The Dynamics of Marketing Channels for Partnership Pattern Laying Hens in Kendari City, Indonesia
R Astarika1, D Zulkarnain2, L O A Sani2, A S Aku2, L O Nafiu2, M A Pagala2, A Tawai3, L O M Munadi1, Y Yaddi1
1Faculty of Science and Technology, Terbuka University, Kendari City, 93232 Indonesia
2Faculty of Animal Science, Halu Oleo University, Kendari City, 93232, Indonesia
3 Faculty of Social Science and Political Science, Kendari City, 93232, Indonesia E-mail: [email protected]
Abstract. Laying hens represent a promising livestock sector with considerable potential, known for its positive impact on public health. This research delves into an in-depth analysis of the intricate channels and strategies involved in egg marketing within Kendari City. The study is scheduled from January to April 2023 and will employ a meticulous selection of locations. With a primary focus on laying hen breeders, the investigation aims to examine all aspects of egg distribution comprehensively. The study's scope encompasses a comprehensive exploration of various dimensions, including characteristics of respondents, marketing agencies, marketing channels, marketing margins, costs, and profits associated with each marketing agency. These variables are meticulously measured and subjected to qualitative and statistical analysis. The findings of the research reveal the existence of four distinct patterns in the egg marketing channels operating within Kendari City, (1) breeders → companies → wholesalers → retailers
→ consumers, (2) breeders → companies → wholesalers → final customers, (3) breeders→
companies → traders’ retailers → consumers, (4) breeders → companies → consumers. The first marketing channel pattern's largest margin is IDR. 17.500/rack, while the fourth marketing channel's lowest margin is IDR. 4.000/rack. The fourth marketing channel, IDR 5.318/rack, has the largest investment. The first marketing channel, with a profit of IDR. 12.182/rack is the most profitable. The fourth marketing channel, which has the lowest marketing margin value, is the most effective marketing channel employed by end users.
Keywords: Marketing channel, Partnership Pattern, Laying Hens
Laying hens comprise a livestock domain teeming with substantial potential and prospects. Eggs sourced from poultry exhibit widespread consumption due to their notable protein content, rendering them conducive to growth and well-being [1]. Eggs extend beyond their culinary application and harbor promising trade opportunities, serving as a lucrative source of income. Moreover, contribute to creating employment avenues, enabling traders to facilitate the distribution of eggs to end consumers[2].
Marketing is an element that can incur costs because without distribution, costs cannot be done perfectly, and products cannot be distributed to consumers [2] with competition to market the product [3].
Companies must know the characteristics of the market and market structure in producing consumer needs [4],[5]. The role of the marketing channel is so important for running a business because it can support the smooth running of a product or service from producers to consumers [6],[7]. Marketing can be done directly that is done directly to the final consumer, and indirect marketing can be done through 1. Introduction
agents, wholesalers, and retailers [8],[9]. Marketing channels are carried out to provide convenience for consumers to fulfill their life needs [10],[11]. Marketing channels are used by producers in distributing goods from producers to consumers because the right distribution channels affect the flow of goods movement [10],[12].
The City of Kendari houses approximately 27.670 laying hens. In 2022, these hens are projected to produce around 17,816 tons of eggs. Significantly, the Baruga District in Kendari City, with its population of 23,650 laying hens, is responsible for an annual production of about 15.228 tons of eggs.
This accounts for roughly 85% of the total egg production in the city. In Kendari City, there is a noted presence of "race" chickens. The Kendari City Government has set up a breeder group of 17.000 laying hens to augment egg production from purebred chickens. This initiative particularly targets the enhancement of egg production in the Baruga District.
The form of partnership between CV. Anging Mammiri and the Berkah Mandiri breeder group collaborate in laying hens’ management. The company provides laying hens DOC, feeds, and assists in marketing the product. At the same time, the farmer group manages the laying hens by caring for them, handling diseases, and assisting partners (CV. Anging Mammiri) in marketing livestock products like chicken eggs. The background description in this study shows quite clearly how the company and breeders will implement the form of marketing channels and systems. So, it is necessary to research marketing analysis of partnership pattern eggs in Baruga District, Kendari City.
2.1. Study Time and Location
The research was conducted from January to April 2023 on a group of Berkah Mandiri laying hens in Baruga District, Kendari City.
2.2. Data collection technique
Data collection involves utilizing breeders as the focal point of investigation to assess diverse facets associated with the marketing channel of the Berkah Mandiri breeder group. Specifically, the selection of research sites for this study was carried out through purposive sampling, taking into account several factors, notably: (1) the breeder group encompasses a population of 4.609 laying hens, and (2) the farm's geographical location holds significant strategic value due to its proximity to the city center.
