Assignment Cover Sheet
Sydney Graduate School of Management
School of Business
Nguyen Tuong Kim Vy
Unit Name and
200737 Marketing System
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Title of Assignment
Assessment 1: Case Study of a Marketing System
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Many years ago, in Viet Nam where I was born, when mentioned about marketing people
always thought that it was just about giving leaflet or advertising on television. However,
with the rapid growth of economy and the integration with the world, the awareness has
changed. With the basic knowledge I knew about marketing before taking this course,
marketing is the creation of marketing campaigns which can bring product’s image to
customers. But now, I do realize that marketing is far greater than that, it can decide success
or failure of a company, it is marketing system.
Understanding marketing system
First of all, there are several definitions about marketing system of various trustworthy
professors and associations. In 1960, according to American Marketing Association (AMA),
marketing could be defined as “the performance of business activity that directs the flow of
goods and services to the customer or ultimate user”. In this definition, marketing was
described as a distribution channel between goods or services and consumers but it had just a
part of marketing. Over the period, AMA (2007) has upgraded their definition that marketing
is activities of institutions as well as processes to create, communicate, deliver and exchange
products and/or services which can bring values for customers and society. Similarly, Philip
Kotler - master of marketing (1997) stated that marketing is a process of society and
management, through that people can attain their needs and wants by creating, offering and
exchanging products of value with others.
Besides that, in the article “Marketing system: A Core Marketing Concept” in 2007, Laytonthe author examined the central role of macromarketing in relation to marketing system.
Basically, macromarketing is the effect of marketing strategies and policies have on society
and the economy, it aims to the four P’s of marketing (product, place, price and promotion).
Moreover, macromarketing also creates the demand for goods and services and the flow for
products go smoothly to customers. What is more, Layton (2007, p.230) used the concept of
macromarketing to define marketing system: “it is a network of individuals, groups and/or
entities linked directly or indirectly through sequential or shared participation in economic
exchange that creates, assembles, transforms and makes available assortments of products,
both tangible and intangible, provided in response to customer demand”. In other words,
people, organizations or parties linked together through various distribution channels (direct
or indirect) to create a system, a network which can satisfy customer’s demands.
Additionally, Layton (2007, p.230) also indicated that assortments are the outputs of
marketing system. Assortments, in this situation, are set of products or services which are
distinguished by various factors such as location, time, price and quality. There are two kinds
of assortments: accessible assortment and desired assortment which can affect on the
efficiency of marketing system. For example, in Viet Nam, the motorbike Vespa LX is
assorted for high class people so this product is accessible assortment in this situation. In
contrast, with medium or low class people, this motorbike is desired assortment because they
want it but cannot achieve.
The five flows of marketing are mentioned by Fisk (1976, cited Layton 2007) which includes
ownership, possession, finance, risk and information. Although, the meanings of ownership
and possession are very confused, they are not similar. Firstly, possession is used when
people own real assets and has contribution in transactions to let customers use as they want,
while ownership is intangible and relates to cultural norms, behavior and legal rules. Then
finance directs the cash or even credit’s flow between buyers and sellers. Take risk is a part
of doing business but some solutions can be considered to minimize it as low as possible such
as carefully doing market research, choosing partner. Finally, collecting and collating the
economic and social information is an essential activity to achieve success. The foundation
of these flows is main factors for social, physical, economic and cultural infrastructure and
important for the operation of marketing system (Layton 2007)
In the journal “On Economic Growth, Marketing System, and Quality of Life”, Layton
(2009) indicated that marketing system plays a vital role in the economic growth and quality
of life. The changing of marketing system can affect positive or negative on the development
of economy as well as society. Furthermore, Layton (2011) stated that “marketing systems are
multi-level, path dependent, dynamic systems, embedded within a social matrix, and
interacting with institutional and knowledge environment” (p.259). Social matrix is the
exchange value between individuals and others. These are components which included in
social matrix: exchange logic, flows, roles, networks, governance, customers and assortment
(Hani 2012, p.28). In contrast, Mick (cited Layton 2007, p.351) argued that “marketing
system is as a complex set of multi-layered, near and far relationships in which the choices
and actions of market participants have long-term consequences beyond their firms, partners
and customers”. On one hand, in the opinion of Layton, marketing system is a network within
individuals or/and groups who interact to each other economically with either tangible or
intangible products. On the other hand, Mick’s idea is quiet different that marketing system is
a complicated relationship between the actions of market and the choices of customers.
