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?