The study incorporates two distinct types of data: secondary and primary. The acquisition of primary study data employs a combination of observation and interview methodologies. The observation techniques are geared towards visually detecting and identifying occurrences pertinent to the study's scope. Conversely, interview sessions were conducted with farmer groups to elicit data directly from their perspectives.
2.3. Research variable
The observational variables encompassed within this study encompass a spectrum of facets, encompassing the attributes of respondents, marketing agencies, marketing channels, marketing margins, costs, and profits associated with each distinct marketing agency.
2.4. Data analysis
Study data that was found at the time of the study, especially regarding the business of laying hens in the Berkah Mandiri group, was tabulated descriptively. Furthermore, Margins and profits for marketing institutions are analyzed using the following formula:
Marketing Margins (M= Hb – Hp)
Information: M = Marketing Margins Hb = Purchase Price Hp = Sales Price Marketing advantage (π = ML – TC)
Information: π = Institutional Profits (IDR/rack)
ML = Marketing Agency Margins (IDR/rack)
TC = Total costs incurred by each marketing agency (IDR/rack) 2. Study Method
3.1. Characteristics of Respondents
A noteworthy observation emerged throughout the survey and identification phase conducted within the research implementation. The breeders' age and the age of the marketing entities—namely, companies, wholesalers, and retailers—associated with the Berkah Mandiri breeder group averaged 37 years. The influence of age on an individual's physical capacities and entrepreneurial perspectives is significant.
The outcomes indicate that the participants fall within the working-age bracket and possess substantial business acumen derived from practical experience. This aligns with the assertion [13] suggesting that the management of laying hens predominantly rests in the hands of individuals who are not only seasoned but also well-versed across various dimensions of animal husbandry.
Education plays a pivotal role in shaping the perspective of breeders regarding the adoption of diverse technologies and innovations geared towards enhancing outcomes within the livestock business domain.
The respondents' educational attainment examination revealed that three individuals (27%) possessed education at the Vocational High School (SI) level. In comparison, eight individuals had completed their education at the high school level (73%). It is imperative to acknowledge that a higher level of education within an individual's background undoubtedly exerts a notable influence on the caliber and efficiency of their endeavors in business development, thereby impacting overall quality and productivity [14].
The spectrum of livestock business experience among the respondents spans approximately 8.5 years. The study's findings underscore that, on the whole, the participants possess a notably robust background in effectively steering livestock enterprises, with a pronounced emphasis on the management of laying hens. This substantial experience equips most respondent farmers with the ability to navigate challenges arising from price fluctuations. Undoubtedly, this accrued experience bestows distinctive advantages upon these farmers in the execution of their business operations, as it significantly streamlines the resolution of myriad business issues [15].
3.2. Marketing Channel Pattern
The entities engaged within the marketing trajectory of purebred chicken eggs within the Berkah Mandiri breeder group encompass the following stakeholders: (1) breeders, (2) corporations, (3) wholesalers, (4) retailers, and (5) end consumers. The study's outcomes revealed the existence of four distinct patterns characterizing the channels through which eggs are marketed within the Berkah Mandiri breeder group:
1. Breeder → Company → Wholesalers → Retailer traders → End consumers.
2. Breeder → Company → Wholesalers → End consumers.
3. Breeder → Company → Retailer traders → End consumers.
4. Breeder → Company → End consumers.
The preeminent approach companies adopt for egg marketing is the 1st marketing pattern. In this scheme, eggs are predominantly channeled through marketing agencies, a preference more pronounced than other marketing patterns. The distribution of goods can encompass a direct route from producers to consumers or be undertaken indirectly [16]. Indirect dealers mean using dealers or distributors, while direct dealers mean no need for dealers [17],[18].
3.3. Marketing Margins
The disparity between the price paid by consumers for eggs and the price remunerated to farmers characterizes the distribution margin. This term also encapsulates the compensation accorded to breeders of laying hens. The computation of the distribution margin follows the method outlined in reference [19], entailing the deduction of the purchase price from the selling price. Table 1 presents the delineation of various market channels: (1) In Market Channel (I), the institution boasting the highest marginal value orchestrates the distribution at IDR. 11.500/rack. This is attributed to the elevated selling price of eggs relative to a lower purchase price, particularly within the realm of retailers operating within Distribution Channel (II), (2) Market Channel (II) features the marketing agent with the most substantial marginal value, signifying the wholesaler at IDR. 5.000/rack, (3) Within Market Channel (III), the marketing agents with the preeminent marginal value are the retailers, with an average of IDR. 6.438/rack. This 3. Results and Discussion
prominence is underpinned by the enhanced packaging of eggs sold by retailers, thereby commanding higher selling prices and facilitating consumer accessibility for smaller quantities, (4) The solitary marketing agency within Market Channel (IV) is the company. The Berkah Mandiri breeder group's chickens are marketed both directly and indirectly. Direct marketing denotes the sale of eggs by traders directly to consumers sans intermediaries, thereby averting price or margin disparities. This mode of marketing is operational within Marketing Channel I. Indirect egg marketing, conversely, entails egg vendors engaging in marketing endeavors with the participation of intermediaries such as collectors and retailers.
