...Research Paper 781 SALESFORCE COMPENSATION PLANS IN ENVIRONMENTS WITH ASYMMETRIC INFORMATION Rajiv Lal* and Richard Staelin** October, 1984 * Graduate Shool of Business, Stanford University, Stanford, California 94305 Fuqua School of Business, Duke University, Durham, North Carolina 27706 ** The authors wish to thank Professors Milton Harris, Joseph Hotz, Jim Noel, and Tom Paifrey for their several helpful comments and suggestions. ABSTRACT In this paper, we present a theory of salesforce compensation plans to explain the type of plans implemented by IBM and St. Regis Paper where the members of the salesforce are provided an opportunity to choose a compensation scheme from a menu of contracts offered by the firm~We model this interaction in an agency-theory framework, as in Basu, Lal, Srinivasan and Staelin (1984), but relax the assumptions of information symmetry and salesforce homogeneity to demonstrate the optimality of such compensation plans. We also show that even when these assumptions are relaxed there are situations where the plans characterized by Basu, Lal, Srinivasan and Staelin (1984) are still optimal. 1. Introduction Most salesforce compeiisation plans include not only a salary, but also some form of remuneration (e.g., comrni~~sions) based on the output of the salesperson. Recently, Basu, Lal, Srinivasan, and Staelin (1984), hereafter referred to as BLSS, proposed a model which provided insights into why the proportion of salary to total...
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...Acknowledgements Brief Contents 1. Introduction to Sales and Distribution Management Introduction 1 Evolution of Sales Management 1 What is Sales Management? 2 Nature and Importance of Sales Management 2 Relationship Selling 3 Varying Sales Responsibilities/Sales Positions 4 Importance of Personal Selling and Sales Management 4 Role and Skills of Modern Sales Managers 4 Skills of a Sales Manager 6 Types of Sales Managers/Sales Management Positions 6 Top-level (Strategic) Sales Managers 6 Middle-level (Tactical) Sales Managers 7 First-line (Operational) Sales Managers 7 Staff Sales Management Positions 8 Sales as a Career 8 Rewards in Sales Career 8 Salesperson to Sales Manager 9 Changing Role of a Salesforce 9 Women in Sales 11 Sales Objectives, Strategies and Tactics 12 Sales Objectives 12 Sales Strategies and Tactics 12 ii vii ix xiii xv 1 xviii Contents Emerging Trends in Sales Management 13 Global Perspective 13 Revolution in Technology 14 Customer Relationship Management (CRM) 14 Salesforce Diversity 14 Team Selling Approach 14 Managing Multi-channels 15 Ethical and Social Issues 15 Sales Professionalism 15 E-Selling 16 Linking Sales and Distribution Management 16 Distribution Channels 18 Maximising Customer Service 18 Sales Operations Planning 19 Summary 20 Glossary of Key Terms 21 Conceptual Questions 22 Objective Type Questions 23 Application Questions 24 Reference Notes 24 Case 1.1: PI Foods Ltd.—Managing Sales and Distribution 2. Personal Selling: Preparation...
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...Presented information is tentative for 2008 KOÇ UNIVERSITY MKTG 450-Selected Topics in Marketing Sales Management Fall 2008 Instructor: Ayten Kök Office: CASE Building-156, Phone: 338 1451, Email: akok@ku.edu.tr Office hours: Monday and Wednesday 15:30-16:30 or Friday by appointment Prerequisite: MKTG 201 Course Objectives and Overview Sales management which can be defined as the planning, implementing, and control of programs designed to achieve the sales and profit objectives of the firm is the focus of the course. The course is concerned with how to manage a salesforce rather than how to sell. It aims to familiarize students with sales management concepts and to show examples of their application for the solving of business problems. The relationship of sales management with other marketing activities and how strategy drives tactics are shown. Case studies which indicate that sales management is concerned with strategic decision making along with carrying out of marketing programs will be worked out. A good understanding of the role of the sales executive in the design and development of corporate marketing programs will be provided. The course uses the lecture-case method. Important Course Policies/Procedures University rules and policies on academic honesty will be strictly enforced. The students are required to attend the course section for which they are registered. Regular and timely attendance at all class meetings is expected...