However, the two points of view support each other because marketing system is a network
which enables customers and organization exchange value.
In the book “The Marketing System” in 1982, Dixon and Wilkinson argued that marketing
system is the mechanic exchange of buyers and sellers to satisfy their desires. In which,
individual people plays one or more different role in social system. Moreover, the authors
suggested that the economic systems need to be analyzed to understand the function of
marketing system in society.
Why marketing system is essential in today’s business.
With the rapid growth of economy in the world, entrepreneurs have to adapt new economic
trends as well as establish a “right” marketing strategy to achieve the success. It depends on
not only the activities within the company but also the factors of outside environment. Wilkie
and Moore (1999) stated that the importance of marketing system can be seen in every corner
of the developing countries (Viet Nam, Thailand and so on). Similarly, “marketing system has
a vital role in the economic development of developing countries” (Smith 1776). That is the
main reason why business has widely adapted and updated marketing system.
First and foremost, the only reason of production is obviously consumption but how product
is known and consumed by customers? That is where marketing system appears to assure that
the product is delivered to the right customers (potential customers, market segmentation) at
the right time (market opportunity). Moreover, marketing can help bringing the image of
product, brand and/or company closer to target customers through marketing strategy
(marketing above the line and below the line). What is more, the studies of Layton (2007)
also indicated the vital role of marketing system which increase more options for
consumption based on quality, location, communication, pricing or transportation in
Secondly, the most basic concept of the world is change; the economy, society, environment
and most importantly the demand of people always changes and requires for better. However,
most of businesses keep employing the same old strategies and tactics, with marketing
system, the evolution and innovation can make the whole network system improve as well as
remain stable. Therefore, understanding and adapting marketing system is necessary for both
economy in general and business in particular. In other words, the knowledge of marketing
system can enrich business’s experience with intangible benefits.
Thirdly, marketing system also brings opportunities to employment and helps them to
increase the personal incomes (Drucker 1958) which relates to economic health. It means that
marketing system has created a network, a linkage between customers, buyers, seller as well
as other participants. Moreover, the more networks are made or expanded, the more job
opportunities are created for employees. Additionally, Wilkie and Moore (1999) examined the
positive contribution of marketing system to society and individual benefits. For examples,
when a man wants to buy oranges, he can go to markets/grocery stores where have plenty
kinds of oranges for him to choose instead of driving directly to the farm.
Finally, marketing system is also important for future generation because it is built up over
the period of time by knowledge, information and experience.
Several reasons as mentioned above have just reflected parts of benefits that marketing
system brings for business. However, to understand marketing system and adapt it correctly
in real business is long way journey. Therefore, the Uncle Tobys case study is a very good
example to understand clearer about marketing system’s theories by analyzing how efficient
they adapt marketing system and find out the reasons why they failed.
Brief explanation of the case
Goodman Fielder is the largest Australian food processor; their worldwide business network
is expanded through 30 countries in the world; the international sales of them has reached
3,890 million dollar in 1995 (Lyon 1999). Among the total profit of Goodman Fielder, Uncle
Tobys which belongs to them gained a significant proportion of the total (McGregor 1995,
cited Lyons 1999). The case study focused on Uncle Tobys’s products which are specified in
breakfast cereals and other actors inside the organic network.
The organic industry enlarged and developed globally throughout the 50s and 60s of the 20th
century. Although there was a narrow market for organic food, this industry has raised rapidly
in the number of either producers or consumers (Monk 1988, cited Lyons 1999). Especially,
the organic food industry in Australia has an increase in “farmer”, consumer demand,
certifications as well as other institutional bodies (Lyons 1999).
