Page 3: Strategic use of the product life cycle
When a company recognises that a product has gone into decline or is not performing as well as it should, it has to decide what to do. The decision needs to be made within the context of the overall aims of the business.
Strategically, Kellogg's had a strong position in the market for both healthy foods and convenience foods. Nutri-Grain fitted well with its main aims and objectives and therefore was a product and a brand worth rescuing. Kellogg's aims included the development of great brands, great brand value and the promotion of healthy living.
Kellogg's decided to try to extend the life of the product rather than withdraw it from the market. This meant developing an extension strategy for the product.
Ansoff's matrix is a tool that helps analyse which strategy is appropriate. It shows both market-orientated and product-orientated possibilities.