1) Martin Ltd has always had a strategy of product differentiation; that is, providing high quality products and extracting a price premium from the market. During the recent economic downturn Martin Ltd has seen its customer base diminish, and decided to move strategically to a cost leadership strategy, that is, to try to sell more products at a lower price.

(a) What are the implications of this strategy change for the expenditure cycle?

(b) What changes would you expect to see in the expenditure cycle?

(c) What are the implications of this strategy change in terms of the usefulness of historic sales data for decision making related to demand predictions?