarchy process (AHP) Model and Super Decision software will be used to identify this hierarchy, which will demonstrate the key variables that affect the usage of Local Perfume Industry.

Business Environment Analysis

A strategic method for determining all internal and external aspects that might have an impact on a company's success is environmental analysis. While external components reflect potential and threats, internal components show a company's advantages and disadvantages. Outside of the company, this exists (Wellmann, Bruder, & Oltersdorf, 2003).

Environmental analysis takes trends and major elements into account. For instance, interest rates and how they might impact a business. These analyses can aid companies in becoming more appealing to customers (Park, Roman, Lee, & Chung, 2009).

Table II. 1 PESTEL Analysis

PESTEL Framework	Factors	Descriptions	Indications
	Political stability	The relevance of the Specialty Chemicals sector to the national economy	Opportunities
Political	Levels of corruption	particularly in the Basic Materials sector.	Threat
	Government bureaucracy	intervention in the Specialty Chemicals industry	Threat
	Contract enforcement	legal framework	Opportunities
	Protection	filing and protection in law	Opportunities
	Pricing controls	there a pricing control system in place for Basic Materials	Opportunities
	Industry Regulations	Regulations for industrial safety in the Basic Materials sector.	Opportunities
Economics	What type of economic	What sort of economic system exists in the nations where we operate?	Opportunities
	Stability System control	system there is and how stable it is	Opportunities
	Financial market Efficiency	Does International Flavors & Fragrances Inc. need to raise cash in the local market?	Threat
	Quality infrastructure	Build up the Specialty Chemicals sector	Opportunities
	Material Sectors	Comparative advantages of the host country and the Basic Materials sector in that nation	Opportunities
	Fee	Labor costs and economic productivity	Opportunities
	Expertise People	Workforce skill level in the Specialty Chemicals business.	Opportunities
	People Interest	Population demographics and skill level	Opportunities
	Social Status	In society, there is a class structure, a hierarchy, and a power structure.	Opportunities
Social	Education	Education level as well as education standard in the industry of International Flavors & Fragrances Inc.	Opportunities
	Cultural	Culture (gender roles, social conventions etc.)	Opportunities
	Society Encouragement	The entrepreneurial spirit and the larger character of society Some civilizations promote entrepreneurship, while others do not.	Opportunities
	Manners	Attitudes (health, environmental concern, etc) (health, environmental consciousness, etc.)	Opportunities
Technological	Rivalry	International Flavors & Fragrances Inc. rivals' recent technological developments	Threat
	Growth Impact	The influence of technology on product offerings	Threat
	Chemical Cost	The impact on the cost structure of the Specialty Chemicals business	Opportunities
	Long Term Effect	The effect on the value chain structure in the Basic Materials industry	Threat
	Diffusion	Technological diffusion rate	Opportunities
Environmental	Chemical effect	Environmental pollution legislation	Threat
	Crop Regulation	Regulations for air and water pollution in the Specialty Chemicals business	Opportunities
	Recycling	Basic ingredients that emphasize the sustainability of nature	Opportunities
	Industry Waste Management	Waste management in the Basic Materials industry	Opportunities
	Environmental Attitude	Support for and attitudes toward renewable energy	Opportunities
Legal	Antitrust legislation	The Specialty Chemicals business and throughout the country.	Opportunities
	Copyrights	Patents and intellectual property law	Opportunities
	Commercial	E-commerce and consumer protection	Opportunities
	Health and safety regulations	Consumer Trust-well	Opportunities

Business Industry Analysis

The Five forces model was primarily created as a tool for competitive strategy analysis, enabling both businesses and analysts to assess the competitive environment within a given sector. An industry may be more appealing and therefore more profitable if competition within it is fierce.

Figure II.2 Porter’s Five Forces Analysis

1. Threats of New Entrants (High)

With the growth of the local perfume Industry right now, the threat of the new entrants in the Fragrance Industry are high as the new stores are selling the substitute of fragrance products and it results in weak sales. New entrants would have to survey market trends and understand consumer needs and lifestyles, so fragrance companies must constantly improve their products to meet market demands in order to maintain their market share and sales and achieve their goals.

2. Threats of Substitute Products (High)

The threats of substitute products are high. Because there are few other major companies competing with fragrance products, the threat of substitute products exists. Consumers are under pressure, forcing them to use mass alternatives to luxury brands.

