Environmental analysis of Smart Sago (SS) product marketing strategy

 
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EurAsian Journal of BioSciences
                 Eurasia J Biosci 13, 207-211 (2019)

                 Environmental analysis of Smart Sago (SS) product
                 marketing strategy
                 Sofyan Samad 1*, Abd Wahab Hasyim 2
                 1
                   Faculty of Agriculture, Khairun University, Jalan Batu Angus, Dufa-dufa, North Ternate, Akehuda, North Maluku
                 97719, INDONESIA
                 2
                   Faculty of Economic, Khairun University, Jalan Batu Angus, Dufa-dufa, North Ternate, Akehuda, North Maluku
                 97719, INDONESIA
                 *Corresponding author: sofyan.samad1970@gmail.com

                     Abstract
                     This environmental study aimed to characterize alternative strategies for marketing of the smart sago
                     (SS) product by observing the implementation of marketing, segmenting and targeting, and
                     positioning strategies using a SWOT analysis. Data were collected through observation, interview,
                     and documentation, and analyzed with data reduction, presentation, and conclusion. The strategy
                     applied was to segment the market for SS in terms of people commonly divided in regions in North
                     Maluku with an average age between 30 and 60 years old. The positioning of the product was focused
                     on the development of the SS product that makes it distinct in terms of flavor and smell, and creation
                     of a high-quality product. The development of smart sago is seen as the appropriate approach due
                     to the fact that the business unit will encounter many environmental opportunities and has the
                     strengths to use those opportunities to its advantage.

                     Keywords: marketing strategy analysis, product development, smart sago, high-quality product

                     Samad S, Hasyim AW (2019) Environmental analysis of Smart Sago (SS) product marketing
                     strategy. Eurasia J Biosci 13: 207-211.

                     © 2019 Samad and Hasyim
                     This is an open-access article distributed under the terms of the Creative Commons Attribution License.

   INTRODUCTION                                                          From the explanation above, development of the
                                                                     smart sago product (flattened sago) requires relevant
    Product development of cassava-based foods is a                  strategies following the dynamic in consumer taste in the
strength in both local and national markets, for the                 market environment, developing products with emphasis
cassava is the third main food in Indonesia after rice and           on the effort to design safe packaging, appropriate
corn (Kheiry et al. 2013). The demand for cassava-                   labeling in accordance with product standards, and an
based foods provides opportunities in the market to                  expiry date. Thus, an integrated marketing plan requires
develop products. Based of BPS North Maluku in 2012,                 the right marketing strategy approach, as cassava-
high demand for cassava in Indonesia especially North                based products are already found in the local market. In
Maluku, is indicated by high utilization of cassava in               this study, our smart sago product is distinguished by
North Maluku. The harvest and production of palawija in              distinct flavors—strawberry, lemon, mango, and
a district/city with an area of 11.770 Ha generates                  chocolate—to change perceptions (market) of the
34.621 tons per year, which is directly consumed by                  product (sago) which has long been distributed in the
people. This strongly promotes interest in developing                local and regional market (Zeithaml et al. 2009).
cassava-based products, including the smart sago                         Product diversification is important in creating a
product, as functional foods. (Bayramlar et al. 2015,                cassava-based high-quality product. Furthermore, the
Erbaba and Pınar 2015).                                              strategy involves a range of marketing devices, including
    Flattened sago is commonly used in North Maluku                  product design in accordance with affordable price,
and Maluku and in nearby regions such as Sulawesi and                promotion, and effective and efficient distribution. These
Papua. Flattened sago is also commonly marketed                      are all important factors in developing the smart sago
directly without packaging. Food packaging is tightly                product at the local, regional, and national scale.
correlated with hygiene, safety, and eligibility to be               Therefore, the suggested marketing activity of the
consumed, and also affects the storage period and                    ongoing business is to consider the strategy needed to
consumer interest. The flattened sago industry in                    deliver products to the customer that can be adjusted in
Ternate has not paid attention to such issues. Labelling
in terms of an expiry date is essential for safety. There
are no foods that have unlimited endurance, which                                                          Received: September 2018
means all foods will eventually decay (Coles et al. 2003).                                                    Accepted: March 2019
                                                                                                                  Printed: May 2019

