Rubber Production Marketing Strategy

Ainun Mardhiyah

Faculty of Social and Political Sciences, Universitas Sumatera Utara, Jl. Dr. A Sofyan No.1 Medan 20155 USU Campus

Business Administration Programs, Universitas Sumatera Utara, Jl. Dr. A Sofyan No.1 Medan 20155 USU Campus

Keywords: Marketing Strategy, Marketing Channels, Product Quality

Abstract: Marketing strategy is a comprehensive and unified plan in the field of marketing that provides guidance on

activities to be carried out in achieving company goals. In the marketing process, agricultural products have

several functions that must be accommodated by the producers and elements involved in distribution which

are often functions which cause problems that must be required by producers and elements involved in the

marketing chain. Prices in a business or business are very necessary, because with the price will be known

the benefits of one's business activities. No exception in marketing rubber production, it is very important to

see how the price is, because if the price that can be sold by a cheap farmer, then pity the farmers, but this is

one of the reasons why the price is involved when talking business. Product quality is also needed in

marketing. Product quality is a very important thing in determining the choice of a product by consumers.

The product offered must be a product that is really well tested about its quality, because for consumers who

are prioritized is the quality of the product itself. Consumers will prefer and choose products that have better

quality when compared to other similar products that can meet their needs and desires.

1 INTRODUCTION

Marketing strategy is a comprehensive,

integrated and integrated plan in the field of

marketing that provides guidance on activities to be

carried out in achieving company goals through

advertising, promotion programs, sales, product

programs, and distribution (Assauri, 2007).

According to Alma (2008), the marketing strategy is

to select and analyze the target market which is a

group of people that the company or business wants

to achieve and create a suitable marketing mix that

can satisfy the target market.

It is known about the definition or

understanding of marketing and marketing

strategies, then it is necessary to know about the

definition or understanding of rubber. Rubber

(Hevea Brasilliensis) is a tree that grows tall and has

a large trunk. Adult tree height reaches 15-25

meters. Plant stems usually grow straight and have

high branching above. In the stems of this plant

contain more famous sap with the name latex

(Setiawan and Andoko, 2007). Rubber plants are

commodities that are closely related to human daily

needs, so that they can produce processed products

that 73% are used for tire processing, while the rest

are used in the form of medical devices, children's

toys, automotive equipment, sandal shoe soles and

so on ( Setiawan and Andoko, 2007). At present the

development of domestic rubber demand during

1980 to 2015 was very volatile with an average

growth of 29.62% per year from 45.83 thousand tons

in 1980 to 510.69 tons in 2015, even though in the

year 2013 (5.74%), in 2014 (0.44%) and 2015

(8.48%) experienced a decline (Data Center and

Agricultural Information System Secretariat General

Ministry of Agriculture, 2016), while for 2016 to

2017 experienced an increase around 32.29%

(Central Bureau of Statistics, 2017).

In general, the price of rubber in the

Domestic Market in Indonesia from 2008 to 2011

has increased, but in 2012 it decreased, while in

2013 to 2014 it increased again. For the nominal

price range in 2008 to 2014 prices start from Rp.

6,050 / kg to Rp. 7,720 / kg (in 2008-2009). In 2010,

rubber prices increased significantly by 77.29%,

namely Rp. 13,687 / kg and in 2011 again increased

by 22.69% to become Rp. 16,793 / kg. The increase

in 2011 experienced a decline in 2012 where rubber

prices fell by 32.51% to Rp. 11,333 / kg. In 2013

rubber prices again increased by 35.11% but for the

rubber price range in 2013 was lower than in 2011

1736

Mardhiyah, A.

Rubber Production Marketing Strategy.

DOI: 10.5220/0010097517361740

In Proceedings of the International Conference of Science, Technology, Engineering, Environmental and Ramiﬁcation Researches (ICOSTEERR 2018) - Research in Industry 4.0, pages

1736-1740

ISBN: 978-989-758-449-7

and in 2016 rubber prices again increased to Rp.