3. Bargaining Power of Customers (High)

Customers have a high bargaining power because there are many substitute products available in the market other than fragrance products; consumers can easily switch to try on other products based on their taste and preferences. Because of the price and quality of the product, as well as brand loyalty, consumers can make value-based decisions when purchasing perfume. As a result, the perfume industry must find ways to lower prices in order to compete with private label manufacturers without sacrificing brand quality. In mass market retailers, customers can save money on mid-tier and premium brand fragrances.

4. Bargaining Power of Suppliers (High)

Supplier bargaining power is high because many new suppliers have entered the market; fragrance can easily switch suppliers in order to capture consumer interest. Furthermore, fragrance items are mostly seasonal, requiring a larger inventory capacity and supply chain activity than other consumer packaging. In order to compete, suppliers may decide to offer more promotion on their products or lower their prices slightly lower than the market price.

5. Intensity of Competitive Rivalry (High)

The fragrance market is suffering from intense competition from foreign rivals who control the domestic market at low prices. The slow growth in revenue of fragrance companies is also due to small competitors' mass marketing of fragrance sales. Fragrance should constantly survey changing consumer needs and market trends in order to maintain a significant market share in the industry. Fragrance should invest more in R&D to achieve this.

Marketing Mix

The objective of this analysis is to ascertain the internal conditions of the company, which are discernible from the resources, capabilities, and activities. Utilizing the 4P Marketing mix, internal analysis is conducted. In terms of marketing strategy, the 4P marketing mix is a tool that elaborates its elements, which include products, prices, places, and promotions, which are managed by the business to get the desired output from the target market (Kotler & Armstrong, 2012).

1. Product

The Idea of creating Multitude Fragrance is to sell a fragrance that always comes up with the idea and telling the customers what kind of fragrance that they have to wear by giving them the story behind scents itself. One of the products that we will release is called “Mawar Merayu”. Mawar Merayu itself is the scent that represents happiness in the morning, also highly-active people who have a spirit of love inside themselves, also a person who prepares themselves to meet their loved ones soon. This Product will be a unisex perfume with a kind of pink liquid but to creating branding that soft color doesn’t have to be a girly color but it can be weared by anyone else.

Figure II.3 Mawar Merayu by Multitude Source: Multitude Fragrance

Figure II.4: Mawar Merayu Packaging

Source: Multitude Fragrance

6. Price

Price, whether it be for products or services, is the entire amount of value that must be exchanged for the advantages of a product (Kotler & Amstrong, 2018). For the first batch Multitude Fragrance came up with 2 (two) variants that can represent day & night scents, with this product Multitude wants to reach many customers by comparing several products in the same level, and also calculating cost production to create the products.

Products Name	Category	Price (IDR)
Mawar Merayu	Day Perfume	Rp. 389.000.000
Kalut Kretel	Night Perfume	Rp. 389.000.000

Table II.2 Multitude Price List

7. Promotion

Promotions are crucial in marketing communication because they serve as a means of informing and persuading customers to buy certain goods or services (Kotler & Amstrong, 2012). The quality of the communications matters more than the quality of the goods or services. Customers wouldn't purchase without promotions because they wouldn't even be aware of them. (Kotler & Armstrong, 2012) state that there are numerous different sorts of promotions, including direct selling, personal selling, public relations, and sales promotions.

a. Referral

Right now, to attracting the segmented customer that really needs the fragrance product and also introduce the products itself, Multitude Fragrance use Referral as a simple solutions and always brings up the products examples to introduce product itself to get the customers to know more about the product and also gives the potential customers to gaves their perspective about the product (Sunarmintyastuti, Prabowo, Narsih, Suprapto, & Vernia, 2021). Multitude also used referral in the perfumery class and Founders friends as ambassadors to be the media of promotion.

8. Place

Social media such as Instagram and personal reach.

SWOT Analysis

Strength	Weakness
● Solid Positioning that Local Perfume never used before by selling stories that can be sniffed by the customers ● Strong fixed resources rely on leaders and top-notch employee performance to keep the organization going. ● The marketing penetration management strategy. ● Utilizing the top perfume designs. ● Pricing adoption that is in line with market demand.	● Inadequate advertisement. ● Inadequate customer service. ● Lack of financial means for production and marketing.
Opportunity	Threat
● Online delivery and shopping. ● Demand is being created by the industry's ongoing growth. ● Development and research.	● Competition from well-known perfume companies. ● The potential threat of entry. ● Cost of raw commodities increasing

Table II.3 SWOT Analysis

1. Strength

● The Multitude fragrance, which no other local perfume company has ever done, has a strong position in the perfume market by offering stories that clients can lather up.

