Market Sabotaging by Indonesian Consumers: How Negative Publicity Can Crush Businesses in the Digital Age

In Indonesia’s rapidly evolving market, consumers hold more power than ever. With social media at their fingertips, they can influence a brand’s reputation and sales with just a single post or review. Beyond traditional consumer dynamics, such as price sensitivity or loyalty shifts, the rise of online platforms has amplified the consequences of consumer dissatisfaction. When disgruntled customers bad-mouth businesses or spread misinformation, the damage can be swift and severe, leading to long-term repercussions for companies large and small. This article explores how Indonesian consumers may inadvertently sabotage markets and industries, with a particular focus on the escalating trend of bad publicity.

1. Price Sensitivity in the Indonesia Market: The Endless Discount Cycle

In Indonesia, price sensitivity remains one of the most defining characteristics of consumer behavior. Whether shopping for electronics, daily goods, or even digital services, Indonesian

consumers often prioritize discounts and special offers above all else. This behavior forces businesses to continuously compete on price, leading to a "race to the bottom" where price cutting becomes the central strategy. However, this is unsustainable, as it leads to market destabilization and can sabotage long-term business viability.

Case Study: E-Commerce Giants and the Price War

Indonesia’s e-commerce sector, led by major players such as Tokopedia, Shopee, and Lazada, provides a prime example of how price-sensitive consumers can influence entire industries. In recent years, these platforms have become locked in a fierce price war, each offering flash sales, deep discounts, and exclusive promotions to win over shoppers. During key events like Harbolnas (National Online Shopping Day), prices are slashed to attract as many consumers as possible, often below cost, resulting in significant losses for the platforms themselves.

Impact on Businesses:
For large platforms, these price cuts are often considered a necessary evil to maintain market share in Indonesia’s highly competitive landscape. However, for smaller businesses and sellers using these platforms, the consequences are far more dire. Forced to lower their prices to stay competitive, many small-to-medium-sized enterprises (SMEs) find it impossible to generate profits. In the long run, this leads to shrinking margins, reduced innovation, and in some cases, companies shutting down. Smaller sellers, unable to compete with the pricing strategies of the giants, eventually exit the market.

Furthermore, the relentless focus on discounts has conditioned consumers to expect ongoing price reductions. This erodes brand value, as customers come to see a product or service as inherently worth less than its original price. Once a business is caught in this cycle, it becomes increasingly difficult to escape, as any attempt to raise prices is met with backlash from consumers who feel entitled to continual discounts.

How Businesses Can Respond:
To counteract the damaging effects of price sensitivity, companies must shift their strategies away from competing solely on price. Building strong brand loyalty through superior product quality, customer service, and unique value propositions can create a buffer against discount-driven behavior. Brands such as GoPay have successfully introduced loyalty programs where regular users can gain exclusive benefits, incentivizing long-term engagement without relying on constant promotions. Educating consumers about the costs associated with extreme price cutting—such as lower quality products or unsustainable business practices—can also help in steering consumer expectations toward more sustainable market behaviors.

2. The Decline of Brand Loyalty: When Switching Becomes the Norm

Consumer loyalty is no longer a given in today’s Indonesian market. The convenience of mobile apps and online shopping platforms has made it easier than ever for consumers to jump from one brand to another in search of better deals. This frequent switching erodes long-term relationships between businesses and their customers, destabilizing entire industries as companies struggle to predict demand and plan accordingly.

Case Study: Ride-Hailing Services (Gojek vs. Grab)

The ride-hailing industry in Indonesia, dominated by Gojek and Grab, illustrates how consumer loyalty has been disrupted by the lure of discounts and promotions. Both companies engage in aggressive promotional campaigns, offering discounts on rides, food delivery, and other services. Indonesian consumers, especially those in urban centers like Jakarta and Surabaya, have become accustomed to checking both apps before deciding which service to use based on the discounts available that day.

Impact on the Industry:
This behavior, while advantageous for consumers in the short term, creates long-term instability for the companies involved. Gojek and Grab, in their efforts to outcompete each other, must continuously spend vast amounts of money on promotions, resulting in financial losses. The focus on short-term customer acquisition through discounts means less investment in customer retention, service quality, or innovation.

Moreover, the volatility in customer behavior makes it difficult for companies to predict their cash flow and plan their operations. During times when discounts are reduced or eliminated, many consumers simply switch to whichever competitor offers the better deal, leaving companies scrambling to regain their market share. This constant churn of customers undermines the development of brand loyalty and long-term profitability.

How Businesses Can Respond:
To build a more loyal customer base, businesses need to invest in creating unique, personalized experiences for their users. Ride-hailing platforms could develop tiered loyalty programs, where frequent users receive benefits like free upgrades, priority customer service, or exclusive access to premium services. By offering value that extends beyond temporary discounts, companies can incentivize users to stay loyal even when prices fluctuate. Additionally, emphasizing the safety, reliability, and social impact of their services—such as employing local drivers or investing in eco-friendly vehicles—can differentiate a brand from competitors and foster emotional connections with consumers.

3. Bad-Mouthing Businesses: The Power of Negative Publicity in Indonesia

One of the most direct and damaging ways consumers can sabotage businesses is by bad-mouthing them online. In Indonesia, where social media use is widespread and platforms like Instagram, Twitter, and TikTok dominate consumer conversations, a single negative post can have far-reaching consequences. Whether justified or not, consumer complaints and negative reviews often go viral, with users sharing their grievances in public forums that can quickly tarnish a brand’s reputation.

