Developing a Marketing Strategy for Selling High Value Nusa Tenggara Barat Beef in Selected Urban Markets in Indonesia

Abstract

<p>Beef demand in Indonesia is increasing due to population growth and the shift in consumer preferences towards beef. In recent years, the number of restaurants, food stalls and meat shops that sell beef has increased in urban markets in Indonesia. The demand for premium beef is now 10% of the total beef demand in Indonesia. Beef demand in Indonesia is fulfilled by both local production and imports from other countries" however, the majority of the demand for premium beef is fulfilled by imported beef, even though local production has the potential to meet the standards required by the demand for premium beef.</p> <p>This project innovation studies the development of an alternative marketing strategy for selling NTB beef in large urban markets in Indonesia. The outcomes of this study are recommendations to the local beef industry for the development of differentiated beef products for relevant markets in Indonesia. The recommendations are based on interviews with industry stakeholders, which provided information on the current condition of the industry and the way the beef value chain operates in each channel in Indonesia, and consumer surveys in each market, which provided information on consumers' preferences, their propensity to buy, and their willingness to pay for NTB differentiated beef in selected urban markets.</p> <p>The consumer survey interviewed 850 respondents and was conducted around meat shops, supermarkets, traditional markets, and food stalls in two big cities on Java Island, Bandung and Yogyakarta. The data were analysed using descriptive statistics, factor analysis, cluster analysis, discrete choice analysis, and multiple regression analysis. The majority of respondents surveyed in Bandung market (88.22%) and in Yogyakarta market (96.75%) indicated they would buy NTB differentiated beef. The industry should offer NTB differentiated beef that has used the halal slaughtering method, has a red bright colour, and is quality guaranteed by product certifications, as these attributes were indicated as determinants that can influence consumers' purchase decisions. The average premium consumers are willing to pay for NTB differentiated beef in Bandung market is Rp 16,818.18 per kg and in Yogyakarta market is Rp 32,374.37 per kg.</p> <p>Based on the results of the quantitative analysis and the literature review, the researcher developed a prototype product and conducted consumer interviews with 40 respondents in the Yogyakarta market to identify in more detail their perceptions, propensity to buy, and willingness to pay for a prototype of the final product, and there was a high level of acceptance of the presented NTB beef. One of the most important objectives of the consumer interviews was to check whether consumers who would buy NTB differentiated products and would be willing to pay premiums for the product would be happy to buy the NTB differentiated beef chilled or frozen and thus forgot freshness. The survey identified that the availability of the NTB differentiated beef as a chilled or frozen product did not affect consumers' willingness to pay a premium for high-quality NTB differentiated beef. This confirmed outcome not only makes it possible for the high-value NTB differentiated beef cuts to go through a process of aging to optimise the eating quality, but also opens up the opportunity to slaughter the animals in NTB province and send only the high-value cuts to urban markets on Java Island.</p> <p>Given the current conditions of the beef industry in NTB province, it is possible to produce high quality beef cuts that comply with safety standards. There are also two alternatives for produce high-quality NTB differentiated beef: the first is to slaughter the cattle in NTB province and send only the high-quality cuts to urban markets on Java Island, and the second is to send live cattle to be slaughtered in the abattoirs on Java Island. These two possible strategies have their own risks and benefits, and it is important to guarantee the quality of the product. The critical points of the strategy are the slaughtering process, transportation, and storage of the product until it is sold to the consumer. </p> <p>After comparing the two possible strategies and considering the beef industry stakeholder interviews, consumer surveys, and consumer interviews on the implementation phase and cost and revenue analysis, the recommended approach for the marketing strategy for the industry is to slaughter the cattle in NTB province and to sell the high-value cuts of beef (such as tenderloin, sirloin, chuck, and ribs) to urban markets on Java Island. In those markets, the high-quality beef cuts will receive higher prices based on the consumer willingness to pay premiums for high-quality beef products. The medium and low-value cuts of beef could be sold in the NTB local market at competitive prices. This strategy is chosen because during the penetration phase of the product, the demand for NTB differentiated is expected to be small with the potential to grow gradually. This strategy could be driven by butchers or retailers in urban markets. To make the chains sustainable, all of the actors should benefit from their activities, they should not harm the environment, and they should not negatively affect the social conditions in NTB and urban markets. Both strategies could be mixed when the product demand starts growing.</p>