Product Segmentation of Wooden Handicraft Micro, Small and Medium Enterprises (MSMEs) in Indonesia

Abstract

The intense competition between wooden handicraft Micro, Small and Medium Enterprises (MSMEs) in Indonesia has encouraged business owners to generate creative innovation in order to maintain the sustainability of the company. This study aims to develop the new product development strategy based on the product segment characteristics from wooden handicraft MSMEs in the Special Region of Yogyakarta, Indonesia. The segmentation of products was done by applying the combination of K-Means Algorithm and Frequency, Monetary, Customer Variety (FMC) variables to the customer transaction data. The results showed five different types of product sales characteristics in three wooden handicraft MSMEs. It will encourage business owners to gain valuable insights about useful product sales characteristics for building business strategies to face increasingly fierce competition in this era.