CONTENTS Page Section I: Course Organization and Teaching Methods To The Instructor.........................................................................................

9 Professor Futrell Online10 Salesperson Information Sheet..11 Shadow Bonus Project...12 Sales Diary Bonus Project.13 Section II: Chapter Lecture Notes..................................................................................15 Part One: Introduction to Sales Management Chapter 1 Sales Management: Its Nature, Rewards, and Responsibilities....................17 Chapter 2 Social, Ethical, and Legal Responsibilities of Sales Personnel......................19 Part Two: Planning the Sales Teams Efforts Chapter 3 Building Relationships through Strategic Planning.......................................22 Chapter 4 The Market-Driven Sales Organization.........................................................25 Chapter 5 Forecasting Market Demand and Sales Budgets............................................27 Chapter 6 Design and Size of Sales Territories..............................................................29 Chapter 7 Sales Objectives and Quotas..........................................................................31 Part Three: Staffing the Sales Team Chapter 8 Planning for and Recruiting Successful Salespeople.....................................34 Chapter 9 Selection, Placement, and Socialization of Successful People......................36 Part Four: Training the Sales Team Chapter 10 The Management of Sales Training and Development..................................37 Chapter 11 Contents of the Sales Training Program: Sales Knowledge and the Selling Process.......41 Part Five: Directing the Sales Team Chapter 12 Motivating Salespeople Toward High Performance......................................45

Chapter 13 Compensation for High Performance.............................................................48 Chapter 14 Leading the Sales Team.................................................................................52 Part Six: Controlling the Sales Team

Chapter 15 Analysis of Sales and Marketing Costs..........................................................55 Chapter 16 Evaluation of Salespeoples Performance......................................................57 Section III:Comments on Management Application Questions..................................61 Chapter 1........................................................................................................................63 Chapter 2........................................................................................................................64 Chapter 3............................................................................................................................67 Chapter 4........................................................................................................................68 Chapter 5........................................................................................................................69 Chapter 6........................................................................................................................72 Chapter 7........................................................................................................................73 Chapter 8........................................................................................................................75 Chapter 9........................................................................................................................76 Chapter 10......................................................................................................................77 Chapter 11......................................................................................................................79 Chapter 12......................................................................................................................80 Chapter 13......................................................................................................................81 Chapter 14......................................................................................................................84 Chapter 15......................................................................................................................85 Chapter 16......................................................................................................................86 Section IV:Comments on Ethical Dilemmas.............................................................89 Section V: End of Chapter Case Analysis...............................................................103 1.1 1.2 2.1 2.2 3.1 4.1 4.2 5.1 6.1 6.2 7.1 7.2 8.1 The Wilson Company: Is the Sales Managers Job Really for Me?.................105 Nabisco: What They Didnt Teach Us in Sales Class.......................................105 Mississippi Leasing, Inc.: Is This Legal?......................................................107 Illinois Office Machines, Inc.: How Should You Handle Competition.............107 Alabama Wholesalers, Inc.: Plans Dont Always Work!..................................108 Alaska Office Supplies: Everyone Is Part of the Sales Team....................108 Reynolds & Reynolds: Team Selling.....................................................109 Florida Computer Sales: What Info Is Needed?.................................................109 Arizona Electrical, Inc.: Is the Information Important?.....................................110 Sally Malones District: Development of an Account Segmentation Plan........110 Arkansas Fishing Company: Are Quotas Accurate?.....................................112 Harrell Manufacturing: Elimination of Sales Budgets and Quotas................112 Connecticut Candy Wholesalers: An Unusual Cause of Turnover....................113

8.2 9.1 9.2 9.3 10.1 10.2 10.3 11.1 11.2 12.1 12.2 13.1 13.2 14.1 14.2 14.3 14.4 15.1 15.2 16.1 16.2

R. J. Reynolds: Selecting the Best Sales Team..................................................113 Delaware Fire Arms: Is This the Correct Person?.....116 Bob Johnson: Searching for a Sales Job...........................................................116 Martin, Inc.: The First Woman Is Hired118 Georgia Auto Supply: Does Training Work?.....................................................120 Toys and More, Inc.: Development of a Sales Training Program..........................120 The Telecommunications Corporation: Trainings Impact on Performance......124 Hawaiian Novelties: Did You Make the Correct Choice?.................................127 Tasters Club: Development of Sales Presentation................................................128 Idaho Bakery Supplies: How Can You Motivate This Salesperson?.............129 Teletronic Electronics: The First Woman Is Hired?..........................................129 Illinois Satellite: Selling Your Top Salesperson................................................134 ComputerBytes, Inc.: Should It Use a Draw Compensation Plan?....................134 Indiana Restaurant Equipment & Sales: What to Do with the Guerilla......135 R. J. Reynolds Tobacco Company: Beyond Field Sales...The Home Office.....135 Ohio Biotech, Inc.: Night Work and Travel Have to Stop.................................137 C&D Foods, Inc: Leadership: Who Is Best for the Job?138 Iowa Farm Supplies: Plans and Data Go Together............................................140 Executive Office Supplies: Determining ROI....................................................140 Michigan Security System: Promote Me or Else!..............................................141 The Dunn Corporation: What Should Be Done with a Low performer?...........142

Section VI: End of Textbook Salesforce Experiential Exercises..145 Sales Team Building....147 Sell Yourself on a Job Interview..151 What's Your StyleSenser, Intuitor, Thinker, Feeler? ..157 Your Sales Aptitude.157 Section VII: End of Textbook Experiential Salesforce Technology..167 Sales World Wide Web Directory...169 Internet Exercises.169 ACT!--Goldmine..169 Section VIII: End of Textbook Comprehensive Case Analysis.....................171 Guidelines For Using Cases...173 Instuctors Please Read this Caution Note..174 Case 1 Case 2 Case 3 Case 4 Case 5 Case 6 Zenith Computer Terminals, Inc. (A): Development of a Total Business Plan175 Zenith Computer Terminals, Inc. (B): Strategic Business Plans FailSales Decline..179 Zenith Computer Terminals, Inc. (C): Redesigning Sales Territories...182 Zenith Computer Terminals, Inc. (D): Setting Quotas Facing Decreasing Sales..185 Wallis Office Products: Defining New Sales Roles..189 Briggs Industrial Supply Company: Determining Who and How Many to Hire..193

Case 7 Briggs Industrial Supply Company (B): Creating Recruitment and Selection Procedures ...200 Case 8 United Cosmetics, Inc.: Creating a Staffing Program...203 Case 9 Farm Machinery For America: The Selection of a Salesperson....205 Case 10 Mead Envelope Company: Is a New Compensation Plan Needed?..219 Case 11 McDonald Sporting Goods Company: Determining the Best Compensation Program.225 Case 12 Burditt Chemical Corporation: Analysis of Sales and Marketing Costs..231 Case 13 Deer Tractor: Analyzing Sales Data.233 Harvard Cases Case 14 Case 15 Case 16 Case 17 WESCO Distribution, Inc.236 SaleSoft, Inc..260 Arrow Electronics, Inc..285 Aladdin Knowledge Systems291

Section IX: Test Bank301 Section X: Transparency Masters531

SECTION I

COURSE ORGANIZATION AND TEACHING METHODS

To the Instructor Thank you for choosing Sales Management to use in your class! It has taken years to bring you the textbook and the accompanying materials. The material has been class tested numerous times in both academic and executive development classes. Students, salespeople, and sales managers have found the material to be educational, enjoyable, practical, and real-world. We have used this textbook with my different groups, such as undergraduates, graduates, organizations, in-house training, and Executive MBA programs. Primarily it is used for the undergraduate sales management course. The instructor's manual was designed to assist instructors as much as possible in teaching the sales management course. It has been particularly written for those who have either never taught the course or not taught the course very often. It will also be a big help to the instructor looking for a different textbook to use for a change of pace As you will see, an enormous amount of time and effort was expended to provide you valuable assistance. Having been in sales with Colgate, Upjohn, and Ayerst Laboratories for eight years, plus having taught the course over 30 times, I still welcome all the help I can get from time to time. So I know how much an instructor's manual can aid you. I sincerely hope it is a help to you! A Caution Note: It is very challenging--if not impossible--to develop an Instructors Manual error-free. Our team has worked very hard to provide you accurate information. However, please double-check the information. For example, we used a spell checker; it came with my PC, it plainly marks four my revue, mistakes I cannot sea, Ive run this poem threw it, Im sure your please too no, its letter perfect in its weigh, my checker tolled me sew. Special recognition goes to Crystal Goodman for her hard work on this IM. Her attention to detail helps make this the best Instructor's Manual accompanying the text in its six editions. Finally, I would like to thank Professor Tom Pritchett, Kennesaw State University, and Betty M. Prichett for developing an excellent test bank for you. These questions have been class tested. I can create any 50 multiple-choice question test and my students average 76 to 83 on it. Please contact me at: TAMU--Marketing Department, College Station, TX 77843-4112, (409) 845-5861 (o), (409) 862-2811 (fax), E-mail: c-futrell@tamu.edu, web page: http://futrellwww.tamu.edu, or the TAMU Lowry May's School of Business web page: http://business.tamu.edu.

Professor Futrell Online! Beginning in the Fall 1997 I went "Online" with both my personal selling and sales management courses. While time consuming to set up the Web site, technology is allowing us to do a much better job of interacting with our students. Students like this "student contact system." You are invited to visit my Web site at either http://futrell-www.tamu.edu or http://www.tamu.edu/cba. Occasionally it is down for repair, so e-mail me if you have trouble getting into the site. My e-mail is c-futrell@tamu.edu. What follows is a brief overview of my student contact system. You should know that over the years we have increased enrollments to the largest in the world--as far as I know. We have 800 to 900 students take the courses each year. My individual section size averages 100 students each. Students enroll in one of two lecture sections and one of six labs. The labs are where students do their "Sell Yourself on a Job Interview" video role-plays. My sections are for business majors only. On the Web site you can go to Classes, and then Marketing 436. Student Contact System Students come to the main page for the course and click on "Important -- REGISTER." They register their student and e-mail numbers. I have them sign a release that it is OK to post their grades using their student numbers. You could assign each student a password. Registering helps insure the numbers are inputted correctly. With a digital camera you can also have a nice picture of each student appear on their grade page. Go to "grades," and input a single "9." This should show you an example of the grade page. Students receive all grades Online. Using a group e-mail for each section, I routinely e-mail such things as when grades are posted on the web and announcements, such as a reminder of a test, assignment due soon, sales jobs, guest lecturer, etc. We are continually improving this student contact system and our teaching procedures using technology. Please contact me any time to see what works or what we are experimenting with today. Web Sites for Sales Management and Personal Selling Please look at both courses' Web site. Also, click on the book covers to allow you or your students to prints out such things as a complete chapter outline of each book and example test questions. I also have the URL's of hundreds of organizations having the largest sales forces in America. Look under Sales hotlinks, Sales Forces.

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Salesperson Information Sheet Personal Selling Course Name:___________________________ When will you graduate?_________ Student number:___________________________ Permanent address:_________________________ ________________________________________ Telephone number:________________________ E-mail:_________________________________ I give Professor Futrell permission to use my full nine digit student identification number when posting grades. Signed:__________________________________

Local address:__________________ ________________________________ Telephone number:_____________ Major:_______________________

Overall grade point:____________ Grade point in major:___________

School activities:_____________________________________________________________

_____________________________________________________________________________ Are you presently working? __Yes__No If yes, where?_____________________________

What work experience have you had?____________________________________________

Are you interested in a sales career?_____Yes_____No______Maybe If yes or maybe, what type of sales job are you interested in?_________________________ Other information you would like to share with me________________________________ What grade do you have to make in this class?_____A_____B_____C_____D. Why?

What are topics you want covered in this course?___________________________________

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_____________________________________________________________________________

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Shadow's Bonus Project --Working With Salespeople In the past, students have benefited from going on sales calls with salespeople. It is the best way to relate what we do in this course to salespeople's jobs. If you would like to work with a sales person this semester and write a paper based on the experience, you can earn up to 50 "bonus" points. If you earn the maximum amount of points, it is like earning an additional 50 points on a test. Here is how the project will be graded: 50 points for 3 sales calls with a salesperson. 40 points for 2 sales calls with a salesperson. 30 points for 1 call with a salesperson.

You will create a typed paper which is graded on (A) neatness, (B) how well you prepare the paper and (C) how well you write up the answers to these questions: 1. 2. Salesperson's name, calling card. Letter from salesperson on company letterhead stationary stating that you actually worked with the person and the number of customers seen. Brief background on: A. B. C. 3. 4. 5. 6. 7. 8. 9. 10. 11. Company Products sold and to whom Salesperson

What does it take to be successful in sales? Description of initial product knowledge, getting product knowledge and selling skills training. How do you prepare for a sales call? How do you prepare for a sales presentation? Does nonverbal communication play a part in sales? What's the best way to start a presentation? What's involved in giving a good presentation? How do you handle objections? What's the best way to ask for the order?

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Sales Diary Bonus Project As a second option, you may chose to keep a sales diary of selling encounters that you have with salespeople in a variety of jobs. For this project, we are defining a salesperson as anyone who interfaces with customers and influences a monetary transaction. The object of this project is to be alert to selling tactics that are prevalent everywhere! If you elect to keep a diary this semester, you can earn up to 50 bonus points. If you earn the maximum points, the 50 points will be added as if you earned 50 additional points on the exam. You will submit a written report based on a sales diary you are to keep from September 30November 15. In this diary, you should document your sales encounters. For each encounter, you must record factual information (where, when, nature of, and reason for encounter) and your assessment of each salesperson and his/her use of the selling techniques discussed in class and in your textbook. Submit your diary along with your written report. In your report, write about the worst encounter as documented in your diary. Try to determine if it was due to the salesperson (e.g., Just not motivated), or the organizations training (or lack thereof). Be creative, seek out other salespeople in the organization, and ascertain whether there are any patterns in their use of sales techniques. If in fact, they have used sales techniques, provide examples of their techniques and label the techniques used by the salesperson. Make specific recommendations as to how the salesperson could have made his/her presentation better, and/or how the organization can improve its sales training. Describe the problem(s) based on the diary input and present a logical plan for improvement. Be selective and focus on the most critical aspects of the encounter. You will be limited to eight typewritten pages (double-spaced, one-inch margins). Criteria for grading your report include how effectively you incorporate concepts from the text and lectures into your paper, your ability to diagnose probable causes of the problems and suggest appropriate solutions. Remember that you are the sales consultant! Grading will also include how you organize and write your paper -- neatness will count!!! The following are examples of questions that should be addressed in your paper (this is the minimum that should be included): Background 1. 2. Salespersons name, calling card, organization the salesperson works for, type of sales job, and products sold. Did you buy? Nonverbal - what image did the salesperson(s) project? Were they dressed appropriately? Did they appear courteous and helpful? Did they appear motivated? How would you classify the salespersons personality style? A Thinker? Intuitor? Feeler? Sensor?

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SECTION II

CHAPTER LECTURE NOTES

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CHAPTER 1 SALES MANAGEMENT: IT'S NATURE, REWARDS, AND RESPONSIBILITIES LECTURE OUTLINE I. II. WHAT IS SALES MANAGEMENT? THE FIVE FUNCTIONS OF SALES MANAGERS A. B. C. D. E. III. IV. V. Planning Staffing Training Leading Controlling

SALES PERFORMANCE MAJOR PARTS OF AN ORGANIZATIONAL SYSTEM TYPES OF SALES MANAGERS A. B. Vertical Differences Horizontal Differences

VI. VII.

HOW DOES ONE BECOME A SALES MANAGER? SALES MANAGEMENT SKILLS A. B. C. Conceptual And Decision Skills People Skills Technical Skills

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VIII.

PROMOTION FROM SALESPERSON TO SALES MANAGER A. B. C. D. E. F. Perspectives Change Goals Change Responsibilities Change Satisfaction Changes Job Skill Requirements Change Relationships Change

IX.

WHAT IS IT LIKE TO BE A SALES MANAGER? A. B. First-Line Sales Management The Promotion Experience 1. 2. 3. 4. 5. 6. 7. C. D. E. Phase 1-Immobilization Phase 2-Minimization or denial of change Phase 3-Depression Phase 4-Acceptance of reality Phase 5-Testing Phase 6-Search for meanings Phase 7-Internalization

Problems New Managers Experience Making A Successful Transition To Management Technology Sales Personnel Use

XII. XIII.

LEARNING TO BE A SALES MANAGER THE BOTTOM LINE

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CHAPTER 2 SOCIAL, ETHICAL AND LEGAL RESPONSIBILITIES OF SALES PERSONNEL LECTURE OUTLINE I. MANAGEMENT'S SOCIAL RESPONSIBILITIES A. B. Organizational Stakeholders An Organization's Main Responsibilities 1. 2. 3. 4. C. II. Economic responsibilities Legal responsibilities Ethical responsibilities Discretionary responsibilities

How To Demonstrate Social Responsibility

WHAT INFLUENCES ETHICAL BEHAVIOR? A. B. The Individual's Role The Organization's Role

III.

MANAGEMENT'S ETHICAL RESPONSIBILITIES A. B. What Is Ethical Behavior? What Is An Ethical Dilemma?

IV.

ETHICS IN DEALING WITH SALESPEOPLE A. B. C. D. E. Levels Of Sales Pressure Decisions Affecting Territory To Tell The Truth? The Ill Salesperson Employee Rights

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1. 2. 3.

Termination-at-will Privacy Sexual harassment a. Handling sexual harassment

4. V.

Reasons for respecting employee rights

SALESPEOPLE'S ETHICS IN DEALING WITH THEIR EMPLOYERS A. B. C. D. E. Misusing Company Assets Moonlighting Cheating Affecting Fellow Salespeople Technology Theft

VI.

ETHICS IN DEALING WITH CUSTOMERS A. B. Bribes Or Gifts Misrepresentation 1. What the law says a. C. D. E. F. G. An example

Price Discrimination Tie-In Sales Exclusive Dealership Reciprocity Sales Restrictions

VIII.

MANAGING SALES ETHICS A. Follow The Leader

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B. C. D. E. F. G. IX.

Leader Selection Is Important Establish A Code Of Ethics Create Ethical Structures Encourage Whistle-Blowing Create An Ethical Sales Climate Establish Control Systems

THE BOTTOM LINE

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CHAPTER 3 BUILDING RELATIONSHIPS THROUGH STRATEGIC PLANNING LECTURE OUTLINE I. IMPORTANCE OF CORPORATE PLANNING A. B. C. II. Strategic Planning Tactical And Operational Planning Establishing A Mission And Vision

WHAT IS MARKETING? A. Definition of Marketing

III.

MARKETINGS IMPORTANCE IN THE FIRM A. B. Marketing Generates Sales Marketing Provides Quality Service

IV.

ESSENTIALS OF A FIRMS MARKETING EFFORT A. B. Product: Its More Than You Might Think Services Are Products 1. 2. 3. 4. 5. C. D. Intangibility Inseparability Heterogeneity Perishability And Fluctuating Demand A Tough Sell

Price: Its Important To Success Distribution: It Has To Be Available 1. Distribution moves products to customers

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2. E. F. VII.

Distribution uses resellers

Promotion: People Have To Be Told The Goal Of A Marketing Mix

RELATIONSHIP MARKETING A. LEVELS OF RELATIONSHIP MARKETING

VIII. IX.

TECHNOLOGY BUILDS RELATIONSHIPS AND PARTNERS RELATIONSHIP MARKETING AND THE SALES FORCE A. B. C. D. Personal Selling Builds Relationships Salespeople Generate Revenue Salespeople Provide Service Salespeople Implement Relationship Marketing

X.

STRATEGIC PLANNING AND THE SALES MANAGEMENT PROCESS A. B. Planning A Sales Strategy The Development of Sales Strategies 1. 2. 3. C. The present situation Preparation of the multiyear strategic plan Financial planning is a part of the sales strategy

Setting Next Years Sales Plan 1. 2. 3. 4. 5. Establish key objectives Compare present with future Allow field managers to participate Develop the budget Establish progress checkpoints

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6. 7. D. XII.

Formalize your plan Convert plans into individual objectives

Sales Objectives Direct Other Activities

THE BOTTOM LINE

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CHAPTER 4 THE MARKET-DRIVEN SALES ORGANIZATION LECTURE OUTLINE I. II. FACTORS INFLUENCING ORGANIZATIONAL DESIGN AND STRUCTURE MARKETING AND MARKETS A. III. Salespeople Work In Two Markets

SALES JOBS ARE VARIED AND CAN BE CLASSIFIED A. Application Of The Sales Job Classifications 1. 2. Order Takers Order getters a. B. Order getters build relationships

True Salespeople Are Hard To Find

IV.

THE SALESPERSON'S JOB ACTIVITIES AS A TERRITORIAL MANAGER A. B. C. D. E. F. G. Provides Solutions To Customer's Problems Provides Services To Customers Sells To Current And New Customers Helps Customers Resell Products To Their Customers Helps Customers Use Products After Purchase Builds Goodwill With Customers Provides Company With Market Information

V.

SALES ORGANIZATIONAL DESIGN A. Purposes And Importance Of Job Design

VI.

SALES ORGANIZATIONAL STRUCTURE

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A. B.

The Line Organization Specialized Design 1. 2. 3. 4. 5. 6. Functional specialization Staff positions with line authority Geographical specialization Product specialization Customer specialization Combination of design elements

C. D. VIII.

Organizing For Selling To International Customers Organizing For Selling To Major Customers

NEW FORMS OF ORGANIZATIONS A. B. Strategic Alliances Team-Based Organizations

IX.

COORDINATION AND TECHNOLOGY A. B. International Coordination Coordination Provides Customer Service

X.

THE BOTTOM LINE

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CHAPTER 5 FORECASTING MARKET DEMAND AND SALES BUDGETS LECTURE OUTLINE I. II. III. IV. MANAGING SALES INFORMATION FORECASTING MARKET DEMAND USES OF SALES FORECASTS THE FORECASTING PROCESS A. V. The Breakdown And Buildup Forecasting Categories

SALES FORECASTING METHODS A. Survey Forecasting Methods 1. Executive opinion a. 3. Delphi method

Sales force composite a. Should salespeople be paid bonuses for accurate forecasts?

4. 5. B.

Users expectations Build-to-order

Mathematical Forecasting Methods 1. 2. Test markets Time series projections a. b. c. d. Naive method Moving average Exponential smoothing Trend projections

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e. VI.

Regression analysis

THE TOP BRASS APPROVES THE FINAL FORECAST A. The Need To Overcome "Computerphobia"

VII.

THE SALES MANAGER'S BUDGET A. Budget Purposes 1. 2. 3. B. C. D. Planning Coordination Control

Sales Force Budgeting Methods Forecasted Budget For Sales Regions Budgets Should Be Flexible

VIII.

THE BOTTOM LINE

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CHAPTER 6 DESIGN AND SIZE OF SALES TERRITORIES LECTURE OUTLINE I. WHAT IS A SALES TERRITORY? A. Who Is Responsible For Territorial Development? 1. Why Establish Sales Territories? a. b. c. d. e. f. g. B. II. To obtain thorough coverage of the market To establish a salesperson's responsibility To evaluate performance To improve customer relations To reduce sales expense To allow better matching of salesperson to customer To benefit salespeople and the company

Why Sales Territories May Not Be Developed

FACTORS TO CONSIDER IN DESIGNING SALES TERRITORIES A. B. Select Basic Control Units Analyze Salespeople's Work Loads 1. 2. 3. C. Nature of the job Intensity of market coverage Type of products sold

Determine Basic Territories 1. 2. Forecast sales and determine sales potentials Determine sales volume needed for each territory

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3.

Determine number of territories a. b. c. Breakdown approach Equalized workload Incremental method

4. 5. 6. D. E.

Tentatively establish territories Determine number of accounts for each territory Finalize and draw boundary lines

Assign To Territories Customer Contact Plan 1. 2. Carefully planning routes Using the telephone for territorial coverage

F.

Evaluation And Revision Of Sales Territories 1. Revising sales territories

III.

THE SALES TERRITORY IS A BUSINESS A. B. The Right Salesperson Pays Off Open Sales Territories

IV. V.

USING COMPUTERS TO DESIGN TERRITORIES THE BOTTOM LINE

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CHAPTER 7 SALES OBJECTIVES AND QUOTAS LECTURE OUTLINE I. II. WHAT IS A QUOTA? WHY ARE QUOTAS IMPORTANT? A. B. C. D. E. III. Quotas Provide Performance Targets Quotas Provide Standards Quotas Provide Control Quotas Provide Change Of Direction Quotas Are Motivational

TYPES OF QUOTAS A. Sales Volume Quotas 1. B. Breakdown total sales volume

Profit Quotas 1. The two types of profit quotas

C. D. E. F. IV.

Expense Quotas Activity Quotas Customer Satisfaction Quota Combinations

METHODS FOR SETTING SALES QUOTAS A. B. C. Quotas Based On Forecasts And Potentials Quotas Based On Forecasts Only Quotas Based On Past Experience

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D. E. F. V.

Quotas Based On Executive Judgments Quotas Salespeople Set Quotas Related To Compensation

EXAMPLES OF SETTING SALES QUOTAS A. B. How Restaurant Supply Corporation Sets Quotas How General Mills Sets Quotas

VI.

SBO SETS FUTURE TARGETS A. B. Treating The Territory As A Business Managing Each Account 1. 2. 3. 4. C. D. Build the stars Harvest the cash cows Fix your problems Dogs

Managing Each Call Managing Oneself

VII. VIII.

BASIC LEVELS OF INDIVIDUAL OBJECTIVES THE PROCEDURES OF SETTING OBJECTIVES AND QUOTAS WITH SALESPEOPLE A. B. C. D. Prepare The Way Schedule Conferences With Each Salesperson Prepare A Written Summary Of Goals Agreed On Optional Group Meetings To Share Objectives

IX.

A GOOD OBJECTIVE AND QUOTA PLAN IS SMART

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X.

SELLING BY OBJECTIVE PROCEDURES A. The Basic Process Is A Two-Way Approach

XI. XII.

THE SALES TERRITORY IS WHERE QUOTAS ARE MADE THE BOTTOM LINE

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CHAPTER 8 PLANNING FOR AND RECRUITING SUCCESSFUL SALESPEOPLE LECTURE OUTLINE I. II. WHAT IS SALES HUMAN RESOURCE MANAGEMENT? PEOPLE PLANNING A. More Effective And Efficient Use Of Human Resources 1. B. Interview to territory time line

Improved Performance Of The Sales Force 1. 2. Whats a salesperson worth? Goal: Hire Above Average Performers

C. III. IV.

Who Does The Planning?

PEOPLE FORECAST DETERMINING TYPE OF PERSON FOR THE JOB A. The Job Analysis Is Important

V.

JOB DESCRIPTIONS AND SPECIFICATIONS FOR SUCCESSFUL PEOPLE A. B. What Are Job Specifications For Successful Salespeople? Profiling The Successful Candidate 1. The American Computer Supply Corporations Profile

VI. VII.

RECRUITMENT'S PURPOSE LEGAL INFLUENCES A. What Recruiting Information Can Be Collected?

VIII.

RECRUITMENT OF SALESPEOPLE A. How Many Recruits Does It Take?

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B. IX.

Who Does The Recruiting?

SOURCES OF RECRUITS--WHERE ARE THEY FOUND? A. Internal sources 1. 2. 3. B. Current employees Promotions Transfers

External sources 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Walk-ins Public employment agencies Private employment agencies Radio and television Newspaper advertisements Telephone-in advertisements The Internet Internships Colleges And Universities Competitors

C. X. XI XII.

Realistic job previews help both company and recruits

THE QUALIFIED APPLICANT POOL RECRUITMENT EVALUATION THE BOTTOM LINE

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CHAPTER 9 SELECTION, PLACEMENT, AND SOCIALIZATION OF SUCCESSFUL SALESPEOPLE LECTURE OUTLINE I. SELECTION AND PLACEMENT OF SUCCESSFUL SALES PERSONNEL A. B. C. II. Is Selection The Most Important Element In Fielding A Sales Force? Purposes And Importance Of Selection And Placement Factors Influencing Selection And Placement

PREDICTORS FOR SELECTION DECISIONS A. B. C. What Are Predictors? Sources For Collecting Information Is The Information Job-Related?

III.

THE SELECTION PROCESS A. The Job Application Bank 1. B. Information typically collected

The Personal Interview--A One-On-One Selling Situation 1. 2. Criticisms of interviewing Types of interviews a. 3. 4. The stress interview

Nonverbal cues in interviews Interviewing phases a. b. Interview preparation Opening the interview

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c. d. e. 5. C. Tests 1. 2. 3. 3. D. E. F. IV.

The interview Ending the interview Post-interview

Interview guidelines

Employment tests Polygraph test Testing problems Establishing a testing program

Assessment Centers Employment References Physical Examinations

EVALUATING SELECTION AND PLACEMENT DECISIONS A. People May Reject The Offer! Why?

V. VI.

THE SOCIALIZATION OF SALES PERSONNEL THE BOTTOM LINE

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CHAPTER 10 THE MANAGEMENT OF SALES TRAINING AND DEVELOPMENT LECTURE OUTLINE I. II. WHAT IS SALES TRAINING? REENGINEERING TRAINING A. III. IV. V. Change Brings About Training Reengineering

PURPOSES OF SALES TRAINING A SALES TRAINING MODEL PHASE ONE: PLANNING FOR SALES TRAINING A. B. C. D. E. F. Organizational Analysis Operational Analysis Sales Personnel Analysis Customer Analysis Making The Needs Assessment Sources Of Information For Determining Training Needs

VI.

PHASE TWO: ORGANIZING FOR SALES TRAINING A. Technology-Based Training Methods 1. 2. 3. 4. B. C. Interactive multimedia training Electronic performance support systems High tech customer service Distance Learning

Role-Playing On-The-Job Training

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D.

Training Learning Curves 1. Plateaus

E.

Where Does Training Take Place? 1. 2. Centralized training Decentralized training

F.

When Does Training Occur? 1. Sales meetings

VII.

PHASE THREE: STAFFING FOR SALES TRAINING A. Who Is Involved In Training? 1. 2. 3. Corporate staff trainers Sales force personnel Outside training specialists

VIII.

PHASE FOUR: DIRECTING THE SALES TRAINING EFFORT A. B. C. Training Culture Support From The Top Leadership

IX.

PHASE FIVE: SALES TRAINING EVALUATION A. Steps In The Evaluation 1. What should be measured? a. b. c. 2. Components to measure Groups to evaluate Items to measure

What should be the information collection method?

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3. 4. X.

What should be the measurement methods? Analysis, conclusions, and recommendations

THE BOTTOM LINE

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CHAPTER 11 CONTENTS OF THE SALES TRAINING PROGRAM: SALES KNOWLEDGE AND THE SELLING PROCESS LECTURE OUTLINE I. II. III. LEARNING IS A LIFE-LONG JOURNEY SHOULD IT BE CALLED TRAINING OR EDUCATION? RELATIONSHIP OF TRAINING TO LEARNING A. On-The-Job Behavior 1. IV. Operational and behavioral information

SALES KNOWLEDGE DEVELOPMENT A. B. C. D. E. F. G. H. J. Company Knowledge The Sales Role Product knowledge Prices Advertising And Sales Promotion Channels Of Distribution Customers Competition, Industry, And Economy Territorial Management Skills

V.

KNOWLEDGE OF TECHNOLOGY A. B. Sales And Customer Service Enhancement Personal Productivity 1. Contact management

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2. 3. 4. 5. C.

Calendar management Automated sales plans, tactics, and ticklers Geographic information systems Computer-based presentations

Communications With Customers And Employer 1. 2. 3. Word processing Electronic mail Fax capabilities and support

D.

Customer Order Processing And Service Support 1. Salespeoples mobile offices

E. F. VI.

E-Commerce and the Sales Force Global Technology

SALES SKILLS DEVELOPMENT A. Persuasive Communications

VII.

THE SELLING PROCESS A. Prospecting Finds Customers 1. Referrals are popular a. b. c. d. B. Leads Referrals Orphans Customers

Preapproach Is Precall Planning 1. Determining a sales call objective

43

2. 3. 4. C.

Developing a customer profile Developing a customer benefit plan Developing the sales presentation

The Approach--Opening The Sales Presentation 1. 2. The first impression is critical to success Approach techniques are numerous a. b. c. d. Introductory approach Product approach Customer benefit approach Curiosity approach

D.

Making A Great Presentation 1. 2. 3. The sales presentation mix Salespeople, managers and trainers prepare presentation mix Sales presentation methods a. b. c. 4. Stimulus - response method Formula method Need-satisfaction method

Technology can help make the sale

E. F.

The Trial Close Objections Are Salespeople's Friends 1. 2. Types of objections Techniques for meeting questions a. Postponing objections

44

b. c. G. The Close 1. 2.

Boomerang Asking questions

Difficulties with closing Closing techniques a. b. c. d. The compliment The summary Minor decision Assumptive

H. VIII. IX. X.

Follow-Up And Service Quality Are Critical

RESEARCH REINFORCES CHAPTER'S SALES SUCCESS STRATEGIES ADAPTING TO GLOBAL MARKETS THE BOTTOM LINE

45

CHAPTER 12 MOTIVATING SALESPEOPLE TOWARD HIGH PERFORMANCE LECTURE OUTLINE I. II. MOTIVATION AT EBBY HALLIDAY REALTORS UNDERSTAND WHAT MOTIVATION IS ALL ABOUT A. III. The Sales Motivation Mix

DEVELOP A SALES CULTURE A. Implementation Of Sales Culture 1. 2. 3. 4. Ceremonies and rites Stories Symbols Language

IV. V.

KNOW SALESPEOPLE'S BASIC NEEDS WHAT'S IN IT FOR ME? A. B. C. What Is The Probability Of Success? Will I Be Rewarded For Success? Are The Rewards Worth It? 1. 2. Expectancy example Managerial implications of expectancy theory a. b. c. C. Increase expectancies Make performance instrumental toward positive outcomes Identify positively valent outcomes

Are The Rewards Fair?

46

D.

How To Facilitate Equity 1. 2. Job satisfaction and work attitudes Voluntary turnover

VI.

A SALESPERSON'S BEHAVIORAL MODEL A. The Dynamics Of The Model

VII.

GET TO KNOW THE PERSONAL SIDE OF YOUR SALESPERSONS! A. B. Understand The Salesperson's Motivational Behavior Match People's Motives With Incentives They Value 1. 2. Everyone values money Motivate the team

VIII.

MOTIVATIONAL COACHING IS NEEDED FOR HIGH-PERFORMANCE RESULTS A. Salespeople Have Boundary Positions 1. 2. Role ambiguity can influence performance Role conflict also influences performance

IX.

BE REALISTIC ABOUT MOTIVATING SALESPEOPLE! A. Techniques Will Help Get The Job Done 1. 2. 3. 4. 5. 6. 7. Teach teamwork Empower Communicate Hear Notice Initiate Integrity Query

47

8. 9. 10. X.

Unify Exalt Set standards

THE BOTTOM LINE

48

CHAPTER 13 COMPENSATION FOR HIGH PERFORMANCE LECTURE OUTLINE I. II. COMPENSATION AT INGERSOLL-RAND COMPENSATION IS MORE THAN MONEY A. Purposes Of Compensation 1. 2. 3. 4. 5. 6. III. Connect individual with organization Influence work behavior Organizational choice Influence satisfaction Feedback Reinforcement

DESIGNING A COMPENSATION PROGRAM A. B. Determine Sales Force And Compensation Objectives Determine Major Compensation Factors 1. 2. 3. 4. Wage level Wage structure Individual wage Administration procedures

49

C.

Implement Long- And Short-Range Compensation Programs 1. Communicate compensation policy

D. E. F. IV. V.

Relate Rewards To Performance Measurement Of Performance Appraisal And Recycling

PERFORMANCE-BASED PAY: PREREQUISITES AND OBSTACLES TYPES PF COMPENSATION PLANS A. Straight Salary 1. 2. 3. B. Advantages to the salesperson Disadvantages of the straight salary plan When to use straight salary plans

Straight Commission Plans 1. 2. 3. 4. Drawing accounts Advantages of straight commission plans Disadvantages of the commission plan When to use straight commission plans

C.

Combination Salary Plans 1. 2. What is the split? How to calculate a. b. 3. Set an upper limit Consider profitable products

Who should participate? a. Split credit

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b. 4. 5.

Support people

Salary administration When to pay a. b. Salary and commission Bonus: individual or group

6. 7. VI. VII.

Sales contests When to use a combination salary plan

THE MANAGER'S COMPENSATION SALES FORCE EXPENSES A. Types Of Expense Plans 1. 2. 3. Company pays all expenses Salesperson pays all expenses Partial payment of expenses

VIII. IX. X.

FRINGE BENEFITS THE TOTAL COMPENSATION PACKAGE FACTORS TO CONSIDER WHEN DEVELOPING A NEW PLAN A. Information To Collect 1. 2. 3. Competitors' plans Product profitability Sales force activities

XI.

DEVELOPING AND INTRODUCING A NEW PLAN A. B. Pretest The Plan Sell The Plan To The Sales Force

51

C. XII.

Constantly Evaluate The Plan

THE BOTTOM LINE

52

CHAPTER 14 LEADING THE SALES TEAM LECTURE OUTLINE I. THE NATURE OF LEADERSHIP A. B. II. III. Leaders Versus Managers Characteristics Of The Visionary Leader

AN INTEGRATIVE SALES MANAGER'S MODEL OF LEADERSHIP THE SALES MANAGER A. B. C. Personality Characteristics Needs And Motives Power 1. 2. 3. 4. 5. 6. D. Legitimate power Reward power Coercive power Expert power Referent power The use of power

Past experience and reinforcement

IV.

THE SALES MANAGERS BEHAVIOR AND ACTIVITIES A. Behavior Influences Salespeople 1. 2. 3. Style 1: Tells Style 2: Persuades Style 3: Participates

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4. B.

Style 4: Delegates

Activities Influence Salespeople 1. The supervision activity a. b. 2. Indirect supervisory methods Direct supervisory methods

The coaching activity a. b. c. d. Presession analysis and planning The Joint sales call Postcall discussions Summary and critique

3.

The counseling activity a. b. c. d. Some counseling principles Three categories of problems Possible counseling approaches Types of counseling

V.

THE SALESPERSON A. B. C. Personality Characteristics Needs and Motives Performance Level 1. 2. 3. 4. Performance level 1 - (low, low) Performance level 2 - (low, high) Performance level 3 - (high, low) Performance level 4 - (high, high)

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5. D. E. VI.

Experienced salesperson also needs leadership

Past experience Leadership Style Selection Requires Power

THE SALE GROUP A. B. C. D. Characteristics Expectations Norms Sales Culture

VII.

THE SITUATION A. B. C D. The Task Faced The Organizational Factors The Problem Faced The Time Pressures

VIII. IX.

THE SALESPERSONS BEHAVIOR THE BOTTOM LINE

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CHAPTER 15 ANALYSIS OF SALES AND MARKETING COSTS LECTURE OUTLINE I. MARKETING AUDIT A. Sales Force Audit 1. B. The 80/20 principle

Directing The Marketing Effort 1. Iceberg principle

II.

NET SALES VOLUME ANALYSIS A. What Is Sales Analysis? 1. 2. B. Accumulation of sales analysis information Uses of sales analysis

Analyzing Sales Volume 1. 2. 3. 4. Sales by region: district Sales by salesperson Sales by customer classifications Sales by product

III.

MARKETING COST ANALYSIS A. B. C. D. E. What Is Marketing Cost Analysis? Uses Of Marketing Cost Analysis Objectives Of Marketing Cost Analysis Assigning Marketing Costs Methods For Determining Profitability

56

F. G. H. J. K. IV.

Techniques Of Cost Analysis Return On Investment Increasing Productivity Problems in cost analysis Variance Analysis

THE BOTTOM LINE

57

CHAPTER 16 EVALUATION OF SALESPEOPLE'S PERFORMANCE LECTURE OUTLINE I. II. PERFORMANCE APPRAISAL AT J & J PERFORMANCE APPRAISAL--WHAT ARE THEY? A. B. IV. V. The Purposes And Importance Of Performance Appraisals Evaluate And Develop For Motivation To Higher Performance

PERFORMANCE APPRAISAL'S RELATIONSHIP TO BEHAVIOR PERFORMANCE APPRAISAL PROCESSES AND PROCEDURES A. B. C. Who Should Evaluate Salespeople? When Should Salespeople Be Evaluated? Are The Performance Criteria Appropriate? 1. Guidelines for performance criteria a. b. c. d. e. 2. Measurable Practical Relevant Discriminating Stable

Development of performance criteria a. b. Quantitative performance criteria Qualitative performance criteria

D.

Performance Evaluation Forms For Gathering Information 1. Graphic appraisal scales

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2. 3. 4. 5. E.

Descriptive statements Management by objectives Behaviorally anchored rating scales 360-Degree feedback

Influences On Performance Appraisals Accuracy 1. 2. 3. New sales managers False performance results Personalities enter in a. b. c. d. 4. 5. Central tendency errors Different evaluation standards The halo effect Recent performance error

The manager's attitudes Salespeople's expectations

V. VI.

THE LEGAL ASPECTS OF PERFORMANCE APPRAISALS RULES TO PERFORMANCE APPRAISALS A. B. C. D. E. F. Be Objective Set Goals And Standards Be Honest Be Consistent Use Proper Documentation Follow Company Policy

VII.

CONDUCTING THE APPRAISAL SESSION

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VIII.

A. B. C. D. E. D.

Be Prepared Be Positive Review Performance Finalize The Performance Evaluation Summarize The Total Performance Evaluation Evaluate The Evaluation System

VII. IX.

YOU HAVE ALMOST FINISHED THIS TEXTBOOK THE BOTTOM LINE

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61

SECTION III

COMMENTS ON MANAGEMENT APPLICATION QUESTION

62

63

COMMENTS ON MANAGEMENT APPLICATION QUESTIONS

CHAPTER 1 SALES MANAGEMENT: ITS NATURE, REWARDS, AND RESPONSIBILITIES 1. The five functions of sales managers are: Planning: Building a profitable customer-oriented sales team. Staffing: Hiring the right people to sell and lead. Training: Educating sales personnel to satisfy customers. Leading: Guiding average people at above average levels. Controlling: Evaluating the past to guide the future.