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...Compensating Salesforce Compensating a sales person is one of the most important part of the sales management . It is factor which may be crucial in achieving phenomenal sales growth or result in a negative manner to . The basic benefits of a compensation plan is that • Helps attract potential salespersons • Impacts a salesperson’s motivation • Is a determinant of status and value • Determines lifestyle and purchasing power Theories suggest people’s actions are driven by one or more of the following factors like: • Economic. Sure, economic reasons drive a lot of behavior. Defining the word “economic” broadly allows us to include not only money, but also health protection, security, wealth, physical safety and purchasing power. Sales compensation payments are a natural fit for this factor, but not universally. Sales compensation payments, for example, do not fully satiate the need for security and physical safety. • Social. When people think about and act upon what others think about them, we are tapping into their social psyche. As a general rule, most people want to receive positive recognition and live in harmony within their social environment. People gravitate to actions that earn themselves positive feedback and avoid performance that garners negative feedback. Measurement (with or without money) is a compelling social lever. • Self-Construct. Often cited as the “wild card” in human behavior, a person’s “self-construct” provides an inner voice that...
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...Assessor name: U YE MYINT Unit Number and title: Unit 20: Sales planning and Operations Qualification: Pearson BTEC Level 5 HND Diploma in Business Submitted by: YAMIN MYO TINT Sales Planning and Operations for Toe Company Contents Introduction 2 Objectives 3 Executive Summary 4 LO 1 Understand the role of personal selling within the overall marketing strategy 6 Task (1.1) Explain how personal selling supports the promotion mix 6 Task (1.2) Compare buyer behavior and the decision making process in different situations 10 “Buying Behavior” 10 Task (1.3) analyze the role of sales teams within marketing strategy 16 LO 2: Be able to apply the principles of the selling process to a product or service. 21 Task (2.1) Prepare a sales presentation for a product or service 21 Task (2.2) Carry out sales presentation for a product or service. 25 LO 3: Understand the role and objectives of sales management 27 Task 3.1 explain how sales strategies are developed in line with corporate objectives 27 Task (3.2) explain the importance of recruitment and selection procedures 34 Task (3.3) Evaluate the role of motivation, remuneration and training sales management 37 Task (3.4) Explain how sales management organize sales activity and control sales output 48 Task (3.5) Explain the use of databases in effective sales management 51 LO 4: Be able to plan sales activity for a product or service 52 Task (4.1) Develop a sales plan for a product or service 52 Task (4.2) Investigate opportunities...
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...objectives of sales management • Definition of sales management • How a Sales executive acts as a coordinator • To know about personal selling In this lesson we will study about an overview of Sales Management. today must develop an integrative management style using adaptive, problem solving, extensive information, in many cases is an ever changing market place. The overwhelming majority of business environment workers are service providers such as investment bankers, consultants, and information technology specialists. Sales Mangers in the current business environment must have the ability to add value, which means functional expertise in sales and marketing along with knowledge of industry. However managers must also have the skills to lead, communicate, use changing technologies, build teams, motivate sales people, form strategic alliance with customers. These are times of drastic corporate downsizing in which sales orgranisations are expected to do more with less. Many internal and external changes in organizations have dictated the need to conduct business differently. External business environment has experienced changing technology, globalization, more competition and more demanding and sophisticated customers. Internal changes have included greater emphasis on quality levels in product and service output, faster communication channels and more educated, skilled employee base. The relationship between sales people and customer is changing faster than sales orders can be...