The existence of intermediaries in the marketing of eggs causes a price difference at the level of traders and final consumers [20]. Chicken egg marketing is affected by the price of broiler chicken eggs.
The cheaper the egg price, the smaller the difference in price between the selling price and the buying price for purebred chicken eggs [21]. The difference in the selling price of a commodity in each marketing channel is due to the different marketing areas [22]. So traders buy at a lower price for maximum profit [23].
Table 1. Egg Marketing Margins in the Farmer Group Marketing
channel Status Egg Purchase Price (IDR/Rack)
Egg Sales Price (IDR/Rack)
Margins (IDR/Rack)
I Breeder - 35.000 -
Company 35.000 39.000 4.000
Wholesalers 39.000 41.000 2.000
Retail Traders 41.000 52.500 11.500
End Consumer 52.500 - -
Total Margins 17.500
II Breeder - 35.000 -
Company 35.000 39.000 4.000
Wholesalers 39.000 44.000 5.000
End Consumer 44.000 - -
Total Margins 9.000
III Breeder - 35.000 -
Company 35.000 39.000 4.000
Retail Traders 39.000 45.438 6.438
End Consumer 45.438 - -
Total Margins 10.438
IV Breeder - 35.000
Company 35.000 39.000 4.000
End Consumer 39.000
Total Margins 4.000
The company's margin through this avenue stands at IDR. 4.000/rack. Table 1 highlights the gross margin dynamics within Marketing Channel I. The apex gross margin within Marketing Channel I is recorded at IDR. 17.500/rack, deviating from the anticipated value of IDR. 583/rack. This divergence is attributed to the prevalence of more marketing agents than other marketing channels. Conversely, the marketing channel with the least margin is documented at IDR. 4.400/rack. Marketing Channel II displays a margin of IDR. 9.000/rack, while Market Channel III demonstrates a margin of IDR.
10.438/rack. This skew is rooted in the fact that the fourth marketing channel exclusively houses a solitary marketing agency tasked with distributing eggs to end consumers, chiefly business entities.
3.4. Costs and Profits of Marketing Institutions
The distribution of eggs from Berkah Mandiri breeders to end consumers entails incurring expenditures by marketing firms, expressed in rupiah per shelf. Conversely, profits for marketing agencies are determined by the disparity between the marketing margin and the corresponding expenses. Referring to Table 2, it's evident that Marketing Channel I boast the highest profit, amounting to IDR. 12.437/rack.
In contrast, Marketing Channel IV's lowest profit is IDR. 1.691/rack. This variance can be attributed to the considerable distance and greater number of marketing agencies in Marketing Channel I. It's worth noting that marketing costs and trade margins escalate with the extent of the distance traversed and the number of intermediaries engaged in the process.
Table 2. Costs and Benefits of Marketing Institutions Marketing
channel Status Margins
(IDR/Rack)
Cost (IDR/Rack)
Profit (IDR/Rack) I Breeder - - -
Company 4.000 2.089 1.911
Wholesalers 2.000 729 1.271
Retail Traders 11.500 2.500 9.000
Total 17.500 5.318 12.182
II Breeder - - -
Company 4.000 2.089 1.911
Retail Traders 5.000 729 4.271
Total 9.000 2.818 6.182
III Breeder - - -
Company 4.000 2.089 1.911
Retail Traders 6.438 950 5.488
Total 10.438 3.039 7.399
IV Breeder - - -
Company 4.000 2.809 1.691
Total 4.000 2.809 1.691
The comprehensive cost associated with Marketing Channel I, as depicted in Table 2, stands at IDR.
5.318/rack. For Marketing Channel II, the cost per rack amounts to IDR. 2.818, whereas Marketing Channel IV incurs a cost of IDR. 2.089/rack. Similarly, Marketing Channel III exhibits a cost of IDR.
3.039/rack. Each marketing agency is characterized by a distinct array of marketing expenses, with this divergence arising from the varying levels of engagement exhibited by each agency throughout the marketing process.
Based on the results of the study, it was concluded that there were four patterns of egg marketing channels in the Berkah Mandiri breeder group, (1) breeder → company → wholesalers → retail traders
→ end consumer, (2) breeder → company → wholesalers → final consumer (3) breeder → company → retail traders → end consumer, (4) breeder → company → end consumer. The I marketing channel pattern's maximum margin is IDR. 17.500/rack and the IV marketing channel's lowest margin is IDR.
4.000/rack. Marketing Channel IV costs IDR. 5.318/rack more than any other marketing channel. The I IDR. 12.182/rack marketing channel has the most profit.
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