question archive Please read the case and answer the questions at the end
Please read the case and answer the questions at the end
Subject:ManagementPrice:16.86 Bought3
Please read the case and answer the questions at the end. Please respond to two of your peers. Do you agree or disagree?
Collegiate Promotions distributes products that are marketed to students and alumni of major universities. High-selling products include coffee mugs and T-shirts that bear collegiate logos. In order to distribute its products, Collegiate Promotions has adopted an independent sales representative model. The sales representatives work for themselves and are not actual employees of Collegiate. They have independent contractor status.
Becoming an independent sales representative is easy. An interested person pays a $300 fee to obtain catalogs and other literature needed to advertise and sell the line of products. The sales representative then begins to write orders for products. A sales representative can sell to anyone through any channel. This means that there are no protected territories, so several sales representatives are often working in the same geographic location. Many representatives also sell through Internet websites.
Collegiate Promotions does not set an absolute price for its products. Instead, it uses a wholesale plus pricing strategy that allows sales representatives to sell within a relatively broad range. The range is normally 30 to 50 percent higher than wholesale. For instance, if the wholesale price of a coffee mug is $10, then the representative can choose to sell the mug at a price anywhere between $13 and $15. The sales representative receives a commission of half the amount charged over the wholesale price. If the mug sells for $13, the representative receives $1.50. If the mug sells for $15, the representative receives $2.50. Because they are independent contractors, the sales representatives receive no other compensation.
Questions:
Do you think the compensation system at Collegiate Promotions is effective?
Why would a sales representative try to sell at the top of the price range? Why at the bottom of the price range? Do you predict that most sales are made at the top or bottom of the range of possible prices?
How does the lack of geographically protected sales areas affect salespersons' behavior?
How committed do you think the independent contractors are to Collegiate Promotions? What are some positive features of the independent contractor status for the organization? What might be some positive features for the independent representatives? Would you expect sales representatives to have long-term associations with the company?
Second peer below
1. Do you think the compensation system at Collegiate Promotions is effective? Yes, I believe the system at Collegiate promotions is effective because of the following. From a business standpoint a sales representative is paying them $300 to obtain the catalogs and are willing to go out and sell the product for the company. By doing this the company is able to hire a large task force without having to pay a base salary besides commissions to the sales representatives. A Sales rep who is highly qualified to move items quickly and aggressively will likely be ok with getting only commission on the items they sells. These employee are able to sell where they feel more comfortable and have the freedom to sell the items at the price they favor. The more they charge the more commission they make. These sales representatives are not employees of the company therefore they can have another job and this can be their side hustle.
2. Why would a sales representative try to sell at the top of the price range? Why at the bottom of the price range? Do you predict that most sales are made at the top or bottom of the range of possible prices? A sales rep would want to sell at the top price range where there is less competition and to volume of items needed are low. A sales rep would want to sell at the bottom of the price range where there is more competition to out beat their competitors and where the volume is high. Larger volumes would offset the lower price and the sales rep would get his profit off the commission. The reading mentioned most of the sales rep work in the same geographic location which to me means more competition so I believe if the sales rep prices their product at a competitive lower price then their competitors.
3. How does the lack of geographically protected sales areas affect salespersons' behavior? As mentioned above a sales rep would want to price their product at a lower sales price because their competition is also selling these same products in the same geographic location. They may also want to do more concentration on internet sales.
4. How committed do you think the independent contractors are to Collegiate Promotions? What are some positive features of the independent contractor status for the organization? What might be some positive features for the independent representatives? Would you expect sales representatives to have long-term associations with the company? Since there is no base pay for these independent contractors they would have to be highly committed to accept this type of job. I can also see this as perhaps a second income. Some positive features of being an independent contract may include you decide to work when you want to, you can make a lot of money depending on how aggressive you are. There are no limitations. Positive features of an independent contractor would be highly qualified, demanding, dedicated and independent. I do not see this as a long term association with the company since you would have to always be hustling to gain your commission and you would get burnt out.
First peer below
Hello everyone,
Do you think the compensation system at Collegiate Promotions is effective?
I do believe this is an effective compensation system because depending on how hard you work and how well you do your job will decide how much you earn. The people the will become sale representative will be driven and competitive with the other representatives.
Why would a sales representative try to sell at the top of the price range? Why at the bottom of the price range? Do you predict that most sales are made at the top or bottom of the range of possible prices?
The sales representative will try to sell that the top price range because they will earn more. They get half of whatever the whole sale is so by them selling the products at top price then they will earn more commission. Some of the representative may want to sell the products are the bottom price range because it may give them an advantage over the other representatives. They may also sale at the bottom because it may prompt the clients to purchase more. I think that most sales will be based on the sales representative and not the price they set.
How does the lack of geographically protected sales areas affect salespersons' behavior?
By not having geographic areas set I think that it makes the salespersons’ very competitive and sometimes territorial of the clients they have. I can not image that system being pretty.
