Effectiveness of the compensation system at Collegiate Promotions
There should be other forms of payment in order to boost the morale of sales representatives and hence make them deliver and be more profitable to the Company. There is a big challenge for Collegiate Promotions in motivating the sales representative through the compensation system. This further makes it even more difficult for the company to use demoralized representatives to explore resources in specific areas that would enable them to compete favorably.
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Sales representatives’ motivation to sell at both the top and the bottom of the price range
Since the compensation given is at best on the amount charged on top of the wholesale price or rather half the amount charged over the wholesale price, you will find that most sales representatives will sell at the top of the price range in order to increase their earnings. Some sales representatives will also opt to sell at the bottom of the price range because through that they realize more sales compared to those selling at the top of the price range.
In this case the greater the sales made on goods the larger the amount compensated for by the Company. Selling at the bottom price range also makes it easier to connect to more consumers as people always tend to spend less or rather buy cheaper goods. My prediction is that most sales will automatically be made at the top of the range prices (Phatak, Bhagat, and Kashlak, 2009).
Prediction of sales made at the top or bottom of the range of possible prices
The sales representatives often have different agendas from their employers; this proves it that for Collegiate to succeed in these markets it has to come up with strategies that influence the behavior of the sales representatives. The cost of selling is considered a fully variable cost for Collegiate Company and this is an advantage to the company since it eliminates the risks of incurring costs without profitable income. Most sales are made at the bottom price range depending on the kind of consumers targeted. This is because most of the consumers prefer buying goods at low prices rather than high prices. For each sale made by the salespersons, the company makes a maximum of half the margin over the wholesale price of products sold.
The effects of the lack of geographically protected sales areas on the salesperson’s behavior
It is important that Collegiate be identified with its brand within a particular region and also its salespeople be identified with a Collegiate’s image. This makes it easier for the company to practice autonomy with its marketing goals resulting in easier support and control of behavior towards the Company goals. Lack of geographically protected sales may however lead to reduced effort support of the Company’s sales objectives.
This reduces trust since the sales representatives lose their identities with the respective companies and this limits their scope of service to the extent that can only benefit them and not the company. There are also possibilities of the sales representative to work against each other for personal benefit s which might be very detrimental to the Collegiate’s relationship with its customers (Phatak, Bhagat, and Kashlak, 2009).
The commitment of the independent contractors to Collegiate Promotions
The independent contractors are not that committed to Collegiate Promotions since they only earn a percentage from the sales they make. This means that in seasons when the business goes down leading to low sales, they are likely to earn less leading to a lack of motivation. This leads to a decrease in their level of commitment. Independent contractors align their control systems to that of Collegiate goals only in cases when doing so proves to be of financial benefit to the independent contractor. The independent contractors will place considerable effort behind the brands as long as they receive support from Collegiate, in cases where the Company becomes less supportive, the independent contractors tend to quit in fear of predicted losses (Chonko, 1986).
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However, the contractors have some positive features which include; hardworking, this is where they work to realize more sales since they know well that they can only earn in accordance with the level of sales they achieve. They can as well be used as a means of advertising the Company through word of mouth. This is realized whenever they convince consumers to buy the Company’s products. The independent contractors who have identified themselves with Collegiate’s brands will try as much as possible to enhance and protect the brand image.
This makes them promote the Company privately and publicly leading to proactive behaviors of the contractors towards the brand outside the scope described by their job. This contributes towards the viability of the brand and healthy competition. Sales representatives are not expected to have long-term associations with the company since they are not given other forms of compensation and sometimes quit whenever sales go down. This is because they sell less or go without selling at all leading to less earning (Chonko, 1986).
Chonko, L. B. (1986). Organizational Commitment in the SalesForce. Journal of Personal Selling & Sales Management, 6 (3), 19.
Phatak, A., Bhagat, R., & Kashlak, R. (2009). Strategic human resource Management: International HRM supplements. New York, NY: McGraw-Hill.