Ignoring any of these functions can hinder the productivity of a business. All of these functions are essential to the success and growth of a company. 2. Becoming a sales manager begins with an entry-level position in sales. This usually consists of a training period, followed by an assignment to a sales territory. Over a period of a few years, a salesperson can earn status and financial awards as well as contacting more important clients. After obtaining a senior sales position, a person can then move into a lower-level management position. Companies usually hire salespeople with the potential to eventually move into management. Strategic or top managers are at the top of the hierarchy and are responsible for the entire organization. Tactical or middle managers work at the middle levels of an organization and are responsible for major groups, such as zone and regional sales leaders. Operational or first-line managers are directly responsible for sales of goods and services, as well as supervising non-management employees of the company. Managers can also be divided horizontally. Many firms have different divisions such as consumer, industrial, and institutional divisions each with their own sales force and management hierarchy. 3. The following are major areas of change to make the transition from salesperson to sales manager:

Perspective: Think of the sales team and the company rather than personal sales. Goals: Company goals and objectives rather than personal goals. Responsibilities: Depend on others doing the work through the sales manager's supervision.

64

Satisfaction: Learning to be satisfied by watching others succeed in selling rather than actually doing the selling. Skill Requirements: Must learn new skills such as delegating, motivating, directing, and training. Relationships: New relationships with former peers, other managers and a new supervisor must be developed.

4.

A first-line sales manager is the link between upper-level management and the sales force. Their primary responsibility is the application of rules and procedures to achieve efficient sales, profits, and customer service, and to motivate subordinates to achieve the goals of the company as determined by upper-level managers. Today, companies are enmeshed with foreign competitors, suppliers, and customers. American companies must compete globally to establish themselves in the worldwide market share. Common markets are reducing trade barriers while also increasing global competition. This is forcing sellers to think on an international scale. Some common problems experienced by sales managers are lack of preparation for the job, the need to step into the job and function effectively immediately, and the lack of an immediate peer group in their new position. CHAPTER 2 SOCIAL, ETHICAL, AND LEGAL RESPONSIBILITIES OF SALES PERSONNEL

5.

6.

1.

If you feel these actions fall within our definition, then each of the three situations are socially responsible actions. They can be viewed as contributing to the welfare of employees. Yes, managers feel business ethics can be improved. They face ethical situations such as: How much pressure should be place on salespeople to sell? Telling people they are good salespeople but not management material. The rights of the employees to such things as privacy and access to employment records, a smoke-free work environment, and freedom from sexual harassment at their job.

2.

While most students will probably want to answer that they would be most affected by their individual moral development, this may be an idealistic exaggeration. As pointed out by the text, most managers have not advanced beyond the conventional level where one feels that good behavior is living up to what is expected by others and the social

65

system. Many are still on the pre-conventional level and would act in accordance with their own self-interest. Persons on both of these levels would probably go ahead and inflate their expense account if they felt it was ethically wrong. 3. This question was designed to stimulate student discussion. It leads to an examination of the underlying nature of ethics and an appreciation that unethical decisions tend to exploit or take advantage of others. When the manager confronts a true ethical dilemma, either choice may result in harm to others. Students are often able to provide examples of situations in which someone is hurt either way. Typically, the most ethically responsible choice is the one that does the least damage. Sales puffery is statements that are viewed as opinions and are not of a factual nature. Misrepresentation includes claims or promises about a product's inherent capabilities. There are a number of ways listed in the text of how to avoid costly mistakes between the two. Extensive product knowledge on the part of the salesperson and educating the customer as to the product's capabilities and limitations are among the most important items to remember. For an organization to succeed--such as at Lincoln Electric--its managers must define goals and specify activity that will help the organization achieve them. In the pursuit of its strategies and goals, managers must make choices. In a noncompetitive world, all stakeholders might be considered equal. In a capitalistic economy, the manager's responsibility is to define which stakeholders are most valued. This does not mean that low-ranking stakeholders will be exploited; it simply means that some stakeholders are more instrumental in helping the organization attain its goals. Indeed, the definition of ethical behavior is that organizations should treat individuals equally except when differences are relevant to goals and tasks. The treatment of individuals should not be capricious, but should help the organization accomplish its goals. To expect organizations to treat all stakeholders equally is not reasonable. A code of ethics combined with an ethics committee does tend to be more effective than leadership. The code of ethics communicates to everyone within the organization the boundaries within which they should behave and the values for which the organization stands. An ethics committee provides an outlet through which questionable activities can be surfaced and discussed, and hence provides guidance to organization members. The code of ethics and ethics committee are an effective way to define and communicate the organization's values both inside and outside the organization. Such an arrangement formalizes and clarifies ethics. It is not subject to interpretation. However, leadership can also achieve much. Of course, the ideal is to use both methods.

4.

5.

6.

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7. a. In dealing with such a sensitive personal issue, the manager must remember that although the salesperson has revealed their condition to the manager, he may not want it revealed to the entire organization. Requesting that he keep the manager updated on his condition is being supportive, as opposed to transferring him to an area where he can work alone, which is ostracizing him for his condition. However, consulting a human resource officer is advisable in order to stay within company policies (if there are any) and legal courses of action. b. In deciding among these, a manager must realize the implications upon the working attitudes among the staff. Laying off workers for reasons other than poor performance, or merely suggesting they leave the organization may demonstrate a lack of loyalty on the part of management. However, privately presenting this option to them in a nonthreatening way would be direct and honest. c. To answer this question, the students must determine to what extent the employee should be expected to perform. If they feel that the employee should be given a certain amount of leeway during these times, then not passing blame on to the employee may be acceptable. However, if the manager has confronted her about her performance, then it may be time to seek support from a supervisor. d. Because the new supervisor has not lied to the reader, the students must be encouraged to differentiate personal feelings from professional work problem. Even if this does not affect their answer, the student must remember that this person has not negatively impacted their job as a direct result of this lie. Consulting a human resources officer or confronting the person about their false claims would deal with the problem satisfactorily, however, the student may not feel compelled to say anything at all. e. Any personnel who knows about unethical behavior and does not further corrective action is potentially at risk if that behavior were to become public. However, contacting the oversight commission or taking the matter public may be unnecessary if the company is truly working to correct the problem. f. Although many people would not find using material of this sort objectionable, students must remember that acceptance of behavior like this could possibly be indicative of a larger management problem. Mainly the students would need to examine the point at which they would draw a line between industry competition and going too far to beat a competitor.

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CHAPTER 3 BUILDING RELATIONSHIPS THROUGH STRATEGIC PLANNING 1. There are three different types of planning within management: Strategic planning: Involves making decisions about the organizations long-term goals and activities that an individual, group, work unit, or organization will pursue in the future, and the use of resources to obtain them. Tactical planning: Translates broad strategic goals and plans into specific goals and plans relevant to a definite portion of the organization, often a functional area such as marketing, or human resources. Operational planning: Identifies the specific procedures and processes required at lower levels of the organization

These three types of planning represent different levels of planning. Goals and plans become more specific and involve shorter periods of time as planning moves from the strategic level to the operational level. 2. The salesman should be reminded of the 6 P's. "Proper prior planning prevents poor performance." Planning is essential to increasing productivity of the organization, including the sales force. Personal selling is a part of marketing. Sales people are in direct communication with a companys customers. Because they talk directly with the customer, they are able to customize their sales presentations to the individual needs of specific people and organizations. This is an essential element of any organizations marketing mix. The main functions of personal selling are to generate revenue and to provide service to help satisfy customers. These build relationships and are the keys to success in todays competitive marketplace. The following are the four elements of a firms marketing mix: Product: Refers to both goods and services, as well as their tangible and intangible attributes, such as packaging, brand, and the reputation of the seller. Price: Refers to the value or worth of a product that attracts the buyer to exchange money or something of value for the product. Distribution or place: Refers to the channel structure used to transfer products from an organization to its customers. It is important to have the product available to customers in a convenient and accessible location. Promotion: Increases company sales by communicating product information to potential customers via personal selling, advertising, publicity, and sales promotion.

3.

4.

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5.

Building a relationship with a customer creates customer loyalty. Relationship marketing is based on the idea that important customers need continuous attention. This form of selling creates a long-term, collaborative relationship with the customer allowing the company to sell to the customer now and in the future. To build relationships with customers and organizations, salespeople must take a customer-oriented approach to selling. They should contact the customer after the first sale to ensure satisfaction with the product or service and take care of problems when the customer is unhappy. CHAPTER 4 THE MARKET-DRIVEN SALES ORGANIZATION

1.

Marketing involves planning and executing a conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational objectives. The two types of markets are consumer and business. The salespeople in categories 6 and 7 are "order-getters." They have a much more difficult selling task and prove to be much more valuable to the business. They are true salespeople and usually earn more than their counter-part, the "order taker." A salesperson as a territory manager must: Provide solutions to customers' problems Provide services to customers Sell to current and new customers 00000000Help customers resell products Help customers use products after purchase Build goodwill with customers Provide the company with market information

2.

3.

When properly used these seven functions produce successful sales performance. 4. Organizational design is the formal, coordinated process of communication, authority and responsibility for sales groups and individuals. It enables salespeople to know their responsibilities and whom they report to, this lets them concentrate on their job. There are four main types of specialization: Functional Specialization: Allows firms to develop departments with special expertise. Minnetonka Inc., the company that markets Softsoap, has a narrow product line and they emphasize marketing over research, so they would probably have a marketing department and a production department. This would be organization by functional specialization.

5.

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 6. 7.

Geographical Specialization: This would be useful in the company that does business in a number of locations. Oil companies that have refineries around the country might be organized this way, or a paper producing firm such as Boise-Cascade. 00000000Product Specialization: There are a number of reasons why a firm might organize around a product. If it is a very technical product, or distributed through different channels are two reasons. Customer Specialization: If the needs of different customer groups are very different, a firm might organize to serve these customer-specific needs.

The key reason is that these accounts may represent a disproportionate amount of sales. They may be 20% of the customers, but represent 80% of the sales. Coordination is the quality of collaboration across groups. If two divisions are working in conjunction with one another, they are more responsive to customer needs and more aware of the activities which affect those needs.

8. A one-man-show organization is a type of line organization. The responsibilities of the key personnel can become too cumbersome for one person, and often some aspect of their job suffers. It is also problematic to have too much information located within one job, making it difficult to replace a person who leaves the firm. By spreading out the responsibilities of the firm, an organization can devote the proper time and energy to important tasks. 9. Order getters are more proactive in their approach to sales than order takers. By building relationships and using more sophisticated sales techniques, they respond more readily to customer needs. The order taker, on the other hand, only has the ability to make price distinctions for the customers. CHAPTER 5 FORECASTING MARKET DEMAND AND SALES BUDGETS 1. Decision support people, like Dan McKee, help a sales manager have timely, accurate, and adequate information to help them make decisions. They help with forecasts and budgets by projecting sales and giving information that allows the sales manager to focus on establishing strategic plans to achieve organizational goals. The break down method starts with a broad general environment forecast, which is broken down to a forecast for the industry and so on until you get to the individual product. The build-up method starts with estimated sales for a small area, such as a product, a product line, or a small set of customers. These then keep getting added together until you get to a company sales forecast. They will probably not give the same figures for a sales forecast at any given level of the firm. Hopefully, if a firm did both kinds of sales forecasting, the difference between the forecasts would be manageable, or they might point out the need for more intensive research to achieve a better forecast.

2.

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3.

Method Executive Opinion

Strengths Experienced executives have a good "feel" for the market. Can check other methods. When product is new. When sales volume and market are stable and well defined. When risk of error is low. They are in direct contact with the customer. It is inexpensive and can be obtained fairly quickly. Very good for a limited customer base, i.e., purchasers of airliners.

Weaknesses Relies on personal views. No way of weighing individual opinions. May take up too much time (Delphi Method). Dominant individuals may influence other members. May be optimistic or pessimistic. May be receiving unreliable data about intentions to buy. Difficult to predict future buying habits

Sales Force Composite

User's Expectations

4.

Naive Method $1,100,000 x 1,100,000 1,025,000 = $1,180,488 for next year's sales.

Moving Average Method $ 975,000 1,025,000 1,100,000 $3,100,000 / 3 = $1,033,333 for next year's sales. Trend Projection: Least Squares A least squares by hand is possible given these few data points. Below are the tables and equations necessary to achieve the equation for the regression line. The sales figures have been restated in thousands and the years in numerical sequence for ease of computations. The basic equation for a regression line determined by the least squares method is: Y = a + Bx, where: Y = sales (in thousands) X = year for those sales a = Y intercept (not a meaningful number) b = slope of the line

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Y 750 825 895 975 1,025 1,100 5,570 Y = 928.3

X 1 2 3 4 5 6 21 X = 3.5

Y2 562,500 680,625 801,025 950,625 1,050,625 1,210,000 5,255,400

X2 1 4 9 16 25 36 91

YX 750 1,650 2,685 3,900 5,125 6,600 20,710

b = S YX - nYX i=1 = 20,710 - 6(928.3) (3.5) = 1215.7 = 69.5 n 91 - 6(12.25) 17.5 2 2 S X - n(X) i=1 a = Y - bX = 928.3 - 69.5(3.5) = 928.3 - 243.25 = 685.05 Y = 685.05 + 69.5(X) Next Year's Sales = 658.05 + 69.5(7) = $1,171,550 They all have their own assumptions about what will continue into the future and they will to give you the same answer. 5. The sales budget is used to plan, coordinate, and control. The budget helps sales managers in planning how to meet their objectives. The budget helps coordinate the activities between functional units. The budget helps control the way funds are used. It gives a yardstick for the managers to compare how they are doing.

6. A. (3) Market test. The buyer survey doesn't indicate how buying intentions may change according to variable economic conditions. The industry forecast depends upon the availability of production and sale statistics from associations or government sources, but these figures are often not readily available, detailed, or specific enough. The market test can also determine the effectiveness of different marketing programs. B. (2) Past sales figures. The industry forecast is dependent upon the gathering of diverse production statistics. Past sales figures are readily available and can simply be multiplied by an average percentage sales increase to produce a reasonably reliable forecast. C. (3) Sales force survey. Market and buyer surveys, properly conducted, admit a relatively constant margin of error. Even though salespeople may have special information that is not available at higher levels, the salesperson may be optimistic or pessimistic by nature, affecting his or her forecast accordingly.

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D. (1) Buyer survey. Statistical correlation analysis is overly sophisticated for your needs. Sales force opinion may not reflect the broader business or economic trends. A buyer survey would be the logical means of forecasting sales, since future sales depend largely upon the intentions of buyers. E. (2) Trend and cycle analysis. Statistical correlation analysis requires critical judgment and should be done by qualified specialists. The market index method doesn't take into consideration the relative strength of the particular forces that influence seasonal sales. Trend and cycle analysis can be used for long-range forecasts--and for short-term forecasts when cyclic or seasonal patterns are clearly defined. CHAPTER 6 DESIGN AND SIZE OF SALES TERRITORIES 1. 2. A sales territory is a group of customers or a geographic area assigned to a salesperson. (See the chapter reasons why or why not to establish sales territories.) When designing sales territories, organizations: 3. Select a basic control unit 00000000Analyze the work load Determine the basic territories 00000000Assign salespeople to territories Use the customer contact plan Evaluate and revise if needed

The six steps to consider when organizing a firm's basic territories are: Forecast sales and potentials Determine volume needed for each territory Determine the number of territories Tentatively establish territories 00000000Determine number of accounts for each territory Finalize and draw boundary lines

To complete step 4, tentatively establishing territories, you can use the breakdown approach, the equalized workload, or the incremental method. 4. 5. 50,000 total yearly calls = 35.7 or 36 salespeople are needed. 1,400 calls per salesperson These methods should not give the same results. Below are tables showing the work necessary to determine each.

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Equalized Workload Method Customer Type A B C Call Frequency 2 per month 1 per month 1 per quarter Number of Accounts 300 700 1100 Calls per Year 7200 8400 1100 20,000

Salesperson Sales Calls 10 X 5 days a week = 50 X 50 weeks = 2500 Number of Sales Salespeople Increase 8 9 10 $75,000 $67,000 $37,500 Incremental Method Direct Costs COGS $25,000 $25,000 $25,000 $45,000 $40,500 -$22,000 Net profit Contribution = = = $ 5,000 $ 2,000 <$10,000>

Nine salespeople should be in this district. 6. The first step would be to locate the salesperson's accounts on a map, using different colors for different size accounts. Look for natural sections of the territory that contain about the same number of the largest accounts. See if the accounts fall into a discernible pattern, such as a cloverleaf, a circle, or a straight line. Suggest things such as, getting up early and traveling to the most distant account and working back to the salesperson's base. Working with the salesperson, an effective sales route should be able to be developed that will keep travel time to a minimum and thereby increase the time available for selling. Sales costs are still on the rise, and the phone may help to cut costs. For a list of appropriate applications, see this section in the text. CHAPTER 7 SALES OBJECTIVES AND QUOTAS 1. Jim Mobley appears to do a very good job in setting and communicating sales quotas for his people. A computer assists in setting quotas, but changes within territories are taken into consideration. These quotas are communicated to each salesperson in private.

7.

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2.

Quotas perform the following functions: Performance Targets: These give direction and goals for the sales force to attain. Standards: This is a measurement against which the salesperson's performance can be compared. 00000000Control: They help direct the salesperson's activities and can be used as an indirect supervisory technique. Change of Direction: Salespeople's quotas may help to change the emphasis placed upon the sales of certain products.

3.

This is not a particularly well-stated quota. It is lacks measurability (increase sales). For instance, how much is necessary, one dollar or one million dollars? The qualitative areas lack measurability as well (more effective sales calls, improved customer relations, better communication skills). However, it does have a time frame (next quarter). A better quota might be stated as "Our objective is to increase sales 5 percent over last year's sales for the territory next quarter. We plan to do this through increasing our sales calls by 5 calls a week, checking the customer's stock levels for them and spending an additional 15 minutes per sales call to plan the call more thoroughly."

4.

All of these companies could use any or all of the quotas discussed in the book. The main quota(s) would be: A. B. C. D. General Mills -- sales volume and activity quotas. Xerox -- sales volume and activity quotas. Beecham's Aqua-Fresh -- sales volume and activity quotas. Fritos -- sales volume and activity quotas.

The main activity quota used is "the number of daily sales calls." 5. Look at the differences: Western District Sales Cost of sales Gross margin Expenses Net profit Sales-net profit ratio
$10,634,000 - 8,507,200 2,126,800 - 140,000 1,986,800 18.6%

Eastern District
$10,380,000 - 8,304,000 2,076,000 - 152,000 1,924,000 18.5%

Difference
$254,000 - 203,200 50,800 + 12,000 2,800

Eastern's sales are lower, yet expenses are higher and profits lower. At first one might conclude that because the "sales-net profit ratio" is almost the same, there is no real difference. However, you need to check out sales and expense differences.

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6.

Fahey is doing much better than Jackson and especially Bush. Sales Quota A. Fahey B. Jackson C. Bush
$1,000,000 750,000 1,200,000

Actual Sales
$1,100,000 720,000 1,050,000

Difference
$100,000 30,000 150,000

Performance Index
110.0 96.0 87.5

(Actual Sales/Quota) X 100 7. It is impossible to tell very much here. Their manager will have to work with them several times to see what is really happening. # of Calls A. Jackson B. Johnson C. Sager
1,200 1,400 1,600

# of Orders
333 700 600

Actual Sales
$6,000,000 6,046,000 11,000,000

OrderCall Ratio
27.7% 50.0 37.5

Average Size Order

$18,018 8,637 18,333

CHAPTER 8 PLANNING FOR AND RECRUITING SUCCESSFUL SALESPEOPLE 1. Planning and forecasting the sales force's short and long term personnel requirements, and analyzing the sales jobs to determine the knowledge, skills, and abilities that are needed. These allow for more effective and efficient use of human resources and improved performance of the sales force. Job descriptions are formal, written statements describing the requirements and responsibilities of a specific position. Job specifications are the personnel qualifications deemed necessary by the organization for the successful performance of the job, such as skills, education, and abilities. Recruiting for sales personnel and professional sports players are very similar. Each individual is important to the success of their team. Success profiles would be developed in a similar fashion for both groups looking at such things as physical characteristics and sources to recruit. The characteristics could be identified as follows: (1) Aggressiveness Member of a sports team or intramural; Observe in the interview; Leader in a fraternity/sorority or club; Eye contact/body language (2) Perceptiveness Maturity level during interview; Answers well, no rambling; Plays off your questions during interview, looks for what you want; Discipline present (3) Intelligence Test scores; Role-plays well (4) High Energy Level Ability to do more than one thing (i.e., school plus a job or sports); Observe in

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interview; observe on day in field (5) Tenacity History of sticking things through to the end; not a quitter; Sports area - never a starter, but stuck with the team; Proud of accomplishments. 5. Internal factors: Sales Human Resource Planning: This will determine what jobs need to be filled and where the firm should look for the recruits to fill them. Job Design and Analysis: This will determine what the design of the jobs will be like and the necessary qualifications of applicants to fill these jobs. External Factors: Legal Influences: Government regulations will influence such things as EEO programs and compensation. Labor Market Influences: This will affect how much you might have to pay a new hire, or how big a pool of applicants you might have that have the proper qualifications for the job. 6. The following are the number of people needed and the timeframe necessary to complete the tasks: Hire Offer Jobs Interview Applicants 2 people 4 people 40 people 60 people 1 week 1 week 2 weeks 2 weeks

This firm should have at least 60 applicants to start the process with, and it will take 6 weeks to find the two salespeople. 7. The sales force is the way the firm generates revenues. It is important that a firm should recruit the best people possible for this vital area of the firm. CHAPTER 9 SELECTION, PLACEMENT, AND SOCIALIZATION OF SUCCESSFUL SALESPEOPLE 1. A recruiter is a matchmaker. They are trying to match the characteristics and demands of the job and the organization with the personalities, interests and preferences of the applicants. A good match will benefit both parties and have a long run commitment from each. Each one of the areas gives the recruiter different kinds of information about the applicant. Information about SKA's will help the recruiter determine what level of SKA's the applicant could bring with him into the job, information about PIP's may help the recruiter to match the person to a job that he would like, information from the other category may give information about how much experience or leadership ability the

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applicant has, and the last category gives information about such things as possession of a car and/or drivers license. 3. The first step is the application blank. The information that is obtained will normally include the applicant's education and work experience. Other information may be collected if it is related to job qualifications.

4. Positive: Allows a face-to-face selling for both the company and the applicant. Helps to determine if there is a match between the applicant and the firm. Helps to see if there is a match between the potential salesperson and the manager. Helps to determine what the benefits of the job will be. Negative: Too many interviewers are untrained. Non-verbal cues may sway an interviewers judgment. Interviewing is very subjective. Information obtained in an interview may be interpreted incorrectly. 5. Just as a poorly planned sales call has a lower chance of making a sale, a poorly planned interview will have a lower chance of getting a recruit. The interview is a sales call that is selling the company and the position it has to offer. A well-planned interview will help make sure that the important questions are asked of the applicants and the important questions of the applicants are answered. It is how the salespeople learn about the roles they have in the firm, the basic goals of the organization, acceptable behavior patterns, etc. It is how salespeople get started correctly and positively on the job. CHAPTER 10 THE MANAGEMENT OF SALES TRAINING AND DEVELOPMENT 1. Training costs should be thought of as an investment in a more productive revenueproducing area of the firm. A well-trained sales force should be more productive and generate more sales for the firm. An expense is something that the firm gets no return on. But the training of the sales force is an investment that will return more than its costs through higher sales from a better-equipped sales force. Planning is the first phase of sales training. The planning phase is when the needs of the sales force are assessed, setting objectives to satisfy those needs, and determining how to evaluate whether the training has accomplished those objectives.

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The on-the-job (OTJ) training would have the highest degree of trainee participation. The discussion method would have the lowest. OTJ training would probably work well for a new employee, a discussion method might work well for a national sales meeting that is introducing a new product. See the discussion in the text for this question. Advantages Centralized: Good facilities. Establishes some espirit de corp through meeting other salespeople Training is standardized Trainees can concentrate on learning because they are away from their territories. Can be done anywhere. Costs are lower. Sessions are shorter. Disadvantages Expensive. Salespeople may come unprepared. Sales could be lost because salespeople are out of their territories.

4. 5.

Decentralized:

Branch manager may not be a good trainer. Facilities may not be as good as in a central location.

6.

The three basic sources of sales trainers are: Corporate Staff: Their main duties are to identify the training needs of the sales force and develop programs to meet those needs. They may assist in the actual training. Sales Force: They bring years of experience and knowledge into the training situation. Salespeople can relate to them quickly because they are in the field. Outside Specialists: These may be specialists in a certain area and may possess expertise that the company couldn't afford to develop on its own.

7.

The culture of a firm helps to define what is important for the employees. If the employees see that sales training is important, through the culture of the organization, then they are more likely to actively participate and use the tools that sales training supplies them with. Evaluation of sales training determines whether the firm is getting a return on its investment in the training. The first stage in the process of evaluation is to determine what should be collected on those areas that are being measured. How this information is measured is the next step, and then analyzing the data collected drawing conclusions, and making recommendations is the last step.

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CHAPTER 11 CONTENTS OF THE SALES TRAINING PROGRAM: SALES KNOWLEDGE, TECHNOLOGY, AND THE SELLING PROCESS 1. A salesperson who views the training they have received as worthwhile and helpful will use it on the job, be receptive to further training, and will have a positive attitude toward training. If they don't view it as worthwhile, they will not use it in their job and will develop a negative attitude toward further training. Operational information is necessary to do the job of selling. It is the "how-to" of getting forms filled out, expenses reimbursed, new product information and new procedures. These are used extensively and quickly become a habit for the salesperson. Behavioral training tries to change how people do their job of selling. This can be especially difficult for a veteran salesperson. Since the job of selling is difficult to monitor, salespeople may not readily accept changes in behavior. The selling process will really only work properly if the salesperson is able to communicate persuasively. Sales will still occur even if the salesperson is not persuasive, but this will happen in spite of the salesperson. A person who is persuasive will also be more effective by using the selling process to focus the conversation on achieving the specific goal of a sale. Does the person want and need my services or products? If the answer is no, there is little reason to believe that the person will become a customer. Does the person have the financial resources, including credit, to pay? If the answer is no, there is no reason to believe that the person can afford to buy your product even if they want it. Can a good approach be made? If the answer is no, it is unlikely that the salesperson would ever be able to get to the presentation stage. 5. The customer benefit plan contains the information that is used for the sales presentation. It can be viewed as a four-step process: 6. Select the features, advantages, and benefits of your product to present. Develop the marketing plan. 00000000Develop the business proposition. Develop a suggested purchase order based upon the customer benefit plan.

2.

3.

4.

Good approaches should 1) capture the attention of the prospect, 2) stimulate interest, and 3) provide a smooth transition into the presentation. Without the attention of the prospect, the sales presentation would be wasted; an interested buyer will pay closer attention to the sales presentation; a smooth transition will make the sales presentation easier to present to the buyer.

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Shoe-care products being sold to supermarkets. The buyers for this area are pressured for time, the unit price on the products is low, this product is usually purchased infrequently, and can be reordered through a catalog. This kind of product could use a stimulusresponse presentation. A computer system to an accounting firm. This product is expensive, the needs are going to vary by user, there would be many questions that need to be answered and the salesperson would need to be able to show how the product would benefit their firm. A need satisfaction presentation would probably be appropriate here.

8. 9.

A trial close is used to check the mood of the buyer, to see how the presentation is going. The close is bringing the selling presentation to a conclusion. Objections show that the buyer is at least interested in the product. Objections that are brought out by the salesperson can be dealt with, and if the objection can be overcome, a sale is more likely to occur. Follow-up and service on the sale will create goodwill that will help to create more sales. The sale is only the beginning of a working relationship that needs to be established. It is up to these salespeople to do such things as making sure that the product is satisfying the customer's needs, following up on any commitments that were made, handling your customer's complaints, and showing your customer your appreciation. CHAPTER 12 MOTIVATING SALESPEOPLE TOWARD HIGH PERFORMANCE

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Ebby Halliday seems to use intrinsic rewards for her sales associates. She selects people that are internally motivated, creates an environment that allows them to succeed, and has created a culture that stimulates selling through being a member of the "team." These are all intrinsic rewards for the sales associates. Motivation is "the arousal, intensity, direction, and persistence of effort directed toward job tasks over a period of time." Sales managers need to understand how to motivate salespeople to get them to perform the activities necessary to get the job done. Sales managers have to learn how to use motivation because that is a tool that the manager must use to get his or her job accomplished, through the efforts of the sales force. Extrinsic rewards or outcomes come from the salesperson's environment. They are rewards that are bestowed upon the salesperson for doing the job. These include things like compensation incentives, selling awards, and recognition from the organization. Intrinsic rewards come from the performance of the task itself. Essentially these are rewards that the salesperson gives himself. These are things like feelings of accomplishment and self-worth. The environment can help make them possible, but cannot give them or take them away.

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Not only can a sales manager develop a selling culture, he or she must develop a selling culture. They might develop a selling culture through helping their salespeople to establish positive perceptions about themselves and their jobs, that performance is required to be on the team, that salespeople should cooperate with each other and take pride in their group but still remain competitive. Sales managers are watched for signs on what it takes to succeed. The selling culture could be passed on to new salespeople through ceremonies and rites, stories, symbols, and language that all support the value of selling the company's products. Expectancy theory is based on the assumption that salespeople have expectancies about what they should receive from their employer as a result of their work efforts. As people realize the outcomes or consequences of their actions, they develop beliefs about how just or fair those outcomes are. Equity theory, on the other hand, says that a salesperson develops a ratio of job "inputs" to "outcomes." This ratio is compared with the salesperson's perceptions of the ratios of other salespeople in the sales district, the region, and outside the organization. Past experiences plus environmental, organizational, and personal factors combine to affect how motivated the salesperson is. This motivation level will affect their performance level. Performance determines the rewards that will be received. Performance will also affect the satisfaction that the salesperson experiences from the job and will either lead to a job search or feed back into the motivation to work. This is a great discussion to help students relate to the expectancy motivational model used in this chapter and the leadership chapter. You might discuss the model as it applies to sales and then have the class discuss the model used in this chapter and the leadership chapter. A boundary position places the salesperson between the company and the customer. The salesperson has to keep both the needs of the customer and the needs of the company in mind. This can lead to problems through role conflict and ambiguity that is associated with the selling position. CHAPTER 13 COMPENSATION FOR HIGH PERFORMANCE

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The company, economy and market had all changed since the initial compensation program was put into place at Ingersoll-Rand. The company began stressing higher levels of service over longer time periods. The initial compensation program didn't promote this. There was nothing really wrong with the old program. It just no longer fit with the company direction.

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Financial rewards, career advancement, and recognition. Financial rewards are the best way to motivate salespeople, through such things as influencing work behavior, satisfaction, feedback and reinforcement. The most critical factor is making sure that the rewards built into the compensation package relate to performance. The salespeople must perceive a close relationship between performance and pay for it to be a strong motivator. It can be difficult, though, to link rewards to job performance. Straight salary allows the organization the most control over salespeople. Straight commission provides the maximum incentive for people to sell. A case can be made, though, for a combination plan (part salary, part bonus) as being the best total motivator. PLAN A Salesperson Herndon MacLean Menon Baker Hand Zank Smith PLAN B Salesperson Herndon MacLean Menon Baker Hand Zank Smith 10% Commission $25,000 25,000 19,000 25,000 22,500 25,000 25,000 12% Commission $6,000 240 4,800 9,000 7,200 5% Commission $15,000 13,500 9,500 14,500 11,250 16,250 15,500 Total $31,000 25,240 19,000 29,800 22,500 34,000 32,200 $193,740 Total $25,000 23,500 19,500 24,500 21,250 26,250 25,500 $165,500

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5.

Salary $10,000 10,000 10,000 10,000 10,000 10,000 10,000

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PLAN C Salesperson Herndon MacLean Menon Baker Hand Zank Smith

Salary $25,000 25,000 25,000 25,000 25,000 25,000 25,000

4% Commission $2,000 800 1,600 3,000 2,400

Total $27,000 25,800 25,000 26,600 25,000 28,000 27,400 $184,800

Plan A is the most expensive, Plan B the least expensive. However, monetary costs are not the only consideration. The company will have greater control over the sales force with Plan C and the company needs to decide how much service each customer needs and which plan will best support that service level. 6. A sales bonus is money that is earned over a longer period of time, typically a year. A sales contest will usually have a shorter time frame. A bonus may also be given on a nonproductivity basis, such as tenure or present salary, but a contest is always based on productivity. 7. Compensation Plan Company pays all expenses Advantages Gives salesperson freedom from concerns about money. Handling of expenses is simple and easy. Geographical differences will not be an issue. Simple for the company. Gives the salesperson a feeling of being on their own. Easier to project and budget selling expenses. Salespeople know their expense limits. Management less likely to question expenses. More control over the salesperson's expenses. Disadvantages Salesperson will not try to economize. Salesperson may be able to make money on it.

Salesperson pays all expenses

Salespeople must keep accurate records. Less concern about their activities. Salespeople may try to economize. Inflexible. Requires time to administer. May not reimburse all expenses necessary for the job. Geographical differences may not be considered.

Partial payment

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The total compensation package includes, not just the pay a salesperson receives, but the fringe benefits that are associated with the job. By putting a dollar figure on fringe benefits like vacations, health insurance, and life insurance, the sales manager is able to offer a better looking compensation package to the employer. As the contribution to the organization's revenue and profits by the sales force increases, they need to be compensated for it by their incentive salary. A sales force that is doing the marketing of the company, such as finding the developing leads, turning leads into customers, and using their selling skills to generate revenue, needs to be compensated for it. A sales force that is more of a customer service team does not do as much actual selling and does not need as much incentive pay. CHAPTER 14 LEADING THE SALES TEAM

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A sales manager can acquire organization-based powers (legitimate, reward and coercive) and individual-based powers (expert and referent). It is important for the sales manager to have both of these power bases. The individual-based powers are important to have so that your salespeople respect the person, the organization-based powers are important so that salespeople respect the position. See the text for a good discussion of the four styles of Tells, Persuades, Participates, and Delegates. It does make a difference whether it is a new recruit or a veteran saleswoman. For a new recruit a participative leadership would be best because the person would probably be low on ability but high on motivation. For the veteran saleswoman a delegation leadership style should work well because she has high ability and high motivation. The sales group will also influence the choice of leadership style. This would include the characteristics of the group, the expectation of the group, the internal norms of the sales group, and the culture that exists in the sales group. A manager needs to know people on both a personal and business level. Some managers only want to know people on a business level. Yet people's personal life is such an influence on their work life its important to know the "whole" person. The text states that if the personal life of an employee is not affecting their performance, it should not be a consideration for the sales manager. However, the likelihood of a drug habit not affecting performance eventually is minimal. Drug habits can take their toll on a persons personal life, which will, at some point, spill over into the workplace. Some companies treat older salespeople poorly and would fire this person. I feel the manager should thoroughly look into this and do everything possible to give this person chances to improve and be successful.

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CHAPTER 15 ANALYSIS OF SALES AND MARKETING COSTS 1. The marketing audit evaluates the total marketing operation, but a sales force audit only evaluates the sales force. They are similar in that they are both a systematic, unbiased review of their respective systems as a whole. They both look at the six factors of objectives, policies, organization, methods, procedures, and personnel. 2. The primary reasons are as follows: You need the product because it helps out your product line, it makes your offerings complete. It increases the contribution margin from your area. The customer's image of other product offerings would be affected. It helps to spread fixed costs over a larger sales volume.

3.

They are similar in that true figures or problems may be covered up or overshadowed. Sales of your products may be up, but due to only a small portion of your product line (80/20). Sales performance of your team may be down, but due to only a few unproductive areas or salespeople (iceberg). It is a detailed examination of a company's sales data where information about the company's sales are classified and compared several ways to aid the sales manager in making decisions. It is useful in detecting strengths and weaknesses in the sales effort. Level of Sales Analysis Total Company Type of Information How the company is doing in the marketplace. Are sales increasing or decreasing over time? Compare this to the industry sales and determine whether the company market share is increasing or decreasing. How each region is doing in comparison to their quota or expected sales for the company. Best expressed as dollar deviations not percentages. Identifies low performing region, district or territory. Breaks down information of the territory or district into sales deviations by salesperson. Identifies low performing salespeople.

4.

5.

Region-District

Salesperson

6.

It is an analysis of those costs that affect sales volume. It is used to try and determine the profitability of different segment operations. It is used to try and maximize the company's profitability.

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The full cost approach takes all variable and fixed costs and allocates them to each market segment. The profit for each segment is determined by taking net sales then subtracting the cost of goods sold and all operating expenses (controllable and uncontrollable) to arrive at net profit for the segment. The contribution margin approach separates costs according to controllability. Only those costs that are controllable by the segment are subtracted from net sales. This gives the contribution that the segment would give to cover those uncontrollable costs. Price Variance = (standard price - actual price) * actual work units Quantity Variance = (budgeted work units - actual work units) * standard price Price variance measures how much you varied your price in the selling of your products, quantity variance measures how much the quantity varied at your normal selling price. CHAPTER 16 EVALUATION OF SALESPEOPLE'S PERFORMANCE

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The performance appraisal is important because it gives the salespeople feedback on how they are doing and what they can do to improve. It is important to both the salespeople to find out how they are doing and the sales manager, to help shape the behavior of the salespeople. It is important that both actively participate or the performance appraisal can degenerate into a yearly meeting where nothing is accomplished. A performance appraisal will deal with either evaluative or developmental issues. An evaluative appraisal deals with how you have done the job in the past and how you will be rewarded or reprimanded for your past behavior. A developmental appraisal deals with how you can improve future behavior. Setting goals, motivating, and training are all aspects of developing a salesperson. The primary evaluator should be the salesperson's immediate supervisor. This person has direct knowledge of the salesperson; they probably have worked with the salesperson in a selling situation. Performance criteria are standards against which the salespeople are measured. They should be used to evaluate how salespeople are performing different aspects of their jobs and identify areas where they need to change or improve their performance and also areas where they should be recognized for doing a good job. Performance criteria can be either quantitative or qualitative. Quantitative are very objective measures of the results that the salesperson has achieved. Qualitative are subjective measures of how a salesperson does his job of selling. The qualitative measures will help to explain the quantitative measures. For example, a salesperson's sales are down in the last quarter because that salesperson was going through a divorce and didn't spend an appropriate amount of time preparing for her sales calls.

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See the discussion in the text for the different influences of the relationship between sales managers and salespeople and their effects on the performance appraisal.

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SECTION IV

COMMENTS ON ETHICAL DILEMMAS

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SALES MANAGEMENT IN ACTION: ETHICAL DILEMMAS

CHAPTER 1: WHO MADE THE SALE? WHAT DO YOU DO? A. Do nothing. Avoid conflict. Let Brian receive credit for the sale. This option is an example of pre-conventional behavior. It is clearly selfish on your part simply to ignore the wrongful situation because you would rather avoid conflict. As a sales manager, there will be times when some conflict is unavoidable. However, you must impress upon Brian the fact that filling out the order form did not earn him a $2,000 commission when Steve spent several hours working with the client, making presentations, negotiating price, and truly "making the sale." In the long run, this option is good for no one: not you, the company, Steve, or even Brian. (Worst Option) B. Split the commission in half by placing Steve's name and Brian's name in the blank to be fair to both individuals. This option is one that is likely to be chosen by a number of people simply because it is a sort of compromise. Since both individuals did help the client, you could probably justify giving each of them some commission. However, realistically, though Brian did carry out the final steps in the sales process, he did little else but fill in blanks on a form. He did not "sell" the client anything. Letting Brian take half the credit (and half the commission!) for this sale is not the best option. (Median Option) C. Place Steve's name in the blank. When Steve returns, instruct him to help Brian with his paperwork for an hour in return for the time Brian spent away from customers while helping Steve. This option is by far the most ethical choice. Steve worked hard with this client and rightfully earned the commission for this sale. Though Brian did devote an hour of his time to fill out the customer's order form, he really did not "sell" the client anything. Steve, however, probably does owe Brian an hour of paperwork time, but certainly not a $1,000 commission. (Best Option)

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CHAPTER 2: IT'S JUST WHAT I NEED! WHAT DO YOU DO? A. Duplicate copies for each of your salespeople and yourself.

Duplication of licensed software is illegal and ethically wrong. By producing copies of this software for yourself, you would be acting only to improve your own sales performance rating without regard to the software creator's rights. Duplication of licensed software programs is a form of theft. (Worst Option) B. Thank Jim, but decline his offer to copy or use the disk. By declining Jim's offer, you are acting in an ethical manner. You realize that both copying software, or using a software package that you did not purchase or have legal access to, is wrong. (Best Option) C. Ask Jim if you can simply use the disk from time to time. Since you are not actually copying the software, you are not breaking the law, but you can still use the software whenever you want. This form of action clearly illustrates conventional moral behavior. You are acting just above the law. Though you avoid getting into legal difficulties, you are still trying to find ways around the law. A good example is not actually copying software but using someone's copy. Though such action is not technically illegal, it is nonetheless somewhat questionable. (Median Option) CHAPTER 3: IT'S ALL RIGHT TO DO OVERSEAS WHAT DO YOU DO? A. Let your price stand without the donation. Letting your price stand without the donation constitutes ethical behavior in that you refuse to engage in what is essentially bribery. (Good Option) B. Decrease your price by $10,000. If you decreased your price by $10,000 in response to a request for a bribe, you would be acting on a conventional level of moral development. You would not technically be breaking the law, but you would not be acting at the highest ethical level. (Poor Option)

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Make the $10,000 donation. Bribing the company president (even though the bribe is termed a "donation") is legally and ethically wrong. Honest business practices here or abroad do not allow the bribing of company executives. (Worst Option)

D.