● Strong Fixed Resources: Multitude Fragrance has strong fixed resources, particularly from excellent leaders and productive staff, which helps to keep the business viable.

● Marketing Penetration Management Strategy: Multitude Fragrance employs a successful market penetration strategy that contributes to growing the firm's market share.

● Using the Greatest Perfume Designs: Multitude Fragrance uses the best perfume designs to produce high-quality, consumer-pleasing fragrances.

● Pricing Adoption: To ensure that its perfume products are well received by customers, Multitude Fragrance adapts the prices of its perfume products in accordance with market demand.

2. Weaknesses:

● Insufficient Advertising: Multitude Fragrance does not advertise sufficiently, therefore few people are aware of their scent offerings.

● Unsatisfactory Customer Service: Multitude doesn’t have an experience with the customer services before, which might discourage customers from purchasing their perfume items in the future.

● Inadequate Financial Resources: Multitude Corporation lacks the necessary financial means.

3. Opportunity

· Online shopping and delivery: Many businesses can profit by allowing clients to easily and swiftly buy their items by providing online shopping and delivery for their perfumes.

· Industry Growth: Since there is an increasing need for and interest in perfume items, many businesses can benefit from the industry's expansion.

· Research and Development: Multitude Company can take advantage of the chance to carry on with its research and development efforts in order to create better and more inventive perfume products.

4. Threat

● Competition from Well-Known Perfume Companies: Many businesses must be ready to take on well-known perfume manufacturers who are already household brands in the industry.

● Entry Threat: Many businesses need to be ready for the possibility of competition from other perfume manufacturers looking to dominate the same industry.

● Increasing Cost of Raw Commodities: Multitude Fragrance needs to be ready for rising costs for the raw materials used in the manufacture of perfumes, which could raise production costs and lower profits.

Competitor Analysis

Competitor analysis is the process of identifying and evaluating your business' competitors to understand how they compete in the marketplace. This can be done by gathering information about their products and strategies, and analyzing their strengths and weaknesses. This is useful for helping your company develop strong strategies and products to beat competitors in the market.

A more thorough grasp of competitor market behavior and strategic maneuvers would be provided through competitor analysis. To acquire a more thorough understanding of the rivals, business can be improved by performing competitor analysis and offering business and market-wide analysis (Honkanen, 2019).

For the local perfume business in Indonesia, one way to do a competitor analysis is to collect information about your main competitors in the local perfume market, such as the products they offer, prices and their marketing strategies. You can also find out how the competitors are received by consumers, and how they compete with them.

Currently, competition for local perfumes in Indonesia is quite tight. Many local perfume companies are trying to find out the needs of consumers and offer quality products to increase their popularity. This is of course a challenge for local perfume companies to continue to create unique and quality products, as well as develop effective marketing strategies to compete in an increasingly competitive market (Tooraj, Khadijeh, & Asieh, 2011). However, with hard work and high commitment, local perfume companies in Indonesia can continue to grow and develop amidst intense competition.

Brand	Humans	Oullu	Carl & Claire	Alien Object	Alchemist
	Modern,	Modern	Basic and	Premium	A perfume
	minimalistic	perfume	understated	fragrance, that	with creative
	fragrances	products	scent that	is,	branding that
	that	demonstrate	demonstrates	uncomplicated,	allows users to
	demonstrate	how scent can	how perfume	free, refined,	enhance their
	both the	transcribe,	may increase	and balanced,	odors with
Brand Image	accessibility of perfume and the	evoke, and savor the world of	self-confidenc e and smells fantastic	demonstrating that the fragrances we	their own home fragrances
	grandiose	memories and		love are the
	designer	feelings.		ones that have
	quality are			meaning for us
	also available.			by helping us
	Not just as a			recall
	customer, but			moments,
	also as a			tales, and
	friend			memories.
Price Range	IDR 205,000 - 395,000	IDR 300,000 - 400,000	IDR 249,000 - 249,000	IDR 710,000 - 11,000,000	IDR 350,000 - 500,000
Perfume Full Size	30ml; 100ml	50 ml	50 ml	50 ml	50 ml
Online	- Official Website	Official Website	- Official Website	- Official Website	- Official Website
Distribution Channel	-Ecommerce: Tokopedia, Shopee	-Ecommerce: Tokopedia Shopee	-Ecommerce: Tokopedia, Shopee	-Ecommerce: Tokopedia, Shopee	-Ecommerce: Tokopedia, Shopee
	-Whatsapp		-Whatsapp	-Whatsapp	-Whatsapp
Offline Distribution Channel	Only temporary pop-up experience shops that are exclusive to their brand	None	-Counter in Lippo Mall Puri -Counter in Mal Kelapa Gading 3	None	-Counter in Plaza Indonesia
			-Counter in Pondok Indah Mall 2