How committed do you think the independent contractors are to Collegiate Promotions? What are some positive features of the independent contractor status for the organization? What might be some positive features for the independent representatives? Would you expect sales representatives to have long-term associations with the company?
I would say that the independent contractors are relatively committed. They have to pay $300 in order to get information they need to be able to sale. If I have to pay for something as opposed to getting something for free I will be more committed. Nobody wants to waste money. Some of the positives is that how much you earn is based off of your own work. If you are not out actively communicating with clients or looking for new clients then you will not be earning a lot. Another positive is the Collegiate Promotions gives the sales representatives a lot of liberty. They have the liberty to set their price as well as the liberty to choose where to sell. I would expect the sales representatives that are successful lasting long-term with the family. If they are good at it and are making a good profit then they will be there for a long time.
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Collegiate Promotions
Question One
Collegiate Promotions' compensation scheme is effective because sales-oriented employees will like that they are in charge of their compensation. Regardless of how hard they work or how often they slack off, most employees have a predetermined compensation rate. This approach, I believe, will entice the most aggressive people to seek jobs there. I am convinced that this sort of person will bring in the most money for the firm. Collegiate has relatively few links to the independent salesperson, and the firm isn't liable for the employee who doesn't sell items.
Question Two
To earn more money in commission, salespeople may sell at the best prices available in the market. The greatest method to make money for oneself is to sell for the highest price. A sales representative will also get recognition, admiration, and respect if they earn the most money for the firm. This, I believe, will compel all salespeople to always sell at the top of the range.
A salesperson may sell at the bottom of the market because they aren't confident in their abilities. It's possible that the salesperson isn't confident in themselves or the products they're selling. It may be difficult to sell an item for a higher price if it is not something the person would buy for themselves. Because they believe it will result in more sales, some salespeople may choose to sell at the bottom of the market.
I believe that the majority of the sales would occur at the very low end of the product range's price range. I expect sales to be low because Collegiate Promotions primarily sells college merchandise to college students, who often do not have as much money as the average working adult. Furthermore, because salespeople want to close as many deals as possible, I expect the majority of sales to be in the low to mid-range.
Question Three
Because of the competition in the same geographic region, a salesperson would want to decrease the pricing on the products. The rates would fluctuate depending on the degree of competition from other salespeople. A salesperson's behavior will be influenced by the lack of a geographically protected sales region, which may make them uncomfortable and hesitant when selling.
Because there are no restrictions on where a salesperson may sell, the lack of a geographically protected sales region might make a salesman work more. Some salespeople may see this as an opportunity to cover a large region, and they want to seize it by being the first to speak with as many potential clients as possible. Salespeople may also be less effective due to a lack of geographically protected sales zones. Without a core objective, salespeople may spend more time figuring out where to sell than how to sell.
Question Four
Working exclusively on commission will require a specific kind of sales representative. During the lean months or days, there is no base wage to rely back on upon. Individuals willing to work only on commission are rare. These individuals, in my opinion, are pushy and demanding, with a strong desire to succeed as salespeople. Independent contractors, I believe, will be somewhat dedicated to Collegiate Promotions because they may believe the company is only moderately committed to them.
Independent sales contractors believe they are entitled to higher commissions. Contractors may not always feel as important as they are, resulting in a modest level of commitment. Because they are unlikely to consider the work a profession, independent contractors may be somewhat dedicated to Collegiate Promotion. The salespeople are unlikely to see themselves earning straight commission with the firm in five or ten years. Starting a job with a high turnover rate may encourage employees to be less committed from the outset.
MGT 208: Collegiate Promotions Discussion responses
Great post (Peer One)! Collegiate Promotions has an effective compensation system because how much you earn is determined by how hard you work and how well you do your job. They can also hire a large number of people without having to worry about their base pay. People who become sales representatives will be motivated and competitive with their colleagues. Because they will earn more if they sell at the top of the price range, the sales representative will try to sell at the top of the price range. Some salespeople may prefer to sell products in the lowest price range because it will give them an advantage over their competitors. They may also sell at a low price to entice customers to buy more. Not having defined geographic areas makes salespeople more competitive and sometimes territorial of the clients they have.
Great post (Peer Two)! Salespeople may sell at the best prices available in the market to earn more commission. Selling for the highest price is the best way to make money for oneself. If a sales representative earns the most money for the company, they will be recognized, admired, and respected. This will compel all salespeople to sell at the top of the range at all times. Because these independent contractors do not receive a base salary, they would have to be extremely dedicated to accepting this type of work. I can see this as a potential source of additional income. You can work when you want and make a lot of money depending on how aggressive you are, which are some of the benefits of being an independent contractor. There aren't any rules. Highly qualified, demanding, dedicated, and independent are all positive attributes of an independent contractor. I don't see this as a long-term relationship with the company because you'd have to constantly hustle to earn your commission.