Withdraw the bid. Withdrawing the bid is the most ethical option presented to you. Not only do you refuse to engage in unethical behavior yourself, but you do not tolerate such behavior from the firms with which you do business. (Best Option) CHAPTER 4: THE REORGANIZATION CREATES LAYOFFS

WHAT DO YOU DO? A. I would say nothing. However, I would start looking for another job as soon as possible. I would also take all of my vacation and sick leave before December 15. This option clearly illustrates a pre-conventional level of behavior. You are looking out for yourself by making certain that you will have a job and your benefits intact. (Worst
Option)

B.

Informally notify your managers to tell their people that if they have another job opportunity--take it! In this situation, you feel the management is treating employees unfairly. Though you know top management would not approve, you feel that you have a moral obligation to inform employees of the possibility that their jobs might be in jeopardy. (Best Option)

C.

Continue to do your best in your work and do not let the upcoming layoffs worry you. Things will work out. Here you follow the rules. You do not divulge the information to the employees and you do your job as expected. (Median Option)

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CHAPTER 5: LET'S BUY IT! WHAT DO YOU DO? A. Select Quantron, Inc. Personal contacts are better for the company than formal bids and company regulations. Enjoy the party. You know choosing Quantron's bid will put you over budget and you know you can obtain an almost identical product from Kentucky Electronics at a more reasonable cost. Most likely, the distance of the company would not ordinarily affect your decision. Therefore, you are probably acting on the idea of wanting to do business with your boss' friend simply because he is your boss' friend and you don't want to "make waves." Such action is of questionable ethical nature. (Worst Option) B. Pass the bids to the head of purchasing. Selecting Quantron, Inc. violates regulations, and Kentucky Electronics should be given a chance to compete. Here, you choose to pass the decision to your supervisor. Such action is clearly within company policy. However, though you certainly have done nothing wrong, you haven't done what is "right," either. (Median Option) C. Try to persuade George to change his mind. Point out that he is using personal favoritism as his decision criterion. It's your responsibility to do the right thing because your are responsible for this project. In this situation, you are clearly being ethical in your decision making. You have chosen the alternative that you believe is right and are willing to stand behind it by sharing your views with your boss. (Best Option) CHAPTER 6: IS IT TOO EARLY TO TELL? WHAT DO YOU DO? A. Share the information, since no warnings were given. Besides, he works for the same company and he would do the same. Since you are not technically breaking any rules (since no warnings about confidentiality were given), you share the information. Such action constitutes conventional behavior in that you try to conform to the expectations of others, in this case, your friend. You are more concerned with whether the action broke the rules than if the action is "right" or "wrong." (Median Option)

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B.

Find out why he wants to know, or needs to know, before deciding what to do. If he wants the information badly enough, and you give it to him, then he'd owe you a favor. This option is a clear example of preconventional behavior. Divulging private information for personal gain is clearly unethical. (Worst Option)

C.

Treat the meeting as confidential and refuse to discuss it with the district manager, even if it jeopardizes your friendship. By treating the information as confidential even though you were not specifically told to do so illustrates an internal set of ethics which you follow whether or not particular rules governing this type of behavior are presented to you. This is an example of principled moral action. (Best Option) CHAPTER 7: HAVE YOU LOST THE SALE?

WHAT DO YOU DO? A. Compare the two offers for the buyer and ask her to cancel the signed contract. Even though you know that your offer is the best one, asking the buyer to cancel a signed contract is wrong. Not only is such an action unethical, it could also cost you the customer's business in the future. (Worst Option) B. Tell her about your proposal but do not suggest she cancel the signed contract. Here, you are acting in the best interest of your company, your customer, and yourself. By not asking your client to cancel her contract and sign your contract, you have maintained the client's trust. Asking her to void the contract, on the other hand, would have been highly unethical. However, it is important that you take the time to explain to your client the proposal which you were prepared to present. That way, perhaps your client will keep your company in mind the next time the firm needs your products. Then, both her company and your company can benefit. (Best Option) C. Say nothing. Keep your cool--act professional. Otherwise, you will lose the customer forever. Accept the loss in a gracious and courteous manner. By saying nothing about the signed contract, you are acting in a professional manner. You are following the rules and employing conventional behavior. (Median Option)

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CHAPTER 8: SHOULD I GO AGAINST THE COMMANDER? WHAT DO YOU DO? A. Give Juan an "exceptional" performance rating, even if it makes your friend and boss look bad and upsets him. The most ethical course of action for you in this situation is to give Juan the exceptional rating he deserves and to stand behind your assessment of his performance. (Best Option) Compromise and reduce performance rating to "good." Many individuals would be tempted to take this course of action which is clearly unethical. This way, you could please your boss and still not really "hurt" Juan. However, you would be hurting Juan. Measures of his performance should be recorded accurately; he is an asset to the company. Being concerned about whether or not your boss will like your rating is selfish, and is an example of preconventional moral behavior. (Worst Option) C. Give Juan an "exceptional" rating but tell him to keep it confidential. There is nothing "wrong" with this option since you are following all the rules. However, the fact that you would rather not "stand behind" your performance evaluation of Juan is less than what would constitute principled moral behavior. (Median Option) CHAPTER 9: TERMINATING A SUCCESSFUL SALESPERSON WHAT DO YOU DO? A. Go along with policy because your own performance review is coming up soon. This option illustrates a form of preconventional behavior. Here, you are acting only to impress your boss and serve your own interests. (Worst Option) B. Refuse to recommend any employee be fired as they are all performing above company standards. Since each employee is performing well above quota, out of the fairness to the employee, he or she should be given a chance to improve before being "run off." Also, it is probably not in the best interest of the company to immediately "run off" that individual. Rather, it is more costly for the company to continue to interview new candidates and train new hires than to advise current employees and help them improve performance. (Best Option) C. Do your job. Doing your job requires that you recommend two people be fired. Its best for the company.

B.

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This option is one that is likely to be chosen by the majority of people. You do as your company expects in order to be a good employee. However, with this particular option, it is uncertain whether recommending two people be eliminated is really best. In other words, you may have chosen this option because management told you it was the "right" thing to do, not necessarily because you believe it is the right thing to do. (Median Option) CHAPTER 10: THIS TEST IS A PIECE OF CAKE! WHAT DO YOU DO? A. Do nothing. The directors of the training program should have developed another test. Such action is clearly unethical. Due to the nature of your former position, you had access to materials that none of the other managers had available to them. If the director of the training program knew you had access to the test, you know she would not approve; this test is too important. Your action (or lack of action) would be considered preconventional moral behavior. (Worst Option) B. Ask the training instructor to come out in the hall and explain to her that you have the test. Ask her what you should do. By admitting fact that you have used the test as a practice test, you are exhibiting ethically sound behavior. However, the fact that you are not willing to take a stand as to what you believe should be done (i.e., take a different test) and instead simply ask your supervisor's opinion, makes this option a form of conventional moral behavior. (Median
Option)

C.

You respectfully refuse the test on the grounds that your scores would not fairly reflect your performance as related to the performance of others. Politely request that you be given a different test. Here, you admit that you had the test and respectfully present your views on the appropriate course of action to take. Since you know that you shouldn't take the test in fairness to yourself and others, you tell the supervisor what you believe is the most ethical option. (Best Option)

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CHAPTER 11: NOW WHAT? WHAT DO YOU DO? A. Say, "No, I really didn't have anything to do with the program," -- knowing that the director won't check-- today she leaves on maternity leave and it is rumored that she is likely to stay home permanently with her new baby. This option illustrates preconventional moral development in that you are acting in your own best interests even if that involves lying and what could be considered cheating.
(Worst Option)

B.

Say, "Yes I did. Also, I should tell you that the test you gave me was exactly like the one I had in my files and used to study. I think that I should be given another test." In this case, you are answering in the most ethical way of the three options. Not only do you answer the class director's question truthfully, but you also volunteer the information that you believe the director should know. (Best Option)

C.

Say, "I did work with that program some." But mention nothing about the fact that you have a copy of the test. Here, you really did not do anything "wrong." You told the truth and it is not your fault that the trainers did not change the test. Besides, they had no way of knowing that you had a copy of the test and used it to study. You did learn the material. However, at the same time, this option is not quite "right," either. Your knowledge of this is evidenced by: 1) not telling the trainer that you had the test when she asked about your affiliation with the corporate sales training office, and 2) intentionally missing one question on the test. (Median Option) CHAPTER 12: SHOULD I OR SHOULDN'T I?

WHAT DO YOU DO? A. Only give a two-week notice. After all, that's all that is required of you by company policy. By simply giving a two-week notice you are following the rules. You are not doing anything technically "wrong." However, you are not acting in a completely ethical manner either, especially considering the fact that you will be exposed to confidential information. (Median Option) B. Don't give notice until the day before you begin work for the new company. Since you know your boss will ask you to leave that day, you will get two weeks' pay even after you start work at your new job.

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Here, you are considering only what you want. You are not positive that your boss will ask you to leave the day you resign. It is possible that he could ask you to work another two weeks. By giving no notice, you could be putting your boss in a tight situation.
(Worst Option)

C.

Resign immediately on the grounds that you can no longer act in your employer's best interest. This option is by far the most ethical choice. Here, you are considering not only your own needs, but what is in the best interest of your employer as well. You have made an ethical decision in that you know your continuing employment in the firm is actually more of a threat to the organization (considering your exposure to confidential information) than a benefit. (Best Option) CHAPTER 13: HEALTH CARE BENEFITS DON'T COVER THIS

WHAT DO YOU DO? A. Do your job and follow the policies as given to you. You shouldn't really involve yourself in your employee's personal lives anyway. Using this alternative, you are choosing the "formal" method of handling this problem. You are fulfilling your obligation as an employee of your company. (Median Option) B. Cover for him and see that he gets paid for the 15 days. The company can afford it. This option is a tough call. On one hand, you know that the employee will suffer if not paid. On the other hand, he did not earn the money for additional sick leave. Therefore, you would essentially be stealing from the company and indirectly involving the ill employee in an unethical situation if you paid him for the extra two weeks. (Worst Option) C. Don't cover for him but try to help him out some other way. You have chosen the best option available to you. You refuse to falsify records so that the employee will be paid, but you are still concerned about his welfare. Perhaps you can obtain approval to pay him for this time as vacation pay, or perhaps take up a collection for him at your office. Emotional support can help as well. Though this option is not ideal, it illustrates a principled level of behavior. (Best Option)

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CHAPTER 14: PERSONAL PROBLEMS AFFECT WORK WHAT DO YOU DO? A. Fire Al immediately. Keeping him on is simply too risky. You know you could lose your job if he doesn't clean up his act. Here you are clearly acting out of concern for yourself. You are not considering Al's welfare, nor are you considering the welfare of the company, which will be damaged by the loss of an employee who has worked there for 30 years. This action is an example of preconventional behavior. (Worst Option) B. Follow the formal procedures set forth by your company for employees who are not meeting their expected sales quotas. Write him up and require him to attend a special "remedial" sales training class. This option is a form of conventional moral behavior in that you do just what is expected of you. Here, you are following the rules by writing Al up and having him attend special remedial sales training classes. However, you know that his problems have little to do with a lack of sales training (with 30 years' experience) and more to do with his problems with alcohol. Therefore, even though you are following the rules, you know this solution really won't help the situation. (Median Option) C. Force Al to get help by making his joining a rehabilitation program a necessary requirement for keeping his job. Require Al also to report to you daily regarding his sales progress. With this option, you are trying to do the best you can for everyone involved in this difficult situation. You are trying to help Al, and in turn, the company, by keeping a valued employee. You also realize that by choosing this option, you are committing more of your own time and effort. However, you have chosen to do so out of a sense of ethical responsibility. (Best Option) CHAPTER 15: JURY DUTY OR VACATION? WHAT DO YOU DO? A. Do nothing. Though you know what he did was wrong, he has been working very hard, often 60 hours a week. He has earned a rest. But subtly let him know that you're aware of what he did and imply if it happens again he will be disciplined. Here you are acting at a preconventional moral development level. You know what the employee did was unethical, but you are trying to rationalize his wrongdoings so that you will not have to discipline him. In this sense, you are acting out of selfishness and are not considering the welfare of your company. You are also not being fair to the other honest

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employees. Essentially, you are condoning employees taking compensation time not entitled to them-- an action which could be considered a form of theft. (Worst Option) B. Discipline him by taking the time away from vacation or sick days. This action is one that would involve a formal course of disciplinary action. Therefore, it is a form of conventional behavior. (Median Option) C. Immediately fire the salesperson as an indication that you absolutely will not tolerate dishonesty in any form from your employees. This form of action may seem very harsh at first glance. However, an employee's taking compensation time not entitled to him or her is a form of theft. This option is reasonable, justified, and ethically sound. Again, such action not only punishes this employee, but sends a message to others that dishonesty in any form will not be tolerated. Therefore, this option is likely to benefit the company in the long run. (Best Option) CHAPTER 16: SHOULD YOU BE A WHISTLE-BLOWER? WHAT DO YOU DO? A. Do nothing. You can't afford to compromise your position at the company. Here, you are looking out for yourself. Though letting this situation continue is harmful both to patients and the reputation of the company, you are only concerned about keeping your own job. (Worst Option) B. Anonymously report to the appropriate government agency. By choosing this option, you are attempting to remedy the problem. You are also upholding moral and legal laws by reporting such misconduct to the proper authorities.
(Median Option)

C.

Make an appointment to discuss the situation with the company president. If he does not agree to immediately rectify the situation, resign your position and contact the proper authorities. Discussing the situation with the company president shows your dedication to the resolution of the problem. This action also illustrates your personal commitment to your internal code of ethics by refusing to work for a firm whose top management condones illegal activities. You also recognize the importance of informing the proper authorities who have the time and resources to handle the problem correctly. (Best Option)

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SECTION V

END OF CHAPTER CASE ANALYSES

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CASE 1-1 The Wilson Company: Is a Sales Manager's Job Really for Me? All students want to move into management. Yet, they really only think of the positive aspects (money) of rising up the corporate ladder. This case introduces them to the personal sacrifices that have to be made to be successful as a sales manager. Questions for Discussion: 1. Compare Joy's present job to what you think her previous job as a salesperson might have been. How are they similar? How are they different? Joy's position as regional sales director is similar to her previous job as salesperson in that both are people-oriented. In the job as salesperson, she would have met with clients, traveled, and dealt with many people face-toface. As a salesperson, however, she was in control of her own time. Her present job involves working through other people, and she must cope with many problems. The job is fragmented and involves communicating and negotiating. Thus, the managerial position is much broader in scope and contains many more day-to-day problems and interruptions. 2. What managerial skills are depicted in the case? important for Joy to possess? Why? Which skill is most

Human and conceptual skills are most important in Joy's present job-especially human skills. She works with subordinates, peers, and superiors-all requiring good human skills. 3. Why do you think Joy may be disenchanted with her present job? The disenchantment may result from unrealistic expectations about the sales director's job. Many people who have excellent technical skills and succeed at a technical job expect to continue performing the same tasks when they become managers. But as one moves up the management hierarchy, the various management functions become more important, and they require human and conceptual rather than technical skills. People who succeed as managers enjoy the opportunity to perform these functions and display these skills. For Joy, the greatest frustration seems to be her inability to control her own time and the need to work through other people, many of whom may disagree with what she is trying to accomplish. Thus, the key management issues become persistence and frequent negotiations. CASE 1-2

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Nabisco: What They Didn't Teach Us in Sales Class This case was written to illustrate the day-to-day realities of becoming a salesperson. It is a very real case and one with which any seasoned salesperson will identify...especially "missionary" or "factory-rep" salespeople who call on retail accounts. The training program described in the case is typical of those used in similar industries such as tobacco, candy, over-the-counter drug products, frozen foods, baby food, canned goods, and paper products. Turnover among salespeople in these industries is higher than most other selling jobs, and the work itself is hard. Retailers see so many salespeople that they become tough buyers to deal with on a regular basis. Those that are trained in selling to retail accounts, assuming that they last through one or two years, become some of the best salespeople anywhere. It has been said that "salespeople who can sell to retail stores can sell to anyone." Rick Lester, the new salesperson in the case, is struggling to adjust to the real world. It is true that he had made an "A" in Sales 461 in college, but neither the textbook nor his professor discussed the feelings of low status and vulnerability that he now faces. He must overcome these feelings or get out of selling to retail accounts. Rick is the one who must adjust, not the system. It is true that Mr. Brown can be helpful in this situation, but it would not be in anyone's best interest to "talk him into staying on the job." Students typically offer two main groups of thought. Undergraduates most often suggest that Mr. Brown should not have said, "Buy a raincoat," and that Mr. Brown had not adequately prepared Rick Lester to perform his job. Many undergraduates agree that Rick should quit this job and find another one that is better. Graduate students, on the other hand, most often suggest that Mr. Brown had hired an "incompetent" salesperson. Some recommend that Rick's resignation be accepted and that he should be replaced with a better applicant. Both of these positions have good and weak reasoning behind them. It is true that Rick is young and inexperienced. But his feelings are real and they need to be addressed by Mr. Brown. In the end, however he must decide on whether he is willing to pay the price--that is, stick with the job until his skills and ability allow him to deal with the practical world of selling. Rick cannot be called "incompetent" at this point. He is the type of person that applies for similar selling jobs today--average or slightly above, and relatively inexperienced. The fact is that many selling jobs go unfilled around college campuses. The top students with strong academic credentials and work experience oftentimes do

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not apply for selling positions. Any good sales manager will tell you that he or she has problems finding top people to recruit. Questions for Discussion: 1. Should Rick Lester "turn in his keys?" Probably not...at this point. All jobs are challenging at first. He needs to talk with Mr. Brown and others who sell to learn that all jobs have their bad points. He needs patience and determination to see him through the learning stage. To make a change at this time will be setting a pattern for the future.

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CASE 2-1 Mississippi Leasing, Inc.: Is This Legal? In essence, the sales manager was seeking reciprocity. The contemplated deal is clearly unethical. In some cases, such a deal may be even unlawful. Companies aware of their legal and ethical responsibilities protect themselves and their employees from unnecessary exposure. For example, IBM marketing representatives are urged to follow the specific steps set forth in IBMs Business Conduct Guidelines--a policy-based code of ethics--which states: You may not do business with a supplier of goods or services. Reasonable? Yes. Important? Absolutely. The students must remember that their career and the future of their company depends on creating values that last. This objective depends on making decisions we can live with tomorrow, not on what we might get away with today. CASE 2-2 Illinois Office Machines, Inc.: How Should You Handle Competition? Dealing with unfair competition represents a double challenge. On one hand you want to get the order; on the other you want to stop the competitor's unfair practices. In this case your prospect is using every bit of information to play one competitor against the other to obtain the best deal. What do you do when the fight for business is getting dirty? Questions for Discussion: 1. Is there an ethical conflict? Would you try to reverse your prospect's decision? Why? First, take notes when you hear a customer's reports about unfair comments made by your competitor. Turn the information over to your sales manager or legal department. Your role is not to pass judgment on the case, but to collect the evidence. Second, do not "knock" the competition, but let the competition knock itself out. It's virtually impossible to build a lasting and profitable business by risking customer trust and confidence on every single deal. Should your customer find out that the operating cost figures were nothing but lies, company X would not be able to sell a single office machine to the medical center in the future. Reputable companies believe in the lasting power of honesty. Their policies and guidelines reinforce that message to every salesperson. For example, Xerox representatives are bound by ethical guidelines that state: " . . . make no disparaging statements, directly or by any kind of inference or innuendo, about competitors and their products and services--even if you believe them to be true." IBM tells its marketing reps: "It has long been the company's policy to provide customers the best possible products and services. Sell them on their merits, not by disparaging competitors,

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their products or services." These guidelines are tough, but fair. They were drafted with the reputation. The absence of ethical guidelines will always create the illusion of safety, yet these illusions are short lived. Over 200 years ago, Thomas Paine wrote about the unethical actions of Great Britain: "A long habit of not thinking a thing wrong gives it the superficial appearance of being right." History proves that appearances are deceiving. It also proves that without ethical conduct, freedom is unsafe. CASE 3-1 Alabama Wholesalers, Inc.: Plans Dont Always Work! On the positive side, total sales did go over the quarters original plan. Unfortunately, expenses also were higher than anticipated. Why didnt the manager notice that the program was going over budget? Was there a lack of up-to-the-minute data? Did the manager get data on actual expenses versus budgeted expenses too late to take action? Did the staff adequately collect information, maintain current records, and analyze and report information back to the manager on a timely basis? Was there a cover-up? Whatever the cause, the manager will have to make sure it doesnt happen again. In this case, the manager must correct his own failure. These actions might prevent the sales group from going over budget again. The manager will have to make the rounds of the field offices and have private talks with each salesperson without sounding accusatory. Instead, the sales manager should be inquisitive (He/she is seeking information, not culprits). The sales manager has a very important lesson to learn and the teachers in the incident should be your salespeople. The manager should congratulate each salesperson for trying to make the program successful. In a mature and businesslike way, the manager must show each rep the final expense and sales data for his or her territory, and ask them to communicate their initial reactions and their continuing feelings about the programs details. What did they really think of the whole idea? The sales manager should listen closely and responsively, making certain not to squelch or argue with a single point that each of them makes. He or she is there to learn. Later, the manager should discuss the findings, conclusions, and recommendations about monitoring and controlling future budgets with his or her boss. CASE 4-1 Alaska Office Supplies: Everyone Is Part of the Sales Team Sales organizations often are so large that salespeople feel they are all alone out in the field. It is me against them--them being the home office. Salespeople are trained to take care of their customers. They know its much easier to keep a customer than get a new one. Tyrone feels he is taking care of business. The angry signals probably tell you its time to go out and work with Tyrone. Top-producers like Tyrone want to be recognized constantly for their accomplishments. They feel the entire organization should focus on them and their customers. Their attitude says, if someone cant help, then stay out of
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their way. However, Tyrone knows something you do not. Maybe, the organization is providing poor service to other customers of Tyrone. You need to find out! CASE 4-2 Reynolds & Reynolds: Team Selling 1. How is the effectiveness of team selling demonstrated by the Reynolds team, and what are some of the disadvantages to this method in this particular case? Bob Sherman and Tim ONeill each exhibited classic personal selling skills: solution selling, translating potential benefits of the sale into P&L impact for the customer, performing a business analysis to ensure the solution fits the customer, good questioning and listening skills, etc. However, the sale was really driven by the teaming of Bob and Tim, and to a lesser degree by Chuck Wiltgen. The Reynolds case clearly illustrates the power of team selling. However, the teaming was largely informal (e.g., executed on an ad hoc basis and based on long-standing working relationships between sellers). Although no information is provided on selling costs, the Reynolds team selling model is higher cost (e.g., just consider the cost of Tim's time as a sales manager not to mention his travel costs). To truly succeed with team selling (or the more formal Account Management), sales effectiveness must increase faster than rising costs. Unfortunately, most sales organizations lack the metric to accurately track sales effectiveness. 2. How did the Reynolds team successfully execute the following critical roles in sales: client access, client education/persuasion, and fulfillment? Client access. Bob made the initial cold call, demonstrated his commitment and began to build trust with the customer, Carol Bemis. Client education/persuasion. Bob and Tim played well off one another; although persuasive, their overall tone was consultative. Fulfillment. Chuck was clearly positioned as the implementation guy, giving the customer confidence that Reynolds would actually deliver what was promised.

Source: David Fritz, "Anatomy of a Sale: The expert's view," Selling Power (January/February 1999): 84.

CASE 5-1 Florida Computer Sales: What Info Is Needed? Florida Computer Sales found it difficult to control new and used inventories, accounting records, taxes, customer profiles, sales forecasts, etc. The solution was a computer, but management would not tolerate printouts they could not believe. Two senior managers took responsibility for acquiring a computer and developing appropriate procedures. Implementation took time but was carefully done. Soon, monthly reports were ready within three days. The data identified high-profit items so that they could be quickly restocked. It also eliminated mass purchases of low-priced items that failed to sell well. Suddenly, salespeople had orderly orders,
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and the records on available stock were accurate and item location was correct. They also could see what to pay for trade-in equipment. The computer system allowed everyone more control, causing managers to ask how they ever survived without it. CASE 6-1 Arizona Electrical, Inc.: Is the Information Important? Without anger, resentment, or threats, the manager should ask Joe to describe how he feels about the reports--asking him to share his ideas for correcting the situation. Maybe Joe doesnt believe the required reports contribute meaningfully. Maybe he feels they take him away from what he understands and does well: selling. The burden clearly is on the manager to improve communications with the entire sales group, so theyll know how each report fits into the operation. Just because the group has always done the reports doesnt mean everyone understands why they have to be done at all, much less done on time. The manager should make two promises: (1) to reevaluate all the reports and forms with an eye to reduction and simplification, and (2) not only will the manager read the reports, but he/she will provide feedback to both individuals and groups to verify that the information is actually put to good use. In addition, the manager should also help all sales reps understand the system, including how and why it works, so that everybody will work with the system instead of against it. CASE 6-2 Sally Malone's District: Development of an Account Segmentation Plan 1. Develop a table showing a salesperson's call cycle using the given call frequency patterns. This table shows how the call cycles for this example (territory) will be made up.

Call Cycles Account Classification A B C D E Number of calls Number of Cycle Accounts 1 10 20 45 12 10 1-10 1-10 1-15 1-3 1-2 40 Cycle 2 1-10 1-20 16-30 4-6 3-4 40 Cycle 3 1-10 1-10 31-45 7-9 5-6 40 Cycle 4 1-10 11-20 1-15 10-12 7-8 40 Cycle 5 1-10 1-10 16-30 1-3 9-10 40

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Exhibit 1 Summary of Sales and Percentage by State

State Alabama Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana % 00.5 03.0 00.5 19.0 08.5 00.0 00.0 03.5 01.0 00.5 02.5 02.0 00.5 00.5 00.0 02.0 00.5 00.0 00.0 04.0 01.0 00.5 01.0 00.5 $ 47,500 285,000 47,500 1,805,000 807,500 0 0 332,500 95,000 47,500 237,500 190,000 47,500 47,500 0 190,000 47,500 0 0 380,000 95,000 47,500 95,000 47,500 State Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington W. Virginia Wisconsin Wyoming % 00.5 00.5 0.0 02.5 02.0 10.0 01.0 00.5 02.0 01.0 05.0 03.0 01.0 00.0 00.5 00.0 08.0 05.0 00.0 00.0 05.0 00.0 00.5 00.5 $ 47,500 47,500 0 237,500 190,000 950,000 95,000 47,500 190,000 95,000 475,000 285,000 95,000 0 47,500 0 760,000 475,000 0 0 475,000 0 47,500 47,500

Percentages rounded to nearest half percent. 2. Discuss why this should be done. It may be seen from this schedule that all A accounts are called on in every cycle, the first ten B accounts in cycles 1 and 3, and the second ten B accounts in cycles 2 and 4. Since the cycles are of two weeks' duration, these accounts will be called on every four weeks according to the call frequency shown. By definition, it takes one cycle to call on all A accounts (two weeks), two cycles for all B accounts (four weeks), three cycles for all C accounts (six weeks), four cycles for all D accounts (eight weeks), and five cycles for all E accounts (ten weeks).

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CASE 7-1 Arkansas Fishing Company: Are Quotas Accurate? In this case, the manager must look at all of his options. The manager could 1) become a dictator telling Carl how it really is and to shape up or shut up, 2) organize the group to confront him, 3) report him to the boss, or 4) assume Carl isnt aware of the affect he has on other people. In order to lessen the risk of turning off Carls highly productive sales energy, option four would be the best one to try first. The manager should choose an appropriate time when working with Carl in his territory to discuss his behavior without anger or threats. The manager should explain to Carl that he perceives a serious conflict within the group, which is caused by his poor relationships with the others. Then, the manager should let him know that the entire sales group values his contributions to the groups performance and productivity. However, Carl and the others must resolve the conflicts between them and improve the interpersonal situation dramatically so that the group can continue to grow and develop as a team. Together, Carl and his manager can work to resolve the conflict so that nobody loses and nobody is embarrassed. The manager should tell Carl directly that he can learn to enhance his effectiveness. In addition, Carls boss can help him to understand that during all problemsolving discussions, each person must listen to the viewpoints of others and respect their rights to open expression. The manager should propose a personal, informal contract between Carl and himself. In the future, Carls manager should let him know, by tipping him off in private, when others feel he is coming across too strongly and upsetting the other members of the group. The manager must explain to Carl the importance of his quotas and the quotas for the rest of the group, as well as work toward getting Carl to agree upon supporting the groups objectives and quotas. If he has something positive to say, the manager should encourage him to say it. The manager should also ask him to not openly criticize sales plans during group meetings. He should discuss these concerns with his manager after the meeting. CASE 7-2 Harrell Manufacturing: Elimination of Sales Budgets and Quotas Question for Discussion: 1. Discuss the advantages and disadvantages of quotas in relation to Harrells views on not using quotas: This question is designed to facilitate a class discussion. Some key points to cover are: Sales quotas dry up the greatest source of profits: incremental sales. Sales quotas instill a corporate culture of just getting by. Elimination of sales quotas encourages salespeople to sell as much as possible. Sales quotas encourage mediocrity and penalize high performance. (Salespeople dont want to exceed their quotas by too much because it would be difficult to top in the following year).

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CASE 8-1 An Unusual Case of Turnover: Connecticut Candy Wholesalers It is entirely possible that some of the fault lies with the manager. The manager apparently had confidence in James and left him to his own devices. However, most subordinates want to know where they stand. High achievers need and want recognition from the boss. Some will even go to strange, exaggerated lengths to get it. Is James a loner, or just lonely? He is dedicated to his work and his job. It is possible that the manager didnt recognize how dedicated James is to him as his boss. What harm would have resulted from the manager saying publicly how highly he regards James performance? Great good can come from such a public expression toward each individual who performs well. James and the manager have developed a new contract, and he will probably feel extramotivated. If youve read this far, let me know and Ill send the first three people who contact me ten dollars. The manager may even discover that James is capable of still greater achievement. What about the manager? Resolving this situation would probably significantly enhanced the managers own self-esteem and the esteem of his subordinates, peers, and superiors. CASE 8-2 R.J. Reynolds: Selecting the Best Sales Team This case is useful in the classroom because it shows how salespeople are typically recruited by many large firms. It also highlights a few of the difficulties that sales managers face in finding good sales representatives. The case brings out some differences (or idiosyncrasies) in recruiting philosophies held by sales managers. In addition, the case supports several concepts covered in the text material. The questions asked are fairly straightforward. Answers sought deal with common sense practices found in sales in the consumer goods industry. The only point that seems to bring out strong feelings and classroom debate in the matter of Joe followingor not followingthe suggestion to recruit at small colleges and universities. In this matter, the case authors come down on the side of following Mr. Wilsons advice. Joe Miller needs to win the confidence and support of his new Division Manager. His best course is to listen and learn, not to change his boss behavior or teach an old dog new tricks.

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Questions for Discussion: 1. Discuss the strengths and weaknesses of the present staffing process traditionally used by the company. The company guidelines suggested in the case were: A. The use of the new assistant division manager to find several applicants that could be screened and referred to the division manager and regional sales manager for employment. B. Desirable applicant qualities of holding a college degree in marketing or business, a proven record of hard work, achievement-oriented, self-confident, and a positive outlook on life. C. Asking applicants only work-related questions. Apparently, the company gives each division sales manager a good deal of latitude in deciding where and how applicants will be located. All of the qualities sought appear to be desirable and coincide with ideas in the literature. A question should be raised about sending the new ADM on recruiting assignments without some on-the-job training. Students have many complaints about recruiters. ADM Miller needs to observe Mr. Wilson interviewing so that he can learn what to ask and what not to ask. There are many legal dangers present when a new manager interviews applicants. 2. Discuss Mr. Wilsons personal recruiting philosophy. Is it good or bad? Mr. Wilsons ideas about recruiting involve: A. Recruiting from colleges in rural areas. B. The importance of hard work, appreciation of money, character, good communication skills, motivation, and persistence. C. The initiative to contact the interviewer after the interview. D. A good mix of women and minorities. E. Married applicants from the local area. F. Women with children, and perhaps a husband that is locally employed. Several of Mr. Wilsons ideas are sound, based on the material included in the text and in the sales management literature. These ideas are the importance of hard work, appreciation of money, character, good communication skills, motivation, and persistence, and a good mix of women and minorities. Some of the other ideas that could be relevant, if based on a systematic analysis of the current successful sales force are recruiting from colleges in rural areas, married applicants from the local area, women with children, and perhaps a husband that is locally employed, and the initiative to contact the interviewer after the interview. However, it is possible that some of the qualities that Mr. Wilson feels are important are not bona fide occupational qualifications, and therefore, could be a problem if used as a basis for discrimination. Some of these preferred qualities raise legal questions.

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3. What alternative sources of applicants are available? Colleges and universities are an excellent source of college-trained applicants. It would seem desirable, however, to use a mix of applicant sources. Some sales managers in the packaged goods industry have experienced problems in employing only college-trained individuals. Salespeople with degrees oftentimes expect higher pay and promotion opportunities. All salespeople cannot become managers. This can lead to disenchantment, high costs, and a higher turnover than desirable. Sometimes it is better to employ a mix of persons with experience, and college degrees rather than employing only persons with college degrees. A major factor is industry standards. There are many internal and external sources cited in the text. Leads from present successful employees should not be overlooked. Internships are also becoming more important and are being used by more and more firms. 4. Discuss the lesson that Joe learned while he was a teenager and how it might apply in the present situation. One of the most important lessons to be learned in this case deals with the posture that a new employee or one in a learning situation assumes. Joe Miller is in this position and would be wise to learn first how Mr. Wilson does things before thinking too much and making suggestions that are not wanted. If Joe supports and learns from Mr. Wilson, they will become friends. Mr. Wilsons recommendations to the company will chart the course of Joe Millers future. Everyone must prove himself or herself before becoming a team member. After a few months on the job and the establishment of more rapport, Joe can slowly start to become more creative. He can then show his ideas and make a few suggestions. When he becomes a DM, he can do things his way. 5. How would you go about accomplishing Joes current recruiting assignment? It would probably be good for Joe Miller to ask Mr. Wilson if he would consider going to two or three schools together. This would not show a weakness on Joes part. It would show common sense and a desire to learn new skills. More importantly, Joe is in no position to design a new recruiting plan. Doing things the way Mr. Wilson wants them to be done is good advice. Questioning the way things have been done over the years, and offering advice to the seasoned sales manager is no way to begin a training relationship. This case was written by Gerald Crawford, Ph.D., Professor of Marketing and Eminent Scholar School of Business, University of North Alabama; Keith Absher, Ph.D., Professor of MarketingSchool of Business, University of North Alabama; and Tom F. Griffin, Ph.D., Lowder-Weil Eminent ScholarInformation Systems/Decision Sciences Department, School of Business, Auburn University at Montgomery.

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CASE 9-1 Delaware Firearms: Is This the Correct Person? The manager should be pretty sure of the problem. But does Andre fully recognize the seriousness of his shortcomings? Does he really understand how he has been confusing and misdirecting salespeople? Andre claims to understand, now that his supervisor has explained it. Okay then. At company expense, Andre should be enrolled in seminars and workshops on Successful Oral Communications and Writing to Be Understood. Because the problem isnt at all unusual, many organizations sponsor or support such programs. Also, Andre should fax memos to his supervisor before he sends them to his salespeople, so that his supervisor may critique them on their effectiveness. The supervisor should also attend his monthly sales meetings and participate in the presentation of important information. The supervisor should help make Andre successfulafter all, thats his job! It is too early to know if the supervisor selected the wrong person for the district managers job. Andres boss should give him the benefit of the doubt, plus all the help, support, and encouragement he can. CASE 9-2 Bob Johnson: Searching for a Sales Job This case is especially interesting to college seniors because it addresses a topic that almost all of them are presently concerned withgetting a good job. This case creates interest and debate about an individuals goals, levels of security and opportunities desired by different graduates. And last, the case provides insight into the practical difficulties of getting a job and adjusting to the day-to-day problems that field salespeople face. Questions for Discussion: 1. What should be the primary basis for job selection? There is no best answer to this question. Because of differing needs, students will typically seek one or more of the following goals: a) job security, b) salary security, c) low rejection, d) high earnings potential, e) opportunities for advancement, or f) training provided. The key indicator for each student is the order in which goals are ranked as more important. Most undergraduate students will select job security or salary security because they are unsure of their ability to make a decent living in the selling field. They lack confidence and this is normal. Only after getting selling experience do most young people realize that selling can be learned and that most of them can make a very good living as a salesperson. Students that rank high earnings potential and opportunities for advancement as most important are more self-assured and confident in their own abilities. They will usually succeed if they can take the abuse that most salespeople are exposed to each day.

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Students that rank training opportunities as most important are more farsighted and likely to succeed in the long run. This is what Bob Johnsons father had in mind when he gave his son advice about selecting a job. Firms invest tremendous sums of money in training young people. This should be a major factor in the selection of one job over another. 2. Discuss the negative aspects of each job. The best way to examine this topic is to break down the typical concerns of students and to rate each company on the basis of each variable for each job. An example of this process is shown in the following matrix. This system provides an excellent basis for discussion. Job Security Salary Security Rejection Earnings Potential Advancement Opportunities Training Program Farmers B C D A B B Nabisco A A C B A B Muro C B B A A A

(Where A=excellent, B=good, C=fair, D=poor). Farmers Insurance has a good training program and offers the potential or high commission earnings over time. Job security with the firm and industry appears favorable. Constant rejection in the insurance industry is a problem for many young people, however. Nabisco is a blue chip firm that offers job and earnings security. It has a high market share and a bright future. The training program is also good and has excellent opportunities for personal growth because of its size. Muro is an excellent smaller company offering high pay and good training in an industry that is undergoing change at the present time. 3. Which training program is the best? Why? All three positions are with medium-sized to large firms and involve good training programs. Nabisco uses a good deal of on-the-job training with division or assistant division managers while Farmers invests more in video and self-paced reading targeted at overcoming rejection. Muro appears to invest more resources into sophisticated training at a centralized location. Their training gets into technical aspects of their products and involves role-playing exercises. Muro appears to invest more money into each sales representative. Overall this program appears to be better. Although turnover figures are not mentioned, it is likely that Muro is more selective in hiring sales representatives and probably has lower turnover rates. 4. Which job would be most interesting for you? The answer to this question depends entirely on students' interests, their backgrounds and the confidence they have in their ability to sell. In classroom testing, Nabisco usually is considered
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to be more popular because it seems to provide more security. Muro is popular because of the high pay and low expected rejection. 5. What job do you think Bob Johnson will take, if offered? Bob comes from a family of salespeople and likely has confidence that selling is a viable occupation with great opportunity to earn a very good living. He also has high grades and good references from an outstanding university (Vanderbilt). He is no average student. Because of his analytical mind and his rational approach to finding a job, he will probably select the Muro job if it is offered to him. Furthermore, he understands the importance of good training, like that offered by Muro. This case was written by Gerald Crawford, Ph.D., Professor of Marketing and Eminent Scholar, School of Business, University of North Alabama. CASE 9-3 Martin, Inc.: The First Woman Is Hired This case is both interesting to teach and discuss, and quite realistic in terms of problems that sales managers face while trying to hire and train more women. The case was intentionally developed to lead students to "jump to conclusions" about the pending relationship between the new salesperson and her sales manager. At first reading, many undergraduate students may offer the opinion that Nancy is coming on strong and Mike is probably going to "take the bait." After a second reading, however, it should be apparent that Nancy is not coming on strong. She is a professional person and is handling things the same way that any sales trainee would likely handle them. Mike, by the same token, is having some adjustment problems, but has not done anything or thought anything out of the ordinary. Question for Discussion: 1. How would you describe the situation? What actions would you take? Mike would be very wise not to become intimately involved with Nancy. Their involvement has been in the minds of the reader thus far. This would be a good point for the professor to discuss the dangers of sexual involvement with employees, customers, or anyone related to the business. A manager that does get involved this way loses power to control his managerial environment. Persons that one has been involved with invariably use the past to get special treatment or favors. The other employees will suspect what is going on and they will resent it. This is a sure way to fail. In addition, an affair with someone in the business environment is a bad mark on a manager's personnel record. It can destroy a career. This would also be a good time to mention three other

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problem areas that are a sure-fire road to failure: (1) drinking or drug use on company time, (2) getting company money mixed in with personal money, and (3) falsification of company reports. Mike should try to get things straightened out at home. Sometimes husbands and wives do not like their spouse to work too closely with a member of the opposite sex. This has been a problem with police, firefighters, and other career fields. Mike would be wise when he gets home to assure his wife that things certainly weren't very exciting. He might even be smart to make things sound more boring than they really were. In either case, Mike should be patient but let his wife know that he does not have a choice in the matter--he must hire and work with women. His job depends on it. He must assure her that he will do the right thing. She should accept Mike's word in the long run if he uses good judgment. Of course, this situation works both ways. Regardless of whether the spouse is a man or woman or whether the sales manager is a man or woman, it is becoming necessary to work together without sexual overtones. Mike would be wise to think of Nancy as another salesperson and not a "good-looking female." The office problem should be watched. It is not uncommon for men or women to quietly resent an accomplished newcomer. Of course, Nancy can earn their respect if she plays her cards right. If she is unable to do this in a reasonable amount of time, it may be necessary for Mike to discuss the situation with the secretaries. Some students may bring up the company pressure to hire more women, especially when they are not as qualified as male applicants. Affirmative action programs have proven to be quite controversial in sales management. These programs are designed to insure that racial minorities and women are not discriminated against in organizations. Prior to 1964, most employers were free to hire persons or groups of persons based on their own criteria. Title VII of the Civil Rights Act of 1964 made it unlawful for an employer "to fail to refuse to hire or to discharge any individual or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin." This act was amended in 1972 by The Equal Employment Opportunity Act. It regulated hiring practices of employees having 15 or more persons and granted the Equal Opportunity Commission enforcement powers. The commission was empowered to bring civil actions in federal courts against employers. The EEOC can require firms to develop an Affirmative Action Program which generally forces an employer to "identify and analyze problem areas in minority employment and to provide in detail for specific steps to guarantee equal opportunities keyed to the problems and needs of members of minority groups, including the development of specific goals and time tables for the prompt achievement of full and equal employment." (See Sec. 703, Title VII, Civil Rights Act of 1964, and U.S. Equal Opportunity Commission, Affirmative Action and Equal Opportunity--A Guidebook for Employers, Vol. II: Washington, DC; Equal Employment Opportunity Commission, 1973, pp. 40-44.) Most large firms have developed an Affirmative Action Program. It is likely that Martin, Inc., is in the process of achieving this end and has determined that more women must be employed.
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This is the justification for hiring Nancy who was qualified, but not as qualified as two male applicants. Related to the above problem is the question of what can be asked and should not be asked of the applicant during the interview. In regard to Nancy's voluntary indication that she "was not interested in marriage and children for several years," it is not acceptable to ask questions which are dependent on the sex of the applicant. The only exception is where a "bona fide occupational qualification is reasonably necessary to the normal operation, motif, culture, or atmosphere of that particular business or enterprise." (See EEOC Compliance Manual: Washington, DC; Bureau of National Affairs, October 28, 1975.) CASE 10-1 Georgia Auto Supply: Does Training Work? It should not be the managers style to damage the pride or self-esteem of his or her people. So, the manager should use his selling skills on Brad. He should have a private conversation with him. Although the manager often holds private conversations with Brad, this one should be a bit different. Let him do most of the talking. The manager should guide the dialogue by asking him to review several accounts, some of which he acquired and developed, some of which he lost or dropped. The manager should be careful not to act like a parent talking to a child. The manager should be an active listenerone who gives undivided attention to the speaker and does not interrupt with negative commentsBrad will appreciate the time that the manager has given to him. He will probably talk openly about the lost accounts. Then the manager will have the chance to probe deeply into the reasons why they got away. They can then discuss what Brad might do to prevent more failures and increase his hit or close rate. They will have a two-way conversation, each person transmitting and receiving ideas. This discussion will take time, but Brad is worth it. The manager should get Brad to discuss his sales training programswhat he likes and dislikes about them. He should find out if Brad feels the sales skills he is being taught are worthwhile to him. The manager should encourage him to give training a chance, and try it on his next 10 sales calls. The manager should tell Brad to let him know how it works. He should continue to work with Brad to improve his closings. Above all, the manager should keep an open mindmaybe its the training that needs to be changed! CASE 10-2 Toys and More: Development of a Sales Training Program Toys and More is a relatively young company (9 years old) in the consumer products industry. Specifically, they sell small toys and novelty items to variety stores and small food retail convenience stores. Their sales force size has increased from two salesmen to forty-five salesmen. There has been no sales training during this period. James New was given the responsibility of developing sales training programs for the National and Regional meeting to be

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held in January and March respectively. Also, some type of organizational arrangement should be developed to facilitate their programs due to Toys and More's rapid growth. The primary learning objective is the formulation of effective training programs including site selection, cost analysis, and basic programming. Important questions to answer are: 1. What type of training program will be most beneficial to the current sales force? 2. What type of organizational alignment should be used by Toys and More to facilitate control of the training? 3. Where will the national and regional meetings be held? 4. What will the costs of these meetings be? 5. What should the major objective of the national meeting be? The regional meetings? NOTE: Have students see the special February issue of Sales and Marketing Management of selling cost. Analysis of Alternatives 1. Conduct highly unstructured programs that involve discussion and a minimum amount of lecturing. A. Advantages 1. It would allow the salespeople and their spouses to have a good time. 2. The pressures of selling could be forgotten and better sales force camaraderie could be developed. B. Disadvantages 1. Why use this type of meeting when it has not been used before and your company is continuing to grow? You might just bore the salespeople. 2. You might get little benefit from it in relation to the costs incurred. 2. Conduct a highly specialized and structured sales training program using guest lecturers and new training techniques. A. Advantages 1. You would be giving your sales force every chance to become more efficient. B. Disadvantages 1. You stand the chance of boring your older salespeople who think they know enough about selling. 2. Outside lecturers must be very dynamic and amusing to be effective. 3. Use some combination of structured and unstructured sales meeting. A. Advantages 1. This will allow the spouses to also enjoy a good time, which is very important. 2. Learning might be better accomplished when interspersed with other activities. B. Disadvantages 1. A lot more planning and coordination is required to make this successful.

