Leveraging Digital Marketing: How Tulungagung Bamboo Crafts Gain a Competitive Edge

Small and Medium Enterprises (SMEs), including the bamboo craft sector in Tulungagung, Indonesia, are vital to the national economy yet face significant challenges in leveraging digitalization for growth. The central issue is understanding how digital tools translate into tangible business performance. This study addresses a critical research gap by investigating the underexplored mediating role of competitive advantage in the relationship between digital marketing and marketing performance within a traditional craft industry. The research objective was to empirically test these relationships. Using a quantitative method, data were collected via a survey from 62 bamboo craft businesses (selected via purposive sampling from a population of 105) and analyzed using Structural Equation Modeling (SEM) with Smart-PLS. The results reveal that digital marketing has a significant direct positive effect on both competitive advantage and marketing performance. However, competitive advantage itself does not directly improve marketing performance, nor does it act as a significant mediator between digital marketing and performance. This conclusion indicates that while digital marketing is a powerful driver, competitive advantage alone is insufficient to enhance performance in this context, suggesting the influence of other complex factors. The policy implication is that support programs for artisans must move beyond basic digital adoption and focus on holistic strategies that integrate marketing skills with other operational improvements to ensure sustainable growth in an increasingly digitized market.