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...Motivational Plan for Team C Virginia Allen LDR/531 April 27, 2015 Franz Gottleib Motivational Plan for Team C Devising a motivational plan requires several elements to increase motivation, satisfaction, and performance of a sales team. The plan is based on individual values to be effective. Second, managers have to apply extrinsic motivators to affect their intrinsic motivators. Third, leaders have to lead by example to reinforce and evaluate team performance. The following describes a motivation plan for cautious and dominate type personalities based on the DiSC Assessment and the position of territory managers for DermaTran Health Solutions for members of Learning Team C. Territory Manager Position Description “DermaTran Health Solutions is a group of compounding pharmacies that specialize in the compounding topical pain creams based on a prescription from a physician” (DermTran Health Solutions Compounding Pharmacies, 2015). Territory Managers are sales people hired to increase market penetration of compounded topical creams. Successful, Territory Managers must develop relationships with physicians and physician assistants to explain the compounding benefits of topical creams to influence them to write prescriptions tailored to the patient’s treatment. Determining Values Territory Managers have high-risk jobs and endure several challenges, constant rejection, fear of job loss, and face bruises to their ego every day. They are sales people expected to perform...
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...and implementing a human resource management program geared toward developing both high performing employees and a high performing organization. Essentially every manager at InterClean will be required to be a human resource manager. Every manager will be required to set goals and objectives for the development and satisfaction of employees. An effective human resource management plan treats every employee as a valuable resource. InterClean’s success is dependent upon high performing employees, and without these employees there is no competitive advantage for the organization. Only through an effective human resource management plan will the organization’s strategies be properly aligned and integrated with the individual needs (Sims, 2002). Human resource management is a strategic approach to the management of the people of an organization, who individually and collectively contribute to the achievement of the objectives of the business (Wikipedia, 2009). An effective human resource management plan will focus on the recruitment, training and development, performance and career management, compensation and benefits, as well as progressive discipline if needed, for the people in the organization. Recruitment InterClean must ensure that it has the right people in place to lead with the vision and focus required for this new business strategy. Workforce planning will play an important part in the recruitment process. During workforce planning, the organization will identify...
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...This is to recommend the initiation of a marketing plan for the Bond-A-Matic 2000 (BAM) beginning in 1979. The total cost of the plan is estimated to be $81,000 (see exhibit 1) which is in addition to the projected Super Bond marketing plan for FY79. The target audiences for the plan are small to midsized companies that are non users and companies that are CA users that will benefit from using the BAM. The objectives of the plan will be to increase brand awareness, educate non-current users of the advantages of CA adhesives (Super Bond) as well as the advantages of dispensing equipment, and to increase awareness of the BAM among current users. The plan will utilize direct mail that will be reinforced by future Super Bonder advertising. The BAM should not be considered as a stand alone product but as a complementary product to Super Bond adhesives. The focus of the plan is to use the BAM as a method of introducing new users to instant adhesives and to react to the expressed interest of current CA users in improved dispensing techniques. Brand loyalty will be strengthened once the end user begins to use the BAM in conjunction with Super Bond adhesives. Also, it is recommended to continue the use of the Loctite logo on the BAM to strengthen brand identity. In order to avoid competition with the Systems Division’s line of applicators, the plan will focus on small to midsized companies within SICs 20 through 39 that use less than five (5) pounds of adhesive per year. The assumption...
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...There is some problems show why the company’s profits going down 1. There was little advertising and sales promotion the company has a little spare cash. The company didn’t active support on advertising and sales promotion. The company produces 95% of technically sophisticated electromechanical control devices to the chemical industry. The company thought that they keep going well in chemical industry but their thinking was wrong. With they have skills and ability; they didn’t invest in variety industry. 2. Pricing was done on cost plus basis with total costs being calculated and a fixed percentage added to an account for profits. The accounts department thus fixed prices and sales had no say in how they were established. This led to much dissent among the sales people who constantly argued that prices were not competitive and that if they were cut sales could be increased substantially. Sales people are very important for company. Actually sales people communicate with customers or buyers directly for this reason arguing among sales people is not good for their business. 3. Delivery times were slow compared with the average in the industry and there were few discounts for large orders quantities, with the sales person first have to clear such discounts with accounts before agreeing to such an arrangement. Regarding Watkinson’s philosophy “if they want the product badly enough they will wait for it. And why offer discounts for large quantities if they did not...