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Assumptions: 1. 2. 3. 4. 5. 6. Ralph New will allow the spouses to come only to the national meeting. The majority of salespeople are older and more experienced. Regional sales offices are present in Dallas, Texas and Atlanta, Georgia. Toys and More needs a better organizational structure. An outside training specialist should be hired for the regional meetings. The regional meetings will be successive weekends in March so Ralph New and the training specialist can attend both meetings.

Questions for Discussion: 1. With you assuming the role of James New and using the "Model of Sales Training" in the chapter, develop a sales training program for the following: A. The national meeting. B. The regional meeting. C. Model of Sales Training. 1. Planning Phase. a. Organizational Analysis. i. Their objective is to continue their controlled sales expansion (10% a year). ii. An effective training program can help accomplish this objective. b. Operational Analysis. i. Development of a "job description" is essential to the initial phase of training; hiring the right people. ii. "Job specifications" (specific qualifications) can then be determined for the given jobs. c. Salesperson Analysis. i. The training needs of the sales force are now determined. ii. These needs can be obtained from working with the salespeople and questioning them on how the company can help them reach their personal and job goals. 2. Organizing and Staffing Phase Determination of the training media, methods, materials, and locations needs to be dealt with. The national meeting will be in January, and the regional meetings on March 19 (Southwest Region) and March 26 (Southern Region). a. Sales Training Methods. i. The training objectives will be: (a) to develop a sense of sales force unity, (b) to better educate the sales force, and (c) to aid in organizational coordination. ii. The national meeting will not use an experienced trainer while the regional meetings will. iii. It must be recognized that the training needs of experienced and new salespeople will be different and their training should take this into account.

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iv. The standard training materials will be used to present information on the company, competitors and their products, and special selling techniques. This will primarily take place at regional meetings. v. The costs per trainee can be developed based upon current data founded in Sales and Marketing Management magazine. vi. In addition to the classroom training at the regional meetings, on-the-job training will continue to be encouraged. b. Where Does the Training Take Place? i. The company will use a variation of centralized training. Due to their geographic dispersion, the expense of a strict centralized training program has been ruled out. Instead, the training will be centralized regionally (on consecutive weeks) and thus allowing the training specialist and Mr. New to attend both programs. ii. The meeting would be held in their market. For example, the national meeting will be in New Orleans, Louisiana, and the regional meetings in Dallas, Texas and Atlanta, Georgia. c. When Does the Training Take Place? i. The national sales meeting will be held each January. ii. The regional sales meetings will only be held in low sales periods or if a very serious problem arises. 3. Directing and Controlling Phases. a. Top management is providing the direction for this program in hopes of adding to the sales force's effectiveness and profitability. Their support is vital to the program's success. b. The attainment of the before-mentioned objectives will be measured by the control procedure. After the programs have been initiated, a look at the sales results might also provide a crude determination of their success. Summaries of the National and Regional Meetings: 1. National Meeting: A. The first day's activities included a speech by Ralph New, introduction of the new organizational structure, lunch (3 hours to allow husbands and wives to eat where they wish), a brief speech by James New, then Henry Haynes, and guest speaker. A cocktail party and dinner followed in the evening. B. The second day included a morning meeting for the salespeople only, lunch, and an afternoon adjournment. C. The actual schedule of events was much the same as above except there was more emphasis on training. 2. Regional Meetings: A. The meeting began on Friday p.m. with the regional sales managers reviewing sales statistics and a question and answer session with the sales trainer. Dinner and cocktails followed that night. B. The next morning, the sales trainer began his training with special emphasis on refresher training. After lunch, a discussion concerning sales situations was held.
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C. The actual regional meeting was conducted by James and Ralph New. They were unsuccessful in their training attempt. Toys and More hopes to both improve organizational coordination and sales force efficiency through their sales meetings and training programs. First, a sense of camaraderie will be developed at the national meeting, then the salespeople will become better educated at the regional meetings. CASE 10-3 The Telecommunications Corporation: Training's Impact on Performance The Telecommunications Corporation (TC), a leading manufacturer of telecommunications equipment, produces and markets the sophisticated machinery. Telecommunications allows for the transmittal of information to various geographic locations by computer via normal telephone channels. Information can be transmitted and received in a matter of seconds. The company held a strong market position. Recently, however, its share has been declining while competitors have maintained or experienced a share increase. A task force was created and assigned the responsibility to find the causes of the decline. The task force's findings indicated that individual accounts were meeting corporate goals. The problem existed in a decline in the major accounts in which integrated units were sold. Numerous factors attributing to this decline were discovered. The primary reason was inadequate sales training to effectively sell the integrated system. Various other problems were found that augmented the decline in major accounts. Included among these problems were present interviewers, selling strategy, unrealistic sales quotas, and poorly designed sales territories. Specific objectives are: 1. The "primary" objective of the case is to emphasize the importance of an effective sales training program. It reveals the effects of an inadequate training program without specific, detailed objectives and definite purpose and the resulting problems that may arise. It emphasizes that a training program plays an integral role in obtaining not only marketing objectives but corporate goals as well. 2. The case reveals that a properly constructed and implemented sales training program can help remedy or eliminate sales force management problem areas such as low product sales, poor morale, and turnover. TC must determine how to make its existing sales force more efficient in selling the integrated system so as to increase major account sales while maintaining the individual account sales level in hopes of strengthening its market position. TC should analyze and evaluate other problems in order to make sound decisions on the following: 1. 2. 3. 4. The replacement of present interviewers. Properly determined sales quotas. Redesigning sales territories. Ways to decrease turnover.
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5. Selling strategy revision. 6. Change in compensation of guide a balanced selling effort. Alternatives: 1. Increase the selling effort directed toward major accounts and less toward individual accounts. 2. Split the existing sales force into two distinct entities, one to cover the individual accounts and the other to cover major accounts. Those covering major accounts will go through a centralized training program designed to meet both sales force executive objectives and corporate expectations concerning the major accounts as well. NOTE: The case does not give enough information to determine of the sales force should be split, such as budget, number of salespeople, number of customers and major customers. However, key account salespeople is an alternative.

Assumptions: 1. TC's integrated system is competitive with other integrated systems. This competitiveness includes product functions and features, efficiency and price. (The case states competitive products have caught up to TC.) 2. The present sales force has some degree of telecommunications knowledge and has the ability to sell telecommunications equipment. In addition to this, the existing sales force is capable of learning new technical knowledge and skills. 3. The task force findings are correct. NOTE: Either alternative can be correct. The following information supports splitting the sales force. It can also be used to support alternative 1.

TC's top sales executives should divide the existing sales force into two separate divisions. One will service the individual accounts and the other two will service the major accounts. Those representatives handling the major accounts will undergo a centralized training program designed specifically for integrated systems selling. The size of each group should be determined carefully as to adequately service each respective account. Selection of those who will receive the centralized training program will be dependent upon two factors. The first is the number of years of experience in selling telecommunications products. Those having more experience will be considered better qualified. The second criteria is the past selling record of integrated systems for each particular sales representative. The representatives not chosen will represent those individual accounts left vacant by the revision, in addition to servicing their own existing accounts. Both the major account representatives and the individual account representatives will report to their respective field managers.

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All major account representatives should be sent to a centralized training program. There are distinct advantages for the use of a centralized sales training program for major account representatives. These advantages include: 1. 2. 3. 4. Instruction can be more professional, complete, and concentrated. Teaching aids are better organized. Product information is more accurate and understandable. The representatives are able to meet the executives they work with.

The major disadvantage to a centralized program is cost. However, "failure to provide good training can have a direct negative impact on the profit and loss statement well in excess of the short-term positive effect of the money saved on training." What TC's existing sales training program lacks are detailed specific objectives. In planning the centralized training program, the initial step is to determine what the program is trying to accomplish. Objectives must provide the results that are in line with TC's corporate goal of increased major account sales. There are three objectives that the newly established centralized program must accomplish for TC. 1. The first is to provide extensive product knowledge about the integrated systems and to learn its various uses. 2. Second, to teach the salespeople adequate knowledge about TC's competitor's product lines. The advantage of this instruction is that a sales representative can design a presentation emphasizing the advantages of his product over its competitors. 3. Last, instruction is needed in the proper techniques of selling integrated systems. TC sales executives must also realize that selling involves more than just getting an order. Selling also involves the sales representative doing numerous customer services before and after the sale. A "major account" sales presentation should be developed which includes a demonstration to the customer using company-collected information on customer cost advantages using the TC system. TC must decide who shall provide the instruction that can best meet the stated objectives. The three main sources of sales trainers are: (1) line executives, (2) staff personnel, and (3) outside specialists. For TC's purposes, the use of senior sales representatives who have proven themselves in integrated system selling should be used. Typically, not only do senior sales representatives have knowledge of their product as well as their competitors, but also possess the necessary selling skills required for integrated systems. Other problems: Recruiting. A variety of other problems exist within TC's present sales force. For one, the interviewers, who also do the hiring, are not experienced in hiring telecommunications personnel. To remedy this situation, initial screening of applicants should be done by TC's field managers. The final hiring decision should be made by sales executives. The newly hired applicant will initially undergo decentralized training for individual accounts only, conducted by
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their field manager. An advantage of using a field manager as a trainer is that he can train an individual to meet the specific needs of present and potential accounts within his respective territory. Eventually, after the sales representative meets a specific quota of individual unit sales, he then can receive centralized training. Training Organization. Potential and current customers should be analyzed to reevaluate present territories. In doing so, at least three factors must be considered when designing a territory: (1) workload, (2) potential, and (3) current sales. Workload should be given major emphasis in establishing major account territories. Integrated systems characteristically involve a greater personal selling effort and more time than do individual account sales. Accounts need to be segmented into major accounts, then large, medium, and small accounts. Quotas. Realistic quotas that meet corporate goals can be determined for each territory. Quotas can be determined by previous sales data, careful territory analysis, and other objective data. In the establishment of major account quotas, consideration should be given as to the amount of time needed to sell an integrated system. Compensation. A change is needed in compensation to reach a proper balance on: A. Short-term sales (presenting emphasizing). B. New customer sales (presenting emphasizing). C. Existing customer sales (not presenting doing). For example, could increase commission rates and/or develop sales contests. The "major account" salespeople should be rewarded for leasing sales. At first, they might be placed on a salary plus commission. Thus, customers could have a "trial run" before making a large dollar commitment. Commissions might be paid as ling as customer leases equipment, rather than a "one-time" sales commission. Proper recruiting, and redesigning sales territories, quotas, and compensation should reduce turnover. It should also increase performance. Training can be used to teach salespeople how to sell major accounts and integrated systems, plus educate them on their competition. CASE 11-1 Hawaiian Novelties: Did You Make the Correct Choice? Sales trainers also need trainingjust as salespeople do. Sales trainers should be experts on all topics in the textbook. Too often, a person is brought into a new job on the basis of outstanding performance in a previous one. Certainly youve heard veteran sales or marketing managers comment sadly, Ive taken many good salespeople out of the field and made lousy managers out of them! Whats the problem here? Carole seems a bit lost--mystified by the process of organizing sales training programs. She appears unable to steer in such a way as to assure that she will meet the training goals. It is her managers job to show her how to get on the right track.

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Call it management by objectives, or results-oriented time management, or self-discipline. The vital thing is that Carole needs help, and her manager is well equipped to provide specific and constructive help. It is her bosss job to make her successful, beginning with a discussion of time management. Sales personnel must be experts on their products and proficient in selling skills. Sales knowledge and sales skills are the main topics of all training programs. For specific topics to cover, she should ask the sales managers and salespeople. She should spend two or three days of each week working in the field with salespeople and find out whats working and whats not. When she finds people doing things well, she should have them conduct training sessions. Training is expensive. Its benefits must outweigh its costs. CASE 11-2 Taster's Club: Development of a Sales Presentation Dick Shoemaker, a salesperson for Taster's Club Coffee, has to decide what information he has available to help him make a sales presentation to a major account. The basic case objective is to have the student analyze both account information and product information in preparing an effective sales presentation. Questions for Discussion: 1. To whom should Dick make his presentation? Dick should make the sales presentation to not only John Barringer, the person in charge of sales promotion, but also to Fred Acosta, the coffee buyer, and Doug Hendricks, the merchandising manager. It would be best if Dick could get all three together at one time, but if that is impossible, then a sales presentation may have to be made to each one. John is important because he is the primary decision-maker on what promotions should be run, but Fred and Doug are friends of Dick and they are certainly influences on the decision that John would make. 2. Develop a sales presentation outline showing the key facts about both the account and the product that would be useful in making the sale. A. Account Information 1. Sales of Taster's Club up 14%, while overall volume was only up 7%. 2. Use of displays in stores. a. Account has not used Taster's Club display in over a year. b. Display is supplied at no cost to retailer. c. Display only uses 2.4 square feet. 1. Should do sales volume of $239.40 per sq. ft. in a week. 2. Should do profit of $31.20 per sq. ft. in a week. 3. Display in each store should increase sales of ground coffee to 600 cases for the week of the promotion. d. Displays have generated up to a 64% increase versus average volume of coffee. e. Inventory turnover for the display should only be 1 week.
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B. Product Information. 1. Coffee is purchased on 30-day terms instead of 10-day for most other items. 2. 50 coupon is coming out in Sunday paper, display would back it up. CASE 12-1 Idaho Bakery Supplies: How Can You Motivate This Salesperson? We all have a need for affiliation and identification. Its especially strong among salespeople, whose work in the field affords relatively little contact with their peers or superiors in the home office. How do field salespeople satisfy this need? Some do it by concentrating on selling during the day and doing their thing at night, on weekends, or holidays. They join business or professional clubs and associations. They might participate in other societal activities, such as fund raising for nonprofit associations or joining hobby clubs. There they may find people they like and who like them. In these situations, salespeople meet with others under friendly, comfortable, risk-free circumstances. Geographical separation can make it difficult for the field salesperson to affiliate or identify with the company or boss. Thats quite natural. But some cope with the situation more successfully than others do. In the example we are discussing, Jackie has created a small circle, a private society. Personal need is overriding the companys need and the needs of the manager. Now that the manager has recognized the symptoms, analyzed the problem, and confirmed his/her conclusions through personal observation, its time to discuss with Jackie the need to foster better relationships with other accounts in an effort in to improve sales volume. The best time to attempt such a discussion would generally be during a trip into the field. Jackies manager should express admiration for her fine relationships with her three regulars, from which the company benefits. The manager should suggest applying the same social skills to other accounts. This part of the discussion clearly defines the problem and the objective. Jackies boss must show her how these suggestions will help her improve her performance and generate more sales. CASE 12-2 Teletronic Electronics: The First Woman is Hired Teletronic Electronics (TE) is a distributor of several thousand small electronic parts. Chris White, a middle-aged man who has been with the company for 22 years, is New Orleans' district sales manager currently responsible for nine salesmen. Recently, TE has hired a young, intelligent, personable, highly-motivated woman with the experience in the electronic distribution field. Her sales trainers at TE felt she has great potential with the company. TE corporate management is interested in moving women into the organization and up to management positions. She is assigned to Chris' region and immediately conflicts arise.
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Chris is dissatisfied with her unconventional selling methods and threatened by her successes. He seeks to control and thus stifle her creativity by demanding she follow a more conventional pattern. He has limited her expenses, tried to discourage her from taking evening courses, and rejected her suggestions for company improvement. Her actions have been aimed at personal and organizational success and not purposely antagonistic toward Chris. The tensions climax when the regional sales manager calls to congratulate Judy on one of her suggestions that Chris had not even bothered to read. In his anger, he calls for a meeting with Judy. How should he, versus how will he, handle the sales meeting? Specific objectives are: 1. Illustrate a generation gap between the older manager and younger saleswoman. 2. To suggest effective tools for the traditional sales managers in handling creative, aggressive new sales representatives. 3. Allow for discussion on management and leadership styles. Leadership styles are discussed in Chapter 15. Several decisions to be made are: 1. 2. 3. 4. 5. 6. 7. To offer Judy an ultimatum; conform to Chris' standards or leave TE. Whether or not to re-educate Chris in more democratic, flexible management styles. Define standard expenses that TE will pay. To develop a system for dealing with salespersons' suggestions. To develop a set of guidelines explicitly stating acceptable and unacceptable selling methods. How and if to deal with Judy's incident with the intoxicated buyer. To establish a supportive company policy regarding continued education in related business fields and possible financial funding.

Alternatives: 1. To deal with the conflict by openly discussing and evaluating the situation and reaching a mutually acceptable agreement whenever possible. A. Advantages 1. Judy will have greater respect for Chris. 2. Chris will gain a better understanding of the personal motivation of the "new breed" of salespeople that will aid him on other interactions. 3. Chris will no longer feel the need to stifle the achievement-orientation of his young sales representatives. 4. Judy will gain a greater insight into Chris' motivation and try to modify her selling methods without 100% conformity. 5. They can develop a set of guidelines, mutually acceptable, that allow "certain liberties" while still adhering to a set of code of behaviors. 6. Chris could link Judy's promotion into management with a certain degree of conformity, thus motivating Judy to impose her own controls, an MBO approach. B. Disadvantages 1. In view of Chris' personality, relinquishing the required degree of control may be impossible.
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2. The two may be too committed to their prospective course of action and so inflexible that such an interaction would not only be useless but created further ill will. 2. Chris could offer Judy an ultimatum where she either conforms to his standard or leaves the organization. A. Advantages 1. This would be the easiest course of action and most personally satisfying for Chris. 2. Chris would maintain a highly controlled and traditional sales force. 3. Judy will very definitely learn what she can and cannot do as a salesperson under Chris. B. Disadvantages 1. He will create greater ill will between Judy and himself. 2. If she stays and conforms, her productivity may decrease and her morale will be greatly lowered. 3. The company will lose out on Judy's insightful, helpful suggestions as Chris will have stifled her creativity. 4. Judy may be forced to quit and TE will lose a very productive saleswoman. 3. Chris can vent his anger but offer no ultimatum and let the situation continue as is. A. Advantages 1. He does not force Judy into quitting. 2. He vents some anger and frustration which may make him somewhat better able to deal with the situation. 3. Judy may find ways to work around Chris so that her style is not impeded. B. Disadvantages 1. The situation is not likely to change and Chris is no closer to a means of resolving the conflict. 2. Judy may become frustrated and quit. Assumptions That Can Be Made: 1. Judy's actions and attitudes are not purposely antagonistic to Chris. 2. Judy has not employed unethical or illegal sales methods to achieve such a high sales volume. 3. TE upper management encourages innovative and creative sales practices. 4. Upper management does not judge Chris by the conservativeness of his sales force. 5. This problem is indicative of Chris' management style and work ethic and is not merely an isolated event. 6. The fact that Judy is a woman is much less of an issue than her being a young, aggressive and an untraditional sales representative. Questions for Discussion: 1. Why is Chris behaving this way? Chris may be described as a very conservative, extremely traditional, bureaucratic, unimaginative and inflexible sales manager. He has evolved a set way of selling and managing over his 22
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years of employment at TE and feels that he knows best how to handle work situations. He is unreceptive to new ideas and unconventional sales representatives and/or sales methods. Chris is acting according to his own set of values and his personal work ethic. He sees Judy's actions as a threat to the company's image and direct threat to him. Instead of encouraging Judy and using her success as an example of his skill as a manager, he is stifling her creativity so that he "doesn't look bad" being upstaged by a newcomer and/or female. Another problem is that he just does not understand and/or know how to deal with the "new breed" of salespeople. He can neither relate to nor control the creative, informal sales methods used and, as a result, is frustrated and feels out of place, especially when they are so successful. His reaction in anger and emotion is typical of this frustration at suddenly losing some of his control. 2. Why is Judy behaving this way? Judy could not conform to Chris' standards and still be the successful representative that she is; their styles are too diverse. Judy is acting in accordance with her personal set of values and work ethic, using her judgment as to the most effective means of making a sale and for personal success. She is highly creative, intelligent, and motivated. If she sees an opportunity for improvement and/or sales success, then she takes advantage of it. Judy is an example of the competent "new breed" of sales representative that sends a cold chill through Chris' spine. Her actions are not out of spite or retribution as motivates many of Chris' actions, but rather out of a sense of "this is the logical way to go." When Judy's plan for realigning sales territories is thwarted by Chris, her strong belief in herself compels her to seek gratification from a higher source. 3. What will Chris do at the meeting? Is it the right thing to do? Chris will probably act in extreme anger--shouting, berating, and giving ultimatums. He will not be open to input from Judy and use the meeting to vent his anger and frustration. His sole purpose will be to humble Judy and to intimidate her. This domineering, uncontrolled and unnecessary show of power and control is probably the worst means of handling this situation. 4. Ideally, what should Chris do? He should be rational, totally calm, and open to feedback during their meeting. He should present Judy with aspects of her job behaviors that he feels uncomfortable with and ask for her input and justification of these actions. He must try to be flexible and responsible to her ideas and new methods. There is strength in his admitting sources of irritation and trying to resolve the conflict rather than smothering it by threats and ultimatums. This type of communication between him and Judy would open the way for compromise and possible solutions to their problem.

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The basic conflict in this case stems from differences in values and attitudes toward tradition and dogma, work ethic, and change between the older, more tradition-oriented managers and what has been labeled the "new breed" of salespeople. Leaders (Chris) must constantly seek a balance between the need for order and consistency and the need for growth, improvement, and change. Unfortunately, Chris has not established this balance and has been hiding behind TE policies to frustrate, alienate, and stifle Judy. Rather than viewing her as an asset to the firm, he fears her and the changes she represents as a personal threat and liability to the company. Achievers such as Judy are the future of the company and, if well managed, will reflect credit on their managers. Chris should reevaluate his current management style. Chris should schedule a meeting with Judy when he can deal with the situation calmly and rationally. He should use the meeting to vent mutual grievances in a constructive, open manner. This exchange should be the basis for compromise and building a new, successful working agreement. Chris should: 1. Re-examine his own motives for controlling; 2. Become educated in alternative management styles; 3. Develop a Theory-Y-type management style and allow employees to exercise self-discipline and self-control; 4. Clearly state sales force objectives and define broadly acceptable paths and corporate policies regarding goal attainment; 5. Implement a management-by-objective plan for his sales force to foster their initiative and creativity; 6. Follow a participative supervision style; 7. Seek to provide direction and guidance to sales personnel rather than total control. Judy should: 1. Deal within established company guidelines as much as possible; 2. Show Chris how her successes can also be viewed as his successes; 3. Try to avoid being in a position that directly threatens Chris, i.e., going over his head in the organization; 4. Submit future suggestions for company improvements through accepted channels; 5. Be patient; 6. Leave and seek a more flexible job opportunity if changes do not occur within TE. TE management should: 1. Establish a "suggestion" system which goes close to the top to try and avoid the problem discussed in this case; 2. Offer a means to teach managers the skills and attitudes necessary for effective management and coping with change;

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3. Evaluate the effectiveness of all managers and transfer the effective managers to other positions. Today, more than 50% of our population is under 25. With the ever increasing influx of young people in the work force, bringing with them new ideas and new ways of doing things, it is increasingly important for managers to develop skills to deal with change. There exists very little experimental evidence currently available to help solve this type of case problem. Most of the views currently held on the "best ways" to manage arise from executive opinion and empirical study. Literature does exist on different management styles but again, little scientific evidence supports the conclusions of the authors. CASE 13-1 Illinois Satellite: Selling Your Top Salesperson The manager should call a special meeting with Lisa and all of her colleagues and use this session as an opportunity to describe 1) the situation that existed before the change had been put into effect, 2) the need for making the change, 3) what options were open when the manager planned the change, 4) the pros and cons of each option, 5) the logic that led to the option that the manager and the group are now implementing. The manager should even go so far as to describe the weaknesses or disadvantages of the change. He or she must explain that when the pros and cons are weighed, the new program offers enough benefits to justify this action. The manager should give everyone at the meeting, especially Lisa, all the time they need to discuss openly and candidly any doubts or questions they might have. This is a real test of the managers ability to communicate with the group. CASE 13-2 Computer Bytes, Inc.: Should We Use a Draw Compensation Plan? This is designed as a discussion case. Have students read it before class. The class can discuss the different compensation programs using this company as an example. Questions for Discussion: 1. Should Computer Bytes use a draw compensation program? Why? As the book says, a commission plan is a good one for the small and/or new company which doesn't have the money to support a sales force. The commission plan discussed in this case is a good one for this company. This case shows students what is involved in a "draw commission" program. 2. Should further changes be made if they decide to use Thompson's plan? No, they should see how this works. It's dangerous to change a compensation program too often.
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CASE 14-1 Indiana Restaurant Equipment & Sales: What to Do with the Guerilla Li has often said that the challenge of a tough-sell situation is a real turn-on. The manager has seen it in Li many times as well as having personally felt it himself. Both the manager and Li have felt that great sensation of power and satisfaction whenever theyve influenced an accounts purchasing decision, especially when taking a sale away from a competitor. As a top producer, Li gains real satisfaction and recognition through superior performance in the fieldnot as an unofficial group leader. But he also has a genuine ability to understand the needs of the sales group and feels especially good when he helps to satisfy them. Since he isnt a trained psychologist and has no leadership experience, Li probably cant articulate these needs. But he is remarkably intuitive when it comes to interpersonal relationships. With his managers encouragement, Li could be an unusually valuable link in the communications chain between the manager and salespeople. He can probably help the manager explicitly define the interpersonal problems and suggest corrective actions. Li probably would be much happier to get back to full-time selling, where he can best use his professional skills as well as his intuition. In fact, with their sense of security restored, all members of the sales group would be able to concentrate on their primary tasks: selling and delivering orders. The proof of the managers skill in dealing with interpersonal relationships would be well-demonstrated by taking constructive action with Li. CASE 14-2 R.J. Reynolds Tobacco Company: Beyond Field Sales . . . The Home Office This case was developed to show some typical problems that upwardly mobile young salespeople frequently face. Three problem areas quickly come into focus. First, when an employee spends so much time and energy on the job, the family situation is likely to suffer. Second, highly motivated young people can move up so fast that they can "burn-out" or, perhaps, fail to learn some of the fundamentals required to survive in the corporate world. Third, a "mentor" is a virtual necessity in surviving the political minefield of corporate headquarters. Questions for Discussion: 1. What role does a "mentor" play in this case? One likely problem, although not the most immediate one in the present case, is that Kerry apparently has no mentor, or trusted advisor at a high level, to depend on for advice and help. It has been said that "good things happen to those who work hard and smart--and have friends in high places." Let me know youve read this far and Ill send the first three people who contact
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me ten dollars. This is how the system works, whether it is getting into medical school, getting a promotion as an Army officer, or getting an article published in a top journal. Kerry Gatlin was placed into a position under a powerful person, Bob Johnson, who really didn't want him. This was a no-win situation. Gatlin needed someone at a high level in the Home Office to get him back into Sales. 2. How would some of the present problems have been avoided? Kerry moved up too fast for his own good. He was never allowed to season as a manager. Someone in the human resources area or sales personnel group should have developed a master plan for training people at all managerial levels. This plan would have spelled out expected competencies and exposure factors needed before promotions were made. The entire promotion process seemed rushed and unorganized. 3. What alternatives are open to Kerry Gatlin? As far as the company is concerned, Kerry needs to talk with the Sales Manager. His work with sales was always outstanding and he appeared to be doing a good job when speaking to field sales groups. If he were to briefly explain his situation and ask the Sales Manager for advice, he would probably arrange for Kerry to be reassigned to the home office group. The most immediate problem, however, is the one discussed in question 4 below. 4. Which problems need immediate attention? Clearly, the marriage problem needs to be dealt with first. Gatlin's mind will be preoccupied with his wife and family until he works out a solution to that situation. It is likely that the marriage has been in trouble for some time, and a solution will not be reached overnight. It appears that Kerry has placed his work ahead of family, and this invariably leads to personal problems. He needs to meet with his wife, talk things over, and try to work out a compromise, A good marriage counselor can help in matters of this nature. 5. Can the marriage be saved? There is no way to answer this question accurately, because not enough data was made available. It would be necessary to hear Beverly Gatlin's side of the story. 6. Can this young man's career be saved? It can probably be saved if Gatlin continues to produce at a high level, and assuming that he can work out his personal problems. Hopefully, he can get back into the Sales Department where his true loyalties lie. Kerry Gatlin was not able to bring about a reconciliation of the marriage. Beverly Gatlin had many years of unresolved difficulties and a great deal of hostility to work through. Kerry was not able to "sell" her on getting back together.

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Gatlin managed to get a lateral transfer back into the Sales Department, where he spent one additional year as Assistant National Sales Promotion Manager before leaving the company. After the divorce, Kerry maintained regular contact with his two young sons. Kerry returned to a university setting, later received a Ph.D. degree, and became a Professor of Marketing at a fine regional university. He remarried, this time making sure that family was his first priority. He has been much happier in his new career. CASE 14-3 Ohio Biotech, Inc.: Night Work and Travel Have to Stop OBI allows for a great discussion of the dual career couple. Many students are married, young, engaged, or will marry. Questions for Discussion: 1. What would you say to Ellen? "Well, Ellen, you and I both know that your job duties require that you work some evenings and travel overnight. I don't see how I can guarantee you won't have to do either. But remember, how you manage your time as a salesperson is up to you. If you can continue to perform as you have in the last six months without working evenings or traveling overnight, I don't have any objections. Please let me know if you want me to talk to Jack to explain my position." Additional Discussion Points: A. Should Ron make any special deals or arrangements for her since she is a woman? Absolutely not. The minute a manager starts making any concessions to an employee on the basis of gender, he/she opens himself and that particular employee to contempt from others within the organization because of the concessions made or received. Additionally, the other employees will then expect the manager to make concessions to them as well. B. Should Ron have a talk with Jack Peters? Only if Ellen Peters requests him to do so. C. Should Ron mention that such a request would very likely rule out any possibility of a promotion to sales manager? Should he mention Al St. Aubin's memo or his intended response? Ron should not mention that Ellen's request would rule her out of a promotion, and he should not mention Al St. Aubin's memo. Ellen should be given the opportunity to work things out for herself without this pressure. Ron should mention or hint that if she continues to perform as in the past that she could be considered for advancement.

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D. If Ron does make concessions for Ellen, what should he tell the other salespeople and their spouses? If Ron did make a concession to Ellen he would have to, in all fairness, extend the same concessions to all the other salespeople that work for him. See if your female students have different opinions than the males. What about married versus single students? CASE 14-4 C&D Foods, Inc.: Leadership: Who Is Best for the Job? The Leadership at C & D Foods, Inc. case can generate a good deal of interest and personal involvement in junior and senior level marketing courses. A major strength of the case is its ability to encourage students to approach problem situations with an open mind. Students who simply read the case will not have all of the facts and cannot make rational decisions without them. On the surface it seems that Tom Pirkle is not being treated fairly. Young white males are most likely to become defensive before asking important questions that can help them to make better value judgments. Case writers agree that it generally not good practice to write cases that contain Gotchas. This means that some significant information has been left out of the case or is purposively hidden away from the reader. Communication is the problem in this case, not equal opportunity. The truth, however, is that the case is written solely from Tom Pirkles perspective and he does not have all of the facts. It appears that he is about to make a fatal mistake by confronting management in a negative way or by leaving the company for another job. Good leadership would dictate that Tom be brought into the picture before damage is done. The missing information is that the company has grown to the point that a small main office marketing unit is needed, and Tom Pirkle is being considered to head up that group. Most of the questions are fairly academic, once the full picture is known. Bob OBrien is nearing retirement and is apparently not a strong communicator. Don Hendon has also failed to communicate effectively with Tom Pirkle. This communications situation and others like it occur regularly in field sales. Good communication skills are a key ingredient in strong leadership. Poor communications can lead to low morale and low productivity. Questions for Discussion: 1. From the facts available in the case, who would make the best Area Sales Manager, Tom Pirkle or Barbara Howard? From reading the case, it sounds as though Tom Pirkle would easily make the best sales manager. The case is written from Tom Pirkles perspective, however, and should not be taken at face value. Whether or not Barbara Howard is in Tom Pirkles league should depend on more objective criteria.
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If Tom had known about the reorganization and his possible opportunity, would he be less defensive? The answer here is a resounding yes. 2. Is Tom Pirkle being objective in this matter? Tom Pirkle is not being objective because he needs more information. His retiring friend and Area Sales Manager, Bob OBrien has not been completely open with him because Don Hendon, the General Sales Manager, has asked OBrien to keep the plans quiet until they are more finalized. Would Tom Pirkle be more objective if he had known about the upcoming reorganization? Again the answer is definitely yes. 3. Was Professor George Montgomery's thinking objective? No, his advice was not objective. He only heard Toms side of the story. He should have advised Tom to sit down and make a list of questions before talking with the General Sales Manager, Don Hendon. 4. Are there other standards by which a potential sales managers performance should be measured? Promotion to Area Sales Manager should not be totally based on ones skill as a salesperson. This is referred to in the literature as the Super Salesperson Problem. People skills, organizational skills, along with recruiting and training skills are equally as important when selecting managers. Tom Pirkle seems to have a wide range of skills and a college degree in marketing. 5. What else can Tom Pirkle do to get more facts or resolve his present situation? Tom should have asked for permission from Bob OBrien to see Mr. Hendon, or perhaps see the two of them together. He should let them know that he is interested in more responsibility with the company. Bob OBrien should have suggested Tom approach Mr. Hendon. 6. What risks does the company take if it promotes Barbara Howard over Tom Pirkle? With poor communication, the company risks losing Tom Pirkle. Others are also affected by poor communications. When effective communications are used, the company reduces its risk and promotes better relations with all of its salespeople. 7. What can Tom say to his friends and family? With poor communications, Tom may continue to talk and may wind up not getting promoted. The best thing he can do is keep his mouth shut until he gets the facts. At that point, he will
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lose face with friends and family and might even file a lawsuit for discrimination. All of this can be prevented with better communication. This case written by Gerald Crawford, Ph.D. Professor of Marketing and Eminent Scholar School of Business, University of North Alabama, and William S. Stewart, Ph.D. Dean, School of Business, University of North Alabama. CASE 15-1 Iowa Farm Supplies: Plans and Data Go Together Did the manager completely explain to Dick all of the field managers responsibilities, including exactly what Dicks supervisors expected of him? Has his manager coached Dick periodically? Two factors are possibly at work here: 1)Dick doesnt fully realize the need or the vital importance of advance planning and 2) he doesnt quite know how to draft a plan. Dicks boss should set aside some time for a calm and cool discussion with him and make a fresh start. Some of us dont learn by doing. Some people require more direction, at least at the beginning, than others. The very newness of Dicks position might frighten him a bit. He may be totally confident and valuable in an eyeball situation with a customer, but to him the paper mill may be quite another matterand one that might be completely overwhelming. Dicks self-esteem might suffer because of his uncertainty about the mechanics of the new job. He might delay his actions for fear of revealing his ignorance. His manager could become his mentor and demonstrate what he learned when he was at Dicks level. Perhaps the manager carried the democratic style of management too far and gave Dick a little too much independence. CASE 15-2 Executive Office Supplies: Determining ROI Questions for Discussion: 1. Determine the return on investment managed for the North Texas-South Oklahoma Territory. ROI = Gross Profit * Sales = Sales Inventory 68,900 * 400,000 = 1.53 400,000 45,000

2. What would the ROI be if sales could be increased by $5,000 without additional costs? What would the ROI be if sales could be increased by $10,000 without additional costs? Sales Increase by $5,000 = 73,900 * 405,000 = 1.64 405,000 45,000

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Sales Increase by $10,000 = 78,900 * 410,000 = 1.75 410,000 45,000 3. What would the ROI be if direct costs be lowered by $2,000 without hurting sales? COGS decrease by $2,000 = 66,900 * 400,000 = 1.49 400,000 45,000 4. What would the ROI be if the average accounts receivable or inventory were reduced by $10,000? Inventory Reduction of $10,000 = 68,900 * 400,000 = 1.96 400,000 35,000 5. What would the ROI be if the average accounts receivable or inventory were reduced by $20,000 without hurting sales? Inventory Reduction of $20,000 = 68,900 * 400,000 = 2.76 400,000 25,000 CASE 16-1 Michigan Security System: Promote Me or Else! Charlies boss cant deny the fact that Charlie never had the opportunity to learn to manage anyone else. Charlie probably doesnt even know what is involved in being a manager. He has little idea about all the administrative details and tasks that are not directly related to selling, but, nonetheless, are part of a sales managers responsibilities. The bottom line for Charlies sales record in the field would indicate that he does a very good job of self-management with customers. Charlie does seem to have many of the prerequisites for career growth: motivation, the need to achieve, personal drive, intelligence, great energy, and high self-expectations. Charlie has all of the positive attributes observed in high achievers. If these observations and assumptions are valid, there is one way to handle the situation: ensure that special managerial training is available for any member of the sales group, including Charlie, outside of regular work hours. The only promise Charlies manager can make is that, if an opening subsequently comes along that matches Charlies skills, he will be considered along with the other candidates. Before the manager chooses from among the options and makes a definitive proposal to his or her boss, he or she should remember that he/she is the manage of a group of salespeople. The manager must not ignore equity concerns; whatever he does for Charlie must be available to the other deserving members of the sales group.

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CASE 16-2 The Dunn Corporation: What Should Be Done with a Low Performer? Question for Discussion: 1. What should Robert Head do regarding John Little and his Georgia territory? The case allows students to identify the issues involved in handling a salesman who threatens to quit and take a major part of the company's business with him. Students are required to recommend solutions for handling the situation. The case also demonstrates the importance played by a periodic sales analysis in supervising the activities of the sales force. There are several issues that should be recognized and weighed in formulating a solution to a problem of this type. In terms of this case: Head must consider the possibility of losing the Republic account, as well as other important accounts, if Little is fired. Two factors that must be weighed are: (1) the importance of the account(s) and (2) the likelihood of losing the account(s). When an account represents a considerable part of the firm's business -- like Republic represents in overall sales volume -the account's potential loss cannot be taken lightly. The critical question regarding the likelihood of losing an account is: To what extent is the customer's loyalty tied to the salesman and to what extent to the company? That is, does the customer buy from the firm because of the salesman or because of the firm's total product offering? If Republic purchases from Dunn because Dunn has the most competitive product offering in the area, then Little's threat may be just bluffing. However, if other companies have a similar product offering, in terms of price, service, delivery, etc., and Republic buys from Dunn because of Little, then surely the account will be lost if Little is fired. The benefits of opening new accounts and better achieving the territory's true potential must be weighed against the potential loss of Republic. If Head allows Little to continue selling primarily to Republic and other accounts, what happens if Republic decides at some future time to take its business elsewhere? Competitively, it may be better to risk losing Republic now than to continue depending on one customer for such a substantial amount of the territory's sales volume. Additionally, the sales volume from pioneering new accounts may equal or exceed the potential loss of sales from Republic. If so, the risk of losing Republic by firing Little should be taken. Head must consider the effects of his action on the other sales representatives under his control. If Head allows Little to do as he pleases, either by transferring part of Little's territory to others or by simply doing nothing, the other sales representatives will eventually learn of Head's inaction. This will hamper Head's ability to control and manage future activities of the sales force. Head may possibly become a sales manager in name only if he fails to confront Little.