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EurAsian Journal of BioSciences 13: 207-211 (2019)                                                                                      Samad and Hasyim

Table 1. Implementation of marketing mix for SS
Product                                                              Price                       Distribution             Promotion
- SS is a pastry consumed directly after being dipped in coffee - Pricing was conducted          - Simple distribution    - Sales promotion: Provide product
  or other drinks. Generally, it is shaped into four rectangles. It    following consideration     consisting of three      sample of smart sago to market
  has a firm texture, is light, has little taste, and swells rapidly   of competitors’ current     steps:                 - Utilize local website and social
  when dipped. It uses cassava as the raw material.                    pricing.                  1. Producer                media
Procedure:                                                           - Penetration Pricing       2. Distributor           - Cooperate with government to
• Cassava flour                                                                                  3. Final consumer          participate in exhibition of middle-
• Cakalang fish flour                                                                                                       micro business
• Mixing
• Sieving
• Cooking
• Drying
• Final product (Smart Sago)
Source: Managed data

Table 2. Implementation of segmenting, targeting, and positioning of SS
Market segment                               Determination of target market                           Positioning
- The SS market segment is people in the      - Geography: Ternate is the central marketing           - Traditional food-based product.
  regions of North Maluku: Ternate,             area.                                                 - Processed from cassava; laboratory tested to compare
  Tidore, South Halmahera, West               - Demography: Men and women aged 30 to 60                 with current products in market.
  Halmahera, North Halmahera, Middle            years; employees, public servants and retirees;       - Test of level of water, lipids, carbohydrates, and
  Halmahera and East Halmahera                  education from elementary school to doctorate.          protein.
- The segment primarily involves men and      - Psychography: social, middle upper, middle low.       - Distinct flavors and smell make it a competitive product.
  women aged between 30 and 60 years.         - Lifestyle: consumptive, creative, modern, critical.   - Free shipping distribution.
                                                                                                      - Durable and practical to carry (travel-friendly), and can
                                                                                                        be an alternative to sugary snacks.

terms of both physical and service characteristics.                                gathering documentation in terms of photos and notes to
Implementation of these strategies (market segmenting                              support and complete the analysis.
analysis, target market, and product position in the                                  Data were separated into main points, analyzed
market) requires relevant information (Akyürek et al.                              according to themes and patterns, and then reduced and
2015, Zeithaml et al. 2009).                                                       classified. Data were presented descriptively, organized
   Management of the marketing mix—consisting of                                   and arranged according to patterns of correlation. A
product, price, distribution channel, and promotion—can                            temporary conclusion was drawn, which was further
be effectively done by managing product attributes such                            changed in the next step.
as features, packaging, affordable price in accordance
with the target market, efficient distribution channels,                                RESULTS
and a promotion platform to achieve segment capacity
                                                                                       SS Marketing Mix
and target market. This study aimed to observe the
                                                                                       The marketing mix elements of a product are
implementation of marketing, segmenting and targeting,
                                                                                   essential for the development of the product. The
and positioning strategies, using a SWOT analysis to
                                                                                   marketing mix for SS is presented in Table 1.
determine alternative strategies for marketing the smart
sago (SS) product.                                                                     Segmenting, Targeting, and Positioning
                                                                                   Strategies of SS
      MATERIALS AND METHODS                                                            The three main strategies to achieve successful
                                                                                   marketing are: (i) segmenting; (ii) targeting; and (iii)
    This study used a descriptive approach,                                        positioning. Implementation interrelates these three
systematically describing the facts and characteristics of                         strategies, as shown in Table 2.
the studied object, including the price and distribution
                                                                                       Implementation of SWOT Analysis of SS
model for SS, and comparing these with a similar
                                                                                       SWOT analysis is a measurement of the strengths
product from competitors to consider the pricing plan
                                                                                   and     weaknesses,        opportunities   and   threats,
and strategy used for SS. This study was conducted on
                                                                                   encountered by the company. Through a SWOT
SS in Ternate, based on the production of SS obtained
                                                                                   analysis, an overview of the company’s situation can be
through a natural process, from seed screening, to
                                                                                   obtained to assist with its strategy.
cultivation, and production, which is different from the
traditional approach used by competitors in the local                                  SWOT and Product Development Strategies
market.                                                                                The production aspect requires a development
    The next step was data collection. This was done in                            strategy to fulfill the production plan and capacity. The
three ways: 1) direct observation of the production and                            SWOT analysis and subsequent development strategy
marketing strategy for SS, comparing the marketing                                 can be seen in Table 3; and SWOT analysis of the SS
model with that for similar products; 2) interviews with                           development strategy can be seen in Table 3.
the owner of SS and several producers in the local
market to ascertain marketing activities; and 3)