In 1990, Uncle Tobys purchased the certification to produce organic breakfast cereal which is
called “Organic Vita Brits”, it had been marked that Uncle Tobys joined the organic network.
There were growers in two main regions: Central Queensland and Wahguyah who provided
organic wheat for them. Moreover, all of Uncle Tobys’s suppliers were verified organic Level
A by National Association for Sustainable Agriculture Australia (NASAA). From 1990 to
1995, the value of organic product increased dramatically from 28 to 80.5 million dollar
(Vittino, cited Lyons 1999).
The marketing strategy of Uncle Tobys focused mainly on environmental responsibility and
food safety because their target customers were “green” consumers (Burch et al., cited Lyons
1999). During the time that Uncle Tobys produced “Organic Vita Brits”, all activities of
marketing such as packaging, advertisement on television, printed media and promotion
aimed to build up the understandings of “organic”. Moreover, the logos of NASAA and
Landcare Australia program (which was sponsored by Uncle Tobys) were also displayed on
the boxes of “Organic Vita Brits”. Besides that, several slogans such as “Organic food:
Healthy for you, Healthy for the Environment” and “Organics and the Environment” which
were also utilized to make consumers pay more attention to organic foods.
In 1996, the company stopped producing “Organic Vita Brits” because it did not have
economic efficiency anymore. In other words, Uncle Tobys no longer involved in the organic
food network. To explain further for this decision, spokesperson of Uncle Tobys imputed the
blame to Australian consumers. He said that Australian consumers were not aware of organic
food and did not know what they were consuming. However Vittino (1988, cited Lyons 1999)
argued that majority of Australian knew the meaning of organic food as well as realized its
On the other hand, Uncle Tobys switched to use non-organic wheat to produce “Vita-Brits”.
Therefore, Uncle Tobys changed their marketing strategy to direct its interest in personal
health and fitness more than environment like before (Lyons 1999). The Landcare logo was
also replaced by the Coastcare logo.
Besides that, although losing contract with Uncle Tobys the organic growers kept producing
organic wheat. Then, they found out some solutions such as exporting organic wheat to the
international market or adding value to their products.
The network of Uncle Tobys will be explained further in figure 1.
Role of Marketing System
Layton’s Marketing System Model
The main specialization of “Organic Vita Brits” takes place from organic wheat to retailers.
As specialization takes place, the trade between networks increases (Layton 2009). It aims to
provide a healthy breakfast cereal for customers by concerning about environmental issue.
However, there are many actors who/which involved in the organic network as well as Uncle
Tobys’s business; each of them has their own specific role. Firstly, organic growers will
supply organic wheat for the company, they are from northern and southwest New South
Wales. All of the wheat was certificated by NASAA Level A to guarantee quality of products.
After that, the organic wheat will be transported from suppliers to Uncle Tobys to make
cereal and packaging. In this stage, the “Organic Vita Brits” was also certified by NASAA as
well as the logo of NASAA and Landcare were displayed to indicate the environmental
concerns which was adopted by many corporations such as Monsanto, BP and BHP (Lockie
1997). Finally, the “end products” will be distributed by many retail outlets (supermarket,
There are interactive exchange logics between institution, growers, Uncle Tobys and
customers. The relationship between farmers and Uncle Tobys is B2B (business to business)
because Uncle Toby buys organic wheat form growers to produce the other products so they
are not end users. However, when Uncle Tobys sell “Organic Vita Brits” for customers, it is
B2C (business to customer) because customers are the end users to consume the products.
Besides that, farmers have their skill, experience and knowledge about planting and they are
aware of the negative impact of pesticides, chemical on land and environment so they choose
to plant organic. Then institution gives them more information about the technique of
planting and the organic certifications to guarantee their quality. Furthermore, after inspecting
the product of Uncle Tobys, institution not only certifies their organic products but also
provides them information and knowledge to consider customer’s needs. Generally, all of
these actors involve in the organic network can exchange in formations, knowledge, source,
products and money.
Flows and Roles
As mentioned above, there are five flows in the social matrix which involved in Layton
Marketing System Model. These are ownership, possession, risk, finance and information.