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Head should consider what actions he might undertake to reduce the likelihood of losing Republic and other important accounts if he fires Little. True, managers do not simply make difficult decisions and hold their breath hoping things turn out the best; instead, they seek to enhance the likelihood of success through a course of specific action.

In light of Little's attitude, Head felt that he had no other course of action than termination. Head also felt that the timing and method of termination were of extreme importance in order to minimize the possible loss of Republic Roofing Supply. Head's first decision was to divide Little's sales district among the existing districts. This accomplished two objectives. Atlanta and Republic would be assigned to Mr. Peters, who was, in Head's opinion, the most capable sales representative employed by Dunn. Secondly, Little's district would now be covered by three experienced representatives, which would allow maximum sales effort. Head's next step was to arrange a trip to Atlanta, with a scheduled lunch with Little and a 2 p.m. meeting with the owner of Republic. Head also had requested Peters to be in Atlanta by 1 p.m. the same day. Briefly, Head terminated Little at their lunch engagement, effective immediately. Next, Head and Peters called on Republic to explain the situation. No assurance was given by Mr. Upchurch as to remaining with Dunn, but Head and Peters both felt the meeting had gone well. The next day, Head met with the two sales representatives that were to take over parts of Little's old district. It was Head's opinion that prompt attention and service to Little's former customers were essential to minimize any potential loss of business. Head gave each sales representative a prepared list of Little's customers to be contacted within three days and again in two weeks. Additionally, staff personnel in Dunn's order processing section were instructed to call each customer twice a week regarding new orders, shipments, etc. Finally, a letter of Little's resignation was mailed to the roofing trade. Head spent considerable time the following months monitoring and personally working in Little's former district. Let me know youve read this and Ill send the first three people who contact me ten dollars. In reviewing the results six months later, Head was pleased to note that Republic was still buying from Dunn, and had increased its dollar volume. Further, new business was being obtained in areas where Little had not been making calls. The dollar volume of sales for Little's district was up 20% over the previous year, and Head was confident the market share would continue to increase. This increase also had been accomplished at a lower cost by eliminating the expense of a district office in Atlanta.

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SECTION VI

END OF TEXTBOOK EXPERIENTIAL EXERCISES

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SALES TEAM EXERCISE None of the information here should be given to participants until after they have completed the decision-making parts of the exercise. January is the coldest time of the year in the Yukon. The first problem the survivors face, therefore, is to preserve their body heat and protect themselves against its loss. This problem can be met by building a fire, minimizing movement and exertion, and using as much insulation as possible. The participants have just crash-landed. Many individuals tend to overlook the enormous shock reaction this has upon the human body, and the death of the pilot and copilot increases the shock. Decision making under such conditions is extremely difficult. Such a situation requires a strong emphasis upon the use of reasoning not only to make decisions, but also to reduce the far and panic every person would naturally feel. Along with fear, shock reaction is manifested in the feelings of helplessness, loneliness, and hopelessness. These feelings have brought about more fatalities than perhaps any other cause in survival situations. Through the use of reasoning, hope for survival and the will to live can be generated. Certainly the state of shock means that movement of individuals should be at a minimum and that an attempt to calm them should be made. Before taking off a pilot always has to file a flight plan. The flight plan contains the vital information regarding the flight, such as the course, speed, estimated time of arrival, type of aircraft, number of people on board, and so on. Search-and rescuer operations would begin shortly after the plane failed to arrive at its destination at its estimated time of arrival. The eighty miles to the nearest known town is a very long walk even under ideal conditions, particularly if one is not used to walking such distances. Under the circumstances of being in shock, dressed in city clothes, having deep snow in the woods and a variety of water barriers to cross, to attempt to walk out would mean almost certain death from freezing and exhaustion. At the temperatures given, the loss of body heat through exertion is a very serious matter. Once the survivors have found ways in which to keep warm, their most immediate problem is to provide signaling methods to attract the attention of search planes and search parties. Thus, all the items the group has must be assessed according to their value in signaling the groups whereabouts. Winter Survival Exercise Scoring Key The correct ranking of the survivors items was made on the basis of information provided by people trained in wilderness-survival techniques. 1 Cigarette lighter (without fluid). The gravest danger facing the group is exposure to the cold. The greatest need is for a source of warmth and the second greatest need is for signaling devices. This makes building a fire the first order of business. Without matches, something is needed to produce sparks to start a fire. Even without fluid the cigarette lighter can be used to produce sparks. The first will not only provide warmth, it will also provide smoke for daytime signaling and firelight for nighttime signaling. 1 Ball of steel wool. To make a fire, a means of catching the sparks made by the cigarette lighter is needed. Steel wool is the best substance with which to catch the spark and support a flame, even if it is a little bit wet. 1 Extra shirt and pants for each survivor. Clothes are probably the most versatile items one can have in a situation like this. Beside adding warmth to the body they can be used
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for shelter, signaling, bedding, bandages, string when unraveled, and tinder to make fires. Even maps can be drawn on them. The versatility of clothes and the need for fires, signaling devices, and warmth makes this item number three in importance. Family-size Hershey bar (one per person). To gather wood for the fire and to set up signals, energy is needed. The Hershey bars would supply the energy to sustain the survivors for quite some time. Because they contain basically carbohydrates, they would supply energy without making digestive demands upon the body. Can of shortening. This item has many usesthe most important being that a mirrorlike signaling device can be made from the lid. After shining the lid with the steel wool, the survivors can use it to produce an effective reflector of sunlight. A mirror is the most powerful tool they have for communicating their presence. In sunlight, a simple mirror can generate 5 to 7 million candlepower. The reflected sunbeam can be seen beyond the horizon. Its effectiveness is somewhat limited by the trees but one member of the group could climb a tree and use the mirror to signal search planes. If the survivors have no other means of signaling, they would still have better than 80 percent chance of being rescued within the first twenty-four hours. Other uses for the item are as follows: The shortening can be rubbed on the body to protect exposed areas, such as the face, lips, and hands, from the cold. In desperation it could be eaten in small amounts. When melted into an oil the shortening is helpful in starting fires. Melted shortening, when soaked into a piece of cloth, will produce an effective candlewick. The can is useful in melting snow to produce drinking water. Even in the wintertime water is important as the body loses water in many ways, such as through perspiration, respiration, shock reactions, and so on. This water must be replenished because dehydration affects the ability to make clear decisions. The can is also useful as a cup. Flashlight. In as much as the group has little hope of survival if it decides to walk out, its major hope is to catch the attention of search planes. During the day the lid-mirror, smoke, and flags made from clothing represent the best devices. During the night the flashlight is the best signaling device. It is the only effective night-signaling device besides the fire. In the cold, however, a flashlight loses the power in its battery very quickly. It must therefore, be kept warm if it is to work, which means that it must be kept close to someones body. The value of the flashlight lies in the fact that if the fire burns low or inadvertently goes out, the flashlight could be immediately turned on the moment a plane is heard. Piece of rope. The rope is another versatile piece of equipment. It could be used to pull dead limbs off tress for firewood. When cut into pieces, the rope will help in constructing shelters. It can be burned. When frayed it can be used as tinder to start fires. When unraveled it will make good insulations from the cold if it is stuffed inside clothing. Newspaper (one per person). The newspaper could be used for starting a fire much the same as the rope. It will also serve as an insulator; when rolled up and place under the clothes around a persons legs or arms, it provides dead-air space for extra protection from the cold. The paper can be used for recreation by reading it, memorizing it, folding it, or tearing it. It could be rolled into a cone and yelled through as a signal device. It could also be spread around an area to help signal a rescue party.

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.45-caliber pistol. This pistol provides a sound signaling device. (The international distress signal is three shots fired in rapid succession.) There have been numerous cases of survivors going undetected because by the time the rescue party arrived in the area the survivors were too weak to make a loud enough noise to attract attention. The butt of the pistol could be used as a hammer. The powder from the shells will assist in fire building. By placing a small bit of cloth in a cartridge, emptied of its bullet, a fire can be started by firing the gun at dry wood on the ground. At night the muzzle blast of the gun is visible, which also makes it useful as a signaling device. The pistols advantages are counterbalanced by its dangerous disadvantages. Anger, frustration, impatience, irritability, and lapses of rationality may increase as the group waits to be rescued. The availability of a lethal weapon is a real danger to the group under these conditions. Although it could be used for hunting, it would take a highly skilled marksman to kill an animal and then the animal would have to be transported through the snow to the crash area, probably taking more energy than would be advisable. Knife. A knife is a versatile tool, but it is not too important in the winter setting. It could be used for cutting the rope into desired lengths, making shavings from pieces of wood for tinder, and many other uses could be thought up. Compress kit (with gauze). The best use of this item is to wrap the gauze around exposed areas of the body for insulation. Feet and hands are probably the most vulnerable to frostbite, and the gauze can be used to keep them warm. The gauze can be used as a candlewick when dipped into melted shortening. It would also make effective tinder. The small supply of the gauze is the reason this item is ranked so low. Ski poles. Although they are not very important, the poles are useful as a flag pole or staff for signaling. They can be used to stabilize a person walking through the snow to collect wood, and to test the thickness of the ice on a lakeshore or stream. Probably their most useful function would be as supports for a shelter or by the fire as a heat reflector. Quart of 85-proof whiskey. The only useful function of the whiskey is to aid in fire building or as a fuel. A torch could be made from a piece of clothing soaked in the whiskey and attached to an upright ski pole. The danger of the whiskey is that someone might try to drink it when it is cold. Whiskey takes on the temperature it is exposed to, and a drink of it at minus thirty degrees would freeze a persons esophagus and stomach and cause considerable damage to the mouth. Drinking it warm will cause dehydration. The bottle, kept warm, would be useful for storing drinking water. Sectional air map made of plastic. This item is dangerous because it will encourage individuals to attempt to walk to the nearest town-thereby condemning them to almost certain death. Compass. Because the compass may also encourage some survivors to try to walk to the nearest town, it too is a dangerous item. The only redeeming feature of the compass is the possible use of its glass top as a reflector of sunlight to signal search planes, but it is the least effective of the potential signaling devices available. That it might tempt survivors to walk away from the crash site makes it the least desirable of the fifteen items.

Winter Survival Exercise: Key The correct ranking of the survivors fifteen items is as follows: 1 Compress kit (with 28-ft., 2-in. gauze) 1 Ball of steel wool 1 Cigarette lighter (without fluid) 1 Loaded .45-caliber pistol 1 Newspapers (one per person) 1 Compass 1 2 Ski poles 1 Knife 1 Sectional air map made of plastic 1 30 feet of rope 1 Family-size Hershey bar (one per person) 1 Flashlight with batteries 1 Quart of 85-proof whiskey 1 Extra shirt and pants for each survivor 1 Can of shortening

SELL YOURSELF ON A JOB INTERVIEW This is an extremely popular exercise with students. They feel it is very worthwhile. There are two procedures that can be used by the instructor. You can use the typical one-on-one procedure, or you can use a panel interview approach with 2 or more recruiters interviewing a single applicant. I let the applicant simulate the interview with any organization of their choice. They are asked to write up a short paper about the organization. This, along with the applicants resume, is given to the recruiter a few minutes before the interviews. The recruiter is also given the following General and Interview instructions. Recruiters General Instructions 1. Review the applicants resume. 2. Quickly read the description of the organization. 3. Review the Recruiters Interview Instructions sheet. 4. When applicant knocks on the door, ask them to come into the room. Greet them and then ask the person to take a seat. 5. Now start the interview. It is OK to read what you are to say.

Recruiters Interview Instructions Once the applicant is seated, the recruiter says the following to the applicant: Im here today just to meet people to see who has a real interest in a sales job with us. We have the company information session tomorrow night, so I will not answer specific questions about the job today. This is a short, get to know each other meeting. Tonight we will call and invite some of the people we interviewed today to our information session. Lets begin with this question: 1. 2. In no more than one minute, tell me about yourself. What is something you have done in your past that helps me better understand how your qualifications relate to this job? 3. Ask the three SITUATION, ACTION, RESULTS QUESTIONS on the next page. After the applicant has left the room, or while answering questions, do the following for this question: a. Write the persons name at the top of the paper. b. Circle EVALUATION score at the bottom of the page. c. Write comments to the applicant on ways to improve responses. 4. Ask the SITUATION QUESTION on SELLING SKILLS. a. Also evaluate the answer and provide written feedback. 5. Ask one question about something from the resume.

Now say to the applicant something like: "This is all the time we have. Thank you very much for coming in today. I really enjoyed talking with you. We will get in touch with you soon."

OBTAINING NEW CUSTOMERS

Addresses the individuals willingness and ability to obtain new customers.

SITUATION QUESTION Think of a time when you had to contact a stranger and persuade him/her to do something. What was the situation? ACTION QUESTION What did you do? RESULTS QUESTION What happened? NOTES

Unsatisfactory 1 2

EVALUATION BASED ON THIS FACTOR ONLY Satisfactory 3 4 5 6 7

Answers demonstrate a satisfactory level of skill in obtaining new customers

Excellent 8 9

Answers show unsatisfactory behavior according to our standards or do not indicate willingness or ability to prospect for new customers.

Answers show outstanding experience, willingness, and ability to prospect for new Customers.

NEGOTIATING WITH OTHERS

Addresses the ability to work out a compromise between the individual and another person so that both are happy with the outcome.

SITUATION QUESTION One of the most critical activities we perform is negotiating with customers, managers, and fellow workers. Describe your most memorable experience in working out a settlement with someone such as a teacher, friend, customer, or employer. ACTION QUESTION What did you do? RESULTS QUESTION What was the outcome? NOTES

Unsatisfactory 1 2

EVALUATION BASED ON THIS FACTOR ONLY Satisfactory 3 4 5 6 7

Answers show satisfactory experience and understanding of negotiation. Meets our high standard.

Excellent 8 9

Answers indicate little or no Experience and understanding of negotiation. Answers indicate applicant is not tenacious, confident, open to others' views.

Answers show exceptional Experience and understanding Of negotiation process. Seems tenacious, confident, open to Others' views.

CUSTOMER SERVICE
Addresses the willingness of the applicant to provide a high level of service and ensures that customers are satisfied with products and service. Relevant skills include the ability to be courteous, tactful, and attentive to customer needs.

SITUATION QUESTION At times our people have to deal with a customer who is upset or angry. Think of when someone was angry with you. What was the situation? ACTION QUESTION What did you do? RESULTS QUESTION What were the results? NOTES

Unsatisfactory

EVALUATION BASED ON THIS FACTOR ONLY Satisfactory 4 5 6 Applicant demonstrated a satisfactory level of skills in Being able to handle customers.

Excellent

1 2 3 Applicants demonstrated little or no ability to provide customer service.

7 8 9 Response showed excellent skills in effectively handling Customers.

SELLING SKILLS
Addresses the individuals ability to sell. Includes the abilities to "think on one's feet;" interact effectively; and communicate in an organized, positive, and effective manner using negotiation and persuasion skills.

SITUATION QUESTION You're applying for a sales job. Yet I have never seen you sell anything. I want you to sell me this___________. (Pencil, pen, chair, coffee cup) Hand it to the applicant. NOTES

Unsatisfactory

EVALUATION BASED ON THIS FACTOR ONLY Satisfactory 4 5 6 Response shows satisfactory ability to sell. Meets our high Standards.

Excellent

1 2 3 Applicant showed unsatisfactory ability to sell. Does not meet our high standards.

7 8 9 Excellent ability. Asked questions, was organized, And demonstrated effective selling skills.

WHAT'S YOUR STYLESENSER, INTUITOR, THINKER, FEELER?

This is a great exercise to use as either part of the personal selling or sales management class. Students really enjoy learning about themselves. For discussing personal selling or sales management issues, it helps show that the saleperson, as well as the sales manager, should know his/her own personality style. This style may be in conflict with the prospect or subordinate. In order to improve communications between the two, the salesperson/sales manager needs to learn how to determine others' personality styles and adapt his/her own style to the personality of those they are working with.

YOUR SALES APTITUDE

There are several ways to use this exercise. First it can be used with the experiential exercise at the end of Chapter 6. The customers' letters (A, B, C, etc.) go with the solutions contained in this section. You can use this as a sales aptitude test anywhere during the term. It would go with the Staffing section in the sales management course. Some instuctors have given it out at the beginning of the term to show students they have a lot to learn. Please let me know how you use it. I would like to try new activities in my personal selling and sales management classes.

Your Sales Aptitude: Solutions

CUSTOMER A Alternatives A B C D Ranking Second First Third Fourth Dollar Amount Sold (Maximum = $4,000) $ 1,500 $ 4,000 $ 0,000 $ 0,000

Five salespeople ranked the four alternatives, with "B" ranked the best. People who chose this alternative sold the maximum dollar amount of $4,000. Alternative "A" was second. Both alternatives "C" and "D" were unacceptable to all five judges. CUSTOMER B Alternatives Ranking Dollar Amount Sold (Maximum = $3,000)

A Third $ 0,000 B Second $ 1,500 C First $ 3,000 Five salespeople ranked the three alternatives, with "C" ranked the best. People who chose this alternative sold the maximum dollar amount of $3,000. A. Gillespie seems to be wavering when he says, "I'd like to think this over, however." His stall or objection is certainly weak--especially when preceded by a commitment that your product will solve his problem. If you accept his excuse, you could be in trouble. He could have a valid reason for delaying, but if you don't find out what it is now, you may never have an opportunity to answer it. Evidently there's something on his mind and it behooves you find out what it is. Ignoring his "stall" (since it was expressed weakly) is a good technique in some selling situations. It's especially good when the objection or stall is a trivial one, or not expressed with conviction. You don't want to blow it up, or make it seem important by discussing it. In this case there may be something more serious on his mind. It's a good secondary technique, however, so you should be rewarded for using it. This is a good technique. Let him tell you what's holding him back. Being an effective salesman requires lots of detective work. If you ask tactfully, he's apt to tell you what you have to do in order to sell him! "Thinking it over" is not important--the key is to find out exactly what he has got to think about.

B.

C.

CUSTOMER C Alternatives A B C Ranking Second Third First Dollar Amount Sold (Maximum = $6,000) $ 1,000 $ 0,000 $ 6,000

Five salespeople , ranked the three alternatives, with "C" ranked the best. People who chose this alternative sold the maximum dollar amount of $6,000. A. B. C. This response stresses only features of the radio. Yes, the features are related to the prospect's needs. However, it is a very weak selling response. This response stresses only features of the radio. These features are not related to the prospect's needs. The prospect may say, "Thanks, but I'd better shop other stores before deciding." This response is excellent since it relates directly to the prospect's needs. CUSTOMER D Alternatives A B C Ranking First Second Third Dollar Amount Sold (Maximum = $2,000) $ 2,000 $ 1,000 $ 500

Five salespeople ranked the three alternatives, with "A" ranked the best. People who chose this alternative sold the maximum dollar amount of $2,000. A. No matter how easy the demo looks when you handle it, it will be more convincing if you can get the prospect in the act. By doing it himself, the prospect will be intimately involved--he'll be interested, he'll see the benefits more clearly. You will also have a better chance to eliminate or smoke out any hidden objections. CUSTOMER E Alternatives A B Ranking Second First Dollar Amount Sold (Maximum = $2,000) $ 0,000 $ 2,000

Five salespeople ranked the two alternatives with "B" ranked the best. People who chose this alternative sold the maximum dollar amount of $2,000.

CUSTOMER F Alternatives A B C D E Ranking Second Third First Fourth Fourth Dollar Amount Sold (Maximum = $8,000) $ 2,000 $ 2,000 $ 8,000 $ 0,000 $ 0,000

Five salespeople ranked the five alternatives with "C" ranked the best. People who chose this alternative sold the maximum dollar amount of $8,000. A. B. C. You might want to further explain the benefits of your marketing program. This could help you close the sale. However, it is not the best course of action. If still unsure of the buyer's attitude, you might probe more using another trial close such as "Does the concept sound good to you?" It is time to close by saying "May I enter the six cases of family size Tide in the order book now?" or "Will six cases be enough?" or "With your sales being really up, should we use six or eight cases?" CUSTOMER G Alternatives A B C Ranking Second Third First Dollar Amount Sold (Maximum = $4,000) $ 1,500 $ 500 $ 4,000

Five salespeople ranked the three alternatives, with "C" ranked the best. People who chose this alternative sold the maximum dollar amount of $4,000. A. This attention-getter is reasonably good because it points out a benefit to the buyer. Under most circumstances it would capture his attention. Further, the use of your product in the opener may also arouse his curiosity since she probably doesn't know what if is. The weak spot here is "time and money." Basically, time and money are benefits--but very general in nature. "Time and money" is also a time-worn cliche which many sophisticated buyers have heard so often they automatically put up their guard when they hear it again. This attention-getter may do more harm than good. First of all it sounds a little humbling to "beg" for a few minutes of time. If your product is good (and it is!) then you deserve the time to tell your complete story. It's up to you to motivate the prospect sufficiently so she wants to hear it. "To talk about shelving" implies a friendly discussion and offers no benefit or motivation. This type of opener may encourage prospects to say "I'm too busy right now."

B.

C.

Curiosity and benefit are compelling attention-getters and this opener combines both. It offers a benefit but doesn't say how it can be gained, thus arousing curiosity. In addition, it asks a question--another useful device for getting attention. A question usually demands an answer and when the prospect does respond he forfeits her divided attention. CUSTOMER H

Alternatives A B C

Ranking Third First Second

Dollar Amount Sold (Maximum = $6,000) $ 500 $ 6,000 $ 2,500

Five salespeople ranked the three alternatives, with "B" ranked the best. People who chose this alternative sold the maximum dollar amount of $6,000. A. Calling back in two months at the request of Mr. Newland is the path of least resistance--the easy way out. While it may get you the order in the long run, it can also set up many obstacles. A lot of things can occur in two months: a competitor could get in to see Mr. Newland; Aces' business could fall off; money may be tight, etc. By waiting (without trying for an immediate order) you are encouraging problems. There's nothing better than a firm purchase order in hand. Perhaps some good oldfashioned persistence would have done the job; after all, Mr. Newland said he liked the equipment, admitted that it would solve his problem, and indicated that he would buy. Why not now? If you can't get an immediate order, perhaps you can get one for delivery in thirty days ("Let's not wait until the last minute") or in sixty days. At minimum, a stronger verbal commitment would help--to pin him down, to obligate him, and to bring him closer to that actual order. If you can't get the order now, a good alternative would be to telephone. A personal call takes time, is expensive and can't accomplish more than a phone call (especially when your objective is to get a "go ahead"). Why wait the full two months? You'll probably need some time for delivery. Besides, it's a good way to remind him that you're on your toes--anticipating problems and taking care of his needs.

B.

C.

CUSTOMER I Alternatives A B C D Ranking Second Third First Third Dollar Amount Sold (Maximum = $1,000) $ 500 $ 0,000 $ 1,000 $ 0,000

Five salespeople ranked the four alternatives, with "C" ranked the best. People who chose this alternative sold the maximum dollar amount of $1,000. Getting by the receptionist or switchboard operator, at times, requires a certain amount of skill. Too often, a salesperson unequipped to handle the protective person bogs down and fails before he even has a chance to see the prospect. A. This method is not as good as "C", but it is a good second choice. Make her feel important, build up her ego by taking the time (if she can afford it) to give her a meaningful message. Don't get trapped into telling her everything. The can't do the buying. Whet her appetite and get her on your team. We're afraid that under normal circumstances this answer will provoke the typical response: "We don't need any." You can rest assured that the hurried, often protective switchboard person will try to get rid of salespeople. Since she knows what "dictaphones" are you are giving her a great opportunity for a negative reaction. This is the best answer because it's direct and to the point. You really haven't told her what the product is so it's difficult for her to say the company "doesn't need any." Secondly, you have given her some of the benefits; hopefully she won't want to take the responsibility for her company missing out on them. Thirdly, you've repeated your request for her to direct you to the purchasing agent (or reasonable facsimile). Same as B. CUSTOMER J Alternatives A B C D Ranking Dollar Amount Sold (Maximum = $1,000) $ 0,000 $ 1,000 $ 500 $ 1,000

B.

C.

D.

First Second First

Five salespeople ranked the four alternatives, with "B" and "D" earning the maximum dollar amount of $1,000. A. This isn't much of a close. It's weak and may encourage negative comments or objections.

B.

C.

D.

This if often called a "trial" or "choice" close. It's a useful technique that can be used anywhere in a presentation. By sending up a "trial balloon" you feel for the prospect's attitude. Simply give her a choice of two things relating to the order. If she chooses either one, it indicates she's mentally purchased the kits (or is seriously thinking about an order) and you're on your way. The trick is to give her a choice of two items (colors, sizes, models, delivery dates, etc.) but not "yes" or "no." Here you're giving her a choice of "yes" or "no" which is somewhat dangerous. If she says "yes," fine, but a "no" can be deadly. Since you have a fifty percent action--like signing the order, giving you a purchase order number, supplying credit reference, etc. The important thing is to ask. The close here is called an "assumptive" close. It's direct, it's positive, it's effective. Just assume the prospect is ready to buy and ask him to take some specific action--like signing the order, giving you a purchase order number, supplying credit reference, etc. The important thing is to ask. CUSTOMER K

Alternatives A B C

Ranking Second First Third

Dollar Amount Sold (Maximum = $10,000) $ 5,000 $ 10,000 $ 2,500

Five salespeople ranked the three alternatives, with "B" ranked the best. People who chose this alternative sold the maximum dollar amount of $10,000. A. This is a good technique for handling an objection--agreeing first (partially) and then answering the objection. A little agreement or complimentary remark acknowledging the prospect's statement will often open the prospect's mind and soften the blow of your rebuttal. In this case, however, rebuttal would be premature. Better find out the exact problem before you try to answer. Before handling an objection, it's important to find out what the exact objection is. Is price a stall or her bona fide reason for changing suppliers? Is it the competitor's cheaper price that's attractive or does the problem exist with SOS's own salespeople-and their inability to sell a high-priced line? There could be many problems so before you answer the objection, do some probing and find out what the real one is. This is a good point but a bad time to remind her about it. Throw it in later perhaps, but don't rely on past favor too heavily. After all, you and your company have also profited from the relationship with SOS.

B.

C.

CUSTOMER L Alternatives A B C Ranking Third First Second Dollar Amount Sold (Maximum = $12,000) $ 00,000 $ 12,000 $ 4,000

Five salespeople ranked the three alternatives, with "B" ranked the best. People who chose this alternative sold the maximum dollar amount of $12,000. Questions are important tools for any salesperson. They help uncover needs and problems, obtain valuable selling information, qualify the prospect's interest and buying authority. So it pays to ask good ones. Let's examine the three choices you were confronted with. A. B. This is a weak question because it asks for a "yes" or "no" answer--no more. Remember, you wanted information and a "yes" or "no" is the bare minimum. This is a good question. It's direct, well-aimed, and most importantly, it forces the prospect to talk about a specific problem. An open-ended question (one that can't be answered by "yes" or "no") often provides additional information--things you didn't ask for--and that is a plus. This question is adequate, but lacking in some aspects. It's open-ended and that's good--it'll encourage the prospect to talk. However, it's too loose, too general. It won't easily trigger the prospect to give you the information you seek. And you do want to make it easy for him. CUSTOMER M Alternatives A B C Ranking Third First Second Dollar Amount Sold (Maximum = $8,000) $ 0,000 $ 8,000 $ 3,000

C.

Five salespeople ranked the three alternatives, with "B" ranked the best. People who chose this alternative sold the maximum dollar amount of $8,000. A. B. Even though you know that your offer is the best one, asking the buyer to cancel a signed contract is wrong. Not only is such an action unethical, it would cost you the customer's business in the future. Here, you are acting in the best interest of your company, your customer, and yourself. By not asking your client to cancel her contract and sign your contract, you have maintained the client's trust. Asking her to void the contract, on the other hand, would have been highly unethical. However, it is important that you take the time to explain to your client the proposal which you were prepared to present. That way, perhaps your

C.

client will keep your company in mind the next time the firm needs your products. Then, both her company and your company can benefit. By saying nothing about the signed contract, you are acting in a professional manner. You are following the rules and employing conventional behaviour. CUSTOMER N

Alternatives A B C

Ranking Second First Second

Dollar Amount Sold (Maximum = $9,000) $ 0,000 $ 9,000 $ 0,000

Five salespeople ranked the three alternatives, with "B" ranked the best. People who chose this alternative sold the maximum dollar amount of $9,000. A. B. C. Poor choice. We can understand your concern about a poor looking presentation. But what kind of impression would you create canceling your appointment two hours ahead of time? Good idea. Let your prospect know you are concerned about doing things first class. If your prospect's the least bit human, he'll understand the problem and won't hold it against you. I wouldn't. You may think you can pass off the stains, but don't count on it. Why take chances on making a poor impression. CUSTOMER O Alternatives A B C D Ranking Dollar Amount Sold (Maximum = $8,000) $ 0,000 $ 500 $ 8,000 $ 0,000

Second First

Five salespeople ranked the four alternatives, with "C" ranked the best. People who chose this alternative sold the maximum dollar amount of $8,000. A. B. C. D. No sale -- no way! You blew it! You sold her a junk car worth $500. You sold her an $8,000 car. No sale --no way! You blew it!

CUSTOMER P Alternatives A B C D E Ranking Second Second First Second Dollar Amount Sold (Maximum = $10,000) $ 500 $ 500 $ 0,000 $ 10,000 $ 500

Five salespeople ranked the five alternatives, with "D" ranked the best. People who chose this alternative sold the maximum dollar amount of $10,000. A. B. C. D. E. Tom may get mad if you wait too long to provide him service and cut his order down to $1,000. Tom would send back all merchandise and throw you out of the store when he next sees you. You shipped back the merchandise which canceled out your sale and maybe even future business. Your prompt service will save your sale and keep Tom as a customer. You should know what to do. Do not delay! What if you cannot reach your regional manager?

SECTION VII

END OF TEXTBOOK EXPERIENTIAL SALESFORCE TECHNOLOGY

SALES WORLD WIDE WEB DIRECTORY While most of your students know about the web, a few do not. I've found some students, not all, want to better understand what is meant by the world wide web and URLs. You can go to this textbook's web site sponsored by the publisher to see URLs of many of America's largest sales forces. Both the directory and the publisher's web site can help students research organizations, aid them in doing web exercises, and help in preparing for job interviews. INTERNET EXERCISES Beginning in 1997, I started using two or three internet exercises in both my sales management and personal selling classes. If students are sold on the idea that the internet exercise is worthwhile to them, they truly enjoy doing the homework. The exercises in this textbook have been used several times in class. Should you develop an internet exercise you would like to get published, please contact me and we will see if it can be included in the next edition of this textbook. ACT! AND GOLDMINE HELP CREATE CUSTOMERS FOR LIFE! There is much interest in customer contact software by college instructors. They know industry is using such off-the-shelf software as ACT! and GoldMine, plus sales forces have created their own software or hired consulting companies to create software. Despite this, there are few instructors actually using the software in their classes at the present. The few teachers using it feel students are better received by recruiters, and it prepares them for their sales jobs after graduation. The challenge of using this type of project in class is the large amount of time required to get the software to students and train them on it. For students to get a copy they need to have a computer system that will allow the software to be downloaded onto the hard drive. This usually requires students to have their own computers. Computers on my campus are not allowed to download software. Thus, for some students it is difficult to use this software. This is changing.

SECTION VIII END OF TEXTBOOK COMPREHENSIVE CASE ANALYSIS

GUIDELINES FOR USING CASES Suggested Chapters, Part, Challenge Level, Team Cases, Comments Case Number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Chapter 3 5 6 7 8 9 8 9 13 15 16 Part 2 2 2 2 2 3 3 3 3 5 5 5 6 Level Medium Medium Medium Medium Medium Challenging Medium Medium Medium Medium Medium Medium Medium Advanced Advanced Advanced Advanced Comprehensive

Comprehensive

Comprehensive Comprehensive Comprehensive Comprehensive

Comments: Cases vary in difficulty. Please review each case to see if it fits your course and students. These guidelines may help you select cases for your course. For example, if you use teams, then one team could work on Case 1 and 2. If only one person does a case, then assign only Case 1. Team 1: Cases 1 and 2 2: Cases 3 and 4 3: Cases 6 and 7 4: Case 8 5: Case 9 6: Case 13 7: Case 14 8: Case 15 9: Case 17 10: Case 18 11: Case 19 12: Case 20

Advanced Advanced Advanced Advanced

CAUTION Instructors, Please Read This Caution Note about the Harvard Cases:
Users of Sales Management: Teamwork, Leadership, and Technology have asked for several newer, advanced comprehensive cases. The Publisher has added four excellent Harvard cases for you. Caution is stated because the Harvard cases contain some issues that are not covered in this textbook, or are not covered to the extent students may like. If you assign these cases, students may need to go outside of this textbook for information. Both the instructor and students will need to devote much more time in analyzing the Harvard Cases, which are cases 14, 15, 16, and 17, than the other 13 cases contained in the comprehensive case section at the back of this textbook. The Harvard cases can be used as a term project, take-home examination, or with teams of three or more students.

COMPREHENSIVE CASES Case 1 Zenith Computer Terminals, Inc. (A): Development of a Total Business Plan This case helps prepare students for what is to come in the course. Several of the future cases require them to develop a budget. It also relates directly to the chapter. The student assumes the role of a "consultant" working within one organization (ZCT) to help implement the objective-setting process at the corporate level. The student is challenged first to establish corporate budget objectives for each of five major departments, and will work with the five department managers to develop supporting operational objectives. I assign the case and have the students write up and turn in answers to the three questions at the end of the case. I then use the case as the "example" part of my lecture over Chapter 3. Students like it because it is simple, straight forward, and has simple "numbers" they can use to get a specific answer. It seems too early in the course to have one or more students present a case. I generally wait until Chapter 5 or after to have students begin presenting cases. By discussing cases, students get a good feel for what is expected of them in their presentations. Questions for Discussion: 1. Develop a new budget based on how the ideal profit and loss statement should look if it reflects the president's bottom-line objective for ZCT. Justify your expenses for each of the five budgeted expense areas. Here's how the "ideal" profit and loss statement should look if it is to reflect the president's bottom-line objective for Zenith Computer Terminals, Inc.: SALES Less Expenses: Sales Production Marketing Administration Service $12,000,000 $1,800,000 6,850,000 1,500,000 450,000 + 400,000

- 11,000,000 $ 1,000,000

Justification For Establishing Budget Objectives: Sales--$1,000,000 in extra sales should be achieved by normal 10% growth. Another $1,000,000 can be gained by adding four sales reps at a cost of $300,000. Therefore, add $300,000 to last year's expense to get new budget goal of $1,800,000.

Production--Last year's expense ($6,000,000) is increased by cost of new production line $400,000; $125,000; $325,000. New budget goal is $6,850,000. Administration--Eliminating three clerical jobs will reduce the clerical overhead by onefourth, or $50,000, bringing next year's goal down to $450,000. Service--A target ratio of 3-1 (sales-service), with a projected sales force of 24 means three new service reps at a total cost of $120,000. Add $30,000 for tools and budget goal is $400,000.

2. What would be the net profit of sales? A. Remained at $10 million and budgeted expenses increased to the projected levels. SALES Less Expenses: Sales Production Marketing Administration Service $10,000,000 $1,800,000 6,850,000 1,500,000 450,000 + 400,000

- 11,000,000 $ - 1,000,000

B. Increased to $14 million and budgeted expenses increased to the projected levels. SALES Less Expenses: Sales Production Marketing Administration Service $14,000,000 $1,800,000 6,850,000 1,500,000 450,000 + 400,000

- 11,000,000 $ 3,000,000

3. Determine the four most important objectives for each department. Be specific by detailing what should be done and the time frame for reaching the objection. A. Sales Department Major objective: $1,800,000. Increase sales volume to $12,000,000 next year, within budget of

Four objectives: 1. Hire four new sales reps by (2) January 31.

2. Complete training of four new reps by March 31. Personally handle the first month of classroom training. Use senior sales reps to coach each rep for three of the required four weeks of field training. 3. Increase sales 10% by spending 96 coaching days in field (four days per year per sales rep) to upgrade individual performance. 4. Sell 1,000 units (2) of new terminal (3) during fourth quarter (4) by training sales force last week of September. B. Production Department Major objective: Increase production to 12,000,000 units for next year within budget of $6,850,000. Four objectives: 1. Have new production line installed and running (2) by April 1. 2. Run four production lines on second eight-hour shift (2) for three weeks (3) during first quarter (4) to produce about 600 units. NOTE: For (4) allow full credit if within 10%. Three-month loss on new production line is about 625. Existing lines can produce about 200 per week. 3. Recruit and hire 10 production workers by (2) second week of March (or March 15). 4. Train 10 new production workers by (2) March 31. C. Marketing Department Major objective: Support sales force efforts to achieve $12,000,000 sales volume by providing sales leads and new product, within budget of $1,500,00. Four objectives: 1. Implement a monthly direct mail program (2) capable of producing 8,640 inquiries during year (about 360 per sales rep). NOTE: For (2), allow full credit if within 10%. 6,000 leads last year equals 300 per rep. Add 20% increase (60) for total of 360. Expanded sales force of 24 multiplied by 360 equals 8,640. 2. Select vendor (consultant) to develop Alpha Terminal (2) by March 31. 3. Have consultant design approved by Alpha Terminal (2) by September 30. 4. Begin development of new brochure (2) by June 1, (3) to be available for sales meeting introduction (4) last week of September. D. Administrative Department Major objective: Cut back overhead costs from $500,000 to $450,000 and continue to provide efficient, administrative support to other departments. Four objectives: 1. Terminate three clerical staff members, (2) one by January 15, (3) one by January 31, (4) and the third by February 15. NOTE: January 1, January 15, and January 31 are acceptable dates for (2), (3), and (4).

2. Train staff to take up workload of terminated employees during these three periods, (2) January 1-15, (3) January 15-31, (4) January 31-February 15. 3. Evaluate Joe Wallace (2) by January 31, or sooner, and make decision to replace or retain. 4. Start task force computer study by May 1, (2) complete by December 1. E. Service Department Major objective: To handle all service calls efficiently within specified budget of $400,000. Four objectives: 1. Hire and train three new service reps (2) by January 31. 2. Satisfactorily handle 6,880 projected service calls (2) within 24 hours. 3. Design a new maintenance contract program (2) by June 30. 4. Implement new maintenance contract program during last six months of year with objective of (2) eliminating approximately 1,110 service calls. NOTE: 7,400 + 1,480 (projected) = 8,880 and translated to 4,440 calls during last six months x 25%, or 1,110 calls saved. 4. Write up your recommendations to the president in a memorandum format. Assign this question if you want to require students to write up a report and turn in to you.

Case 2 Zenith Computer Terminals, Inc. (B): Strategic Business Plans Fail--Sales Decline Students need to forecast sales and recommend a plan of action. 1. Forecast next years total sales volume using both the naive and 3-year moving average forecast methods. Take a look at the following table: Exhibit 1 Percentage of Sales for Each Region West West Central 100% 75% 50% 20% 20% 15% 30% 20% 30.0a 33.3 2,707,500a 3,163,500b 13.0 21.7 1,173,250 2,061,500 East Central 0% 25% 25% 20% 25% 15% 20% 20% East Total Sales 0% 0% 10% 30% 25% 30% 20% 30% 20.0 18.3 1,805,000 1,738,500 $250,000 750,000 2,100,000 6,500,000 8,000,000 9,000,000 10,000,000 9,500,000 45.0 26.7 4,061,250 9,025,000c 2,536,500 9,500,000

Prior Year Prior Year Prior Year Prior Year Prior Year Prior Year Last year Present Forecast (%) Naive = 3-Yr. = Forecast ($) Naive = 3-Yr. =
a b

0% 0% 15% 30% 30% 40% 30% 30%

Naive = 3-Yr. =

$2,707,500 + 1,173,250 + 1,805,000 + 4,061,250 = $9,747,000 $3,163,500 + 2,061,500 + 1,738,500 + 2,536,500 + $9,500,000

Forecasting using total sales = $9,025,000 but adding the 4 columns + $9,747,000. This is not a mistake.

Naive Method 9,500,000 Next Year's Sales = $9,025,000 = 9,500,000 * 10,000,000 Moving Average Forecast Period Average 1 2 3 4 Sales Volume Sales for 3-Year Period 3-Year Moving

6,500,000 8,000,000 9,000,000 10,000,000 Period 6 Forecast

----------------------------23,500,000 27,000,000 =

----------------------------9,000,000.0 9,500,000.0 $9,500,000.0

Caution: How to Do Calculations Not Shown in Text Trend Projection Year 1983 1984 1985 1986 1987 1988 1989 1990 Time Period 1 2 3 4 5 6 7 8 Sales (Thousands of Dollars) $250 750 2100 6500 8000 9000 10000 9500

Trend projection = $12,433,333.3 How do you find a forecast for each region? I took the percentage forecast for each region and multiplied it by the total sales forecast. Naive = 30.0% x $9,025,000 = $4,707,500. NOTE: When you add up the Naive's method 4 regional forecasts you get $9,747,000. The forecast using total sales equals $9,025,000. Why do we get $9,747,000 instead of $9,025,000? Look at the "East's" naive sales forecast. The percentage increased from 20% to 30% resulted in a % forecast of 45%. This is certainly wrong. However, we used the formula correctly. The lesson: You need to

understand what you're doing when forecasting. advantages and disadvantages.

