Wgu Ast1 Task 1
Business and Management
Submitted By bill9352
AST1 - Task 1
Strategies for Motivating Intermediaries
Higher Margins – Offer higher margins to dealerships to incentivize promoting our new line.
Special Deals – Extended terms for stocking inventory
Premiums – Tiered discounts for volume unit purchases.
Cooperative Advertising Allowances – Subsidizing a portion of the dealership’s local advertising cost.
Display Allowances – bonus payments for premium floor space in high traffic areas.
Sales Contests – Incentivize the dealer’s sales team to promote our scooter over the competition.
Advantages and Disadvantages
Higher Margins – This has the advantage of offering a higher return to the dealership and/or the salesperson. However, the difference of a percent or two of commission sometimes can get lost in the overall picture if the item itself is a harder sell. Sales people usually follow the path of least resistance. If a competitor’s product has more market recognition and a buyer is asking “buying questions,” a salesperson is not going to try to direct the buyer to the higher margined item unless the margin is significantly higher. In an age where competition rules, it is unusual for a supplier to have sufficient margin themselves to incentivize solely on margin.
Special Deals – Offering an extended payment term is usually of interest to a dealership. The extended terms alleviates some pressure on their working capital needs. The disadvantage is that it requires an increase in working capital for the supplier.
Premiums – A tiered discount program incentivizes a dealership to move a minimum number of units a month in order to obtain the lower cost and corresponding increased profit margin. The disadvantage to the supplier is that early in the program they have not yet obtained many economies of scale that a successful tiered discount program will eventually yield, resulting in a lower margin per…...