The flow of ownership included farmers who have skill and experience for planting wheat
and Uncle Tobys who has machine, technique, knowledge and information for making
“Organic Vita Brits”. In the possession flow, growers as sellers sell organic wheat for Uncle
Tobys who acts as buyer; Uncle Tobys as seller sells organic cereal for retail outlets who act
as buyer; retail outlets as sellers sell organic breakfast cereal for the end user. Furthermore,
there is transportation sells “transfer” at each stage. As regard to risk, there are two actors
involve in this flow: growers and Uncle Tobys. Growers take risk to produce organic wheat
though it is different from traditional/normal wheat, Uncle Tobys entered to the new, small
and complicated market. In the next flow-finance, famers sell organic wheat to customers
with a reasonable price but it may be higher as compared to the normal wheat because
organic wheat uses everything from nature, it does not use chemical or technique to improve
quantity and quality. After that, Uncle Tobys sells organic breakfast cereal for retailers with a
higher price because costs of producing, packaging, promoting and transporting. Moreover,
the organic cereal’s price will definitely higher than conventional breakfast cereal which
could be considered as risk. Finally, growers get information about planting wheat without
using chemical and technique. Uncle Tobys gets information about target market, potential
customers, and demand of market. Customers get information about how healthy organic
products are and how it is helpful for environment if everyone uses organic products.
In this case study, Uncle Tobys’s product is the main factors in the organic network; they are
the centre which connect to the other actors involved in the network such as customers,
institution, grower, ect. Especially, the link between Uncle Tobys and their target customers is
the main connection in this network, if this linkage corrupts or unsustainable the other
linkages will collapse as well. To sustain the relationship between “seller” and “buyer”,
“Organic Vita Brits” has to adapt and update customer’s needs. So far, the main concerns of
“green” consumers-their target customers is the healthy and environmental problems,
therefore Uncle Tobys has to gain the certifications of NASAA and Landcare to assure their
quality as well as attach these two logos on the box of products to give more information for
customers who have less care about environmental impacts. Besides that, during the time
when Uncle Tobys produced “Organic Vita Brits”, they had a strong connection with their
suppliers who are growers from Central Queensland and Victoria. In converse, Uncle Tobys
was the good supplier for retail outlets who want to sell organic products. However, when
Uncle Tobys stopped producing “Organic Vita Brits”, they removed themselves out of the
organic network, closed the contracts with organic growers, and stopped using Landcare logo.
Then, Uncle Tobys has created a new non-organic network by using normal wheat to produce
“Vita Brits” and replacing Coastcare logo.
In the organic network or non-organic network, in any networks, governance always plays an
important role. In this situation, to qualify Uncle Tobys’s products and to protect consumer’s
interests, governance has established new law about organic products. For example, the
Landcare program was established by Federal Government in 1989 and other certifications
such as the National Association for Sustainable Agriculture Australia (NASAA), the Organic
Herb Growers of Australia (OHGA), and the Organic Vignerons Association of Australia
(OVAA) and so on.
As mentioned above, there are location, time, price and quality which included in assortment.
At first, when Uncle Tobys entered to the organic network, this market was new so they had
to suffer many difficulties (market research, high/low customer’s demand). However, it could
be considered as an advantage for them when there were few competitors. Moreover, when
Uncle Tobys produced “Organic Vita Brits”, their product aims to “green” consumers who
care about food safety and environmental issues. Therefore, though the price of organic food
is higher than the normal products, customers willing to pay because they buy not only
product but also value. More importantly, their products were certified by NASAA and
Landcare which were specialized in organic network. After that, when “Vita Brits”-nonorganic product took place of “Organic Vita Brits” on the shelves of supermarket, Uncle
Tobys had redirected their customers to “health and fitness” rather than environment
anymore, but they still added extra value on their products. For example, Coastcare logo was
used to display outside the box to highlight the healthy and coastal lifestyle that customers
could get when they used “Vita Brits” breakfast cereal.