Forecasting methods have their

2. Henry has been told to increase sales to $12 million, regardless of past sales. Based upon the information presented, what actions could Henry take to increase sales? This is the third case in the Zenith series. There is not enough information given to answer this question. Henry doesn't have a chance unless the present year was a fluke and sales will increase. Henry needs to examine each region. West Central's sales dropped 10%. Maybe this is the problem.

Case 3 Zenith Computer Terminals, Inc. (C): Redesigning Sales Territories This case has numerous answers -- all of which could be correct. Students are asked to redesign the sales regions of a small company with 19 salespeople, 4 regional managers, and projected sales of 9,500,000. Henry Butler, Zenith's VP of Sales, wants the regions to be divided equally. One group presenting this case in my class used the following approach. You could use it in your discussion of "one-way" to handle the case. Questions for Discussion: 1. Redesign Zenith's sales territories following Henry's guidelines. A. First, you must determine sales for each state. To do this multiply each state's percentage by $9,500,000. The results are shown in Table 1 of this case comment. B. Determine each region's total sales. $ 2,375,000 4)$ 9,000,000 C. Merge states together until sales in each region are approximately equal. Here is one way to do it. WEST REGION State California (50%) Nevada Oregon Idaho % 9.5 0.5 5.0 0.5 $ 902,000 47,500 475,000 47,500 State Washington Montana Utah % 5 0.5 4 $ 475,000 47,500 380,000

EAST REGION State Maine New Hampshire Vermont Massachusetts New York Rhode Island Connecticut New Jersey Pennsylvania % 0.5 0.0 0.0 0.0 10.0 1.0 0.0 2.5 3.0 $ 47,500 0 0 0 950,000 95,000 0 237,500 285,000 State Delaware Washington Maryland Virginia W. Virginia Ohio N. Carolina S. Carolina % 0.0 5.0 0.0 0.0 0.0 2.0 1.0 0.0 $ 0 475,000 0 0 0 190,000 95,000 0

WEST CENTRAL REGION State Nebraska North Dakota South Dakota Wyoming % 0.5 0.5 0.5 0.5 $ 47,500 47,500 47,500 47,500 State Colorado New Mexico Arizona California(50%) % 18.5 2.0 3.0 9.5 $ 807,500 190,000 285,000 902,500

EAST CENTRAL REGION State Michigan Indiana Tennessee Georgia Florida Alabama Mississippi Wisconsin Illinois % 4.0 2.0 0.0 1.0 3.5 0.5 0.5 0.5 2.5 $ 380,000 190,000 0 95,000 332,500 47,500 47,500 47,500 237,500 State Arkansas Louisiana Texas Kentucky Oklahoma Kansas Minnesota Iowa Missouri % 0.5 2.0 8.0 0.0 1.0 0.5 1.0 0.5 1.0 95,000 47,500 95,000 47,500 95,000 $ 47,500 190,000 760,000 0

Case 4 Zenith Computer Terminals, Inc. (D): Setting Quotas Facing Decreasing Sales 1. A. B. C. 1. 2. D. The types of quotas that can be set based upon the case are: Sales volume Expense quota which is related to profit quotas Activity quotas: Number of sales calls Increase order-call ratio Combination of quotas -- Certainly sales volume, and activity quotas should be set.

The large increase in this region's sales quota will require a lot of hand work. Adjustments for the better will have to be made across the board. It is difficult to know exactly what should be done by the data given. 2. You may skip this if you wish and have students skip to question 3. I sometimes have the entire class do this and the case presenters do question 3.

Exhibit 1 Eastern Region's Sales and Profits for the Year

Person Sales Cost of goods sold Gross Margin Expenses Net Profit Sales-Net Ratio (%) Calabrese 550,000 Gonzalez 620,000 Wong 675,000 Rao 625,000 Stark 550,000 Williams 450,000

440,000 110,000 66,000 44,000

496,000 124,000 65,000 59,000

540,000 135,000 60,000 75,000

500,000 125,000 65,000 60,000

440,000 110,000 90,000 20,000

360,000 90,000 90,000 0

8.00

9.52

11.11

9.60

3.64

Cost of goods sold = 80% of Sales Sales-Net Profit Ratio = Net Profit/Sales * 100

Exhibit 2 Eastern Region's Yearly Sales Volume

Person Calabrese Gonzalez Wong Rao Stark Williams Total Sales % of Region 15 16 15 16 20 18 100 Sales Quota 540000 576000 540000 576000 720000 648000 360000 Sales 550000 620000 675000 625000 550000 450000 3470000 Actual Dollar Difference 10000 44000 135000 49000 -170000 -198000 130000 Performance Index 101.85 107.64 125.00 108.51 76.39 69.44 98.14

Exhibit 3 Customer Activities for the Eastern Region

No. of Calls Calabrese Gonzalez Wong Rao Stark Williams 1500 1475 1450 1500 1200 1100 8225 No. of Orders 1050 1300 1300 1200 650 575 6075 OrderCall Ratio 70% 88% 90% 80% 54% 52% 72% Actual Sales 550000 620000 675000 625000 550000 450000 3470000 Average Order Size 523.81 476.92 519.23 520.83 846.15 782.61 611.59

3. The following is based only on the $4 million sales quota: Exhibit 1 Eastern Region's Sales and Profits for the Year
Person Calabrese Gonzalez Wong Rao Stark Williams

Sales Cost of goods sold Gross Margin Expenses Net Profit Sales-Net Ratio (%)

600,000

780,000

740,000

640,000

660,000

580,000

480,000 120,000 65,000 55,000

624,000 156,000 65,000 91,000

592,000 148,000 53,000 95,000

512,000 128,000 70,000 58,000

528,000 132,000 89,000 43,000

464,000 116,000 91,000 25,000

9.17

11.67

12.84

9.06

6.52

4.31

Cost of goods sold = 80% of Sales Sales-Net Profit Ratio = Net Profit/Sales * 100

Exhibit 2 Eastern Region's Yearly Sales Volume

Person Calabrese Gonzalez Wong Rao Stark Williams Total Sales % of Region 15 16 15 16 20 18 100 Sales Quota 540000 576000 540000 576000 720000 648000 360000 Actual Sales 600000 780000 740000 645000 660000 580000 4000000 Dollar Difference -60000 -204000 -200000 -64000 60000 68000 -400000 Performance Index 111.11 135.42 137.04 111.11 91.67 89.51 112.64

Exhibit 3 Customer Activities for the Eastern Region

No. of Calls No. of Orders Order-Call Ratio Actual Sales Average Order Size

Calabrese Gonzalez Wong Rao Stark Williams

1350 1500 1400 1450 1100 1000 7800

945 1275 1260 1015 660 500 5655

70% 85% 90% 70% 60% 50% 71%

600000 780000 740000 640000 660000 580000 4000000

634.92 611.76 587.30 630.54 1000.00 1160.00 770.75

4. If actual sales percentages are representative of each territorys sales potential then this method would work. 5. Expenses go up with sales. Salespeople will have to increase the size of orders and their ordercall ratio. New customers will be a must! 6. Alice must work with each person all she can to help and to see what they are doing. Sales must increase $1,150,000. This 28.75% increase is a lot to ask for one year.

Case 5 Wallis Office Products: Defining New Sales Roles Overview: The sales executive, like John Stevens, who faces what seems to be an unreasonably high sales quota, cannot simply do more of the same.1 Often the sales organization is working flat-out; there is no more water to squeeze from this particular stone. What you must do is first understand the customer's buying process and the company's four selling opportunities: retention, penetration, conversion, and new market selling. These opportunities change as the business moves through the growth cycle. For a brand new business, there is no retention selling because there has been no selling at all. For a mature business, there may be little new market selling because the company has no new products (which may be another kind of red flag for top executives). Moreover, we find that the different kinds of selling demand different sales personalities, different training, and different compensation. Without clear, well-defined sales roles, the company runs the risk that it will not attract and retain the salespeople it needs to meet management's growth objectives. To see how the sales resources may be organized differently, consider this a five-step process. 1. Formalize the sales strategy and quantify the sales opportunities that exist. 2. Map out the sales process required to sell different products/services and the roles of current sales and service personnel in the process. 3. Use the five W's---who, what, where, when, and why---to determine if these sales processes require different sales roles. 4. Identify any gaps that exist between the current sales process and the desired sales process. 5. Formulate and implement new sales roles to fill the gaps. The sales executive who takes these five steps is now in a position to take advantage of the company's sales growth opportunities. Questions: 1. Formalize the Sales Strategy and Quantify the Sales Opportunities That Exist The breadth and depth of WOP's product line and the size of the geographic market that John's organization must cover requires a clear sales strategy, one that defines the sales opportunities in the context of this type of business. WOP can take two actions to sustain this business: First, they can assure a high quality of service delivery - on time, complete, and responsive - so that current customers are not motivated to cancel or reduce service because of
1

Adapted from Jerome A. Colletti and Mary S. Fiss with Wally Wood, Compensating New Sales Roles (New York: The Alexander Group, Inc.), 62-72. I recommend that you read this excellent book to better understand the new sales roles recommended by the authors.

operational deficiencies. Second, they can maintain close contact with these customers relationship management - to understand how changes in the ways customers are doing in business may require either new solutions or new responses on WOP's part. John and his managers should estimate the additional business they could get from selling additional storage and processing services and value-added services to their current accounts. The first is user penetration selling, selling more storage and processing and value-added services to the current buyers at the current sites. The second box is account penetration selling, selling both core products and services to new buyers, that is, new sites in the current accounts. WOP can sell its current products and services to prospective accounts - targeting its competitors' accounts and winning new sales with companies that are already familiar with the current products and services offered. They can also sell something to a customer or a prospect they have not previously bought. In WOP's situation, there are actually two types of new concept selling opportunities. First is the opportunity to sell SARS 1000 to customers that are using the current core or traditional WOP storage and processing products. Second is the sales opportunity to sell SARS 1000 and Document Flash to new sites within current accounts or to prospects (accounts that have not done business with WOP). 2. Map Out the Sales Process Associated With the Different Products/Services and the Roles of Current Sales and Service Personnel in the Process Too often managers assume the sales process associated with retaining and expanding business is the same with all customers. Of course this is not the case. WOP has at least three different sales processes it applies to its products and services. In mapping out the sales process for WOP's core products, John Stevens and his sales staff determined that they should develop a sales process to win new customers for the current core products. The process should include an account executive (AE) leading the process, and later steps require a service representative (SR) to be involved. Successfully delivering WOP's services on an ongoing basis earns the account executive the opportunity to do account penetration selling. John and his salespeople determined that once an account is up and running, the service representative is the WOP employee most likely to identify opportunities to sell value-added services Through careful examination of accounts where WOP had successfully sold its new products and services, John and his staff learned that the sales process was really much different than the process they used to sell the core products. For example, the sales process required more meetings, the involvement of both the account executive and service representative throughout the process, and a system trial before the customer would make a final commitment to do business with WOP. 3. Use the Five W's to Determine If the Sales Process Requires Different Sales Roles Using the five W's, John and his sales staff determined answers to each of the five questions for WOP's three product categories. For example, the basis for making a buying decision, the "why," differs for each offering. For the core products, the "why" is price and responsiveness; for the value-added services, it is ease of use and price; and for the new products, it is cost savings and accessibility.

4. Determine the Gaps That Exist Between the Current Sales Process and the Desired Sales Process As a result of their analysis, John and his salespeople began to see some gaps between how they were selling and the opportunities to sell more. They identified several shortcomings in their current practices: Service representatives were instrumental in maintaining contact with current accounts, although account executives were also involved in this type of work. John wondered if this lack of role clarity was contributing to the less-than-satisfactory performance in customer retention - 85 percent retention compared to best practices in the range of 90-92 percent. Account executives may not have the skills and experience necessary to sell SARS 1000 products and services to the identified buyers, senior executives. Account executives may be stretched too thin across the number of selling activities and opportunities.

5. Formulate and Implement New Sales Roles John and his staff concluded that the current configuration of jobs - account executive and service representative - was no longer an appropriate way to address the sales opportunities they identified as available to them. To grow the business in the future, they concluded they would have to specialize their resources. This would require new sales roles. These include: Account executive. The account executive's job should be changed to focus on new account core product sales, with a secondary emphasis on selling SARS 1000. This will allow the account executives to spend less time on postsale service and SARS 1000. Account Manager. An account manager would focus on developing current customers. This position will allow WOP to successfully penetrate current users (user penetration) and expand to new sites within customer accounts (account penetration). SARS 1000 specialist. A SARS 1000 specialist position should be created to concentrate on selling this sophisticated product to new customers and penetrating large accounts with SARS 1000. The SARS 1000 specialist will both drive and support sales (for opportunities uncovered by the account executive or account manager). SARS system support specialist. The SARS system support specialist should assist the SARS specialist with presale technical support. Service representative. The service representative position should focus on servicing only core product customers. The service representative's new emphasis will minimize account executive involvement in servicing the core product. Additionally, the service representative

may focus on expanding high penetration accounts independently and supporting the account manager on expanding low penetration accounts. SARS installation manager. An installation manager position should be created that will allow one group of technical experts to install both SARS 1000 and the core product and to service the SARS product. This change will relieve account executives and service representatives from SARS 1000 installation responsibility. Once John clearly understood the sales opportunities that existed and mapped out the sales processes necessary to sell the different products and services, it was not difficult to establish the gaps that existed between what the salespeople were doing and what they needed to do in the future. John was also able to see exactly what new sales roles were necessary if he was to accomplish his mission. He could not continue to deploy his salespeople as he had in the past, no matter how successful they had been. WOP had changed, customers had changed, it was time for new sales roles.

Case 6 Briggs Industrial Supply Company (A): Determining Who to Hire and How Many Questions for Discussion: 1. What should Jay Anderson do? Unlike the more specific questions of earlier cases, this general question may confuse some students who need specific guidance. You may wish to give them more instructions. However, if you are presenting the case, you might not want to guide them. Most will be surprised with the number of issues you discuss or ask them to discuss. Examples of Assumptions That Can Be Made 2. Turnover of existing sales personnel is 15% per year. 3. Briggs can continue to hire and retain qualified personnel at its present compensation levels even though the industry median is much higher. 4. The general managers opinion that sales will increase 25% next year is correct. 5. The sales force personality Profile using the 15 outside salespeople is statistically significant 6. The ratio of inside salespeople: western salespeople: eastern salespeople will remain the same as the sales force increases in number. Determining Sales Force Size
Examine Environment

Sales Force Objectives

Manpower Estimates

Current Sales Force

People Leaving

# to be Hired

Strategic Plans

Environment: Industrial Sales (Wholesaler) Serving large and small companies Initial customers were in the oil field Now customers are in non-oil fields Low technology

Sales Force: Strategic Plans: Manpower Estimates: A. Assuming the ratio of sales/salespeople is correct as of today, then the number of salespeople due to growth alone is: (Number of salespeople) * (Growth in sales) = 15 * 0.25 = 3.75 B. One salesperson has to be promoted to be the new sales manager. C. Using the incremental sales approach to determine any additional salespeople required. Salespeople Fixed and Variable Costs Base Salary Avg. Commission = Commission Rate * Total Sales Number of salespeople = 0.05 * 6,540,000 15 Total Compensation Travel & Entertainment Expenses = 12*500 Total Salesperson Expense $40,000 Grow by 25% Hire a sales manager to oversee the outside sales Increase inside backup to outside salespeople Coordinate outside sales

$21,800 $61,800 $ 6,000 $67,800

How much additional sales volume does each salesperson have to generate Total salespeople expense Contribution margin = $67,800 1- 0.65 = $193,714

According to Jay Anderson, the following table reflects the additional revenue due to incremental increases in the number of salespeople: Additional Salespersons 16 17 18 19 20 21 22 Estimated Additional Sales Volume $380,000 300,000 225,000 165,000 100,000 95,000 83,000

Refer students to Chapter 6's Tables 4 and 5. Based upon Chapter 6's discussion of the "incremental method," you see that no more than 4 people should be hired using this incremental approach. Table 1, located below, was constructed using information from Chapter 6.

Table 1 Briggs Industrial Supply Company

Additional Estimate Salespeople Additional Sales 1 2 Cost of Goods Sold 3 Gross Margin of 4 (2)-(3) $133,000 $105,000 $78,750 $57,750 $35,000 $33,250 Salary (Fixed) 5 Commissions Expenses Net Profit (Variable) (Fixed) Contribution 6 7 8 (4)-(5+6+7) $68,000 $44,000 $21,500 $3,500 -$16,000 -$17,500

16 17 18 19 20 21

$380,000 $300,000 $225,000 $165,000 $100,000 $95,000

$247,000 $195,000 $146,250 $107,250 $65,000 $61,750

$40,000 $40,000 $40,000 $40,000 $40,000 $40,000

$19,000 $15,000 $11,250 $8,250 $5,000 $4,750

$6,000 $6,000 $6,000 $6,000 $6,000 $6,000

D. Assuming an employee turnover rate of 15%. Briggs can expect to lose: Turnover (# of salespeople) Includes 3 counter, 3 inside sales = (0.15) (21) = 3.15

E. Briggs also needs more inside salespeople to provide support to the outside sales. Present ratio is 15:3 or 5:1, outside salespeople to inside. Hiring an additional six sales people due to sales growth and incremental sales will create a position for at least one more inside salesperson. New Outside Salespeople = 6 Ratio Out:In 5 Summarizing, Additional Salespeople to be Hired: Due to sales growth One promotion to S.M Due to incremental sales Expected turnover Additional inside people Total to be hired 3.75 1.00 4.00 3.15 1.20 13.00 = 1.2

Briggs needs to hire additional 12 salespeople in order to meet its manpower objective. Analysis of Personal History
Name Cahill Everest Billings Kane Dacy Kurtin Manus May Russell Saphn Walter Smith Head Holmes Reasor Overall perf. Age Marital Sts. Sex 120 115 110 110 109 105 104 102 100 101 96 91 86 94 85 29 26 34 55 25 41 46 62 49 24 24 27 38 36 52 Ma Ma Si Ma Si Si Ma Si Si Si Ma Si Ma Ma Si M M M M* F* M** M M M M* F M M M M Experi. Personality Sales Apt 5 3 10 15 3 19 20 32 20 2 1 5 9 11 10 Senser Senser Senser Intuitor Intuitor Senser Senser Thinker Intuitor Thinker Intuitor Thinker Senser Feeler Thinker 55 60 40 46 65 56 54 55 68 63 63 43 61 71 55 SCI test Wonderlic 33 55 35 43 35 54 42 42 48 43 41 49 43 46 39 26 38 36 32 30 24 23 20 29 28 20 26 18 20 20

Notes: *= African** = Mexica

Plots

The plot of Performance Index and Experinence of the salesperson shows a mixed trend. You can see from the plot that for a low Perf. Index we have salespeople with an average experience and it can also be seen that salespeople with a high Perf. Index have a few years of experience and some among them have higher experience.
Perform ance Index V/s Experience
35

30

25

20

15

Value

10

0 0 20 40 60 P erf Index 80 100 120 140

The plot of Performance Index and Age of the salesperson shows a mixed trend. You can see from the plot that for a low Perf. Index we have salespeople with an average age and it can also be seen that salespeople with a high Perf. Index have a lower age and some among them have higher age.
Perform ance Index V/s Age in Years
70

60

50

40 Value 30

20

10

0 0 20 40 60 P erf Index 80 100 120 140

The plot of Performance Index and SCI Test shows a mixed trend. You can see from the plot that as the Perf. Index value increases so do the scores of the salespeople on the SCI Test show an increasing trend. The plot of Performance Index and Sales Aptitude Test shows a mixed trend. You can see from the plot that as the Perf. Index value increases so do the scores of the salespeople on the Sales Aptitude Test show an increasing trend.
Perf. Index v/s Sales Aptitude
80

70

60

50

40

Value

30

20

10

0 0 20 40 60 Perf Index 80 100 120 140

Perf. Index v/s SCI Test 60

50

40 SCI Test

30

Value

20

10

0 0 20 40 60 80 100 120 140 Perf Index

The plot of Performance Index and Wonderlic Test shows a mixed trend. You can see from the plot that as the Perf. Index value increases so do the scores of the salespeople on the Wonderlic Test show an increasing trend.

Perf. Index v/s Wonderlic Test 40 35 30 Wonderlic test 25 20 15 10 5 0 0 20 40 60 80 100 120 140 Perf Index Value

Case 7 Briggs Industrial Supply Company (B): Creating Recruitment and Selection Procedures Both Briggs (A) and (B) cases could be assigned to one or two teams. They could be presented together during the same class period by the two teams, if you have a class of one hour and 15 minutes or longer. NOTE: The last paragraph of Briggs (B) summarizes the main issues in both cases. Please refer to the "United Cosmetics, Inc.: Creating a Staffing Program" case for ideas on creating a recruiting program at a university. Panel Interview: The panel interview is not directly related to any materials discussed within a chapter in our textbook. Retailers have been using the panel interview for some time, while sales recruiters have only recently begun to use the procedure. You will see examples of the "Obtaining New Customers" and "Negotiating with Others" interview questions which students are asked to do for the case. These are not given to the students in the case. We were asked to keep the book's length as short as possible. Thus a full discussion of a panel interview was not included. Please contact the author if you have any questions. NOTE: The author set up a sales staffing program as Dr. Hise was asked to do within the (B) case. He created these questions for the organization. For several years he has been using the questions for an in-class exercise. The students liked the exercise so well that he decided to develop it into a case for you. Role Play: You can role play an interview using these four questions. Please refer to the "Sell Yourself on a Job Interview" experiential exercise.

OBTAINING NEW CUSTOMERS

Addresses the individuals willingness and ability to obtain new customers.

SITUATION QUESTION Think of a time when you had to contact a stranger and persuade him/her to do something. What was the situation? ACTION QUESTION What did you do? RESULTS QUESTION What happened? NOTES

Unsatisfactory 1 2

EVALUATION BASED ON THIS FACTOR ONLY Satisfactory 3 4 5 6 7

Answers demonstrate a satisfactory level of skill in obtaining new customers

Excellent 8 9

Answers show unsatisfactory behavior according to our standards or do not indicate willingness or ability to prospect for new customers.

Answers show outstanding experience, willingness, and ability to prospect for new Customers.

NEGOTIATING WITH OTHERS

Addresses the ability to work out a compromise between the individual and another person so that both are happy with the outcome.

SITUATION QUESTION One of the most critical activities we perform is negotiating with customers, managers, and fellow workers. Describe your most memorable experience in working out a settlement with someone such as a teacher, friend, customer, or employer. ACTION QUESTION What did you do? RESULTS QUESTION What was the outcome? NOTES

Unsatisfactory 1 2

EVALUATION BASED ON THIS FACTOR ONLY Satisfactory 3 4 5 6 7

Answers show satisfactory experience and understanding of negotiation. Meets our high standard.

Excellent 8 9

Answers indicate little or no Experience and understanding of negotiation. Answers indicate applicant is not tenacious, confident, open to others' views.

Answers show exceptional Experience and understanding Of negotiation process. Seems tenacious, confident, open to Others' views.

Case 8 United Cosmetics, Inc.: Creating a Staffing Program Question for Discussion: 1. Assume you are Al Kantak. What would be your recommended college recruitment program? Al Kantak's goal is to develop a 5-year plan with goals for each year. At the end of the 5 years, Al wants to have accomplished everything Sparky asked of him. First, Al evaluated the entire situation and then developed and implemented a coordinated program consisting of: A. Recruitment on college campuses with a great deal of raw talent. Recruiting nationally means selecting only 25 schools to concentrate on visiting each year. The schools were selected based on their size, the presence of personal selling and sales management emphasis in the marketing curriculum, and traditional success of the graduates at UCI. Geographical considerations were also used so people could work in the part of the country where they were hired. At these schools, key faculty were found and a friendship developed so that faculty would recommend students. Such recommendations reduce campus recruitment time and increase the quality of people interviewed. B. Establish specific sales personnel selection criteria to be used uniformly by all managers in hiring people. C. Train all managers in interviewing so everyone is using the same methods. D. Develop recruiting tools consisting of: 1. A brochure 2. Recruiting posters to send to schools in advance of our campus visits. 3. A 3-ring binder for a school's placement center library containing information on the job and company. 4. A recruiting video. A permanent copy goes to a school's placement center library. Also, copies are sent to faculty who want to show it in their classes. The video would also be used at presentations to student groups and at career fairs. E. Develop a summer internship program. F. Develop a co-op program in which a person would work in the fall or spring. G. Establish scholarship and grant programs for the most productive schools. H. Become involved with the school's student organizations such as Pi Sigma Epsilon and the American Marketing Association.

I. Have sales personnel make presentations to classes and student organizations. This is great PR! J. Participate in career fairs.

Case 9 Farm Machinery for America: The Selection of a Salesperson Learning Objectives: This case presents the sales management problem of selecting a salesperson from a number of qualified applicants. The sales manager, Randy Garvin, has been given a pre-screened list of people to interview for an open position in his territory. He can assume that these people are among the most qualified, according to the personnel area, of the people that have applied for the job. What questions to ask each prospective employee and which person then to hire are the major concerns for Mr. Garvin. Specific learning objectives are: 1. This case designed to make the student think about how to conduct an interview to help with the selection process. The number and kind of questions that they choose to ask each applicant will elicit information that will be useful in making the "correct" choice. This case employs a method that involves the student in a fictional, but realistic situation. The selection principles and techniques that are exhibited in the case can be easily transferred to real life. A secondary, but none the less important objective, is to acquaint the student with the kind of questions that might be considered to violate the Equal Employment Opportunity (EEO) guidelines.

2.

3.

Teaching Assignments: The instructor might consider having the students read the case and prepare a list of the questions they would like to ask outside class. The instructor could then take a vote on each question for each applicant at the start of the next class period. The voting will provide a ranking of the questions to answer. The instructor could then read the answers to the top five questions for each applicant. At the end of these he could ask those students that would like to make their selection to write down their name, their selection's name, the number 5 and turn it in. The instructor could then do the same kind of procedure for the next 2 sets of 3 questions, and the final 4. The numbers on the selection choices would change to 8, 11, and 15 respectively. If there is a question that nobody would like to ask, the instructor should not answer it. There are four illegal questions in this case. The illegal questions are numbers 4 and 13 for Ms. Long, number 14 for Mr. Harrison and number 2 for Mr. Lennon. Once the students have made their choices, the instructor should go back over the questions and answers, and review the notes on these that are at the end of this case analysis. The instructor should then tell the class who the "correct" choice was and why that person was chosen over the other two. If the instructor uses the team approach, it is suggested that each team turn in a list of questions that they would like answered. The instructor could then turn back to them the answers to these questions. The discussion that a group would have in agreeing upon which questions to ask an applicant would undoubtedly make an effective learning tool.

Interview Answers for Ms. Long A1 A2 My husband had an excellent job offer that required us to move from Dallas to Austin. Yes I do. My father has a farm implement store in Huntsville, Texas and has sold FMA equipment since 1960. I worked in his store all through high school and during the summers when I was in college. I believe that it would be very exciting and challenging. I enjoy dealing with people and I feel that having been on the purchasing side of sales transactions, I have been exposed to both good and bad sales presentations and have learned from both. No. I feel that marketing oriented firms are the only ones that will be able to survive the competition in the marketplace now and I wanted to be able to contribute to their success. There was always something new happening. When I was a department manager we were always receiving new goods that I had to decide where to display. When I was an assistant buyer there was always a new skill to learn. And when I was buyer there was always a new line to see. There really was nothing about my jobs that I did not enjoy. I would really like to have my own business, preferably a retail store. While the pay was a little lower than for other industries it was balanced with other personal goals that were achieved. I loved my college years. When it was time to graduate I almost didn't want to leave. Yes, I do. What kind of training will I receive before going out in the sales territory, who will conduct it, where will it be held and how long will it take? In spite of my recent history, I do have a good knowledge of FMA products and how a FMA dealership works. I am very self-motivated and need no supervision to do my job. I have always had a good rapport with the men I have dealt with and they have always respected my knowledge of the business that I bring with me into a business situation. The retailing situation in Austin has nothing to offer me at this time. The larger stores all have their headquarters in Dallas or Houston and the smaller stores don't need or can't afford my skills.

A3

A4 A5 A6

A7 A8 A9 A10 A11 A12 A13 A14

A15

Not at all. As a buyer I was out of town about 10-15 days every month and my husband and I are used to these separations.

Interview Answers for Mr. Harrison A1 A2 A3 A4 A5 A6 A7 My advisor recommended it. Also, the class work was easy for me. Well, my wife and I were living in College Station at the time and we didn't want to move and there weren't any jobs in accounting available. Yes. No. It was a good opportunity for me. They offered me more money and a chance to be my own boss. They were a good company to work for. Again, it was a chance to earn more money and have more responsibility. I had a larger territory than I had with Caterpillar. The freedom to be my own boss. I got to set my own hours and could work as long and as hard as I wanted. Because I was a commissioned salesman I was able to earn more if I could produce more sales. I have to admit that being away from home so much was the least favorite part, not that I mind traveling. It was really my wife who didn't like my traveling. Not really. About the only thing I got from it was the GI Bill to help me get through school. I haven't really thought about it much. Yes I did. Well Mr . . .I'm sorry what was your name again? Garvin. Well, Mr. Garvin, I am curious about how big the territory is that I would be covering for the job? Well, I know that the people I sold IH to didn't handle them, but they felt that they were good machines. I'm active in my church. I teach a Sunday School class once a month, and I also help coach a Pop Warner football team each fall. Yes I was. They also had an excellent benefits package with a good health insurance plan that my family and I made use of.

A8 A9 A10 A11 A12 A13 A14 A15

Interview Answers for Mr. Lennon A1 A2 A3 A4 A5 Yes I do. Yes I was, right here in Austin. 1974. I was originally hired as a dispatcher in the warehouse here in Austin. I am looking forward to selling our farm equipment. I feel that we have an excellent product and believe strongly in them. I enjoy meeting people and am familiar with most of the dealers through my years at the warehouse. This should help me a great deal because I am already on a first name basis with many of the dealers. Well, I have reached the top of where I can go in the company without moving or changing fields. I would much rather change my job within the firm than move. Also I am looking forward to increasing my income so that I will be comfortable when I reach retirement age. I really have no where to go without moving to a different location. Friendly, easy to deal with, and fair. For the most part, yes. However, the promotions have taken a little longer than I would have liked. I get to meet the dealers for our products and even a few of their customers. I wouldn't mind at all. I am confident that I will be offered this position and will do an excellent job for the company. Not really. I have dealt with the dealers and the salespeople for a number of years and know what the job entails. I actually have wanted to change for the last few years, but the circumstances just weren't right. My wife...my ex-wife, I'm divorced now, didn't like the idea of my traveling and the sales positions that came open have always been in other areas of the country and I didn't want to move. I am outgoing and I have a very good knowledge of the products. I have worked with the dealers in the area for a number of years. I know the old salesman, and we talked on numerous occasions about what the job is like, how much I might be able to make and how much traveling I will have to do.

A6

A7 A8 A9 A10 A11 A12 A13 A14

A15

Notes on Ms. Long's Interview Q1 You seem to have had an excellent career going at Neiman Marcus. Is there any particular reason why you left them? Good question to ask. It is important to find out why someone is contemplating a career change, especially when it seems that the career has been a successful one. My husband had an excellent job offer that required us to move form Dallas to Austin. Ms. Long's answer shows that a career change is not something she wants to do, but may be required to do. Do you know anything about the equipment we sell here at FMA? Very appropriate question since Ms. Long's resume is all based in the fashion industry. Her application notes that her father has a FMA dealership, but it is still good to find out how much she really knows about FMA products. Yes I do. My father has a farm implement store in Huntsville, Texas and has sold FMA equipment since 1960. I worked in his store all through high school and during the summers when I was in college. Ms. Long's answer shows that whatever product knowledge she has is at least eight years old. That was the last time she worked with her father's dealership. You have never been in a straight sales position according to your resume. Do you think you would like an outside sales job? Since Ms. Long has never held a sales job, according to her resume and application, this would be an appropriate question to ask. Mr. Garvin could have worded it better though, because it is too easy to answer with a simple "yes." I believe that it would be very exciting and challenging. I enjoy dealing with people and I feel that having been on the purchasing side of sales transactions, I have been exposed to both good and bad sales presentations and have learned much from both. Mr. Garvin is lucky and gets some good information from Ms. Long. She may be right in her assessment that she has learned from poor sales presentations. Are you planning to have children in the near future? This is an illegal question, unless it is also asked of all prospective male employees, also. No. We don't learn much from Ms. Long's answer. You majored in marketing in college. What made you choose that major? This kind of question is usually a good one. It gives the interviewer a chance to see how the applicant thinks about and plans for the future.

A1

Q2

A2

Q3

A3

Q4

A4 Q5

A5

I feel that marketing oriented firms are the only ones that will be able to survive the competition in the marketplace now and I wanted to be able to contribute to their success. Ms. Long's answer shows that she at least put some thought into her choice of major in college. What did you like most about your jobs that you had at Neiman Marcus? This is a fairly standard interview question. As such, most people are prepared to answer it and the answer becomes an important way to gauge what actually motivates that person. There was always something new happening. When I was a department manager we were always receiving new goods that I had to decide where to display. When I was an assistant buyer there was always a new skill to learn. And when I was buyer there was always a new line to see. Ms. Long's answer shows that she enjoys adapting to new, challenging situations. This is good because if she is hired the job would be both new and challenging, however, over time she might be dissatisfied with the slower pace that farm implements have in comparison to the fashion industry. What did you like least about your jobs at Neiman Marcus? This question usually will be teamed with the previous question. Again, the answer is important because most people will have spent time thinking about this question. There really was nothing about my jobs that I did not enjoy. All we find out is that Ms. Long was very happy at her jobs with Neiman Marcus. What would you like to be doing ten years from now? Looking at where your applicant would like to be in the future is good to try to find out. I would really like to have my own business, preferably a retail store. Ms. Long's answer shows that her heart is still in the fashion industry and it may be difficult or impossible to get her to view a future for her in the farm implement industry. Were you satisfied with your earning at Neiman Marcus? Not a very insightful question. Can be easily answered yes or no also. While the pay was a little lower than for other industries it was balanced with other personal goals that were achieved. Mr. Garvin is lucky and gets the knowledge that Ms. Long may be motivated more by internal motives and goals than strictly by earnings. You have an excellent academic record. Did you enjoy your college experience? A very weak question. People who do well in school generally enjoy school. Not much can be learned here.

Q6

A6

Q7

A7 Q8

A8

Q9 A9

Q10

A10 Q11

I loved my college years. When it was time to graduate I almost didn't want to leave. We learn very little from this answer, other than she enjoyed going to college. Do you have any questions about the job that you would like to ask me? This is an important question to ask any potential candidate. If they have no questions, they probably haven't thought much about the job and what it might entail. Yes, I do. What kind of training will I receive before going out in the sales territory, who will conduct it, where will it be held and how long will it take? Ms. Long's answer shows that she recognizes her lack of sales training and would like to help in overcoming this handicap. What are your strengths that you feel you would be bringing to our company and this job in particular? A standard type of interview question that allows the interviewee to talk about themselves. In spite of my recent history, I do have a good knowledge of FMA products and how a FMA dealership works. I am very self-motivated and need no supervision to do my job. Ms. Long's answer implies that she may have kept up more on FMA products than originally thought, but this information should be taken "with a grain of salt." Since all of our present dealerships are owned by men, do you feel that you would have any trouble dealing with them? This is a discriminatory question unless asked of both sexes. I have always had a good rapport with the men I have dealt with and they have always respected my knowledge of the business that I bring with me into a business situation. Ms. Long's answer is very good and shows that she had thought about this before Mr. Garvin ever asked the question. Why the industry change now? You have an excellent record in retail, why are you willing to switch to industrial sales? This question is very similar to the first question. Not much extra information would be added by asking both. The retailing situation in Austin has nothing to offer me at this time. The larger stores all have their headquarters in Dallas or Houston and the smaller stores don't need or can't afford my skills. Ms. Long's answer shows that she would rather still be in retail. Would you mind the traveling that is involved in a position like this? This is fairly standard question when interviewing someone who has never had a traveling sales position before.

A11

Q12

A12

Q13

A13

Q14

A14

Q15

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Not at all. As a buyer I was out of town about 10-15 days every month and my husband and I are used to these separations. Ms. Long's answer shows that the traveling probably would not be a problem for her.

Notes on Mr. Harrison's Interview Q1 I see you majored in accounting at college. Any particular reason for this? This is usually a good question. It allows the interviewer to get insight as to how the applicant plans for the future. My advisor recommended it. Also, the class work was easy for me. Mr. Harrison's answer shows lack of planning on his part and a willingness to take the easy route, whether it is the best one or not. Why didn't you pursue an accounting career when you graduated? This is an appropriate question to ask, since Scott worked for four years to get an accounting degree and has never had a job in the accounting field. Well, my wife and I were living in College Station at the time and we didn't want to move and there weren't any jobs in accounting available. Mr. Harrison's answer shows a lack of commitment to pursuing a career and shows his willingness to change jobs rather than move. You've been in sales for a number of years now, do you like selling? This a very weak question that is too easily answered with one word. Yes. That's all Randy got was one word. Physically you are a rather large man, are there any health problems that we need to be concerned with because of your weight? This question is treading on thin ice under EEOC guidelines. A pre-hiring physical exam would probably be a better route to take. Also it is another one-word-answer kind of question. No. This is the only answer someone could expect to that question. You seemed to be doing a good job selling cars at Ford dealership. Why did you leave that job to go to work for Caterpillar? This is a good question to ask Scott. He seemed to be doing well at the Ford dealer and had a start on a career. Why he would give this up for a traveling job is good to know. It was a good opportunity for me. They offered me more money and a chance to be my own boss. They were a good company to work for.

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Scott's answer shows that he is motivated by money and possibly some personal freedom from a 9 to 5 job. Q6 Why did you leave Caterpillar to go to work for International Harvester? This is another good question that should be asked. Scott seems to be having a difficult time establishing a career orientation with the firms he has worked for. Again, it was a chance to earn more money and have more responsibility. I had a larger territory than I had with Caterpillar. This reinforces the idea that Scott is motivated by money, but he does seem to have a concern for moving up. What did you enjoy most about your jobs with both Caterpillar and IH? Fairly standard interview question. Most people should have thought about the answer and we might get some good insights into their motivation. The freedom to be my own boss. I got to set my own hours and could work as long and as hard as I wanted. Because I was a commissioned salesman I was able to earn more if I could produce more sales. Scott's answer shows that income and personal responsibility are major motivations for him. What did you like least about your jobs with both Caterpillar and IH? The mirror of the previous question. It is still a good question to ask. I have to admit that being away from home so much was the least favorite part, not that I mind traveling. It was really my wife who didn't like my traveling. A wife who doesn't like her husband traveling can cause problems for a salesperson. Did you gain anything from your military service? Since there is no description of what the applicant did in the military, this is a good question to try and uncover any hidden talents or experience they may have gained. Not really. About the only thing I got from it was the GI Bill to help me get through school. This is a very weak answer. Mr Harrison makes it seem like those three years were wasted. What would you like to be doing ten years from now? How the applicant views the future, and their future potential with your company, is a good question to ask. I haven't really thought about it much. Mr. Harrison gives another demonstration of his willingness to let events shape his life rather than taking charge of it. Did you enjoy your first job that you had after you graduated from college?

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The first job out of college is usually a start on a career path. It is good to get information about how the applicant viewed this job and their choice of careers. Unfortunately this is not a good question for Mr. Harrison (he changed careers) and this question is also poorly worded so that it doesn't elicit much information. A11 Q12 A12 Yes I did. We learn nothing from this answer. Do you have any questions about the job that you would like to ask me? A standard question to ask in an interview. Well Mr . . .I'm sorry what was your name again? Garvin. Well, Mr. Garvin, I am curious about how big the territory is that I would be covering for the job? The fact that Mr. Harrison could not remember Mr. Garvin's name shows a very weak spot for a salesperson. They have to be good at remembering people's names. Do you know anything about the equipment that we sell here at FMA? Fairly standard type of interview question to see how much homework the applicant has done on preparing for an interview. Well, I know that the people I sold IH to didn't handle them, but they felt that they were good machines. This answer shows that Mr. Harrison has not bothered to gather information about the company and its products. This lack of preparation may carry over into his sales presentations. What clubs or organizations do you belong to? This is an illegal question under EEO guidelines. I'm active in my church. I teach a Sunday School class once a month, and I also help coach a Pop Warner football team each fall. This answer shows that he may be very much like his customers which is always good. Were you satisfied with your earnings while you were with IH? Not a very good question. It is too easy to give a simple yes or no answer and really doesn't give much insight into the person's ability to do the job. Yes I was. They also had an excellent benefits package with a good health insurance plan that my family and I made use of. It appears that Mr. Harrison was happy with his pay and used the health insurance package, possibly extensively.

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Notes on Mr. Lennon's Interview Q1 You've worked for our company for a long time now. Do you like your present job with the firm? While it is important to see how the applicant feels about the firm, this question is poorly worded and geared toward getting a short, simple yes in response. Yes I do. A short yes is all Randy got. Were you born and raised here in Texas? This is an illegal question under EEO guidelines. Also, this applicant got his degree at a school in Texas and has worked twenty years for the firm in Texas. There is no special need for the applicant to be a true native. Yes I was, right here in Austin. We learn that Bill is a native and nothing else. On your application it says that you received your bachelors degree from the University of Texas. What year was that? This question is a way of establishing a rough idea of the applicant's age without directly asking. A large majority of people graduate between the ages of 21 to 25. 1974. Since Mr. Lennon graduated in 1974,this means that at the time of his interview, (2000) he would probably be in his late forties. What was your first job here at FMA? A weak question since his application says that he started with the firm as a dispatcher. I was originally hired as a dispatcher in the warehouse here in Austin. We only learn what was on his application, that he started as a dispatcher. With all your experience here at FMA, you must know a great deal about our products. How do you think you would do selling these products? This is a good question. With twenty years in the firm his product knowledge is probably extensive. How he will be able to translate that into sales is important. The question is open-ended enough that we should get some good information from it. I am looking forward to selling our farm equipment. I feel that we have an excellent product and believe strongly in them. I enjoy meeting people and am familiar with most of the dealers through my years at the warehouse. This should help me a great deal because I am already on a first name basis with many of the dealers. Mr. Lennon's answer is quite informative. We learn that he already knows most of the dealers and thus would have a better chance at selling our products than a new person.

