Marketing Channel and Margin Analysis of Grouper in Pulau

Terong, Belakang Padang District, Batam

Karnila, and Shinta Wahyu Hati

Department of Business Management, Politeknik Negeri Batam, Jl.Ahmad Yani, Batam, Indonesia

Keywords: Marketing Channel, Market Margin, Grouper.

Abstract: This study aims to examine the pattern of marketing channels used by the Fishermen of Pulau Terong in

distributing fish to end consumers in Singapore and determine the amount of marketing margins between each

level of marketing used. The problems examined include internal and external factors that affect the

performance of fishermen in fishing efforts such as a lot of capital spent and adequate weather. The analytical

approach used is a qualitative descriptive analysis for marketing channel patterns and quantitative descriptive

in the form of a formula for calculating marketing margins.

1 INTRODUCTION

Batam is geographically one of the cities in Indonesia

which is located on the international shipping lane.

The area of Batam reaches 1,038.84 km2 and the area

of its waters is 2,791.09 km2. So, it can be concluded

that Batam has a greater water area than the land area.

Seeing from the sea area, many of Batam residents

also earn a living as fishermen, due to the supporting

geographical factors. some of them are in Pulau

Terong, one of the islands that is located in Belakang

Padang District, Batam.

Based on data from Pulau Terong Village, the

population of Pulau Terong is known to be 3,117

people with 963 households. Pulau Terong also has a

land area of 5.79 km2 with a sea area of 110.89 km2.

Pulau Terong is also one of the major fish productions

contributing islands in the Belakang Padang District.

The northern part of Pulau Terong is directly

bordered with Pecung and Kasu. The western part of

Pulau Terong is bordered with the Sea. The east itself

is bordered with Bulang Lintang island while the

southern part is directly bordered with Karimun

Regency. Pulau Terong is one of the islands

surrounded by the sea and it is reasonable if many of

the residents who work are mostly fishermen.

Fisherman is a term for people who work daily to

catching fish or another marine biota. According to

data from the village of Pulau Terong, it can be seen

that the number of fishermen is 563 people, which

means that more than 60% of the population of Pulau

Terong earn a living as fishermen.

Among a variety of fish found in the waters of

Pulau Terong, according to one of distributor on

Pulau Terong, there are several fish that are the main

products of Pulau Terong such as Mackerel,

Memparang, Tondan, Unga, and Grouper. One of the

biggest commodities in Pulau Terong is grouper fish,

both in terms of fishing and in terms of cultivation.

Grouper fish is one of the marine products that has a

high enough price and is usually exported abroad.

Based on the results of an interview with one of

the distributors on Pulau Terong, it can be seen that

the sale value of grouper fish from Pulau Terong can

be classified based on the types. Grouper fish can be

calculated from a price range of Rp. 25,000 to Rp.

200,000 per kg. The more difficult and rarer the fish,

the more expensive the price offered. Next, there are

8 types of grouper fish in Terong Island.

Table 1: Type of Grouper in Pulau Terong.

No Type of Grouper Price

1 Gopak Grouper Rp. 25.000

2 Rice Grouper Rp. 40.000

3 Black Grouper Rp. 60.000

4 Tiger Grouper Rp.70.000

5 Line and Line size

Grouper

Rp.70.000 and

Rp. 115.000

6 Gertang Grouper Rp.80.000

7 Cantang Grouper Rp.100.000

8 Sonu Grouper Rp.200.000

Karnila, . and Hati, S.

Marketing Channel and Margin Analysis of Grouper in Pulau Terong, Belakang Padang District, Batam.

DOI: 10.5220/0010354000210028

In Proceedings of the 2nd International Conference on Applied Economics and Social Science (ICAESS 2020) - Shaping a Better Future Through Sustainable Technology, pages 21-28

ISBN: 978-989-758-517-3

Based on the data in the table above, the lowest

price of grouper is found in the type of gopak with the

price of Rp. 25,000 which have the characteristic of

being brown with yellow speckled tails, while the

grouper fish with the highest price of Rp.200,000 is

owned by the Sonu grouper with the characteristic of

red colour and large size. The high level of price of

grouper makes fishermen directly sell grouper fish

directly to distributors as an intermediary to

consumers in the village, looking at the side of the

village economy. This price determination is also

seen from the high protein content of the Grouper.

