Perceptual product congruity as a catalyst for market performance of small and medium enterprises in North Sumatra

This study aims to examine how perceptual product congruity acts as a mediating factor in enhancing the market performance of Small and Medium Enterprises (SMEs) in North Sumatra. The research investigates the influence of innovative performance, marketing capability, and product advantage on market outcomes. A quantitative research design was employed using Structural Equation Modeling (SEM) on a sample of 334 SMEs, comprising 201 small and 133 medium-sized enterprises, selected through proportional cluster random sampling. Data analysis involved validity and reliability testing, as well as assessment of measurement and structural models. The findings reveal that innovative performance positively affects market performance both directly and indirectly through marketing capability and product advantage. Furthermore, perceptual product congruity, defined as the alignment between product attributes and consumer self-concept, significantly mediates the relationship between product advantage and market performance. The study concludes that enhancing innovation and marketing capabilities not only improves product advantages but also fosters stronger congruity with consumer perceptions, thereby influencing purchasing behavior and satisfaction. The results suggest that SMEs can strengthen their competitive position by aligning innovation strategies and marketing efforts with consumer expectations. This alignment enhances brand relevance and market responsiveness, ultimately leading to improved business performance in a dynamic market environment.