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Abstract Indonesia possesses significant and diverse potential in local food production. The diversity has created ideal conditions for the production of a wide variety of local foods rich in flavors and nutritional value. This research aims to assess the extent of product development and innovation by Micro, Small, and Medium Enterprises (MSMEs) in Central Java, Indonesia, in responding to market challenges in producing locally-inspired food products. The research method involved a survey of 50 MSMEs producing local food products in five districts of Central Java, namely Grobogan, Banyumas, Semarang, Sragen, and Wonosobo, with 10 MSMEs sampled from each district using purposive sampling technique. Data analysis is conducted descriptively and through a literature review. The results of the study indicate that MSMEs have a high ability to create various locally-sourced food products, modify food products, believe in the originality of their products, and make efforts to brand the products they produce. Furthermore, the research also reveals a high level of innovation in marketing strategies carried out by MSMEs, including their ability to try new things in product marketing, openness to new marketing ideas, continuous product improvement, and the development of new product models.
Retnaningsih et al. (Wed,) studied this question.