Local Perfume Arena: Signaling Dynamics and Strategic Positioning at Scent of Indonesia

Abstract

Background: The Indonesian perfume industry is experiencing a massive transformation, shifting from digital market dominance characterized by e-commerce algorithms to intense physical competition. This transition is highly evident in national-scale events such as Scent of Indonesia (SOI), where brands are forced to translate digital hype into tangible offline competitive maneuvers.
Purpose: This study aims to analyze the strategic positioning, signaling mechanisms, and competitive dynamics of local perfume brands at SOI Vol. 5.
Design/methodology/approach: A qualitative comparative case study was employed, utilizing theoretical sampling to select four strategically distinct brands representing maximum variation and polar types: J, S, BD, and K. It integrates Porter’s Strategic Positioning, Kirmani and Rao’s Signaling Theory, and Chen’s Competitive Dynamics frameworks to evaluate how brands navigate crowded physical markets. Data were collected through participatory observation and in-depth interviews, followed by Deductive Thematic Analysis using NVivo 12 Plus.
Findings/Results: First, brands evade the "stuck-in-the-middle" trap via extreme strategic discipline: cost leadership (J), premium differentiation (S), niche specialist (BD), and broad differentiation (K). Second, they deploy costly signals (bonding costs, scarcity, and reputation leveraging) to mitigate information asymmetry. Third, incumbents deploy asymmetric non-price defenses (product education, experience technology) instead of destructive price wars against low-cost disruptors.
Conclusion: Strategic coherence drives competitive advantages. Managerially, practitioners must design uncompromised, brand-specific strategies, whether executing pure cost leadership (like J), premium isolation (S), artificial scarcity (BD), or reputation-leveraging (K). Brands must abandon strategic ambiguity and prioritize structural defense over reactive price retaliation.
Originality/value (State of the art): This study offers a novel integrated model of competitive advantage tailored for real-time physical market arenas, challenging the prevailing argument that business model flexibility is universally beneficial for SMEs.

Keywords: competitive dynamics, local perfume industry, positioning strategy, scent of Indonesia, signaling theory