Course Title & Code: Production Management, MGT314

Group Members:

Syeda Aaliya Sabrin 1813322630 Momotaz

Rahman- 1812354630

Farzana Majid- 1812214030.

Mosammat Maria Alam Arpa- 1721526030

Section: 08

Case Study: Kellogg’s: extending the product life cycle

Course Instructor: Muhammad Maruf Ibne Wali (MFW)

Q.1. Using current products familiar to you, draw and label a product life cycle diagram, showing which
stage each product is at.
Ans: The product life cycle of Nokia phone is given below-
1. Launch- Launch is the introduction of a new product. This stage of the cycle could be the most
expensive for a company to launch its product. The size of the market for the product is small, which
means sales are low although they will be increasing. On the other hand, there are various costs like
research and development, consumer testing etc. For example- Phones. Phones were introduced to make
communication easier.

2.Growth- The growth stage is typically characterized by a strong growth in sales and profits and because
the company can start to benefit from economies of scale in production, the profit margin, as well the
overall amount of profit will also increase. For Example- Nokia E- series. This product was a growth
product as the sales of this product was increasing with all the amazing features and grabbed customers’
attention and interest.

3.Maturity- This is the time of maximum profitability, where the product reaches maximum profit and
this profit can be used to build the brand. In this stage the product is established and the aim for the
manufacturer is now to maintain the market share they have built up. For Example- Nokia Symbian and
N- Series which reached its maximum sales and profit and became a mature product.

4.Decline- Eventually the market for a product will start to shrink and this is what is known as the decline
stage. The shrinkage could be due to the market becoming saturated. For Example- Nokia windows and
Symbian phones. they went in the decline stage as they didn't update their phones and the demand was
changed. Windows phones were valueless as android phones came and created a big buzz in the market.
This is why it became declined.

Fig: The product life cycle

Q.2. Suggest appropriate aims and objectives for small, medium and large businesses.
Ans:
Aims and objects are extremely important for any business be it in whichever state of the business they
are in. An aim refers to where the company wants to go in the future whereas an objective refers to
measurable targets that help achieve the aims.
Aims and objects differs on the basis of:
 The type of business
• The stage in which the business is in
• The size of the business

Aim and Objective for a small business:

A small is more often than not one that is just starting off and is still in the launch state thus an
appropriate aim for the business can be “to attain maximum exposure”
New businesses must have concrete objectives. Objectives should follow SMART rules. I.e. it should be
measurable, specific, action-oriented, timely and realistic. The objectives should have a numerical or
monetary value and should have specific deadlines.

In order to reach this aim, the business can have multiple objectives like:
• Making every customer in their Target Market aware of the business through BTL and social
media promotion.
• Building an ethical brand image
• Positioning the brand in the minds of the audience according to the mission and vision

Aims and Objectives for medium business:

Medium sized businesses are ones who have some level of exposure to their audience and have a
developing customer base. At this point, their aim can be “Attaining more market share to be the top
player”
The objectives to attain this goal can include
• Increasing sales or service
• Building a loyal consumer base

Aims and Objectives for Large businesses:

Large businesses are ones that are well known to their consumers and also have a notable market share.
For them, a good aim would be to “Expansion of products and services”

They can attain this goal by setting small objectives like

• Identify and target one particular geographical area to expand their market into
• Launch new product lines or products
• Keeping existing customers satisfied

Q.3. Explain the difference between market orientated routes and product orientated routes in Ansoff’s
matrix.

Ans: Ansoff’s Matrix is the strategic planning tool that provides a probable risk of the course of action to
help the marketers, executives, managers, operators to construct strategies for future development and
growth. The matrix also helps the managers to analyze the appropriate strategies. Here, the difference
between market orientated routes and product orientated routes in Ansoff’s matrix is that a market
orientated organization gets the right product and a product orientated organization gets the product right.
The differences are explained further below:

a) A marketing oriented route emphasizes on packaging of a product development. There are two
types of marketing oriented route. They are:

• Market Penetration:

In market penetration strategy, the organization tries to grow using a greater share of its existing market,
i.e. the products and services they are currently offering. In other words, the organization tries to evolve
within its existing market share. This can be attained by increasing their sales to their existing customers
or by finding new ones within the current markets. The organization can achieve this strategy by:

• Increasing their promotional activity

• Decreasing the price of the products
• Re-launching their products
• Increasing brand awareness

• Market development:

In market development strategy, an organization chooses to expand their business into new markets
geographically. They use their existing offerings to find new markets by targeting new parts of the
markets. It has a minimal products and service development. This can be achieved by:

• Segmenting different customers

• Foreign markets, for ex: if the firm has an advanced technology, it benefits the new market also
experiences economies of scale if the output increases.

b) A product oriented route emphasizes on the procedures and stages needed to sell a product. There
are two types of product oriented routes. They are:

• Product development:

In product development strategy, an organization produces new products and services which are targeted
to its existing customer and market to attain the maximum growth. This strategy helps to expand the
range of the products to make it available in the existing market. This can be achieved by:

• Developing new products- such as in this case, they have introduced Minis and Twists to the
Nutri- Grain range.
• Investing in the research and development of the new products

This strategy is known to have the medium risk

• Diversification:

In diversification an organization increases its market share by launching new offerings in new markets. It
seeks to create and develop new products and is known to be the riskiest strategy. That is why Kellogg
decided to focus on changing the product to meet the changing market needs. For example: when Nutri-
Grain was first launched.
Thus, if we want to look at the core differences,

• Market oriented strategies focus on the market first and deliver a product that the market wants
after proper target market analysis and market gap. Whereas, Product oriented strategy focuses on
the product and its attributes and tries to make the market like or desire the developed product.
• Market oriented strategy is more focused on consumer behavior and market psychology whereas
product oriented strategy is more focused on product benefits.

Q.4. Consider the decision taken by Kellogg to opt for product development. Suggest a way in which it
could have diversified instead. Justify.

Ans:

Alternative Approaches:

There were many ways that Kellogg’s could have used to diversify Nutri-Grain-

1. Acquisition of a New Product line: Kellogg’s could have acquired a product line of
manufacturing Nutri-Grain instant hot and cold mix.

Pros:

• Acquire Resources and core competencies: By acquiring not only it could immediately acquire
the core competencies and the resources that the company didn’t have currently.
• Reduction of development cost: The cost of developing a new product would have drastically
dropped.
• Creating a New Market Segment: By introducing a new product line Kellogg’s could have
reached a new market

Cons:

• Immense costs: The process of acquisition could have been very costly.
• Management Issues: Acquisition might introduce different management issues like- cultural
clashes. These would then shift the core purpose of acquisition.

2. Targeting the Untapped Market: Kellogg’s could separately target the group who focuses
on fitness. As we all know, the gymnasts and athletes heavily rely on protein bars. Kellogg’s could
introduce something like this for the athletes and the gymnasts, and market accordingly.

Pros:

• No Competition: As no other competitors have tapped this market there will be no competition.
• Promotion through Influencers: As Nike does with their promotional strategy using the
athletes, Kellogg’s can do the same by introducing their new protein bar as athletes and gymnasts
new favorite snack bar.

Cons:
 • Cost: The cost will increase for R&D and marketing
3. Diversifying based on demographics: Just like Nestle has many brands that focuses on
regional product development, Kellogg’s could have done something similar. They could introduce their
products with new flavors based on demographics.

Pros:

• Discovering New Markets: This would open their gate for entering to new markets

Cons:

• Cost: The cost of R&D and marketing will increase.

• Competition: The new product would face completion from the existing similar kind of products
in the same market.