16,360 / kg (Data Center and Agricultural

Information System Secretariat General Ministry of

Agriculture, 2016). While the prices for 2017 to

early January 2018 are accumulated around Rp.

15,000 to Rp. 19,000. (http://www.karetpedia.com/).

From the price stated above, that price is

the price sold by Rubber Collectors (Second Party

after Rubber Farmers) to Factory prices (commodity

prices of the domestic market) while the selling

price of rubber farmers to rubber collectors ranges

from Rp. 5,000 / kg to Rp. 7156 / kg

(http://www.karetpedia.com/). The comparison of

the selling price of rubber has made a significant

difference so that from this price makes rubber

farmers more difficult to develop in the economic

conditions they experience.

For this reason, rubber farmers can produce rubber

with a good rubber category, it requires a touch of

hand from the government in the form of providing

counseling and training for rubber farmers so that

these results can have proper knowledge so that they

can produce rubber that is suitable for sale without

having to through rubber collectors.

1.1 Rubber Marketing Channels

Marketing channels are a series of interdependent

organizations involved in the process to make

products or services ready for use or consumption

(Kotler, 2005). From the above definition it can be

concluded that the marketing channel is a way that

occurs so that a product or item can get to its final

destination.

There are several distribution channels

according to Kotler (1996), namely:

a. Direct distribution channel. This channel is the

simplest and lowest distribution channel, namely

the distribution channel from the producer to the

consumer without using intermediaries. Here

producers can sell their goods by mail or directly

drive consumer homes, this channel can also be

given a zero stage channel.

b. Disrtibusi channels that use one intermediary that

involves producers and retailers. Here large

retailers directly buy goods from producers, then

sell them directly to consumers. This channel is

usually referred to as one stage channel.

c. Distribution channels that use two groups of

wholesalers and retailers, this distribution

channel is a channel that is widely used by

producers. Here, producers only serve large

quantities of sales to large traders, not selling to

retailers by retailers served by wholesalers and

purchases by consumers are only served by

retailers. Such distribution channels are also

called two-level distribution channels (two stage

channels).

d. Distribution channel that uses three intermediary

traders. In this case the producer chooses an

agent as an intermediary to distribute the goods

to large traders who then sell them to small

shops. This distribution channel is also known as

the three stage channel channel.

From some of the distribution channels

above, the manufacturer will see which distribution

channel is the most suitable for the product or item

being marketed. When the producer chooses a direct

distribution channel, of course the producer will sell

the product without intermediaries and will go

directly to the end-level consumer or the user. When

producers choose a distribution channel that uses

one intermediary, then in this case the producer does

not directly sell the product or goods to the final

consumer, but usually through selling it to retailers

and retailers will sell directly to the end consumer,

and usually the price sold by the producer to the

retailer is little cheaper than directly to end

consumers. Furthermore the distribution channel

with two intermediaries, this is usually already in

large sales, so there are large retailers first from

producers and from these large retailers will

distribute to ordinary retailers and eventually regular

retailers will sell directly to end-level consumers.

Finally, a distribution channel that uses three

intermediary traders, of course this is on a larger

scale than one, two and three distribution channels.

Rubber production distribution channels

according to the results of the study Setiawan et al.

(2015) stated that rubber marketing channels existed

through one intermediary, namely directly to

wholesalers, some through two channels, namely

from farmers, then to the next to wholesalers. This is

in accordance with Kotler's (1996) theory of

marketing channels.