Table II.4 Picture Source: (HMNS,2022); (Oullu,2021); (Carl & Claire,2022); (Alien Object,2022); (Alchemist;2022)

Conclusion

According to the findings of this study, in order to accelerate and determine the influencing elements for customer preferences in local perfume products, the formulation of is required based on the research question and purpose of this study. Based on the previous chapters' examination, the following is the key conclusion:

Research Question 1: What is the current business situation?

Customers, the government, and competitors are the four primary stakeholders in the current business situation. Other industrial stakeholders include macloon, the perfume community, and the media. Every facet of these stakeholders plays an important part in expressing their concerns and influencing the determinant variables for local perfume in Indonesia.

The main cause of the limited adoption of local perfume growth is unfavorable regulation and commercial feasibility.

Research Question 2:

What are the customer preferences factors to choose the Local Perfume product?

Based on the investigation, 5 criteria and 20 sub-criteria have been identified as influencing factors for customer preferences in local perfume items. These factors were studied using the analytical hierarchy process (AHP) model, and the results are as follows:

Criteria in Order:

X1 = Price

X2 = Marketing Promotion

X3 = Referral

X4 = Product & Design Quality

X5 = Scents Option

Research Question 3:

What are the influencing factors of the customers preference to choose a product? The 5 most influential sub-criteria were:

X54 = Brand Experience

X41 = Great Brand Creation

X43 = Easy to Used and Carry

DAFTAR PUSTAKA

Aghdaie, Seyed Fathollah Amiri, Piraman, Amir, & Fathi, Saeed. (2011). An analysis of factors affecting the consumer’s attitude of trust and their impact on internet purchasing behavior. International Journal of Business and Social Science, 2(23).

Davis, Gordon B. (1999). Kerangka Dasar Sistem Informasi Manajemen Bagian I Pengantar.

Holbrook, Morris B. (1994). The nature of customer value: an axiology of services in the consumption experience. Service Quality: New Directions in Theory and Practice, 21(1), 21–71.

Khraim, Hamza Salim. (2011). The influence of brand loyalty on cosmetics buying behavior of UAE female consumers. International Journal of Marketing Studies, 3(2), 123.

Kotler, Philip, & Amstrong, Garry. (2012). Principles of Marketing Global. USE: Pearson Education, 6, 47–48.

Kotler, Philip, & Amstrong, Gary. (2018). Principles of Marketing. Edisi 15 Global Edition. Pearson.

Kotler, Philip, & Armstrong, Gary. (2012). Principles of Marketing (ed.). New Jersey.

Park, Namkee, Roman, Raul, Lee, Seungyoon, & Chung, Jae Eun. (2009). User acceptance of a digital library system in developing countries: An application of the Technology Acceptance Model. International Journal of Information Management, 29(3), 196–209.

Sunarmintyastuti, Lies, Prabowo, Hanggono Arie, Narsih, Dwi, Suprapto, Hugo Aries, & Vernia, Dellia Milla. (2021). Peran Pelatihan Kewirausahaan dan Minat Siswa Yayasan Tahfidzul Ar-Rahmani Tangerang Selatan. Jurnal Ilmiah Wahana Pendidikan, 7(2), 90–95.

Tooraj, Sadeghi, Khadijeh, Ghaemmaghami Tabrizi, & Asieh, Noroozi. (2011). The effective factors related with feelings, brand perception and purchase decision under a model. African Journal of Business Management, 5(30), 12025–12030.

Wellmann, Katrin, Bruder, Ralph, & Oltersdorf, Karen. (2003). Gender designs: aspects of gender as found in the design of perfume bottles. Design and Emotion, 96. CRC Press.