Grouper fish such as Sonu are valued more highly

because of their large size and high protein content

according to one of the distributors on the Pulau

Terong called Mr. Eri (Research Informant).

Fish on Pulau Terong can be caught by using

various kinds of fishing gear such as Nelon Nets,

Tansi Nets, ordinary fishing rods or using Bubu and

aquaculture. Grouper fish in Pulau Terong itself are

mostly obtained using fishing gear and fish traps, then

they are distributed to fish distributor. The fulfilment

and distribution of grouper fish is also inseparable

from how the flow or Pattern of Marketing Channels

are found in Pulau Terong.

Marketing channels can be compared to pipelines

where water flows from its source to its final

boundary. Marketing Channels are a vital element in

the marketing activities of a product. Nowadays,

fishermen are not only faced with production

problems but also marketing and distribution

problems. How the fish can be caught by fishermen

and reach the consumers on time or can be more

efficient. Fishermen and distributor as well as

retailers must pay attention to the freshness of the

fish. Timeliness in the provision of ice and fish box

also affects the quality of fish to the end consumer.

Long distribution patterns can cause complexity and

inhibit the smooth arrival of fish into the hands of

consumers so that it can cause spoilage, quality

degradation, and lack of marketing margins.

Fishermen certainly expect a profitable marketing

margin for their business. To Get a profitable

marketing margin, fishermen must pay attention to

the quality of its products, distribution, and

marketing. Marketing is an activity carried out to

exchange offers between customers and producers to

create an agreement between the two parties.

Marketing was created to provide value in order to

achieve the target market and desired benefits.

Determination of price of grouper on Pulau

Terong is also seen from the interest of grouper

consumption by end consumers, the price of oil at the

time of distribution, to packaging of fish that requires

additional costs such as ice blocks and fish boxes.

However, in managing Marketing Channels, there are

still several obstacles and consequences such as

timeliness and the number and quality of consumer

needs.

2 RESEARCH FOCUS

The focus of this research was started from grouper

fish producers, in this case Pulau Terong Fishermen,

then continued with the distribution phase of the

marketing flow carried out by Distributors on Pulau

Terong or fishermen sending their fish directly to

distributors from Pulau Terong. The series of

processes is also accompanied by an analysis of

marketing margins arising from marketing channel

activities.

Figure 1: Research focus.

Researchers apply data analysis methods in the

form of qualitative and quantitative descriptive

analysis. To determine the market structure,

marketing channels, and market behaviour,

researchers used a qualitative descriptive analysis

while the quantitative descriptive analysis in this

study aims to analyse business income based on

revenue and costs from the distribution process,

marketing margins, as well as profits and costs. This

study also uses interviews and field observations,

which are collecting data with questions that are

directly given to informants and visiting survey sites

that related to research. This research was conducted

with analysing distribution patterns and also by

paying attention to marketing margins from the

relevant regions.

In conducting data processing, researchers used

several formulas, including:

1. Marketing Margins

M = Hp - Hb (1

)

Where:

M: Marketing Margin

Hb: Purchase rate price

HP: Price level of sales

2. Profit Margins

П = M - Bb (2

)

FISHERMAN

DISTRIBUTOR

ON PULAU

TERONG

ICAESS 2020 - The International Conference on Applied Economics and Social Science

Where:

П = Benefits

M = Marketing Margin

Bp = Marketing Costs

3. Marketing Efficiency

"MM" = SP / CP × 100% (3)

Where:

MM = Market Margin

SP = Selling Price

CP = Cost Price

Criteria:

 MM >50% means that marketing was efficient

 MM <50% means that marketing was Inefficient

3 RESULT AND DISCUSSION

Pulau Terong has six inhabited islands including

Pulau Terong, Tumbar, Geranting, Buce Island,

Tanjung Ladan Island and Seberang Island. The

population in the Pulau Terong urban village is 3,332

people with 989 families (family cards). Pulau

Terong has 5 units of neighborhood and 14 units of

hamlet. The land area is 5.79 km2 with the sea area of

110.89 km2. From this fact, it can be seen that most

of Pulau Terong is surrounded by ocean, so it is not

surprising that many residents of Pulau Terong make

a living as fishermen.