The main purpose of production is obviously consumption, so no one can deny the power of
buyers. The potential “buyers” of organic food is green consumers who have concerns about
quality of food and environment. Nevertheless, when Uncle Tobys failed in the organic
market, they blamed on Australian consumers that they were not aware of organic products
and did not know what they were consuming. In contrast, the study of Vittino (1998)
indicated that 80 percent of candidates realize the existence of organic food and 64 percent of
them were willing to pay the premium price to get this type of product. Therefore, the reasons
why Uncle Tobys failed in this case study are probably ineffective marketing strategy
(Australian was not aware of “Organic Vita Brits”) or unsuitable taste (the quality of product
could not adapt customer’s demand).
The growth and well-being of any business are estimated by the company’s profits.
Moreover, the organic product of Uncle Tobys brings profits/benfits for not only company but
also environment and society. There are several aspects which can be considered to appraise
the growth and well-being of Uncle Tobys. The first factor is transportation which is very
important in business; transport between suppliers to sellers and from sellers to buyers. It is
also one of reasons that make Uncle Tobys failed in this market because the organic grower’s
locations were too far from the processing factory as compared with the conventional
growers. Secondly, the main distribution channel of Uncle Tobys is retailing chains in the
organic food line and in supermarket which are the good ways to distribute products closer to
customers. However, “Organic Vita Brits” may suffer strong competition in the supermarket’s
shelves because they will categorized similar products near each other for customers easy to
compare. Then, there are two important aspects: promotion program and packaging
innovation. Uncle Tobys had used packaging and promotional material to indicate the interlink between organic and environment. The promotional materials showed how effectiveness
and benefits that organic farming methods can bring for environment as well as improved the
knowledge of people about organic. Besides that, several impressive slogans are used to link
“Organic Vita Brits” and environment such as “Organics and the Environment” and "Organic
Food: Healthy for You, Healthy for the Environment". Packaging innovation utilized logos of
NASAA and Landcare which indicate the connection between agricultural production and
environmental awareness. The next factor can be considered is market research; according
to the above information, the market research which was undertaken by Uncle Tobys is not
effective because it did not reflect the reality and there was a completely different result from
Vittino (1988). Finally, the pricing program of Uncle Tobys is very valuable because they
made customers willing to pay their organic food with the premium price. For further
explanation, the company indicated that when customers bought “Organic Vita Brits”, they
got not only organic foods but also safety food, better health and environmental quality.
Through this part above, Uncle Tobys had adapted marketing system deeply to operate their
business; some parts were applied effectively such as specialization (grower, retailer,
Landcare, NASAA and so on), exchange logics, roles, and governance. However, there are
few aspects that they did not pay enough attention on which will be mentioned to analyze
why Uncle Tobys failed in this situation.
Marketing system played an important role in Uncle Tobys business because when Uncle
Tobys entered to the organic network, this market was not mature enough; Marketing system
assisted Uncle Tobys to create a logical “system” included entities, farmers, institution,
producer and customers. The social matrix of Uncle Tobys was embedded in marketing
system in every stage. In detail, the quality of organic wheat and organic cereal was inspected
and certified by Governance to satisfy customer’s needs and protect customer’s interests.
Additionally, every actor in the network exchanged their knowledge, information, products
However, after all these theories, the success of a business is calculated buy sale volume in
the market. When “Organic Vita Brits” cannot bring any profits for Uncle Tobys, they just
stopped producing organic food and remove themselves out of organic network. It seems that
organic product was not planned to be sustainable, “Organic Vita Brits” was produced to
meet current needs. Furthermore, there are two main reasons which could be considered as
the failure reasons of Uncle Tobys: economy and promotion. Firstly, in the range of economy,
the premium price of organic food was set as 30 percent higher than conventional food.