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How do you think you would adjust to having a commission instead of a straight salary? This is a good question to ask somebody who has never worked on a commission basis before. Well, I have reached the top of where I can go in the company without moving or changing fields. I would much rather change my job within the firm than move. Also I am looking forward to increasing my income so that I will be comfortable when I reach retirement age. Mr. Lennon is looking for a way to increase his income and will be motivated to go out and get the sales necessary to do this. What do you like least about your job at FMA? A standard interview question to ask. I really have no where to go without moving to a different location. Mr. Lennon is looking for some upward mobility without having to leave his present living area. If I were to ask the employees you supervise to describe you, what do you think their response would be? This is a very good question to ask. It gets the applicant to think about how people view him or her. Friendly, easy to deal with, and fair. Mr. Lennon lists attributes that are all very good to have in either a manager or salesperson. Have you been happy with your career so far here at FMA? A fairly standard interview question, but you probably don't need both this question and the next. For the most part, yes. However, the promotions have taken a little longer than I would have liked. We don't learn much from this answer, except that Mr. Lennon seems to be persevering in achieving his goals. What do you like most about your present job at FMA? A standard question, but probably don't need this and the previous one. I get to meet the dealers for our products and even a few of their customers. Mr. Lennon seems to enjoy meeting people, a good asset for a salesperson. How would you feel about being on the road a great deal of the time? A very appropriate question to ask of someone who has never had a traveling sales position before.

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I wouldn't mind at all. A weak answer that doesn't really say much. If your aren't chosen for this position, how will you feel about FMA? A very appropriate question to ask this applicant. Here is a very good, valued employee. How he would feel if he is passed over should be of concern to the firm. I am confident that I will be offered this position and will do an excellent job for the company. Bill's answer shows that he is a positive thinker but would probably be hurt to some extent by not being offered the position. Do you have any questions about the job that you would like to ask me? A standard good question to ask. Not really. I have dealt with the dealers and the salespeople for a number of years and know what the job entails. A good answer that shows he already knows a great deal of inside information about the job and has probably thought about what the job requires. Why now? Why have you decided to change your direction in the company after 20 years. A very appropriate question to ask of someone who is trying to make a career change. I actually have wanted to change for the last few years, but the circumstances just weren't right. My wife...my ex-wife, I'm divorced now, didn't like the idea of my traveling and the sales positions that came open have always been in other areas of the country and I didn't want to move. Mr. Lennon's answer shows that this change has been contemplated for a number of years. The conditions have just now come together to give Mr. Lennon the right opportunity for change. What would you say are some of your strengths that you would be bringing to this position. A fairly standard interview question that asks the applicant to contemplate what their personal strong points are. I am outgoing and I have a very good knowledge of the products. I have worked with the dealers in the area for a number of years. I know the old salesman and we talked on numerous occasions about what the job is like, how much I might be able to make and how much traveling I will have to do. Mr. Lennon lists a number of things that make it seem like he would be a good choice: product knowledge; customer knowledge; and knowledge of the job itself.

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COMMENTS ON APPLICANTS Ms. Long Ms. Long is young and attractive. She would get the attention of dealers, but it is questionable whether they would feel comfortable or confident in buying products from her. She has never had a sales position, but she would probably be quite good with some training. She does have inside knowledge of FMA products and how a FMA dealership works, although that knowledge may be dated. Her father would certainly be willing to give her advice and updated information. Having her father as a customer could cause some conflict of interest. Ms. Long seems to enjoy the fashion retail industry and may leave at the first good opportunity. Overall, she is a very good find for almost any firm, but she would probably not be happy staying with farm implements and would leave after a few years. Mr. Harrison Mr. Harrison is the only applicant who has a sales background. He has even sold farm equipment previously. His knowledge of central Texas would be an asset. He seems to lack motivation and direction, though. While a varied background is not necessarily bad in a salesperson, Mr. Harrison seems to change jobs searching for more money constantly. There is no guarantee that he would not do the same if he is hired at FMA. His forgetting of Mr. Garvin's name is a very bad sign of inattention that salespeople can not have. His wife also seems to be a big influence on what jobs he has and where they live. She may tire of his traveling soon, since he has been on the road now for four years and they have two children at home. While Mr. Harrison's knowledge of farm equipment and central Texas is a valuable asset, his lack of commitment to a firm and lack of memory are enough to keep him from being hired. Mr. Lennon Here is the best choice. Mr. Lennon has extensive product knowledge and dealer knowledge. He is divorced, so there is no wife to complain about his traveling. He has twenty years with FMA and is a valuable asset to the firm. While he has no sales background, his physical appearance and similarity to his customers is important and will help. While he is not as young as the other applicants, he still has 15-20 years to work and will probably stay with FMA for those years. Also, Mr. Garvin might consider grooming him as a replacement for himself, since Mr. Lennon has managerial experience.

Case 10 Mead Envelope Company: Is a New Compensation Plan Needed? Three Reasons You Need New Sales Compensation Plans: Hal Jones's situation is fairly typical today as companies struggle to redefine how they will grow. When a company faces the problems Jones faces, there can be three reasons a sound compensation plan for salespeople--and in many situations for all customer contact employees-is necessary. 1. A Sound Compensation Plan Will Help Achieve Marketing Strategies and Sales Objectives. Without an effective sales compensation plan, a company will not accomplish its marketing strategies and sales objectives. Winning and keeping customers is the ultimate competitive challenge. Companies must serve customers effectively and, therefore, continually improve their value proposition. Customers demand effective products, better service and quality, and competitive prices. The sales force must deal with both the changing customer demands and the organization's developing competencies. In most industries, the sales force is the primary customer contact, and the customer often sees the sales representative as the face of the organization. The sales person therefore occupies the position of helping customers meet their objectives by presenting the company products and services that best meet the buyer's needs. Mead Envelope Company's products are more varied today than in the past, and they can be more complicated--customized envelopes designed to meet specialized needs--as the division endeavors to satisfy the needs of different customers in different market segments. Jones correctly concludes that a properly structured compensation plan would help to clarify the account executive role so they can spend time on the right selling activities. 2. A Sound Compensation Plan Will Attract and Retain People With the Right Skills and Competencies to Perform Effectively. Successful salespeople are always in demand. A company with a poorly designed compensation plan runs the risk that it will not be able to attract and retain the caliber of people it needs to sell its products and help customers with their service requirements. By reading trade publications and general business magazines and by networking with one another at conferences and conventions, salespeople today are more familiar with compensation levels and practices than in the past. Increasingly, salespeople express certain expectations about how they should be compensated for a job well done. To be effective, a sound compensation plan must embrace the values and expectations of the people for whom it is designed. 3. A Sound Compensation Plan Will Control the Cost of Sales. Compensation is frequently the most significant cost of maintaining a sales organization. Depending on the industry, direct compensation--salary plus variable pay (commission or bonus

or both)--can range from 2 to 20 percent of sales. Today, many companies are concerned with customer profitability: the mix of products they buy and the cost of serving them. For the sales force, this frequently means that volume alone does not constitute successful performance. However, as Jones observed, if Mead does not structure the compensation plan to recognize performance requirements other than sales volume, which the salespeople are obtaining through the standard product line, it will realize a less-than-optimum return from the expenditure. One of the most effective ways you can increase sales profitability is through the compensation plan. The plan's principal objective is to direct salespeople to sell to and interact with customers effectively. Whether you want increased volume, a better mix of customers or product sales, or more new accounts, the right compensation plan can help you accomplish objectives. Five Positive Outcomes of a Successful Sales Compensation Plan Sales compensation is one of the most powerful tools available to management to achieve business results. The incentive component (commission or bonus) communicates the results the company needs its sales personnel to achieve. In most sales organizations, the sales force is extremely interested in the sales compensation plan. In fact, sales representatives typically judge the plan by a single criterion--Am I making more money now than I did a year ago? Management, on the other hand, typically judges the sales compensation plan's success on multiple criteria. In companies where sales compensation plays a key role in shaping the effective performance of the sales force, top management looks to the plan to contribute positively to five business outcomes: growth, profits, customer satisfaction, attract and retain sales talent, and sales productivity. Growth The desire to grow--by creating new markets, winning new customers, and continually improving processes to retain current customers--is a top priority at many companies. The Alexander Group's 1997 Survey of Executive Confidence in Sales Growth reported that 64 percent of the respondents expected to achieve sales growth of 15 percent or more. Their indepth investigation into how companies achieve their sales objectives shows that the growth strategy they pursue is "deeper penetration of current customers." This suggests that these companies have gone back to the basic block-and -tackle approach to growth: selling more to current accounts, either new product sales to current buyers or more sales to new buyers within the same account. This sales strategy suggests a compensation plan that rewards the sales organization for (a) retaining and growing sales volume in current accounts and (b) booking sales with new customers. The challenge is to motivate and reward the sales force for profitable topline growth. Often the biggest obstacle to doing so is overcoming the inertia associated with "annuity"-oriented compensation, particularly for plans that base a disproportionately high percentage of the variable compensation (80-90 percent) on reaching volume objectives tied to last year's sales: Mead's problem. Profits Increasingly, companies want salespeople to focus on profitable business. The availability of meaningful information about purchase transactions at the account level, and the

intense pressure in many industries on operating profit margins, is motivating executives in many companies to examine the mix of business sold to customers. Selling the right mix of products may produce better profits and, therefore, a key question to investigate is--Is the sales force motivated to and rewarded for selling the right mix of products? Sales Talent--Attract and Retain In most companies, top management looks to the compensation plan to help attract and retain the caliber of people it needs to successfully sell to and interact with customers. A strong sales force is a major competitive advantage, especially in high contentious markets--markets characterized by high product parity or markets in which all the major players offer virtually equally high levels of product quality and customer service. In such situations, your company's advantage is the relationship between the customer and the salesperson. As one executive said, his company's objective in this type of competitive environment was to "shrink-wrap" the salesperson around the product offering so that a company employee became the source of differentiation. The sales compensation plan plays a pivotal role in attracting and retaining talented salespeople. Thus, a question to ask about a current plan is--Does it help the company hire and keep the right salespeople? Sales Productivity Today, most companies view their customers as "assets" of the business. Thus, investments in salespeople, who regularly interact with customers, are regularly reviewed for improvement. In the late 1990's, a sales job well done in a given industry produced $1-$1.5 million in revenues. To justify that salesperson with today's smaller margins, two things have to happen: (1) volume has to be higher, usually twice as much or more, and (2) the mix of business has to change, in terms of both what customers buy and which customers to address. If the salesperson's average productivity was $1.2 million a year, it now has to be $2.4 million to maybe $3 million with an improved product and customer mix. Otherwise you may get the volume, but not the better margins. Moreover, the productivity issue is dynamic. Today, the entry-level person may have to produce $700,000 in sales while a senior salesperson may have to produce $2.5 million, but those numbers are not fixed. Each year they must rise by some significant factor if the company plans to continue investing in direct resources. Companies' management teams ask us what they should expect a salesperson to produce (a figure that varies by industry), and once we get the figure, they know if it stays set. The unhappy answer is no; it has to go up if no resources are added. Five Reasons Sales Compensation Plans Fail Experience shows that as the sales organization grows revenues and profits, the management challenges also grow. The Alexander Group has conducted considerable research involving many industries to identify the challenges management faces in sustaining productive, highperforming sales organizations. Of particular interest to them has been the role that sales compensation plays in contributing to and sustaining sales force motivation and productivity. They find five indicators that suggest a sales compensation plan is slipping into ineffectiveness.

Let's consider the indicators relative to the situation that Hal Jones finds himself in at Mead Envelope Company. 1. The Sales Compensation Plan Does Not Support the Company's Business Objectives. In a recent study of human resources professionals, 81 percent of the respondents reported that their company experienced some form of restructuring during the past three years. They said they see improvements in leadership, productivity, customer satisfaction, and employee teamwork as a result of the restructuring efforts. Almost 91 percent of the respondents reported that their company's success was based on carefully linking its compensation programs to its business objectives. This study is the most recent of many we have seen over the years that makes a strong case for tying the achievement of business objectives to compensation. Why then is this the number one reason that sales compensation plans fail? The experience of the Alexander Group suggests that this failure results from a separation in business accountabilities. Typically, the people who write the business plan are not the people who execute the plan. The situation in which Hal Jones finds himself illustrates how this can happen. Jones's goals, as well as those of the product managers, are to grow revenue within the product categories and overall. Management tells Jones to grow the business and to deliver that growth based on a defined ratio of standard and customized product sales. Management tells each of the two product managers to realize sales growth in their respective product lines. The company rewards the sales force, however, for selling volume. The company has no explicit product mix objectives. And, equally important, the company does not reward the customer service representatives at all for their efforts should they make additional sales in the two categories. The compensation plan reflects a sales strategy prevalent in the early days of the business when all volume was good volume and there was no customized product line. As at many companies, while people come and go, programs and processes at Mead are slow to change. Too often we find the changes in the sales compensation plan lag behind the changes in business strategy and objectives by one to three years. The objectives change, but it takes a year or more to design and implement a new sales compensation plan that is in sync with the objectives. This appears to be the case at Mead. 2. The Sales Compensation Plan Does Not Reflect the Realities of How Jobs Operate Within the Sales and Customer Relationship Management Processes. Increasingly, senior sales executives ask their salespeople to channel their time and effort toward the high-value selling activities. To achieve this goal, it is essential to map the optimal process for selling to and interacting with customers. Such a mapping process makes it possible to clarify job roles and, therefore, identify the high-value selling activities the compensation plan should direct, motivate, and reward. In the Mead division, Jones had inherited a situation where it is virtually impossible to effectively align compensation with the jobs that are interacting with the customers. For example, there is one primary sales job, the account executive position. Jones's field trip suggests that the company may need either multiple sales jobs or, at the very least, specialization within the account executive job. How Jones decides to segment, target, and assign customers-by size, by application, or by some combination of variables--will determine the types of sales

jobs Mead needs and therefore the sales compensation. Jones faces the additional challenge of integrating the customer service representative position into the sales and customer coverage processes. One alternative is to team customer service representatives with account executives. For example, he could assign three account executives to one customer service representative, and each account executive would share responsibility for customer accounts with the service rep. If the customer service representatives are responsible for retaining and expanding business with assigned customers, this arrangement offers the opportunity to recognize and reward their performance through a sales incentive compensation arrangement. 3. It Does Not Attract and Retain the People Required for Sales Success. A well-designed sales compensation plan is a powerful communicator of what your company values, in terms of both the types of business it goes after and the people it intends to attract and retain. Typically, a sales compensation plan fails a company when the skills required to be successful do not mesh with the company's definition of sales success. A common problem many companies face is how to find the right balance between rewarding salespeople for retaining and expanding business with current customers and motivating and rewarding the same salespeople for winning new customers. Too often, the sales compensation plan disguises the fact that the company rewards salespeople at a disproportionately high rate for retaining business with current customers and does not direct, motivate, or reward them for expanding the business by winning new customers for new business. When this happens over time, a salesperson's selling skills--particularly those needed to sell new accounts--actually atrophy; the salesperson becomes incapable of growing the business by selling to new customers. It is not clear if this is the case in Jones's situation. 4. It Does Not Link the Right Measures of Sales Performance to Incentive Compensation Payment. Over the years, many studies have been conducted to determine the characteristics of effective sales compensation plans. The studies consistently report that one of the most important elements of plan success is performance measurement. When we discover plan failure based on performance measurement, we find that (a) the company uses incomplete performance measures; (b) the company uses too few measures; (c) the company uses too many measures; or (d) some combination of the above. 5. It Causes the Cost of Sales to Increase Over an Extended Period of Time. Today in most industries, top management wants sales executives to maintain or reduce the current level of selling expense. Often, management takes this stance because the firm has cut prices and, in turn, profit margins to gain competitive advantage. The company can cut selling expense two ways. One way is to reduce head count. This is not an attractive alternative, particularly if the company views its customers as assets and its sales resources as an investment in those assets. Reduce the head count and the company risks dribbling away the assets. Another way is to carefully examine the company's buying/selling/customer service processes to determine whether there can be a more effective, cost-efficient way to engage with customers. We have found that the second course is almost always possible.

Can You Fix a Failed Sales Compensation Plan? In a word, no! Putting a fix on a current and failing plan will not, by itself, restore sales success. In most cases the sales compensation plan has not caused poor sales performance. Rather, the sales compensation plan becomes the lightning rod for change because it reveals performance deficiencies. Take a commission plan, where the company pays a percentage of sales as a commission and pays it from the first dollar the salesperson brings in each year. Management comes to realize that this is not really a first-dollar commission plan. Not all the customers quit buying each year; the salespeople don't have to start fresh. In fact, the company is paying the salespeople an amount disproportionate to what they contribute. They are getting a percentage of every sales dollar, when they only had to sell perhaps 10 or 20 percent of the time. What the company really wants is to have them sell on the margin, to sell to new customers or new buyers at existing customers, to sell more than the year before where selling makes a difference. So the first little tweak that companies usually make to their commission plans is to say, "Gee, we can't afford to be paying from first dollar," or "We're paying way too much in commissions and getting way too little return. We need to introduce some performance expectations." That was the idea at Mead: the prior year's sales established the performance standard. The salespeople needed only to beat last year's gross sales figure to start earning their commission. The problem is that there is no relationship between the sales potential bonus and the territory. Mead may be beating last year's numbers but underperforming in Florida because it does not know the true sales potential. Similarly, it may be penalizing the superior sales representative in Nebraska who has a growing share of a shrinking market but is not beating last year's figures.

Case 11 McDonald Sporting Goods Company: Determining the Best Compensation Program Learning Objectives: MSG produces and markets a wide variety of hunting and fishing accessories to approximately 6000 small and medium size retail stores in the North East and North Central regions of the United States. Over the past three years, the annual sales volume of MSG has ranged between $7,200,000 and $7,650,000. While management at MSG is satisfied with profit levels, there is concern over the lack of increasing sales volume. MSG currently employs 11 sales representatives who receive commissions of 5-7%, depending on the level of sales achieved. Additional compensation may be received through 2 sales contests. Five salespersons at MSG have guaranteed drawing accounts. Hudson McDonald, the president and chief operating officer is concerned that the sales force may be significantly undercompensated. Therefore, he instructed the comptroller, production manager, and an outside consultant to make proposals revising the current compensation plan. Specific case objectives are to: 1. 2. 3. Develop a compensation plan that should motivate the sales force to seek significantly higher sales volume, and provide necessary incentives to attract and retain a capable sales force. Illustrate the interrelationship between various elements of the sales job such as training, account coverage, motivation and evaluation. Emphasize the part the sales force plays in assisting the organization to reach its objectives.

QUESTIONS AT END OF CASE Which of these plans, if any, should the company use to compensate its salespeople? Why? PRIMARY DECISIONS 1. 2. 3. 4. What commission rates to utilize. Whether to include salary in the compensation plan. Whether to eliminate the current contests. Whether to offer a bonus to those salespersons reaching their quota.

SECONDARY DECISIONS 1. 2. At what level of sales volume to set the quota. How to present the new compensation plan to the sales force.

Assumptions Which Might Be Made

Teaching note written and copyrighted by Charles M. Futrell, 2001.

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That significantly higher compensation levels are needed to recruit and retain quality sales personnel. That sales potential is currently much higher than the current sales volume.

Alternatives 1. 2. 3. Retain the current compensation plan. Adopt one of the three proposed compensation plans. Propose an alternate compensation plan.

Analysis of Alternatives Neither the current compensation, nor the plans proposed by the production manager, the consultant, and the comptroller offer sufficient means for the salesperson to receive the compensation level of $45,000.00 deemed desirable by McDonald without achieving unrealistically high sales volume. Therefore, the risk inherent in any of these plans is that MSG will end up with an incompetent, unmotivated sales force, and a static or declining yearly sales volume. Present Customers The firm's sales efforts were being directed largely toward the small retailers of sporting goods located outside the large metropolitan areas. This is reflected by the annual sales volume per account. The instructor may ask the students to recommend actions that could be taken to expand sales to the larger retailers of hunting and fishing supplies. Since the retailers apparently had little or no brand preference, the sales force played the major role in obtaining retail distribution for the company's products. A large scale advertising campaign to develop a preference for the McDonald brand would be very costly and questionable. However, direct mail and other forms of advertising could be utilized to a greater extent to supplement the salespeople's calls on the retail trade. Sales Training The training the salespeople received prior to being assigned a territory consisted essentially of memorizing the names, prices, sizes and colors, and the "primary selling features" of the company's products. It is questionable if such training adequately prepared the salespeople for the task of persuading retailers to stock the McDonald line of sporting goods. For the first several weeks the salespeople were in their territories, they were accompanied by Mr. McDonald. Thereafter the salespeople received little additional training except during the semi-annual sales meetings. A more extensive training program for the salespeople could improve their selling abilities. The students can prepare a program for training the salespeople. A full-time sales manager could give the salespeople additional training by working with them periodically in their respective territories. Only one-third of Mr. McDonald's time was being spent in managing the sales force. A full-time sales manager could exercise closer supervision over the activities of the salespeople, and he could assist them in planning their itineraries. The variations in sales coverage and the low average sales per account indicate that many of the

salespeople are spending too much time with accounts located close to their homes and with retailers who well only a small volume of hunting and fishing supplies. Market Potential Explicit estimates have not been made of the market potential for hunting and fishing supplies in each of the sales territories. Possible differences among territories in market potential and competition are being ignored in the compensation and evaluation of the salespeople. The students can propose methods for estimating market potential. Estimates of market potential may suggest a realignment of the sales territories. Why Is Motivation A Problem A review of the salespeople's ages, years of service, and sales may suggest to some students that several of the salespeople have little or no potential for becoming high volume producers. The more perceptive students may question if any change in the compensation plan will motivate some of the salespeople, such as Mr. Gatewood and Mr. Wates who seem to be satisfied with their incomes, to increase their sales appreciably. Incentive Plans The Annual Sales Increase Awards Incentive Plan enables five of the eleven salespeople, or 45 percent of the sales force, to receive prize money. Salespeople who produce a very small increase in sales volume can win an award, for example, Mr. Gatewood. As a salesperson's annual sales volume rises it becomes more difficult for him to win the top award. Consequently, the salesperson who produces the largest increase in absolute dollar sales for the year may not win the top award. In the current year Mr. Campbell had the largest dollar increase in sales, but Mr. Mason had the largest percentage increase and won the top award. This plan emphasizes competition within the sales force rather that competition against other suppliers of hunting and fishing equipments. Under the Weekly Sales Increase Award Plan, the monetary award per week is the same regardless of the actual dollar increase in sales. A very small increase in volume results in the same award as a very large increase in sales. Therefore, the plan does not provide an incentive to produce a large increase in weekly sales. The salesperson producing the largest cumulative increase in dollar sales for the year may not receive the largest total amount of award money. This characteristic of the plan is illustrated by comparing the increases in sales volume and accrued awards of Mr. Campbell, Mr. Mason, Mr. O'Bryan, and Mr. Samuels for the current year. The guaranteed weekly income in itself does not provide an incentive to increase sales volume. A salesperson producing $225,000.00 in annual volume may think he has little chance of pushing his sales above the $432,000.00 level to earn commissions in excess of his draw. The plan does not provide an incentive to those salespeople who are earning in excess of $450 per week. Likewise, it holds no incentive for those salespeople who are not receiving a guaranteed weekly draw. The plan can result in inequities in income among those salespeople receiving the guaranteed

draw and those who are not. However, the plan does provide recently employed salespeople with the minimum income on which to live while they develop their respective territories. The Comptroller's Plan The comptroller's plan would give some of the salespeople essentially a salary of $225 per week plus a commission. The weekly incomes of the salespeople on such a plan could vary widely as a result of fluctuations in their sales. The comptroller's proposal is not explicit on the question of how long a salesperson would continue to receive $225 per week. It is anticipated with the guarantee plan now in effect that each salesperson will be able to develop sales in his territory to the point where his commissions will exceed the amount of the guarantee. Under the plan proposed by the comptroller discontinuation of the $225 a week guarantee when a salesperson's annual income. Inequities in income would result unless all the salespeople were given $225 per week plus commission. For example, a salesperson who did not receive the guarantee would have to produce $572,175.00 in sales to annually earn as much as a salesperson receiving the guarantee whose volume was $405,000.00 for the year.

The Production Manager's Plan The increase in per diem proposed by the production manager would raise the company's annual per diem expenses by at least $2700 ($54 for 50 weeks) per salesperson plus $81.00 for each Sunday a salesperson spent away from his home. The students can estimate the total increase per diem expenses the company would incur if this proposal is adopted. Per diem Sunday is an incentive for the salesperson to use Sunday for traveling which would increase the amount of time he has available for calling of prospects. Indirectly, the additional time may result in an increase in sales volume. However, an increase in per diem is not a direct incentive to increase sales volume. However, an increase in person would be compensated for being in the field regardless of the volume he produced. Better coverage of the territories may result if the salespeople receive a larger allowance for traveling. The Consultant's Plan The Ten Percent Self-Improvement Plan proposed by the consultant is based on two implicit assumptions: 1) all the salespeople have the ability to increase their sales volumes; and 2) the sales produced by each of the salespeople are not approaching the market potential limits of the territory. The bonus commissions, computed on total sales for the year. that would have been paid in the current year are compared in Table 1 with the incentive payments made under the Annual Sales Increase Awards and the Weekly Sales Increase Award plans. The effective commission rate on the incremental volume would be 15 to 17 percent depending on the salesperson's total volume for the year. The bonus commission may be a strong incentive for the salespeople to appreciably increase their sales volumes since the amount of the bonus is in direct proportion to the absolute dollar increase in sales. To earn bonus commissions each salesperson would compete against himself and

McDonald's competitors rather than against other salespeople. Since a bonus commission would be paid only on the incremental volume about the sales in the comparable month of the previous year, the salesperson would have to continue to increase his monthly sales each year in order to earn the additional commission. The bonus commissions earned would be limited only by the salesperson's willingness to work and his selling ability. The plan provides the salespeople with an incentive to reduce the amount of time spent with smaller accounts and to devote more attention to the discounters and other large volume accounts in their territories. Since the over-ride commission would be paid on a monthly basis, conceivably a salesperson could earn bonus commissions without increasing his total volume for the year. An example of this possibility is shown in Table 2. The plan as proposed by the consultant make no provision for the situation in which an increase in a salesperson's volume is followed by subsequent months in a decrease in his sales. The students may wish to recommend modifications of the compensation plans mentioned or propose alternative methods of compensating and motivating the salespeople.

COMPARISON OF INCENTIVE PAYMENTS IN CURRENT YEAR WITH BONUS COMMISSIONS UNDER THE CONSULTANT'S PLAN TABLE 1
SALES VOLUME INCENTIVE PAYMENTS Under Existing Plans Previous Year $185,774 670,608 ----201,672 233,401 --362,831 305,960 414,576 208,525 Current Year $185,184 776,385 233,244 235,921 201,685 233,285 319,342 464,112 321,971 463,766 192,488 Dollar Increase --105,777 ----13 ----101,282 16,011 49,190 --Consultant's Plan

Salesmen Allen Campbell Duvall Edwards Gatewood Hammond Logan Mason O'Bryan Samuels Wates

Annual --$3,375 ----450 ----4,500 1,125 2,250 ---

Weekly $1,138.50 2,524.50 ----1,242.00 472.50 --3,874.50 1,701.00 1,462.50 688.50

Total

$1,138.50 --5,899.50 $10,579.50 --------1,692.00 --472.50 ------8,374.50 10,129.50 2,826.00 1,602.00 3,712.50 4,918.50 688.50 --$24,804.00$27,229.50

TABLE 2 FEBRUARY AND MARCH BY SALESPERSON A Last Year February March Total $45,000 $40,500 $85,500 This Year $54,000 $31,500 $85,500 Bonus Commissions $900 $0 $900

Case 12 Burditt Chemical Corporation: Analysis of Sales and Marketing Costs Overview: Scott Cate is the DM, and the main case character, of the Burditt case. Scott's boss, Mr. Zinc, has sent Scott exhibits showing that his district may have a performance problem. Scott is to analyze the data and then discuss his findings with Mr. Zinc. Scott needs to analyze sales profits and salespeople's activities in determining the reasons for the present performance dilemma. Approaches to Analyzing Case 1. Examine issues of salespeople's influences on a district's sales and profits. 2. Crunch the case data. Highlights of Data Examination A. Exhibit 1 shows sales and profits increasing since 1996. B. Exhibit 2 shows District 3 as the lowest among districts in (1) % sales quota; (2) % gross profit quota. C. Exhibit 3 shows District 3's total selling expenses are high ($810,414 vs. average expenses of $754,272), accounting for 15.3% of region's expenses. D. Exhibit 4 shows District 3 lowest in sales contributed to administrative expenses and profits. E. Exhibit 5 shows District 3's sales by account category higher than District 7, yet gross profits lower. F. Exhibit 6 shows District 3 with a larger number of bigger prospects and customers (A's and B's) and makes more sales calls. G. Exhibits 5 and 6 help show that District 3: 1. 2. 3. 4. 5. Failed to develop potential accounts in market. Sales from existing accounts are not adequate. A, B, and C account groups' "mix" not best to achieve sales objectives. Some combination of 1, 2, and 3. District 7 (relative to District 3) has done a better job with larger accounts (A and B). Also, District 7 has higher gross margin dollars per active accounts and higher average gross profit.

H. Possible Conclusions to Data and Ways to Increase District 3's Performance.

1. 2.

Sales effort needs to improve. Need to focus on A and B accounts and prospects. Improve product mix sales to increase sales volume and gross profit. Focus on higher gross margin products.

Case 13 Deer Tractors, Inc.: Analyzing Sales Data Deer Tractors, Inc. manufactures six major product lines. There are push lawn mowers, powerpropelled lawn mowers, riding lawn mowers, garden tillers, lawn tractors, and garden tractors. The company is divided into five geographical regions. Annual sales have steadily increased to $725.6 million as of 2000. In fact, sales have increased at a more rapid rate than industry demand and the company's market share has been increasing. At the beginning of 2000, a market decision support (DS) was installed to allow for a continuous audit of the firm's marketing operation. When Jim Tanner, the national sales manager, received the income statement he noted that the Western region was the lowest in terms of profitability, and the Eastern region was the most profitable. Tanner asked that this contribution margin approach be extended to the product lines. He was surprised to see the lack of profitability of the lawn tractor line. Tanner requested a regional breakdown of company sales volume. All except the Western region were meeting quotas. Tanner did not know why sales were down. He called John Anderson, the Western region sales manager, and asked him to look into the matter and report back to him in two weeks. John knew sales were slow; however, he had not been that concerned until now. To examine the $956,000 loss, John used the district sales breakdown. It was very apparent that the Northern California sales district was experiencing problems. He called Kurt McNeal, the district manager, and asked him why sales were down. Kurt told him that he was getting ready to fire Leslie Stark. He said the personal problems were getting in the way of business. John asked if he had talked with Leslie. Kurt said that he had, adding that Leslie claimed that their competition was using that area as a test market for a new line of garden tools. Kurt told him he felt Leslie was not working very hard and as a result competition was getting their business. John told Kurt he would mail him some data he should look over before firing Leslie; if after this he still felt like letting him go, he would have John's permission. John added that he was not sure Leslie was doing so badly compared to the rest of them. The objectives of this case are to show that general sales data can be misleading and to require students to examine regional, district, and individual salespeople's performance data to arrive at a decision. Questions for Discussion: 1. What do you feel is the main purpose of a firm's marketing information system? Do you feel Deer Tractors has an adequate MIS? MDSS help management to direct activities toward areas of specific need and opportunity, and thereby generate additional sales or more profitable sales, guard against loss of business through failure to provide service, control costs, and strengthen the company's marketing position in both the short and the long-term.

Deer Tractors's MDSS is new, so people will have to use it for a while to see its value. It appears to be adequate, however; reports need to be developed to better compare salespeople's performance within a district. For example, see tables in answer to Question 2. 2. Do you agree with Kurt's decision to fire Stark? Why? No, I do not agree with Kurt's decision. The information in the case can be rearranged to form Tables 1 and 2 shown below. Table 1 shows all salespeople except J. Dozzier have negative sales. Table 2 shows that five of L. Stark's six performance indexes look reasonably good. His sales are better than the district average on four of the six products. Garden tractors are not selling in Stark's territory. Kurt needs to visit Stark to find out why. 3. What action, if any, should John Anderson take? For example, should he let Kurt handle the problem of low sales in the district? The data shows several of Kurt's salespeople have sales problems with several products. Kurt and John need to discuss methods to improve their sales. Indications are Kurt is not doing his job. TABLE 1 District's Salespeople's Product Sales
Push Mowers J. Boles L. Stark J. Dozzier A. Penney TOTAL Average 7.0 11.0 9.0 8.6 35.6 8.9 Power Mowers -3.4 -2.2 1.0 3.1 -1.5 -0.4 Riding Mowers -44.3 .4 1.7 .8 -41.4 -10.4 Garden Mowers 3.6 -8.2 5.2 -15.4 -14.8 -3.7 Lawn Mowers 3.6 15.2 1.6 -10.5 8.2 2.1 Garden Mowers 10.1 -46.3 21.6 -4.0 -18.6 -4.7

TABLE 2 L. Stark, Product Sales District 38 (Thousands) Performance % Gain or Loss Over Last Yr.
Product Push Mowers Power Mowers Riding Mowers Garden Tillers Lawn Tractors Garden Tractors Quota $2064 1088 416 2196 3052 2352 $11,168 Actual $2088 1080 468 2192 3232 624 $9684 Difference $24 -8 52 -4 180 -1728 $-1484 Index 101 99 112 99 105 26 86.71 (avg) Territory 11.0 -2.2 .4 -8.2 15.2 -46.3 District 8.9 -1.5 41.4 -14.8 8.2 -18.6 Region 7.6 3.7 3.8 -4.2 11.5 -9.1

HARVARD CASES
Case 14 WESCO Distribution, Inc. Synopsis In June 1997, Jim Piraino, VP of marketing for WESCO Distribution, Inc., is preparing for a yearly review meeting with WESCO CEO Roy Haley. Haley wants the firm to reach annual growth goals of 6% to 8% in revenues and 12% to 16% in profitability over the next five years. The centerpiece of this growth strategy is the National Accounts program, which WESCO has developed to serve its major industrial customers in response to recent changes they have made to their business processes. However, as of June 1997, the NA program has not delivered the expected increases in sales and profitability. Jim Piraino has to give Haley his recommendations for the future of the NA program, in particular, whether WESCO should continue to pursue NA business with the intensity it has in the past, or whether to assume a more reactive stance and offer the NA program only when it is requested by current customers. As well, he must account for how WESCO will achieve the desired increases in profitability and overall revenues when its current program already seems to be encountering difficulties in generating the desired numbers. Use Although the "customer" is at the heart of marketing strategy, "effective customer management" is still not a very well understood concept in industrial marketing practice. This case can be used to explore the difficulties encountered in developing and implementing new ways of customer management in mature industries such as component parts, industrial raw materials and consumables,1 and other similar industries. These industries are characterized by an environment in which competitors are able to offer equivalent products at competitive prices and vendors/ distributors have to use service rather than product characteristics to create differentiation and add value to customers. This note was prepared by Professor Das Narayandas with the assistance of Research Associate Sara Frug for the sole purpose of aiding classroom instructors in the use of WESCO Distribution Inc., HBS case No. 598-021. It provides analysis and questions that are intended to present alternative approaches to deepening students comprehension of business issues and energizing classroom discussion. Copyright 1998 by the President and Fellows of Harvard College. Used with permission.

1*

In the 1980s and '90s, over half of the sales dollar of an industrial product-manufacturing firm is made up of these purchased parts and services.

In the 1990s, the standard response of these vendors has been for them to set up a National/Key/Major Accounts Program. While in principle these programs are a good idea, since they lock customers into long-term agreements with volume commitments, there are several factors that can derail this effort. Vendors are learning the hard way that not all of their customers are interested in getting into these agreements. Further, they are finding out that many of the customers who get into such agreements are only interested in getting lower prices in addition to more service from the vendor/distributor,1 and are not willing (or not able) to work with the vendor in a mutually beneficial mode. As the case highlights, the true benefits from these programs come when both sides put in the effort and the investments to make it happen. By using WESCO's partially successful national accounts program as the foundation, this case analysis helps students develop a better understanding of how to develop, implement, and effectively manage a National or Key Account Program with major customers. The case is also rich on distribution and integrated supply management issues, and can serve as an effective recap of the distribution module if taught in a business marketing course. Finally, the case has a lot of information on trends in buyer-vendor relationships through the 1980s and '90s. Given the complexity of the situation and the information provided, the case is best taught in a second year MBA elective such as business marketing, service management, or distribution management. It also works very well with executives, since it deals with customer management-an issue that is very important to every sales and marketing executive who deals with customers in a business-to-business context. At HBS, this case is taught as a transition between the "Managing Distribution" and "Managing Customer Relationships" modules in the second-year Business Marketing elective. Objectives The teaching of this case involves the following objectives: 1. Understanding the role of service in differentiating commodity products. 2. Identifying the factors that determine the success or failure of long-term collaborative buyer-seller relationships in business markets. 3. Defining the notion of customer value and mapping its changing nature over time in a long term relationship. 4. Understanding the role of a NA program in acquiring and retaining industrial customers. 5. Developing a process model for initiating and implementing a NA program.

For those who also use the Signode case (HBS case #9-586-059), these are the Low price - - Hi Cost-to-Serve customers.

6. Building an appreciation of the need for suppliers to be selective in implementing a NA program. 7. Exploring the difficulties involved in managing a portfolio of customers. 8. Understanding trends in supplier management, including recent trends in supply chain management systems such as supplier tiering and integrated supply alliances. Teaching Questions 1. What is your action plan? Do you recommend that WESCO be proactive in managing its NA program or would you prefer that WESCO adopt a passive approach? 2. Where and how does WESCO add value to its suppliers? Its customers? 3. Why did WESCO start the NA program? What are its benefits to WESCO? 4. Why do you think the NA program is not delivering on its promises? 5. What does case Exhibit 5 tell us? Is there something that we can learn about the issues involved in implementing the NA program? 6. What about the NAM capacity issue? 7. Going ahead, what is going to happen? Can this NA program be sustained over time? What will happen if other competitors also develop NA programs? 8. How does all this attention being paid to the NA program affect WESCO's ability to serve its other customers? 9. What should WESCO do with the NA program? What are your recommendations? Analysis What is your action plan? Do you recommend that WESCO be proactive in managing its NA program or would you prefer that WESCO adopt a passive approach?

The various comments supporting proactive and reactive positions are as follows: Proactive vs. Reactive NA Strategies Pursue a Proactive Approach to the NA Program Take a Reactive Stance in the NA Program Haley's aggressive growth plans for WESCO The NA program is only highly profitable depend upon substantially increased revenue when fully implemented. In the middle from the NA program. Key NA customers stages, the costs to serve are very high. can ramp up revenues very quickly. The NA program is pitched to headquarters. Key NA customers allow us the best margins Local branches uninterested in the when including costs to serve in the corporate bottom line can sink calculation (Exhibit 5). implementation. The NA program has a lot to offer customers in heavy process industries (Exhibit 13). Larger and more predictable orders are more economical for suppliers and allow WESCO to obtain better prices. Consolidation in the EES industry has made competition fiercer. We need to get as many customers as we can to sign on. Being proactive gives us more control over the profile of the customers we choose to work with. Actively pursuing customers improves our chances of becoming a first-tier supplier to our customers, which should, in turn, improve our margins. Taking a reactive stance could cause us to lose out on the business of potential key customers being pursued by our competition. Pushing the NA program could alienate contractor customers by ignoring them or even competing against them. If the prospecting and selling phases of the NA process could be cut substantially, NAMs would have more time to work on implementation and maintenance. The selling process could be directed at consultants in order to increase demand for the program. Including only those customers who demonstrate a strong interest in the NA program will improve the return on WESCOs investments in the early stages of the program. PirainoStrong individual partnerships have brought us to where we are now and they may even be able to keep us going for some time.

In addition to the issues listed above, students will also focus on numbers to justify their arguments for either a proactive approach or a reactive one.