From the several fish commodities in Pulau

Terong, grouper is one of the biggest commodities

compared to other fish. According to one grouper

producer, high market demand for grouper is a

challenge for Pulau Terong fishermen to increase the

production and quality of grouper fish in their area.

the type of grouper that is most often obtained on

Pulau Terong is the type of grouper or regular grouper

which in one catch can reach up to 7 to 8 fish. Besides

that, there are also groupers of petals, rice, and also

sonu, which are often obtained by fishermen of Pulau

Terong, while the type of grouper abstraction, tiger,

and barren are rarely found by fishermen. The

groupers on Pulau Terong will be distributed to

distributors in Pulau Terong.

Marketing Channels are formed from the

relationship between producers, consumers and

intermediary traders. Marketing channel for grouper

in Pulau Terong involves fishermen to the consumer

that described in the picture below:

Figure 2: Marketing channel.

From the picture above it can be seen that the

grouper marketing channel in Pulau Terong begins

when there is a flow of information received from

each level or level of grouper marketing. Initially

from the Jurong Singapore distributors will first read

the market and consumer demand for grouper in

Singapore, then from Singapore distributors will

inform to distributor Pulau Terong about consumer in

Singapore that has a demand from the fish, both

distributors of fishing boat owners to the distributor

of Pulau Terong, then from these distributors arises a

request to fishermen to meet the needs of fish grouper

at the Singapore Market. Usually, there is no limit on

how many groupers that need to be supplied and

delivered to Singapore because of the large number

of fish in Singapore.

The marketing functions performed by fishermen

on Pulau Terong include:

1. Fish Sales. Pulau Terong fishermen sell their fish

directly to distributors, not to consumers directly.

2. Fish storage. Fishermen go out to sea for 3 days

so that the packaging and storage of fish must also

be considered by fishermen. Pulau Terong

fishermen use a box called pebe to store fish. The

pebe will later be filled with ice to maintain the

freshness of the fish.

The marketing functions performed by fishermen

on Pulau Terong include:

1. Purchase. The types of purchased by the majority

of traders are fresh fish at a relatively higher price

than fish that have experienced a decline in

quality.

2. Sales. The distributor resell fish without changing

the condition of the fish. In this case the collecting

trader only estimates the selling price that applies

in accordance with the market price.

Marketing Channel and Margin Analysis of Grouper in Pulau Terong, Belakang Padang District, Batam

3. Price Estimation. In estimating prices, distributors

are required to be able to estimate various types of

fish prices in the process of purchasing fish from

fishermen and reselling them to subsequent

distributors.

4. Sorting the quality of fish. The activity of sorting

fish in this case requires the traders to be able to

determine the quality of fish in order to obtain fish

that are in accordance with the desires and the

right price.

5. Fish packaging or storage. Distributors also carry

out fish packaging activities so that fresh fish is

guaranteed before reaching the hands of the next

distributor. This packaging is included in the

preservation of fish by using a box or fish crates

which contains ice cubes.

6. Fish Delivery. The fish that has been packaged by

the distributor will then be delivered to the fish

shipping vessel to Singapore.

The following is the flow pattern of the grouper

marketing channel in Pulau Terong:

Figure 3: Marketing channel pattern.

From the picture above it can be seen that the first

marketing channel, fishermen, sell their fish to

distributors in Pulau Terong. In Pulau Terong there

are 7 Distributors who have their subordinates

(fishermen) so that when the fishermen return from

fishing, fishermen directly distribute their fish to their

distributors except for a few fishermen who do not

have a permanent distributor, they tend to choose the

distributor who at that time provide the most

attractive price. From the distributor in Pulau Terong,

it is then distributed to the Distributor of the owner of

a fishing boat to Singapore. Furthermore, from the

distributor of the owner of the fishing boat, the fish

will be distributed again to Singapore's Jurong

Fishery Port. The vessel would check the immigration

office at Belakang Padang beforehand continue the

journey to Singapore. After the ship arrived in

Singapore, traders in Jurong will pick up the fish and

pay taxes to the owner of the ship while paying the

price of the fish. Furthermore, from traders in

Singapore Jurong, the fish are then distributed to

consumers by selling the fish at Jurong Singapore.