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EurAsian Journal of BioSciences 13: 207-211 (2019)                                                                                Samad and Hasyim

Table 3. SWOT analysis of SS
                                                  Internal     Strengths (S):                         Weaknesses (W):
                                                               1. Easy production which doesn’t       1. Lack of tools for quality control plan.
                                                                  requires sophisticated technology   2. Lack of technical skill in quality control
External                                                       2. Quality control is available
Opportunities (O):
1. There are many suppliers of materials, both local and
                                                                               (S) – (O)                                    (W) – (O)
    regional in the same province
2. Production tools are available
Threats (T):
1. Limited area of cultivation of raw materials in long term                   (S) – (T)                                     (W) – (T)
2. High cost of supplementary materials

                                                                                accordance with the new product characteristics in the
    DISCUSSION                                                                  marketing area, especially in the local area.
     Based on Table 1, implementation of the marketing                              As a first stage, the type of promotion used was sales
mix for SS focuses on the idea that smart sago can be                           promotion, by giving a sample of smart sago to the
directly consumed after being dipped in a drink, as well                        reseller and another distributor. The promotion was also
as being cooked into a porridge or sweet jelly. Shape,                          conducted by utilizing the local website and social
size, and color vary depending on its maker or cook; they                       network to minimize the cost.
are also dependent on the type and color of the starch                              To increase promotion of SS, it is essential to build a
sago as raw material. Generally, flattened sago is                              partnership with associated parties such as the
flattened into four rectangles. This food is firm, light,                       Department of Industry and Commerce, the Department
tasteless, and relatively hygroscopic: it rapidly swells                        of Cooperatives, and the Department of Tourism to
when it is dipped in drink. Flattened sago contains low                         participate in bazaars or exhibitions, and to be able to
protein. Flattened sago is made of half-wet/half-dried                          offer economies of scale. Moreover, there is an order
cassava flour which is gently crumbled. Production of                           system for smart sago. Referring to Rewoldt et al.
smart sago is performed through many processes. SS                              (2005), to determine the best method by which to sell a
should consider aspects such as package design, smell,                          product, the main decision focuses on the most effective
and flavor, and the distinct texture that differentiates it                     promotion combination. According to Kotler and Keller
from competitors. Cravens and Piercy (2006) states that                         (2009), there are several forms of promotion that can be
a product is “anything that is potentially valued by a                          used to deliver a product message to customers.
market target for the benefits or satisfaction it provides,                     Implementation of promotion is conducted through a
including objects, service, organizations, places, people,                      range of activities, namely advertising, sales promotion,
and ideas”.                                                                     publicity, and personal selling. Zeithaml et al. (2009)
     Smart sago pricing is set in accordance with the                           state that advertising is a non-personal presentation
target market. Usually, similar cassava-based products                          paid to offer a product. The message is spread via
already exist in the local market, therefore the pricing                        television, radio, newspaper, magazine, outdoors, and
strategy will likely take the target market strategy into                       the internet. Setiadi (2008) states that advertising is
account without neglecting the real main price                                  composed of six elements: (i) paid communication; (ii)
calculation (Palabıyık et al. 2017).                                            identification of sponsor; (iii) persuasion to affect
     The penetration pricing strategy of SS is based on                         customer; (iv) medium as a platform to deliver the
similar products of fellow competitors and aims to make                         message to target audience; (v) non-personal; (vi)
the product price lower: a characteristic of the                                audience as the customer and message target.
penetration pricing strategy is that price is lower than                        Referring to Kennedy and Soemanagara (2006),
fellow competitors in the market. Price also facilitates the                    publicity is a tool that strongly affects public opinion of
positioning value of the product or company brand in the                        the desired situation.
market (Kotler and Keller 2009). According to Tjiptono et                           As shown in Table 2, looking at implementation of
al. (2008), price is the only element of the marketing mix                      segmenting, targeting, and positioning of smart SS, to
that provides income to the organization.                                       sell smart sago it is necessary to perform market
     Initially, exclusive distribution was chosen as the                        segmenting in which the market segment for smart sago
distribution channel for SS, in which marketers employ                          is people commonly divided into regions in North
just one person/specialized mediator to distribute the                          Maluku: Ternate, Tidore, South Halmahera, North
product in a particular region on the condition that the                        Halmahera, West Halmahera, and Middle Halmahera.
mediator is not allowed to sell products from other                             The age segment is between 30 and 60 years, these
suppliers. This requires harmonized cooperation                                 being the people more likely to consume the product in
between the supplier and the mediator. The next stage                           quantity, as compared to those aged below 30 years.
was selling to the customer through the mediator and                                A study conducted by Iskandar (2015) reported that
distributor. These two stages were chosen in                                    identifying the customer target consists of geography,
                                                                                demography (age, sex, and education) and