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...addressed. You are expected to illustrate your answer using relevant diagrams and/ or equations. ECN256 ASYMMETRIC INFORMATION ECN256 ASYMMETRIC INFORMATION Salespersons, being boundary spanners between the organization and customers, play a critical role in enhancing customer satisfaction in order to maintain the buyer–seller relationship in situations involving service failures (Naylor & Frank, 2000). Companies hire sales people as employee’s or on a commission basis. According to the question, the firm is hiring a salesperson that will be paid an hourly rate. Paying hourly rate at start is preferable compare to that of commission. Because if the firm and its product is popular and the sales person effort level is high; therefore, in order to motivate the salesperson fixed hourly rate is advisable because whether the salesperson sales or not they still have their fixed hourly rate and also is independent of how much the firm sell or their ability to sell. Unlike commission, the higher you sale the higher you are been compensated and the lower you sale the lower you are been commissioned. Salespersons that are been commissioned, tend to feel ownership of their accounts, therefore, as a result of that they are prone to leaving you and taking your customers with them. While a fixed hourly rate salesperson, may not be as driven but they may excel at service and building relationships. There are issues involved in hiring salesperson; these include; The willingness to let go...
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...| | |PART FOUR COMPENSATION | | | | | |CHAPTER | |T Twelve | | | | | |Pay for Performance |12 | | |And Financial | | | |Incentives | | | |Lecture Outline | | | |Strategic Overview |In Brief: This chapter gives an overview of money | | |Money and Motivation: An Introduction ...
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...and stages of life. Competitive products are differentiated based on factors such as location, reputation, quality, features, design and price. Competition in the home building industry comes from a number of sources. First, the industry itself is widely fragmented, in terms of the number of players. At the peak of the industry’s prosperity, at the height of the recent housing bubble, the top ten players in the industry accounted for only 35% of its sales in dollars. The actual number of players considered legitimately “in the game” at a nationally-visible level numbers between 1,500 and 3,000 at any given time, depending on the industry’s prosperity level. This is a very large number for any one industry to have at this level. There are also innumerable very small local players. But, competition for the new single-family home building industry does not only come from within. Such competition also comes from the re-sale of existing single-family homes, new and existing condominiums, rental housing, and recently short sales and foreclosures....
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...the supply chain consists of the organizations and processes for distributing and delivering products to the final customers. Answer: True False 5) Supply chain inefficiencies can waste as much as 25 percent of a company’s operating costs. Answer: True False 6) Safety stock acts as an inexpensive buffer for the lack of flexibility in the supply chain. Answer: True False 7) The bullwhip effect is the distortion of information about the demand for a product as it passes from one entity to the next across the supply chain. Answer: True False 8) Supply chain execution systems enable the firm to generate demand forecasts for a product and to develop sourcing and manufacturing plans for that product. Answer: True False 9) To minimize the expense of implementing an enterprise system, businesses can opt to curtail the customization of an enterprise package and instead change business processes to match the software. Answer: True False 10) Implementing an enterprise application typically requires organizational change as well as adjustments to existing business processes. Answer: True False 11) In a push-based model of SCM...
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...functions: marketing and innovation.1 All else, he implied, was detail. The central role of marketing in the enterprise stems from the fact that marketing is the process via which a firm creates value for its chosen customers. Value is created by meeting customer needs. Thus, a firm needs to define itself not by the product it sells, but by the customer benefit provided. Having created the value for its customers, the firm is then entitled to capture a portion of it through pricing. To remain a viable concern, the firm must sustain this process of creating and capturing value over time. Within this framework, the plan by which value is created on a sustained basis is the firm’s Marketing Strategy. Marketing Strategy involves two major activities: (i) selecting a target market and determining the desired positioning of product in target customers’ minds and (ii) specifying the plan for the marketing activities to achieve the desired positioning. Figure A presents a schematic describing a general process of marketing strategy development. As shown, five major areas of analysis underlie marketing decision making. We begin with analysis of the 5 C’s— customers, company, competitors, collaborators, and context. We ask: Customer Needs Company Skills Competition Collaborators Context What needs do we seek to satisfy? What special competence do we possess to meet those needs? Who competes with us in meeting those needs? Who should we enlist to help us and how do we motivate them? What cultural...
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