The second grouper commodity trading channel is

almost the same as the first marketing channel

pattern, except that the fishermen do not deliver their

fish through the intermediary distributor from Pulau

Terong but the fishermen distribute the fish directly

to the Distributor of the owner of the fishing vessel?

It is from the ship's distributor that the fish are

brought to Singapore as usual through immigration

checks and stop at Jurong Fishery Port and then the

fish are transported and paid for by traders in

Singapore Jurong. After that, Singapore Jurong

Traders will start distributing their fish to Singapore

consumers by selling the fish at Jurong Singapore.

The following is the flow pattern of the grouper

marketing channel from Pulau Terong Fisherman to

the distributor in Pulau Terong:

Figure 4: Marketing channel pattern.

From the picture above it can be seen the

correlation or relationship between fishermen and

distributors depicted with arrows indicating the

mutual relationship that occurs between the two

parties. When there is demand for fish from

consumers, the distributor who first has this

information will share it with fishermen, so the

fishermen will start fishing, using either a fishing rod

or using a trap. Previously, fishermen would first

prepare provisions and transportation for fishing

which usually takes place for 3 days at a time of

departure.

Usually in one departure, fishermen will need a

capital of Rp. 648,500 which includes the cost of

supplies, packaging, fish storage and transportation

used. Not all of this capital comes from fishermen,

they are also from distributors who provide loans to

fishermen in the form of purchasing machinery when

it is damaged or in the form of too long of fuel money.

This loan capital then binds fishermen to always sell

their fish to distributors who are owed. But there are

also some fishermen who use private capital to

finance all of their fishing costs so that fishermen like

this will not be bound to any one distributor and have

the right to sell their fish to the distributor who offers

the most attractive price.

In fishing, sometimes fishermen also experience

several obstacles such as uncertain weather

ICAESS 2020 - The International Conference on Applied Economics and Social Science

conditions and poor planning. The weather factor is

one of the important determinants for fishermen to get

fish. Unfriendly weather often inhibits fishermen

from catching fish because strong currents or high

waves make the fishermen's stability in fishing

disrupted and the fish obtained are not according to

the expected target. Usually fishermen will get fish in

satisfying and profitable quantities during the north

wind season, where the situation and conditions at sea

are very good and many fish commodities make the

fishermen always succeed in bringing home groupers

in large quantities and of course with high incomes

too.

Besides in the northern season, fishermen will

also usually get high income when the Chinese New

Year is getting close because the consumers will

accommodate and need a lot of fish, the more fish that

consumers want, the greater the offer of attractive fish

prices to distributors or fisherman. Likewise, for

Pulau Terong fishermen, by offering a high price

from the distributor, makes fishermen competing to

get a lot of fish at sea and get high prices on the price

of the fish so that it will increases income fisherman.

Besides the northern monsoon and Chinese New

Year, there are also several seasons which have a big

impact on reducing the income of the fishermen of

Pulau Terong. Among them is the south wind season

where the water usually becomes murky and many

fishermen choose not to go to sea at this time because

it can have a detrimental effect due to the fish

obtained cannot return the capital spent. In addition,

there is a western season where the wind at that time

will be very strong and make fishermen quite

dangerous to go to sea because of the swift currents

and unpredictable weather that makes it difficult to

concentrate on getting fish. In addition to the season,

other factors such as the presence of large vessels

anchored in the usual fishing grounds also disrupt the

fishing process, because sometimes the fishing rod or

nets used by fishermen for fishing get caught and

break up due to being hit by the ship and harming the

fisherman. Even though the docked ship has paid

Rp.10,000,000 per month, but that still does not cover

the loss of fishermen because the money will be

distributed to the entire community of Pulau Terong

even those who are not fishermen or who do not fish

in the area docked.