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EurAsian Journal of BioSciences 13: 207-211 (2019)                                                                             Samad and Hasyim

Table 4. SWOT analysis of marketing strategy of SS
                                                 Internal   Strengths (S):                                        Weaknesses (W):
                                                            1. Easy production due to availability of materials   1. Low promotion budget
                                                            2. Tools that support distribution and marketing      2. Simple promotion plan
External                                                    3. Distinct flavor to increase product value          3. Relatively high cost of the product
Opportunities (O):
1. Local and outdoor markets are widely available East
    Indonesians                                                                   (S) – (O)                                     (W) – (O)
2. Sufficient amount of raw materials
3. Main food for East Indonesians
Threats (T):
1. Many competitors both local and regional
                                                                                  S) – (T)                                       (W) – (T)
2. Smart sago is barely known in market
3. Lack of networking to the market outside.

psychography (social class and lifestyle). Ternate is the                      Strategy (W)–(O): a) Use food-grade packaging and
main target for SS customers. Ternate is a strategic                        containers for production, or packaging composed of
place because it is the first capital city of North Maluku.                 safe materials in accordance with standardized product
Later, North Maluku developed into North Maluku                             quality.
province, so Ternate was a temporary capital city.                             Strategy (W)–(T): a) Use simple and efficient quality
Ternate is an archipelago region. Demographically,                          control by utilizing the limited room available; b) develop
Ternate is populated not only by the native population of                   technical employment to increase capacity of quality
North Maluku, but also by people coming from Java dan                       control of SS.
Sulawesi. Those characteristics are therefore taken into                        Development of SS Marketing Strategy
consideration in the SS target market. Demographic                              Strategy (S)–(O): a) Utilize available tools to
factors are also included, these consisting of men and                      accelerate distribution in both local and non-local
women aged 30–60 years that work either as public or                        markets; b) Utilize available materials to enhance SS
private servants and whose academic background                              product capacity; c) develop flavor to increase the sale
ranges from elementary school to a doctoral program.                        value of smart sago; d) take advantage of opportunities
Psychographic factors consist of low- and upper-middle                      to be a market leader by expanding distribution and
class, and a lifestyle that is largely consumptive,                         market.
creative, modern, and critical.                                                 Strategy (S)–(T): a) Elevate the service by utilizing
    The positioning of smart sago aims to place the                         facilities—i.e. maximize phone service for orders and
product as an excellent local and regional product;                         complaints; b) optimize promotion activities to introduce
although sago products made from cassava are                                the new product, and use distributive tools as promotion
currently available in the market, smart sago                               tools.
emphasizes its distinct flavor and smell. The quality of                        Strategy (W)–(O): a) Widely use an efficient and
smart sago is different from other cassava-based                            affordable promotion strategy through a local network to
products because it has undergone scientific tests in the                   become very familiar among local people; b) suppress
laboratory such as measurement of water, lipids,                            the distribution cost and supportive materials to
carbohydrates, and protein level.                                           minimize additional outlay that causes higher costs.
    To guarantee continuity of smart sago orders in                             Strategy (W)–(T): a) Increase and maintain product
