Collegiate Promotions and Sales Commission - Essay Example

? Collegiate Promotions of Collegiate promotion uses commission to pay its sales representatives. The purpose of the paper is to evaluate the effectiveness of the collegiate compensation system, establish reasons why a sales representative is willing to sell both at the top and bottom range of a price and determine whether sales are made at the bottom or top range of the prices possible. In addition, the paper delves into how the lack of geographic locations influence the behaviors of a sales while evaluating the independent contractors commitment to collegiate promotions Effectiveness of Collegiate promotion compensation system The business structure of the collegiate promotion is based on sales representatives who determine the amount of sales to achieve at a given time. These representatives get paid according to the number of products sold. Unlike individuals employed directly for a wholesaler or a manufacturer, the collegiate promotion representatives are compensated strictly on commission basis. In addition, the company never reimburses their expenses such as those spent on entertaining of customers, transport costs and meals. This enables the company to cut on its operational costs and maximizing on its profits (“Career Information”). Alternatively, a company may have a perfect compensation plan but not achieve the amount of targeted sales. For instance, if the sales manager does not adequately instruct the sales representative on how to carry the duties you are paying them for, then the results can be devastating. It is essential to develop a business structure that supports the behaviors of the salespersons in the reinforced compensation plan. It is also likely that individuals in sales and marketing teams may not meet the job’s vigorous demand despite their adequate product knowledge. In addition, direct salespersons may not be able to cope with the challenges in the market such as constant rejections or the necessity of creating relationships that are positive with everyone. In addition, the marketing team may shy away from the responsibility of managing their time effectively and the need to learn more about their customers’ domain continuously (Kahle, 2007). These are some of the challenges faced by the company despite their effective and efficient compensation plans. Reasons why a Sale Representative Is Willing To Sell At both the Top and the Bottom Range of a Price The sales representatives are willing to sell at both levels of prices because of various factors. For instance, competition in the market and demand of the product affects the price of the product. Bottom range pricing often occurs when the demand of the product is low and competition is tough. As a result, the sales representative has got no choice but to dispose the product at the lowest cost set by the company he is working for. When the product demand is high, he has to set a higher price so that he can get enough commission to cater for the expenses incurred during the product promotion. Predicting Whether the Sales Are Made At the Bottom or Top Range of Possible Prices The sales at the bottom range are often lower than those at top range. This is because the size of the swing is often determined by price levels in the market. The markets operating with higher prices have broad swings compared to those operating at lower prices. It is paramount that, stops be located at I, 2 or 3 price units below or above the swing tops and bottoms. For instance, when a market operates at low level historically, then a stop needs to be near the swing bottom or top than when the market is historically operating at levels that are high(James, 2001). How lack of geographically protected areas affect the behaviour of a sales person A product often corresponds to a geographical position such as a country, region or a town. This clearly indicates the product reputation within a specific geographical location. The product or service often enjoys a unique reputation and qualities. Governments historically and legally have been defending trademarks and trade names utilized in connection to food products within a specific region (Nallusamy, 2008). Lack of a protected geographical region makes the work of a sales representative an uphill task. First, he has to market the product first before he gets a bigger customer base. In addition to that, there exists fierce competition from other products already stabilized in the market thus minimizing his sales completely. This will reduce his sales before he gains stability in that area. Furthermore, some legal regulations may prohibit a sales person from carrying business in a territory that does not belong to him or her. This significantly reduces his or her market domain and consequently affects his or her earnings. The Independent Contractor’s Commitment to Collegiate Promotions Independent collegiate promotions contractor’s major task is to perform sales forecasting. The job entails determining the purchase volume of a company given the features of the product and sales condition. In addition to that, they help companies to make sufficient and adequate decisions about investments in ventures that are new. They are of great significance in the firm operations as they support managers on matters such as, the size of inventory to carry, the figure of workers to employ, the pricing strategies, amount of commission and incentives to pay the sales people and the number of advertising campaigns to have. Despite the efforts of the contractors, the firm profitability depends on the usability of the forecast plan and having a forecast that is accurate on costs and sales. Conclusion The method of compensating sales representative for the provided services to their employer is referred to as sales commission. In this method, an individual receives a certain percentage agreed on sales revenue made by him or her. Both product and service sector utilizes these type of commission arrangement. The principal advantage of using such a method is that it encourages the sales individuals’ to work extra harder on the Company’s behalf. However, the critics of this method argue that the uncertainty of this method of payments may make it difficult for a company to secure perfect sales people. In addition to that, poor business habits emerge because of their dependence on commissions. Despite their argument, they also content that the provision of sales individuals with commission set ups provides an excellent incentive for them to work extra hard. This has made most of the businesses maintain sales individuals via a combination of methods such as commission and base earnings. This is the way forward for collegiate promotions. References “Career Information”. Retrieved I March. 2012 from http://www.collegegrad.com/careers/marke08.shtml James, A.H. (2001). Pattern, Price and Time: Using Gann Theory in Technical Analysis. New York, NY: John Willy & Sons. Kahle, D. (2007). It’s not just about the bling it takes more than just compensation to unleash a sales force! Agency Sales, 37(12), 20-22.Retrieved from http://search.proquest.com/docview/210998313?accountid=45049 Nallusamy, R. (2008). Geographical Indications. Retrieved 1 March 2012, from http://www.lawyersclubindia.com/articles/details.asp?mod_id=54. Read More