In the marketing process, agricultural

products have several functions that must be

accommodated by the producers and elements

involved in distribution which are often functions

which cause problems that must be required by

producers and elements involved in the marketing

chain. These functions according to Mubyarto

(1997) consist of:

a. Purchase and collection, this is the function

concerned with the transfer or possession of a

number of items intended as production supply

or to meet the needs. In analyzing this purchase

there are a number of actions that must be taken

Rubber Production Marketing Strategy

1737

into account, namely fixing needs, seeking

sources of needs, price negotiations and official

transactions.

b. Sales and dissemination, this is an activity to

find and endeavor that goods that have been

produced or owned can be marketed

profitably.

c. Transport and transportation, is a function

that means moving a product from its source

of production to the market or consumer at a

certain time that is appropriately adapted to

the needs and interests of the market or

consumers. So transportation creates

usefulness of time and time.

d. Storing products (storage), this function is a

function that is almost found in each

marketing agency, this is a temporary

collection of products before being marketed.

e. Product processing, in the marketing system

here is not the processing of shapes, outside

sizes and so on, but in the form of sorting

these products.

f. Funding or financing, which is the provision

of a sum of money for a product sale and

purchase transaction.

g. Risk, is the function concerned with losses

arising from the lack of maturity of

consideration in making plans.

h. Market information, which is the information

search function about the market needed for

the preparation of product marketing policies.

Of the eight marketing processes

mentioned above, it can be seen from the marketing

of rubber production as to the purchase that will be

done by consumers (in this case the trader) will see

how the quality of rubber production will be sold so

that the buyer feels interested and the price is also as

desired, how is the sales and distribution process in

making sales, how about the transportation to be

used, when the sale is only the area around the seller

lives, it may not be a problem, but when the place of

sale is far from domicile, this is also one that must

be considered by seller.

1.2 Price Formation Mechanism

Price is a very important part in marketing a product.

According to Cannon (2008), prices are something

that must be given by customers to get the

advantages offered by the company's marketing mix.

According to another opinion, Basu (2005), price is

the amount of money (plus several products if

possible) that is needed to get a number of

combinations of products and services. Price is very

important because it is one of the factors that

determine the profit and survival of the company.

Pricing has an impact on adjusting the marketing

strategy taken. Price elasticity of a product will also

affect demand and sales.

Tjiptono (2008) states that basically there

are four types of pricing objectives, namely:

1. Goal-Oriented Goals

The assumption of classical economic theory states

that every company always chooses prices which

can produce the highest profit. This goal is known as

maximization profit. Nevertheless, in the current

global economy, profit maximization is very high

difficult to achieve, because it is difficult to estimate

the number of sales accurately at the level certain

price. Therefore, there are companies that use the

profit target approach, namely the level of profit that

is appropriate or expected as a target of profit.

2. Objectives Oriented to Volume

Companies that set prices based on certain volume-

oriented objectives are known as volume pricing

objectives. Prices are set in such a way as to achieve

the target sales volume.

3. Image-Oriented Objectives

The right pricing strategy will be able to determine

the company's image in the community. The

company can set high prices to form the image of a

prestigious company / product. It can also set a low

price to form a certain value image.

4. Purpose of Price Stabilization

This goal-based pricing strategy is very suitable to

be applied in markets where consumers are price

sensitive, where if a company lowers its price, then

the move will be followed by its competitors. This

condition underlies the formation of price

stabilization goals in certain industries whose

products are highly standardized, such as petroleum.

Stabilization objectives are carried out by setting

prices to maintain a stable relationship between a

company and the prices of industry leaders.

Prices in a business or business are very

necessary, because with the price will be known the

benefits of one's business activities. No exception in

marketing rubber production, it is very important to

see how the price is, because if the price can be sold

by a cheap farmer, then feel sorry for the farmers,

but this is one of the reasons why the price is

involved when talking business.

As stated by Ningsih et al (2015) in his

research that prices are the most important to see,

the price information and prices at the farmer level

may vary based on the prices set in the sale and

purchase transaction. Traders set prices to farmers,

ICOSTEERR 2018 - International Conference of Science, Technology, Engineering, Environmental and Ramiﬁcation Researches

1738

of course, first know the price of the factory. Prices

for collectors and wholesalers differ from each

other. In reality farmers are still ready to sell their

crops to each trader and some farmers will not want

to move to other traders even though other traders

offer farmers higher prices. This happens because

farmers owe to the collecting traders, farmers also

feel that they are suitable with the traders. Traders

can create good relations with farmers and even

farmers have considered traders like their own

families.

