Question

Berwick Ltd has always had a strategy of cost leadership; that is, selling high volumes of low-cost products at a competitive price. During a recent sales slump, Berwick Ltd saw its sales revenues drop dramatically and has decided to move strategically to a product differentiation strategy; that is, to sell lower volumes of high-quality products at a premium price. Discuss in your workshop group: What are the implications of this strategy change for the revenue cycle?

Answer 1

Answer)

Here,from changing to cost leadership to differentiation needs lots of advertising need to done for making the product reach the taret audience because when it comes to cost leadership the primary focus is for price sensitive consumers whereas when it comes to differentiation the primary focus will be on price insensitive consumer.Along with it Berwick ltd. competitors also change and there will be more established compition for it.Taking all of them into account,Without proper marketing there will be drastic fall in revenue.Moreover it takes some time from consumers to believe that Berwick ltd could produce better differentiated product and they would get their true value for their money.Hence,it is something like the revenue cycle will be be low at initial stage due to introduction of new product at new segment.If the Berwick ltd. has good reputation from it's cost friendly products then they can enter into the profitable stage very quickly and make the revenue cycle as estimated in no time.