Case Study: The Holywings Controversy

In June 2022, Holywings, a popular Indonesian bar and nightlife chain, launched a controversial promotion offering free alcoholic beverages to anyone named "Muhammad" or "Maria." This marketing campaign was met with swift backlash for being insensitive, as the names hold significant religious value in Islam and Christianity, respectively.

The outrage spread rapidly across social media, leading to widespread calls for boycotts. Influential public figures and religious groups amplified the discontent, which resulted in the closure of several Holywings outlets by local governments. Despite the company’s attempts to address the situation, the damage to its reputation was significant and led to a considerable drop in customer traffic.

Impact on Businesses:
The Holywings case illustrates how deeply consumer reactions and social media can affect a brand's survival. What may have seemed like a harmless promotional tactic turned into a national controversy, causing job losses and long-term damage to the company’s image.

How Businesses Can Respond:
To protect against bad-mouthing and online backlash, businesses must adopt a proactive approach to reputation management. Monitoring social media for potential issues and addressing complaints swiftly can prevent situations from escalating. Transparency is key: businesses that openly acknowledge their mistakes and take corrective action are more likely to regain consumer trust.

Additionally, fostering positive relationships with influencers and loyal customers can help counterbalance negative publicity. Encouraging satisfied customers to share their positive experiences online and leveraging user-generated content can help mitigate the effects of bad reviews or negative posts.

4. Misinformation in the Digital Age: When False Rumors Go Viral

Misinformation can spread like wildfire in Indonesia, where many consumers rely on social media and messaging platforms like WhatsApp for news and information. False rumors about a company’s products, practices, or policies can cause significant harm, even if the information is later proven untrue. This form of consumer-driven sabotage often leads to boycotts, reputational damage, and financial loss.

Case Study: The Viral Panic Over Product Safety in the Food Industry

One of the most infamous cases of misinformation in Indonesia occurred when rumors spread about the presence of harmful chemicals in a popular packaged snack brand. The rumors, which initially circulated on WhatsApp, claimed that the product contained dangerous additives that could cause serious health issues. Despite there being no scientific evidence to support these claims, the story went viral, leading to widespread panic among consumers.

Impact on the Market:
Sales of the product plummeted as consumers, driven by fear, stopped purchasing the snack. Even after the company issued multiple statements and provided laboratory tests to prove the safety of their products, the damage had been done. The brand had to invest heavily in marketing campaigns to rebuild trust with consumers, but the rumors continued to circulate in some online communities, causing lingering doubt.

This incident highlights the destructive power of misinformation, especially in a country like Indonesia where access to reliable information is often limited. The viral nature of false rumors can cause lasting harm to even the most reputable brands.

How Businesses Can Respond:
To combat the spread of misinformation, businesses must prioritize transparency and proactive communication. Regularly updating consumers about product safety, manufacturing processes, and company policies can help build trust and reduce the likelihood of rumors taking hold. When misinformation does arise, companies need to respond swiftly, providing clear, fact-based rebuttals and leveraging trusted voices within the community to help spread the truth.

Takeaways and Strategies for Survival

Indonesian consumers wield significant power in shaping the market. Whether through price sensitivity, switching behaviors, negative publicity, or the spread of misinformation, their actions can have lasting effects on businesses and entire industries. To survive and thrive in this environment, companies must be agile, focusing on building strong relationships with consumers, maintaining transparency, and investing in long-term brand loyalty.

By understanding these dynamics, businesses can better navigate the complex and often unpredictable landscape of Indonesian consumer behavior. Staying one step ahead—whether through proactive reputation management, loyalty programs, or innovative pricing strategies—will be essential for success in this competitive market.

Lalamove Demonstration: A Case Study

In September 2024, Lalamove faced backlash when its drivers protested over discrepancies between advertised income potential and actual pay. Lalamove had promoted the possibility of earning up to IDR 21 million monthly, but many drivers found this unattainable due to inconsistent earnings. This protest, held in major cities across Indonesia, called attention to unfair wages and poor working conditions, escalating into a public relations challenge for the company.

The Lalamove demonstration is a prime example of how worker dissatisfaction can directly affect consumer perceptions and damage a brand’s reputation. As Lalamove drivers took to the streets, social media amplified the protests, leading to negative consumer reactions. Public sentiment quickly turned against the company, with discussions centering around Lalamove’s treatment of workers and its failure to deliver on promises.

Consumer and Worker Relationships

In Indonesia, both consumers and workers can wield significant influence over a brand's market standing. As seen in the Holywings and Lalamove cases, worker dissatisfaction often spills over into the public domain, and in a highly connected society, this backlash can travel swiftly through digital platforms. Consumers are increasingly holding businesses accountable not only for their products but also for how they treat their workers.

A company's internal issues, such as disputes with employees, can easily become public matters that damage consumer trust. When companies fail to manage worker relationships effectively, they risk a dual backlash: one from workers and one from consumers who empathize with those affected. This dynamic highlights the interconnectedness of modern business practices, where both employee and consumer satisfaction are critical for long-term success.

Businesses in Indonesia must now focus on creating transparent and fair labor policies that align with their public image. As workers become more vocal and consumers increasingly care about ethical practices, companies will need to proactively manage these relationships to avoid damaging their brand’s reputation.