1.3 Importance of Product Quality

Product quality is the first driver of customer

satisfaction and the quality of this product is a global

dimension (Durianto, 2004). According to Kotler

(2000) product quality is the overall characteristic of

a product that affects the ability to satisfy the stated /

implied needs. Product quality is a very important

thing in determining the choice of a product by

consumers. The product offered must be a product

that is really well tested about its quality, because

for consumers who are prioritized is the quality of

the product itself. Consumers will prefer and choose

products that have better quality when compared to

other similar products that can meet their needs and

desires.

According to Garvin, there are eight quality

indicators that can be used as strategic planning and

analysis frameworks (Tjiptono and Gregorious,

2008). The following is the eighth description of the

dimension:

1. Performance (Performance), which is the main

operating characteristics of the core product

purchased and the ability to carry out the

functions of the product.

2. Display (Feature), which is a performance aspect

that is useful to add basic functions, related to

product choices and development.

3. Reliability, namely the possibility of an item

successfully carrying out its function every time

it is used in a certain period of time and under

certain conditions.

4. Conformance, namely the extent to which design

and operation characteristics meet predetermined

standards.

5. Durability (Durability), relating to how long the

product can continue to be used. This dimension

includes both the technical age and the economic

life of the product.

6. Serviceability, namely the services provided are

not limited only before sales, but also during the

sales process to after-sales, which also includes

repair services and the availability of required

components.

7. Aesthetics (Esthetic), which is the attraction of

the product to the five senses and is a subjective

characteristic of aesthetic values related to how

consumers expect quality or quality.

8. Perceived quality, namely the image and

reputation of the product and the company's

responsibility towards it. Quality is a factor that

is contained in a product that causes a product to

be valued in accordance with the intent for what

the product is produced.

According to Kotler (1998) products are

all things that can be offered to a market to meet the

wants or needs. So, basically the product is

everything that can meet the needs or desires of the

community or consumers. For companies that

produce a product or service, the product is a tool or

means to achieve the target, namely the company's

profit or specific purpose.

In this era of globalization, it seems that

people or consumers are increasingly critical in

assessing a product. Stanton (1985: 285-286) gives

an understanding of product quality a guarantee in

order to meet the needs of consumers in choosing a

product and in this case the image of personal sense

plays a role.

The quality of a product is needed when

you want it to be marketed. Rubber production with

good quality will be more expensive, if the rubber

production produced is not good, like many mixtures

such as wood and others, the price of rubber will

also be cheaper. Research like this has been done by

Aini et al (2017) Rubber product quality (product

aspect) becomes the initial mouth for determining

price, place, promotion. As long as farmers still

maintain rubber products in the form of ojol (lump),

marketing by relying on networks with tauke

(promotion) in traditional markets (place), farmers

will always get cheap prices. This pattern must be

realized as a chain of rubber price impartiality for

farmers. Changes and improvements in rubber

farming make farmers aware of the importance of

changing the marketing strategy of rubber products

in accordance with market demands. Farmers and

farmer groups must carry out segmentation,

targeting and repositioning with the current

marketing patterns. This concept will relate to the

marketing mix pattern which includes product, price,

promotion and place aspects. This aspect of the

marketing mix can be strengthened through

improvements in the product, institutional, and

regulatory aspects to increase market alignments for

farmers' rubber products.

Rubber Production Marketing Strategy

1739

2 CONCLUSIONS

The price formation strategy for rubber production

can be seen from several aspects, including through

marketing channels, how the marketing channels are

carried out in marketing these products.

Furthermore, in terms of price, the price of a product

can be seen based on product quality, if the product

quality is good, the higher the price, and vice versa,

if the quality of a product is not good, then the price

will usually be low.

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