Although, there was 64 percent of Aussies who are willing to pay this price to get the organic
food, Uncle Tobys did not have the variety of products. People may feel bored when they
only have one option. The suggestion is besides organic breakfast cereal, they can produce
organic cookies, organic drinks. Besides that, the distance between Uncle Tobys manufacturer
and their suppliers is too far, the cost of transportation could be a problem. As regards to
promotion, Uncle Tobys used Landcare and NASAA logos to aim at concerning about
environment and food safety; their target customers are green consumers. Their assortment
was right, there was demand for organic foods of consumers, however, these slogans, and
goals may be inaccurate because the segmentation maybe too small and Uncle Tobys could
not touch the right chord of customers. After that, the later marketing campaign was better;
Uncle Tobys used Coastcare instead of Landcare logo and focused on the healthy and fitness
For further discussion, the case study of Grameen Check who is manufacturer of
environmentally-friendly fabric in Bangladesh can be analyzed because they have some
similar aspects with Uncle Tobys. However, Grameen Check succeeded in applying the
innovation of marketing system on their own business. As the result, Grameen Check not
only gains profits for company but also helps to develop society and Bangladesh business.
Either Grameen Check or Uncle Tobys focus on environment. Uncle Tobys produces organic
food by 100 percent organic wheat and Grameen Check uses 100 percent cotton fabric to
make their products. While, there is only one product “Organic Vita Brits” from Uncle Tobys,
Grameen Check has more than 2400 designs which are accepted by Europe and North
America consumers. The products of Grameen Check are famous by their quality and are
exported internationally. Furthermore, the Bangladesh Company also creates many jobs for
poor people and accelerates national development. They also won “The 2006 Nobel Peace
prize winner” (Hani 2012). In contrast, when Uncle Tobys moved out the organic network
and terminated the contract with organic growers, they left these farmers stuck with large
quantities of organic wheat. For suggestion, Uncle Tobys should assist them to overcome
Besides that, to approve the products, both of them have to be qualified by their governance
(Grameen Check has to gain the certification from Bangladesh Garment Manufacturers and
Exporters Association (BGMEA) as well as Bangladesh Standards and Testing Institution
(BSTI)). Moreover, the networks of both companies are quiet similar from organic
wheat/fabric growers to end users. This means that, as compared to the professional network
like Grameen Check, Uncle Tobys has created an exact network which included many
Critical discussion has pointed out that Uncle Tobys applied effectively marketing system in
the aspects of creating network and making smooth flows between these actors in the
networks. Actors in this case study can be seen as not only farmers, institution, customers but
also certifications, knowledge and information. Moreover, catching the organic trends on
time, Uncle Tobys' short-term involvement in the organic food network was undertaken to
maximize economic efficiency while presenting an image of corporate commitment to health
and the environment. In addition, Uncle Tobys adapted marketing system on their business
and created a strong relationship with growers, institutions and customers. However, the
organic network was not planned sustainable, so when this product could not bring any
profits for Uncle Tobys, they closed all the contracts with organic growers. For further
discussion, this essay has indicated that the failure of Uncle Tobys in the organic market due
to ineffective promotion to mainstream customers suggests that organic market remains a
niche market commodity. Finally, Uncle Tobys' reconstruction of the meaning surrounding,
“Vita Brits" has altered the relationships that persist within the organic network. Besides that,
the case study of Grameen Check was utilized to compare and indicate the effective and
ineffective aspects of social matrix that Uncle Tobys applied on their business.
Furthermore, in the rapid growth of economy, marketing system more and more plays an
important role in every business. The success of a company depends not only on the insides
factors or activities but also outsides environment that marketing system can help them to
control. Based on the literature review above, marketing system can be defined as a net work
within individual, groups, organization and entities exchange values. Among that, customer’s
demand is the starting point. To make profits, every business has to enable to satisfy
customer’s needs. Kenton (2009) stated that the basic target of marketing is to create a
sustainable relationship with potential customers. In other words, if company is able to
provide valuable goods or services which can satisfy customer’s wants needs and demands.
In response, customers will exchange their brand loyalty and precious relationship to the
Overall, marketing system should be debated under the macro-view, the appraisal of global
business, not in micro-view, within a company, a country. This means that, the integration
with the world of each country, each entrepreneur will give them an opportunity to create
more linkages and if the more connection is created, the more sustainable the company’s
network is. Globalization has changed the concept of traditional marketing, it helps bringing
the new term to human beings “Global Village”.
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