Ternate, SS also distributes orders without an additional                   quality to balance against the price of competitors; b)
shipping cost. Another advantage of SS is that this                         add promotional activities to become well known.
product is not easily broken: it is therefore travel-friendly,                  The SWOT analysis was used to analyze the
as well as a healthy alternative snack. Analysis of the                     development of smart sago and its appropriate
production and development of SS used a SWOT                                marketing strategy. A growth strategy is the appropriate
analysis approach (Tables 3 and 4), that described the                      approach: the business unit may encounter many
following.                                                                  environmental opportunities and has strengths to utilize
    Production of SS                                                        of those opportunities. According to Udaya et al. (2013),
    Strategy (S)–(O): a) Select appropriate technology to                   a tendency in an environment that can be utilized by
generate optimal and more efficient production to fulfill                   industry is an opportunity. Moreover, Siagian (2012)
production plan; b) select supplier near production                         states that SWOT is an effective instrument by which to
center (manufacturing location) to assist in monitoring                     perform a strategic analysis: it encourages the ability in
the quality of materials.                                                   strategic decision making to maximize the role of
    Strategy (S)–(T): a) Build a partnership with the                       strengths     and    opportunities   while    minimizing
government to free the cultivation area to enhance the                      weaknesses in the organization and suppressing
capacity of material cultivation; b) quality control to                     emergent threats. According to Hunger and Wheelen
control materials consumption so that it is optimal and                     (2003), analysis of the situation is the first stage of
efficient.                                                                  strategy arrangement. It is also necessary for the

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EurAsian Journal of BioSciences 13: 207-211 (2019)                                                  Samad and Hasyim

strategic manager to find a strategic compatibility among     distinctive flavor and smell. The quality of smart sago is
external and internal opportunities.                          different from other similar products, because it is
                                                              scientifically tested to measure water, lipids,
   CONCLUSION                                                 carbohydrates, and protein level.
    Implementation of the marketing mix consists of               SWOT analysis was used to analyze the
components such as product (tasteful packaging, smell         development of smart sago and its appropriate
and flavor, distinct texture), price (penetration price       marketing strategy. Thus, a growth strategy is seen as
strategy), distribution (exclusive distribution and direct    the appropriate approach due to the fact that the
selling without mediator/distributor), and promotion          business unit will encounter many environmental
(sales promotion and local web site/social network).          opportunities and has the strengths to use those
    The market segment of smart sago is people                opportunities to its advantage.
commonly divided into regions in North Maluku: Ternate,
Tidore, South Halmahera, North Halmahera, West                   ACKNOWLEDGEMENT
Halmahera, and Middle Halmahera. The age segment is             The author thank to Directorate General of Higher
between 30 and 60 years, the segment which is                 Education Indonesia for facilitating this research.
assumed to consume the product highly compared to
those below 30 years. Ternate is the main target for the         FUNDING SOURCES
SS customer, who belongs to the low- and upper-middle            This research received funding from Directorate
class. Smart sago aims to position itself as an excellent     General of Higher Education Indonesia by Masterplan
product in both the local and regional markets. Although      for the Acceleration and Expansion of Indonesian
sago products made from cassava are currently                 Economic Development (MP3EI) Research Program
available on the market, smart sago’s emphasis is on its      2016.

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