Regardless of the obstacles that fishermen face

when going to sea, the average fisherman will get a

few kilos of fish to be sold to distributors. Decisions

about the marketing channel system used are one of

the most important decisions faced by management or

business entities or individuals. All marketing

decisions are influenced by the channel chosen. But

at the same time, the marketing strategy is able to

influence the choice of the channel itself while still

paying attention to segmentation, targeting, and

positioning. Pulau Terong fishermen decide to sell

their fish directly to distributors without first selling

it to consumers directly. In contrast to research

conducted by Ezihe, et al (2014) which in addition to

going through distributors, consumers also buy fish

directly from fishermen. This is done with

consideration of the convenience of fishermen in the

transaction and also because the price sold for

grouper is very high so consumers on Terong Island

rarely buy this fish.

Table 2: Income of the Fisherman.

Fishermen can meet the target if there are dozens

of kilos of fish obtained that return the capital spent

by fishermen. The fish sold by fishermen also vary,

but the most obtained are grouper fish and unga. The

price of each fish certainly varies according to the

type of fish obtained. Fish groupers that commonly

obtained by fishermen, such as ordinary Line grouper,

black grouper, gopak grouper and sonu grouper have

varying prices that can range from Rp.25,000 -

Rp.200,000 per kilo. Usually, the grouper is obtained

according to size. Regular grouper for Rp.100,000 per

kilos is sold from fishermen to distributors.

From the picture above, it can be seen that if a

fisherman can produce 20 kg at a time at sea, the

fisherman will get a gross income of Rp. 2,000,000 so

that he can return the capital or costs previously

issued at Rp. 648,500 so that the total net income of

fishermen in one catch can reach Rp. 1,350,500.

Marketing Channel and Margin Analysis of Grouper in Pulau Terong, Belakang Padang District, Batam

Fishermen usually fishing grouper fish every 3 days,

so in 1 week, there are 2 fishing process and in one

month there will be 6 fishing processes, because 10

days at the end of the month will be a time for

fishermen to rest. Therefore, the income of fishermen

in a month can reach Rp.8,103,000. However, this

income cannot be determined precisely because the

amount of fishermen's income depends on the large

number of fish produced by fishing at the time. The

more fish obtained, the greater the income that can be

received by fishermen. Conversely, the smaller the

results of fishermen fishing, the smaller the income

earned which can even be a loss because they cannot

the capital such as capital at the sea, transportation

and storage capital.

In addition, the price of grouper can also increase

or decrease in accordance with the target in the

market and the quality of fish sold. If the number of

fish sold is small and consumers need a large supply

of fish, the higher the price of fish offered to

fishermen and distributors. On the other hand, if the

fish in distributor experience abundance, the fish

offered by fishermen will experience a slight price

decline and also have an impact on decreasing profits

of fishermen and distributors. But this rarely happens

because usually from the distributor side always

requires a supply of fish from outside. In addition to

fish quotas, the quality of fish is also a consideration

for the price of fish obtained, the better the quality of

fish maintained, the better the price given.

It is important for fishermen and distributors to

always maintain the freshness of the fish. It starts

when fishermen get fish while fishing. When going to

sea, fishermen must prepare a fish storage box in the

form of a box or pabe and also ice cubes that are put

in the box so that it does not melt easily. The fish box

is also given a small hole to keep the ice from melting

easily. When the fish is obtained, the fishermen will

let it die and then put it in a fish cage that is coated

with ice and closed as tightly as possible so that the

quality of the fish and ice is maintained. After

packaging and storage and fishing are finished, the

fish will then be immediately taken to the distributor.

When the fishermen are about to go home from

the sea, the fisherman will first notify via telephone

the distributor where the grouper is delivered and then

the distributor will prepare ice and fish storage and

wait for the fishermen to come home. After arriving,

there will be a process of transporting fish by a

distributor to the fish that the fisherman gets. Usually

the distributor will use a pulley or rope to lift the fish

from the sea. The fish that have been transported are

then separated by species and weighed for the amount

to be calculated. Usually, in determining the price the

distributor will take at least Rp. 5,000 - Rp. 10,000

per kilo of fish sold by fishermen. This advantage is

taken by considering the price of transportation,

storage, and also the fuel that will be spent by the

distributor when delivering fish to the next

distributor. The following is income from Pulau

Terong distributors

Table 3: Income of Pulau Terong Distributor.

If the distributor buys fish from the fisherman at a

price of Rp. 100,000, then the distributor will resell

the fish at a price of Rp. 110,000. That way, the

marketing margin obtained by the distributor is

Rp.10,000 (5.88%). If in a day the distributor delivers

an average of 100 kilograms of fish, the fish

purchased to the fisherman is Rp. 10,000,000 with a

total price of Rp. 11,000,000, taking into account the

transportation, storage, and fuel costs of Rp.305,000,

so that the total net income of the distributor is Rp.

695,000. If the fish calculated per kilo, a distributor's

profit of margin is Rp. 6,950 at a cost of Rp. 3,050.

Besides fishermen, distributors also experience

several obstacles in running their business. The

formal education of distributors in Pulau Terong is

still very low and makes the distributor's ability to

analyse fish quality and the lack of sensitivity to fish

quality so that sometimes distributors have to suffer

losses because they cannot identify and estimate fish

quality when they arrive at the next distributor.

Usually, fish delivered by fishermen will be paid

directly by the distributor at a price set by the trader

ICAESS 2020 - The International Conference on Applied Economics and Social Science

in Singapore. Furthermore, the distributor will

receive payment from the Singapore side after the fish

arrives at Singapore and the fish quality is checked. If

there is a change in quality, the distributor will suffer

losses because the price of fish will decrease

dramatically along with the decline in fish quality.

For example, the distributor pays Rp. 100,000 per

kilogram to fishermen and only receive half the price

from Singapore due to the reduction in fish quality.

Sometimes, the fish sent are not paid for or repatriated

because of very poor quality.

The distributor had first bought fish from the

fisherman at the normal price and got a refund at a

lower price and caused losses. In addition,

distributors always use family ways to establish

business relationships with fishermen. The same is

true of accounts payable and credit. Sometimes, in a

business, there are fishermen who find it difficult to

pay their debts to distributors who have previously

provided loans for business capital. Usually, if there

is a little fish season like the south season, distributors

tend to give loans to fishermen for the capital of the

sea because at this time, usually the fishermen will

need capital to cover a small amount of income and

this will also burden the distributor.

4 CONCLUSIONS

Based on the results of research and discussion,

conclusions can be drawn. The marketing channel of

grouper on Pulau Terong can be described from the

fishermen of Pulau Terong who deliver their fishing

products to distributors without first selling their fish

personally to consumers on Pulau Terong so that the

marketing pattern used in Pulau Terong is Indirect

marketing because fishermen on Pulau Terong prefer

to distribute their fish through intermediaries.

From the chosen marketing pattern, fishermen got

several problems in their marketing of fishing catch,

including limited information on grouper prices,

uncertain whether that makes it difficult for fishermen

to predict grouper catches. This is also influenced by

the formal education of Pulau Terong fishermen who

are still relatively low. For distributors themselves

there are several problems such as the declining

quality of fish when they arrive at consumers causing

a significant difference in prices between those given

by distributors to fishermen. In addition, there are

some fishermen who find it difficult to pay debts to

distributors, making distributors sometimes have to

lose money.

The marketing margin obtained by the distributor

is Rp. 10,000 (5.88%). If in a day the distributor

delivers an average of 100 kilograms of fish, the fish

purchased from the fisherman is Rp.10,000,000 with

a total price of Rp.11,000,000, taking into account the

transportation, storage, and fuel costs of Rp. 305,000

so that the total net income of the distributor is Rp.

695,000. If calculated per kilo, a distributor's profit

margin is Rp. 6,950 at a cost of Rp. 3,050.

ACKNOWLEDGEMENTS

Acknowledgments addressed to all of participant or

informant who helped researcher find data about

marketing channel in Pulau Terong. I would like to

thank the fishermen for providing information about

the fish and cost incurred. I am grateful for

distributors who have given information about

marketing channel from fishermen to consumers, cost

and margin of groupers, and also document needed to

support research. I am Thankful The head fishermen

in Pulau Terong who have given permission to carry

out research in Pulau Terong.

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