Roy Haley states his revenue and profitability goals for the company. By the year 2000, he wants revenues to have grown by $725 million and profitability by at least 60%. Extrapolating from the figures given in Exhibit 2, and assuming no seasonal differences in purchasing patterns, we find existing rates of growth of approximately 19% for key customers, 15% for focus, and a decline of 1 % for other NA customers as follows: Key : 89*12/5 = 213.6 (213.6 -180)180 = 18.7% Focus : 25 * 12/5 = 60 (60 - 52)52 = 15.4% Other : 14*12/5 = 33.6 (33.6 - 34)34 = -1.2 % Under this scenario, assuming the average level of growth from the other segments (as shown in case Exhibit 5) amounting to $192 million, this leaves a need for $266.5 million through business acquisitions and $266.5 million in NA growth. This means that WESCO needs to double its current NA revenues in the next three years in order for Haley to meet his targets. Based on the current levels of growth, the NA program would reach the $476 million level by the year 2000, falling short of the goal by over $50 million. More importantly, if each type of customer continues to generate the current average revenues for their category, then this scenario means expanding the number of NA customers to 525 from 300. Using the current NAM customer loads, this means that WESCO must add 12 new NAMs to its team. Given the difficulty of finding suitable NAMS, this may be difficult. Further, the NAMs are already quite heavily committed, so the estimate must be considered conservative. The instructor might want to capture these numbers as they come. However, there is little value gained by getting into further discussions of the numbers at this time. It is better to come back to them at a later point in the discussion. Once some or all these points have been addressed in the discussion, the instructor can transition the case with the following comment: It looks like we need to have a better understanding of this business before we can make any judgments about what WESCO should do with its NA program. Why don't we take some time to understand the role that WESCO plays in this supply chain. What is it that WESCO provides its suppliers and its customers? Where and how does WESCO add value to its suppliers? Its customers? WESCO adds value to its suppliers both in general and in its specific initiatives. In general, as a distributor, WESCO allows EES suppliers to sell to customers too small to purchase directly from them. By offering customers products from numerous EES suppliers, WESCO increases the probability of a good product-customer fit by helping the customer to find the product that most exactly fits their requirements. In its specific initiatives, WESCO adds value to its suppliers by generating demand for their products. In the course of monitoring its

relationships with its customers, WESCO obtains information about customer needs and translates that knowledge into explicit demand for vendor solutions by identifying problems and demonstrating the efficacy of solving them. (Case Exhibit 7 provides a schema for this process.1) As with its suppliers, WESCO adds value to its customers both in general and in the particular features of the services it provides. As a distributor, WESCO can offer customers a one-stop solution to their EES needs that allows them to purchase the products they want from EES suppliers of their choice, in volumes appropriate to their size. Under the NA program, WESCO offers specific value added services aimed at trimming procurement costs. Without intervention, costs-to- acquire MRO products can exceed the costs of the products themselves. Inventory costs (summarized in case Exhibit 9) add to acquisition costs and bloat the total procurement cost for MRO products. In the interest of cutting these types of costs, WESCO offers inventory management and reduction initiatives that range from JIT systems to storeroom management to inventory consignment (see case Exhibits 10-11). WESCO also monitors inventory to ferret out mechanical problems and inefficient energy usage, as well as providing detailed records indicating where and how initiatives for cost reduction can help customers. Finally, by offering standardized, year-long pricing regardless of volume at a particular site, WESCO offers customers the ability to make better estimates of their MRO costs during a particular year. At this point, the instructor can push the discussion along by asking students to explain why WESCO started the NA program and by highlighting its benefits to WESCO. Why did WESCO start the NA program? What are its benefits to WESCO? There are several reasons why WESCO initiated the NA program and ways in which the company is benefiting from it: 1. Large industrial customers are demanding it, and they are important to WESCO. Industrial customers currently account for nearly one half of WESCO's revenues and have ongoing and relatively predictable MRO needs. During the late 1980s, many large industrial customers demanded higher quality levels, which necessitated major investments on the part of distributors like WESCO. 2. It offers national distributors, like WESCO, an opportunity to create a unique and sustainable competitive advantage with its customers and suppliers. Customers: The NA program builds customer value and enhances cooperation. This can potentially lower the customer's price sensitivity and temptation to switch. By constructing the intricate networks between WESCO's sales and customers' purchasing staffs required for the NA implementation and maintenance processes, WESCO can build a high level of trust and cooperation with its customers. Because the NA program can document the value it adds to
1

The instructor might choose to use Exhibit 7 to run a short lecture on the role of distributors in the future when technology will reduce the costs for transferring information between customers and suppliers. Will this mean that WESCO's role in the supply chain is threatened in the long run? What can WESCO do to ensure its position and its margins? I have found executives to relate a lot to this set of questions.

customers, particularly in its transaction cost reduction initiatives, customers are disincented from price sensitivity because haggling undermines their efficiency. Finally, the NA program builds in some switching costs. Particularly in the design of systems for inventory management, the NA program creates technical links that are far easier to continue to use than to dismantle and rebuild with a competing distributor. Suppliers: WESCO can also use the NA program to demonstrate the unique value they add to their suppliers' offerings. The NA program creates demand for its suppliers' products in the course of NA value creation activities for WESCO's customers. In the process of conducting energy audits and the like, WESCO gains access to information about the customer's needs that allows it to demonstrate the value of using vendor solutions (see case Exhibit 7 and the discussion of value added in the following question.) By engaging in these types of demand creation activities, WESCO can secure a position as a desirable distributor with which to work, overcoming some of the natural antagonism and conflict that can arise across the two levels in the channel. 3. Roy Haley sees it as an opportunity to increase the scope of WESCO's business with each of its major customers. NA customers can each generate up to $10 million or more apiece in yearly revenues. Their demand is relatively predictable and maintenance reasonable straightforward once the implementation phase of the national account management process is complete. Haley knows that certain types of inefficiencies pervade heavy process industries such as pulp and paper and petrochemicals, so once WESCO has its foot in the door, its value proposition should be compelling. If WESCO can push NA customers through toward tiered integrated supply agreements, the program holds even more potential. 4. WESCO needs it to meet Haley's ambitious growth plans. Haley wants to increase revenues by 30% and profitability by over twice as much by the year 2000. The only customer segment that can generate the necessary revenues at the required levels of profitability are key NA customers. Having established the importance of the NA program to WESCO's overall growth strategy, the instructor can transition the class with the following question: "Well, the NA program is important. Also, going back to the beginning of this discussion, most of us feel that this program hasn't been very successful. Can we be more explicit about why we think this program has been a failure to date?" Why do you think the NA program is not delivering on its promises? The two main issues here are choosing the right customer to partner with and developing a proper implementation plan. Specifically,

1. WESCO needs to be more selective in choosing NA prospects. Currently, WESCO does not have a process for segmenting its customer base. It has tried to use a shotgun approach to select customers as partners in its NA program. 2. After having chosen the right customer, WESCO needs to ensure proper implementation. Implementation should be easier when customers are chosen in part on the basis of how easy or difficult it would be to implement an NA program with them. Nevertheless, the process needs to be streamlined and responsibility reapportioned. Using the results of the study done by Piraino, we can develop a list of factors that can ensure a high degree of success. These factors are as follows: 1. Being in the customer's procurement sweet spot. Customers are interested in value as opposed to price when the purchase is of sufficient magnitude. As Piraino points out, for most of WESCO's customers, over 70 percent of the annual procurement budget is accounted for by the top five to ten suppliers. It is with these suppliers/distributors that customers are usually interested in developing a relationship based on value more than price. The purchase dollar volume and effort involved in these relationships makes customers willing to go beyond transaction prices and focus on the total cost of ownership. For instance, in case Exhibit 14, imagine that the customer currently spends $12 to $15 million per year on EES needs and $100,000 on office supplies. Pursuing value over price in EES purchases could save the company upwards of $2.5 million per year, but spending time and energy on office supplies procurement will save only $20,000, an amount that is too small to attract the customer's attention, especially given the effort to achieve these savings. 2. Senior management buy-in. This issue is especially important in a bottom-up sell. An individual customer plant may be extremely enthusiastic about the services WESCO is offering, but if senior management doesn't see the benefit to the company as a whole, then implementation over the usual two dozen or so customer sites will be an uphill fight. As Piraino points out, once there is a mandate from the top, pockets of resistance in the rest of the organization are relatively easy to overcome. It is interesting to note Piraino's comment that there can be an enormous difference between a VP of Purchasing championing WESCO's cause and the CEO spearheading the effort. The problem, of course, is that for a supplier of electrical components, it might be very difficult to get the CEO's attention. This is where the role of the consultant comes in. 3. Role of consultants. One way that senior management tends to become interested in MRO procurement costs is through the work of consultants. Through the nineties, it has been quite common for large firms to hire high-powered consultants to conduct studies of how to re-engineer their organization toward greater efficiency in operations, manufacturing, and service. These consultants are more likely to see the implications of the 20% savings figure and be better able to convince senior management of the importance of cutting procurement costs than WESCO. They may

also help the customer's organization become more conducive to change, aiding the implementation process. 4. Relationship with the local customer. Purely top-down initiatives have the reverse problem of bottom-up initiatives. Local customer plants may have been doing business with a particular distributor for decades and not be interested or motivated to break off a relationship in which they are successful at getting good prices. 5. Uniformity of needs across customer plants. NA implementation is ultimately dependent upon each distributor's branch being able to meet the needs of each customer's plant. As Piraino points out, in several less successful NA relationships, unanticipated differences in procedures and purchases across customer sites have made implementation difficult. For example, when a local plant's bill of materials turns out to be very different from the list covered by the NA agreement, the local WESCO branch has to resolve all matters locally, often with no cooperation from the local customer. The customer's corporate staff accuses WESCO of not working hard enough. Their local purchasing and materials management staff will not cooperate because they would need to make major changes to their systems in order to do so. WESCO gets caught in the middle and its implementation team quickly loses interest in the face of implementation headaches and small potential sales volumes. Even the NAM shift focus to other accounts that might be easier to manage. 6. The customer has initiated NA programs with suppliers/distributors of other product categories. This point addresses both plant- and corporate level resistance. If the company has implemented previous NA programs, then management is usually interested in and prepared to work under such a structure, and individual plants are used to conform to top-down initiatives of this sort. The negative aspect of this factor is that the first movers might lock WESCO out of the customer site for good. Having identified these factors, the analysis can now shift to how WESCO can use this information to improve the performance of its NA program. The instructor can motivate this discussion by asking students two questions: "Are each of these factors within WESCO's control and, can WESCO use this information to select customers for its NA program?"

Factors

Controlled by WESCO? No Partly Yes Partly Yes Yes No No

Being in customer's procurement sweet spot Senior management buy-in Role of consultants Relationship with local customer Uniformity of needs across customer plants Customer has NA programs for other products

Can WESCO use it to Segment Customers? Yes Yes Yes Yes No Yes

1. WESCO cannot control a customer's purchase profile. However, this information can be used by WESCO to segment customers. WESCO should selectively pursue customers whose profile looks like that of the customer in case Exhibit 16. 2. WESCO can work with the customer's senior management and convince them about the benefits of the NA program. The reality, however, is that CEOs might not be interested or have the time to get into looking at cost savings from light bulbs and switches. 3. WESCO can develop good relationships with consultants and gain access to their customers. The issue here is that consultants, especially those that focus on reengineering and supply chain management initiatives, might view WESCO as a competitor rather than as a collaborator. Relationships with local customers are a very critical piece of the NA puzzle. This point entails a chicken-and-egg problem, however, insofar as WESCO needs the local relationships to make the NA program work, while needing the NA program to give an incentive to develop local relationships. As the case suggests, WESCO's successful NA programs have been those in which WESCO branch personnel had already established good working relationships with local customers. On the other hand, given limited resources, it remains a question whether WESCO has the time to pursue grass roots customer development. Before an NA agreement is signed, the branch personnel will tend to want to work with the customers who will make the largest purchases with the least effort. These customers are either potential NA customers or not. If not, it is unappealing

4.

to give them up to pursue a corporate goal. As the case suggests, this is an issue even after the NA agreement has been signed. 5. Although uniformity of needs is very important, WESCO cannot control it. Further, the only way that WESCO can get access to this type of information is during the implementation stage, at which point it is too late. Otherwise, WESCO gets the information haphazardly, since it is almost never the case that WESCO branches working separately would happen to serve all of the branches of a potential NA customer. 6. The presence of existing NA agreements is not controllable by WESCO and is an effective mechanism for segmenting customers. However, there is a downside here. If WESCO waits for the customer to initiate NA programs with other distributors, it runs the risk of the customer also asking the other distributors to manage WESCO as a second tier distributor.

Even after the discussion to this point, students may say that WESCO should get its customers to commit up-front. The instructor should push them at this point and ask them to justify their arguments by asking the following question: Why will industrial customers commit to investing in the relationship? The instructor can also ask students a question like, Are you suggesting that WESCO ask customers to invest in these relationships, and if they don't, do you recommend that WESCO drop these customers? Clearly, there need to be a lot of factors in place for customers to participate willingly in the program, make the investments, and work collaboratively with WESCO to achieve mutual gains. The reality is that customers get into these relationships in a gradual manner. At each stage, they are likely to look at the return on their current investments before they make any further investments in the relationship. Students will recommend that one way to accomplish this goal would be for WESCO to have the customer agree to collaborate on a few minor projects. The collaboration process represents an opportunity for WESCO to gather information about the customer that is useful in determining their suitability as a long-term partner. Producing concrete gains (and higher value) through collaborative endeavors can improve the chances of WESCO being selected as a national distributor and of the customer being fully committed to the relationship from day one. It is evident to the students by now that not only does WESCO need to be selective, they also need to have a very clear implementation plan after they have been selected. However, there is still an incomplete understanding of the patterns of relationship development. The instructor can therefore direct the students' attention to the case Exhibit 5.

What does case Exhibit 5 tell us? Is there something that we can learn about the issues involved in implementing the NA program? I find it useful to quickly get some students to provide the information from this exhibit as I draw a diagram like the one shown below.

Having drawn the three curves on the board, I have the students interpret these curves. It also helps to ask students whether the three NA segments are, in fact, three stages in the process of relationship development. There is usually a lot of support for this line of reasoning. Students will relate to this issue by pointing out that if an implementation program is not executed properly, then WESCO ends up in a situation where it has made significant investments while the customer has probably not made any investments at all. In this situation, if the volume of sales are not realized, then WESCO is going to lose a lot of money. Another attribute of this analysis is that it proceeds through time based on current and past experience, and that it is therefore difficult for a customer to anticipate the dramatic nature of the change experienced in becoming a "key NA" customer unless they have already reached that stage. The Evolution of NA Relationships: Other NA customers and focus NA customers Prior to initiating the NA program, all customers have "other industrial customer" status. From the data, it is clear that WESCO's costs-to-serve "other NA" and 'focus NA" customers are significantly higher than for other industrial customers. This is because of the investments that

WESCO makes in these relationships that it does not incur in its relationships with other industrial customers. From the point of view of the "other NA" and the "key NA" customer, the value of the NA contract lies almost entirely in the discount. Although standardizing prices across all plants would have the potential to cut costs involved in obtaining quotes and improving the accuracy of budget forecasts, local plants have probably not seen the situation this way. Purchasing agents are probably viewing the NA agreement as amounting to a discount of one telephone call. They usually get quotes from other distributors, using WESCO's price list as a benchmark from which to negotiate with WESCOs competitors. A worse scenario: because purchasing agents tend to be evaluated on the basis of the discounts they can derive from distributors, standardized pricing might mean that they will be disincented from purchasing from WESCO, since their talents in negotiation will be irrelevant to such purchases. In summary, these customers do not see a significant increase in value, and whatever marginal increase they do see is because of lower prices that they are now getting. Many of them have possibly gotten into these agreements just to cherry-pick the best prices. These customers are not interested in going any farther. Unfortunately for WESCO, they have little or no power to take any legal action given the incompleteness of these agreements/contracts and the relative power imbalance in the customer's favor.1 Key NA customers In the case of 'key NA" customers, the story is very different. WESCO's costs-to-serve these customers go down dramatically. This is probably because the joint activities and detailed implementation plans developed and executed with the customer are leading to better ordering patterns, reduced administration costs, etc.

Some students are likely to conduct the following analysis, which the instructor needs to manage carefully. They will calculate the dollar value of price discount for the other NA customers as follows. Case Exhibit 2 lists the mean annual purchases per other NA customer as $227,000. Case Exhibit 13 gives the breakdown of savings for a fully implemented "key NA" customer. From the case, we know that this customer purchases $1 million per month from WESCO. Case Exhibit 5 suggests that WESCO gives its best discounts to its largest NA customers, so it seems reasonable to assume that the customer profiled is receiving as good or better a discount than the average $3.6 million-per-year "key NA" customer. With this in mind, we know that the customer's annual savings exceeds 20% of $12 million for a savings of over $2.4 million annually. Of that, we know from case Exhibit 13 that five percent of the savings (~$120,000) derives from price improvement. Thus, the price discount works out to approximately one percent. From case Exhibit 5, we see in the price index that ten index points separate "key" prices from "other industrial" customer prices. Since "key" prices have a discount of around one percent and "other industrial" customer prices have no discount, we can estimate discounts for focus NA customers at 0.7% and for "other NA" customers at 0.5%. Thus, the discount offered by WESCO to "other NA" customers works out to about one half of one percent. The instructor should clarify that these are volume discounts of the list price as stated in the agreement. In all likelihood, these list prices would be negotiated by the two sides and would be significantly lower than list prices available to other non-NA customers.

At the same time, the customer is beginning to see much greater value in this relationship. Prices have gone down slightly further. The main point here is that key NA customers not only benefit from the relationship, they are also collaborating with WESCO to continuously improve processes and systems. It is important for the instructor to bring the students' attention to case Exhibit 13. As this exhibit points out, 95% of the value derived in the NA program lies in areas other than price. However, the productivity improvement and transaction cost reductions that together account for 50% of NA savings cannot occur until the customer treats the NA agreement as being exclusive and actively participates in the relationship. Further, concrete savings through inventory reduction, SKU deletions, and product substitution, which together account for nearly 40% of value added through the NA program, require that the customer and WESCO undertake an inventory audit and jointly improve the process. Overall, WESCO is probably able to delight the "key NA" customers and do it in a way that is very profitable to WESCO. Both sides have a lot to gain from maintaining this relationship and stand to lose a lot if the relationship were to terminate. Since the value received by the customer has been achieved through the joint collaborative activities of the customer and WESCO, the competition is shut out. Unless the customer has the time or inclination to sit down with another supplier and recreate this process, they know that it will be difficult to get the same level of benefits from any other supplier. This is a big learning point for students and the instructor might want to ensure that everybody is clear about the shift in the process as one moves from "other NA" and "focus NA" to "key NA" customers. In fact, the instructor should take a few minutes to summarize these issues in the following manner. 1. Price Line: See TN Exhibit 1 - Under the NA program, WESCO offers year-long, national pricing regardless of volume at any one customer site. For "focus NA" and "other NA" customers, WESCO pays for the lower prices by giving up margins. Once the customer reaches the "key NA" stage and the relationship is fully implemented, WESCO is able to get better prices through better planning, so prices for the customer can go down without hurting WESCO's margins, and WESCO maintains profitability. 2. Cost Line: See TN Exhibit 2 - The early stages of the NA program involve substantial investments on WESCO's part in order to acquire the customer. In these stages, there is little or no involvement from the customer. However, once implementation has been successfully completed and the customer moves to the "key NA" stage, WESCO's costs plummet because the customer is now investing in the relationship. In addition, they are adapting their processes to match WESCO's capabilities and vice versa, reaping efficiency gains through relationship management. 3. Customer Value Line: See TN Exhibit 3 - The instructor can point out that in the "focus NA" and "other NA" stages, the relationship is adversarial, insofar as the customer is extracting value at WESCO's expense. However, in the "key NA"

customer stage, there is an explosion in customer value and this is achieved in a collaborative mode. At this point, it is vital to discuss the importance of the implementation program. As is highlighted in the case, the building of a successful NA program is not just about getting the right customer. It is also about developing an implementation plan that ensures buy-in from both sides at all levels. This is critical to the success of the relationship. The instructor can highlight this issue by drawing the hockey stick that captures the impact of acquiring and retaining customers.

The instructor can use this hockey stick to show the fact that WESCO can make money only if the firm is able to execute the implementation and get the customer to invest in the relationship as well. If this is not done right, then WESCO can wind up in the shaded region and continue to lose money indefinitely in the relationship. The instructor should be very deliberate in this part of the discussion to avoid losing the students attention to this point. This can also serve as an ideal learning for the instructor to return to later in the discussion and ask the students whether it makes sense for WESCO to try to convert existing other NA and focus NA customers into key NA customers. At this point, the instructor may choose to segue into the issue of the organizational limitations of WESCOs NA program. One way to do this is to push the issue of WESCO being stuck with focus customers and ask a question in the vein of what it means for WESCO that the ranks of focus customers are swelling nearly as fast as those of key customers in the program: how many focus customers can eighteen NAMs convert to the next stage, that is, make into key NA customers?

Is NAM capacity an issue here? WESCO currently has 18 NAMs managing an NA program that involves 50 key customers, 100 focus customers, and 150 other NA customers. This works out to an average of slightly under three key customers, 6 focus, and 8 other NA customers per NAM. NAMs responsibilities in the evolution of NA agreements work out as follows: Stage NAM commitment Timeframe Prospecting Active Selling Flexible Varies 30-40% 6-9 months Implementation up to 50% 2-3 months Maintenance 15%+ Indefinite

Looking at the time the NAMs spend on the second through fourth stages, if a NAM is in stage two or three and is maintaining three key accounts, then there remains little or no time at all for prospecting. In addition, with the time and customer allocations, the NAMs will end up over-committed once their fifth key customers move into the implementation stage. This means that barring change, the maximum number of additional key customers is 32. Possible solutions to these problems are somewhat complicated. Hiring more NAMs is difficult because the process of professional development takes time and needs to be planned out far in advance. A second option involves minimizing NAMs responsibility by expanding the support service staff to take over much of the maintenance role. This plan could serve the double purpose of decreasing the NAMs commitments while creating a group of managers that could serve as a pool of candidates for NAM positions in the years to come. Going ahead, what is going to happen? Can this NA program be sustained over time? What will happen if other competitors also develop NA programs? The sustainability of the NA program is going to be affected by changes in supplier management approaches and competitive threats. WESCO developed the NA program in response to EES customers consolidating their supplier bases, implementing quality certification programs, and demanding low prices. Having reduced the procurement costs in relationships with the top 5 to 10 suppliers, these customers now find that procurement costs for other categories of MRO supplies equal or even exceed the costs of the supplies themselves, and have expanded to over 80% of total procurement costs. In order to reduce these procurement costs, these customers are already shifting to new procurement model modes: suppliers tiering or forming supplier alliances. In the case of supplier tiering, several important issues arise. The most important one is the issue of what business is WESCO in. Should WESCO take on supplying janitorial supplies to one customer, industrial gases to another, and so on? Can this affect WESCO in the long-run? Does WESCO have the competency to manage non-traditional lines of business?

Those in support of this move will use the same logic as that used by Haley. According to Haley, WESCO should take on any new business as long as it is profitable and it ensures the continuity of WESCOs relationships with its important customers. This is part of Haleys Integrated Supply concept. Those who are against it will point to the face that this approach will work only as long as it is managed from Pittsburg. They will suggest that the approach can lead to a lot of chaos, confusion, and losses if the local branches are allowed to customize offerings to local customers. There is usually a lot of energy in this part of the discussion. It is important for the instructor to highlight the fact that there is always a chance that vendors can take customization to a point where each relationship unprofitable. As well, there is sometimes very little learning from one relationship that can be transferred to other relationships. Overall, there is consensus that this can be good for WESCO if done right. Students are less enthusiastic about the alliance option. Their reservations stem from the fact that WESCO will have to make further major investments in working with other MRO suppliers without the compensation that goes along with tiering. Overall, in either case, there is a larger peril as well. The NA program is designed to exploit efficiencies that arise form the predictable demand ensured by long-term contracts to the benefit of both customer and distributor alike. If, however, becoming a fully implemented key NA customer is not the end of the period of heavy investment but instead only a hiatus before the next ramp-up, then the economics of the program may be further skewed against WESCOs goals. This problem can be compounded if customers want first to purchase through an NA agreement, then to have WESCO serve as a first-tier distributor in a supply tier, then to purchase from an alliance of distributors who will team up to provide a one-stop solution. Further, WESCOs competitors are pursuing similar customer management strategies to its own, so the threat posed by potential competitor NA programs is real. Students may point out that profits will not be sustained for several reasons. First, customers are migrating all the time. As described above, as soon as WESCO gets through one stage, customers begin to demand even more service and support from WESCO. Second, competitors will follow and develop their own NA programs. This is not as much of an issue. Especially if the customer and WESCO have collaborated and shared the huge gains in the relationship, it may be unlikely that the customer will walk away from the relationship or that competitors will be able to replicate the gains either in supplier learning or in the process of role definitions, goals and objectives setting, and continuous monitoring.

The instructor can use the diagram shown below to capture this line of thought:

At this time, the instructor can pose the following question to bring students back to the issues that Piraino is currently faced with: Clearly WESCO is short on NAM capacity. Further, WESCO has twice as many focus and three times as many other NA customers as it does key customers. What is your advice to Piraino? How does all this attention being paid to the NA program affect WESCOs ability to serve its other customers? Students usually lose sight of the fact that WESCO has other types of customers that it needs to serve as well. The case has details on customer, organization, and other issues that highlight the impact of the NA program on other customer types. For example, there is John Whitney's quote, where he says that NA customers demand a lot of service that is not commensurate with their sales volume-either current or potential. Whitney is referring to the fact that spending more time with NA customers comes at the expense of attention that he can pay to his traditional customers. Another example can be found in Larry Worthington's quote, where he says that his branch has been forced to change the way it does its business to an extent that it might not be in a position to serve its traditional customers, i.e., the contractors, any more. There is also information in the case on the sales approach required to serve the different types of customers. As Piraino points out, in order to manage NA accounts sales reps need to have a farmer mentality, and to manage contractors they need to be like hunters.

The instructor needs to ensure that students are keeping this issue in mind as they make decisions on the NA program. The instructor might want to run a short lecture on the difficulties of organizing the sales and marketing effort to maintain and manage a portfolio of customers. For example, in order to do this successfully, WESCO needs to think through very carefully whether it should adopt a generalist approach where a salesperson sells to all types of customers, or a specialist approach where a salesperson sells to only a specific type of customers. This issue also exists at the level of the branch. Given the richness of issues with the NA program design, I have found that this is an area that gets passed over by the students in this case. Consequently, I take a few minutes in class to bring this to their attention. This works well for me since I get into issues in this area in greater detail in the WESCO case than I do in the session immediately following this one. What should WESCO do with the NA program? What are your recommendations? There are several areas that need to be covered here. The issue of NAM capacity means that, given the current number of NAMs and the difficulty of adding more than a very small number to that staff in the short term, it will be very difficult to add many customers to the NA program. One way to handle the NAM capacity issue is to hire executives to take over some or all of the maintenance functions that the NAMs currently do. By cutting down on the time spent on maintenance, the NAMs would be freed up to do more prospecting, which, given a better customer segmentation process, has the potential to yield better results for WESCO. The problem of the evolution of profitability means that growth in the number of focus customers threatens the ambitious profitability goals set out by Haley. Thus, changing the growth profile of the NA program becomes a key factor in achieving success. In the most optimistic of scenarios, it is possible that WESCO could use a segmentation process to find a group of 28 new customers who come close to fitting the ideal profile for an NA customer and whose total EES purchases fall between $12 and $15 million per customer per year (and whose purchases from WESCO could reasonably reach the $10 million mark at the key level). If the existing NAMs could each develop one or two of these potential NA customers into such a "key NA" customer during the four-year period, then the sales goal could be met without increasing the ranks of the NAMs. Another approach would be to find a group of as many such customers from among the current focus NA and other NA customers. This would also help by reducing the number of other NA and focus NA customers, while also being slightly more realistic, as 28 new and perfect customers might be difficult to find (where were they, after all, when WESCO signed the first 300 customers?). Nevertheless, by sticking to customers with whom WESCO already has some acquaintance, the chances of finding ones who will be amenable to full NA implementation are somewhat improved. The problem that remains is that this approach requires WESCO to stick with customers collected through a less well-refined segmentation process than the one they now have. Although it might make it possible to reach revenue and profit goals in the short-term

(even this is doubtful, as there is precious little space for mistakes), it may not be a good longterm strategy. I have found that at the end of this discussion, there is an even split between those who think that WESCO should use the NA program only in the reactive mode in the future and those who would like WESCO to be more proactive. Teaching Strategy In order to facilitate a proper analysis of the wealth of issues discussed in this case, the instructor might want to break the discussion into several themes. Theme 1: The best place to start this case is with an action plan. The central question here is whether WESCO should be proactive or reactive in managing its NA program. I have not had a student or executive who has recommended that WESCO scrap its NA program If I did get some sentiment in that direction, I would make sure that it was not squashed prematurely. Rather, I would try to get this student(s) to identify the sources for filling the gap left by the NA program. This part of the discussion should take around 15 minutes. Theme 2: The next part of the discussion focuses on the role of WESCO as a distributor, how WESCO adds value to its customers and suppliers, and how the NA program was initiated. This part of the discussion should take about 15 minutes as well. Theme 3: Here the discussion centers on the reasons why the NA program has not delivered on its promises to-date. This is a very important part of the case discussion and the instructor should allocate at least 30 minutes to it. Theme 4: The instructor now needs to get students to recommend any changes that they would like to make to the NA program and the implications of these changes. It is also important to spend time on the impact of supplier tiering and the formation of supplier or distributor alliances/ consortiums on the NA program. This part of the discussion takes about 15 minutes, leaving the instructor with about 5 minutes to summarize the learning points in the case. Postscript WESCO refocused its efforts in managing the NA program. As far as Haley was concerned, the NA program was critical to his growth strategy. WESCO hired managers to take over the maintenance functions, thereby relieving the NAMs to focus on the development of new

NA customers. In addition, after an extensive recruitment effort, WESCO was able to add several NAMs to its current teams. Piraino also conducted a thorough review of the existing "other NA" and "focus NA" customers to identify customers that were good prospects but with whom the implementation program had not been handled correctly. Piraino and his team then developed a comprehensive plan that focused on re-implementing the NA program with these customers. Current results suggest that this effort was very successful as well. WESCO continues to take on non-traditional lines of business requested by its large and important customers. However, the decisions are still made in Pittsburg on a case by case basis. There is no current plan to pass this responsibility on to the branch offices. Overall, based on numbers in the second half of 1997, the NA program appeared to be back on track.

Exhibit 1 Presentation on the Evolution of Customer Value

Exhibit 2 Presentation on the Evolution of Customer Value

Exhibit 3 Presentation on the Evolution of Customer Value

Case 15 SaleSoft, Inc. (A) Synopsis Greg Miller and Bill Tanner, Executive Vice President and CFO, founded SaleSoft in July 1993 with the objective of marketing PROCEED, a Comprehensive Sales Automation System (CSAS). While PROCEED had received very favorable responses from prospects, converting interest to actual sales was taking a long time with only five PROCEED systems having been sold to-date. In September 1995, with limited funds and the need to show performance before seeking additional venture capital, Gregory Miller, the president and CEO of SaleSoft, and William Tanner, the executive vice president and CFO, now need to decide the future course of action for their company. They are faced with the question of whether or not to introduce a Trojan Horse1 product. This product can be developed, with some work, using the existing modules of PROCEED's Sales System that have already been developed. Trojan Horse (TH) could potentially distract SaleSoft from its primary objective of becoming a leader in the high end of the Sales Automation (SA) software industry. In addition, there is a risk that it might cannibalize sales from the PROCEED product that SaleSoft is currently marketing. Finally, TH can potentially prevent SaleSoft from forming relationships with consultants whose support is critical to the success of PROCEED. Yet, TH might offer an easy way for SaleSoft to get into new customer accounts, gain quick sales, and generate much needed revenues. The situation is complicated by the fact that current PROCEED customers are expecting SaleSoft to deliver the complete PROCEED solution as soon as possible. Should Sale5oft complete the development of the PROCEED product and continue trying to sell PROCEED to select customers? or, should the firm make an all out effort to launch TH to a much larger customer base? This note was prepared by Professor Das Narayandas with the assistance of Research Associate Sara Frug for the sole purpose of aiding classroom instructors in the use of SaleSoft, Inc. (A), HBS case No. 596-112. It provides analysis and questions that are intended to present alternative approaches to deepening students comprehension of business issues and energizing classroom discussion. Copyright @ 1998 by the President and Fellows of Harvard College. Used with permission.

1*

The term "Trojan Horse" is used to refer to an object or action used to gain easy entry into areas that might otherwise be difficult to access. The Trojan War is the subject of Homer's Iliad and is thought to reflect a ten- year siege of Troy by the Greeks circa 1200 b.c. The fall of Troy is recounted in Virgil's Aeneid: according to Virgil, the Trojans, having held out against the Greeks for 10 years, were tricked into hauling inside their city walls a large wooden horse (the so-called Trojan Horse) left as gift for the Trojans by the Greeks. The belly of the wooden horse was full of Greek soldiers who, once inside, opened the city gates at night and thus let in their compatriots to sack Troy.

Positioning This case can be used to illustrate the challenges faced by suppliers with limited resources that operate in markets with long buying cycles. It can also be used to link buyer behavior, product design (bundling), and pricing issues. The case is best taught in a business marketing, entrepreneurial marketing, or a high technology marketing course. It can also be used very effectively towards the end of a basic marketing strategy course. At HBS, this case is taught as the transition between the "Understanding the Customer" and "Managing the Value Proposition" modules in the second-year Business Marketing elective, and on the last day of the Business Marketing Module in the Strategic Marketing Management program for senior marketing executives. Objectives The teaching of this case involves the following objectives: 1. Linking product policy and pricing issues with the customer acquisition and retention process. More specifically, 2. 3. Understanding the role of a Trojan Horse product in developing a customer migration path that facilitates customer acquisition and enhances their retention. Quantifying a product's benefits or value to a customer, and integrating this value with other strategic and tactical issues to set price.

Understanding the complexity of a decision making unit (DMU) and the associated decision making process (DMP) in the purchase of complex, technological products. More specifically: Understanding the decision making process (DMP), its stages, time frame, and the people (the DMU composition) involved. Understanding the link between a customer's DMP (or buying cycle) and a vendor's selling cycle. Understanding sales and marketing issues faced by a start-up operating in an embryonic market by comparing/contrasting approaches required to sell products of varying complexity.

4. Exploring the role of a vendor's organizational structure in defining its ability to implement marketing strategy.

5. Understanding the role of automation in linking sales, marketing, and service functions in a firm.

Recommended Readings Major Sales: Who Really Does the Buying? HBR-82305 Automation to Boost Sales & Marketing HBR 89105

Teaching Questions 1. 2. 3. 4. 5. 6. 7. 8. What is your plan? Do you plan to continue with PROCEED or will you introduce the TH product? Provide support for your plan. What is the buying cycle for PROCEED? Who are the people involved in the purchase of a CSAS solution? What is the role of consultants? What is SaleSofts current approach to selling PROCEED? Quantity the benefits of CSAS to a customer using the information given in Exhibit 7. What value does TH provide a customer? How is this different form the customer value delivered by PROCEED? What is a Trojan Horse? How does it facilitate customer acquisition and retention? How will you price TH? How do you think SaleSofts organization structure will affect its ability to sell PROCEED or TH?

Details of the Discussion Flow What is your plan? Do you plan to continue with PROCEED, or will you introduce the TH product? The various comments supporting going ahead with TH or PROCEED are as follows:

PROCEED vs. TH Continue with PROCEED

We have spent too much time on PROCEED to walk away from it now. Tanner We will lose our first mover advantage in the CSAS market if we divert our attention to TH.

Sell Trojan Horse

PROCEED has only generated interest--

Selling TH is very much like selling CMS and there are so many success stories in the CMS market. Customers dont need to be educated on the benefits of TH. Most Sales VPs will grab it at any price. The cost involved and the time required to develop the TH product are not very high. We can afford to do it. Tanner We dont need consultants to sell TH. Tanner Its a much bigger and broader market than the PROCEED market. TH is an easy way to get into customer accounts, gain quick sales, generate much needed revenues (pg. 1). Industry experts think it is unlikely that one vendor will be able to do it all (pg. 2)

TH will prevent SaleSoft from partnering with consultants who are very important to the firm. SaleSoft has committed to current customers that remaining modules of PROCEED will be read by June 1998. Twenty Prospects for PROCEED want to see completed product before making any purchase commitments. Miller knows what he is doing. He has shown that he can make it work he was successful in bringing order to chaos in the MRP area. The competition is going to heat up very quickly in the TH market Microsoft and Lotus are planning to enter. All the CSAS competitors are small and like SaleSoft this is an easier battle for SaleSoft. We don't have the skills to mass market products we don't know how to sell TH. Creating awareness for TH is very expensive half a million dollars over the next six to eight months. We just need to convert 6 of the 20 prospects to hit $5.7 million in sales**. Given that there are just five players in CSAS and we are better than the others, (using Exhibit 3) this is not difficult.

Customers are very skeptical about CSAS and the ability of CSAS vendors to survive in the long-run (pg. 2). It is easier to quantify the benefits of TH, and it needs no customization (pg. 9). TH is easy to sell only the sales VP needs to get on-board. There are too many players involved in the purchase of PROCEED (pg. 9). TH needs only 1/3rd the time taken for selling PROCEED (pg. 9) Tanner We will not relinquish the PROCEED market if we go after TH (pg. 10)

(** - $2,400/seat * average of 400 seats per prospect * 6 = 5.76 million)

Once some of these issues for and against have been brought up, the instructor can push the discussion to the next theme in the following manner: It looks like both sides have legitimate reasons to support their action plan. Those who are against PROCEED seem to be disturbed by the lack of sales in the last eighteen months. They also believe that TH will not have the same problems as PROCEED. Those who support it believe that more PROCEED sales are just around the corner and that selling TH is no different from selling PROCEED in terms of difficulty. In either case, it seems that understanding the purchase process for the PROCEED product will help us understand why some people think that PROCEED is the wrong product for SaleSoft and others think it is the right product. Lets understand the CSAS buying cycle as given on case page 4. What is the buying cycle for PROCEED? The buying cycle begins when the senior management realize that a CSAS might solve existing sales, marketing, and service problems. The case doesnt provide any details about how long this stage takes. It is useful to ask the students what the catalyst is for this stage to happen. Typical responses here focus on the top managements frustration with the inefficiencies that exist with current systems and their inability to control and improves sales, marketing, and service processes. Once top management have seen that they are able to bring order to the manufacturing, inventory, and materials handling functions, like Miller (pg. 7) they think that automation might provide answers to managing sales, marketing, and service issues. Some students might counter these comments by pointing out that automating sales and marketing functions is very different from MRP systems (see pg. 2 on the general belief that there was no standardized approach to sales order cycle). Next, the subsequent stages of the CSAS buying cycle can be captured in the following manner. In addition to text on pg. 4, there is a lot of information in Exhibits 4 and 5 on the issues raised by different members of the DMU, their concerns, and the benefits they seek from CSAS solutions. Using these three sources of information, the instructor needs to push the students to answer the following questions for each stage: What is this stage in the buying cycle all about? Who are the people involved in that stage? What are their roles? What do they want at this stage? Are they positive or negative about the CSAS product? (This format is what the students would have read in the assigned reading Major Sales: Who Really Does the Buying? by Tom Bonoma.). I have found that there is wide variance in the student analysis on who is involved in each stage and what are their motivations. Rather than trying to clarify these issues, I take them as they come. There is a lot of energy at this point and it doesnt help to challenge students on their views. Invariably, this job is well done by other students who will object to comments with which they disagree. It is important that the instructor captures the following points: 1. Consultants get involved very quickly in the cycle and get more powerful over time.

2. 3. 4.

Senior management plays a bigger role in the beginning and in the end. However, in the middle stages they have a limited role to play. Line managers are involved more in the intermediate stages that involve systems design. Users might only be involved towards the end. This is not clearly spelled out in the case and students will debate this issue. Some will insist that users will be involved throughout. Others will quote the case and suggest that it is only with the pilot test that users get involved in the process.1

Below, is an example of a table that came out of a class discussion in my Business Marketing Class. SaleSoft Buying Cycle
Stage Need Identification Need Clarification Involvement CEO, CFO, VP Sales, VP Marketing, VP Service VP Sales, VP Mktg., VP Service, VP MIS, SA Consultants VP MIS, IS Managers, Sales, Managers, Marketing Managers, SA Consultants CEO, CFO, VP MIS, SA Consultants Sales Reps, Sales Managers, MIS dept., SA consultant, CSAS vendor Activity Realization by senior management that CSAS might solve existing problems Evaluation of potential to automate existing processes and specification of the order in which functions are to be automated Evaluation of how different functions to be automated are related and how data is to be collected, stored, and analyzed Decision on which system (h/w & s/w) to purchase, short-listing of vendors Customization of CSAS and pilot testing Timeframe (months) 21-30 3-4

Need Definition and Specification Evaluation of Software/hardware And vendor Alternatives Pilot Testing and Customization Rollout
1*

2-3

6-8

3-4 4-6

There is an interesting question here about how one would select the sample for the pilot test: should the test sample constitute people who will be most comfortable with the product, or should it be done with a group of people who are very skeptical about it? Should the test site be one of the more important markets for the customer, or should it be done in one of the secondary markets where there is less at stake for the customer? I had the opportunity to sit in on a couple of pilot test design sessions and found that these were issues on which the parties involved had a lot of trouble coming to any sort of agreement. The vendor and product champion (on the customer side) wanted to have a sample of favorably disposed users in a high profile office of the customer. They felt that this would given them a higher chance of success. The customers senior management wanted to pilot test using skeptics in a low profile market. I usually take a minute to bring this issue to the attention of the students. Given the time constraint, I usually dont get into a long distance on this issue.

An important point for the instructor to point out here is that it is common for the DMU composition to change as we go from one stage to another. On a side board, the instructor can also separately capture the orientation of each DMU member towards CSAS. DMU Member CEO Orientatio n to CSAS +/UnderInterest in standing of Implementin CSAS g CSAS Low +/Reasons

+Would like more control and higher sales & marketing efficiency - Has other things to think about

CFO VP Marketing + +/Low Low +/+/-

same as above +Wants more control -Fears that other will have access to data. Erodes power

VP Sales VP Service Sales Reps

+/+/-/+

Low Low Low

+/+/-/+

same as above same as above -Worried about sharing customer informationif everyone knows everything about my customer, what is my role? +This will make me more efficient +This is my livelihood

Consultant What is the SaleSofts selling cycle for PROCEED?

Students will be quick to point out that SaleSoft enters into the picture at the end of Stage 4 of a customers buying cycle, and that too only if it happens to be selected as a CSAS vendor. One way to run this part of the discussion is to draw a ladder on the board, with one vertical line for the customers buying cycle for PROCEED and the other for SaleSofts selling cycle, and build the rungs as links between the two vertical lines. In this case, the process highlights the fact that SaleSoft does not have an approach that maps onto the customers selling cycle. This is a very big learning point for students and is worth the drama. I usually turn to the student who is giving me this information with a total look of bewilderment and disbelief saying

something to the effect of Is this firm out of its mind? Doesnt it understand the process of selling?

To the above figure, the instructor can then add the following information that highlights the role of consultants.

The instructor can also use the point out how intermediaries can become powerful in buyer-seller transactions by getting in between the two sides very early in the process and keeping the two sides apart after that. An example that the instructor can use here is the important of getting the product specified in a customers RFQ (request for quotation). In many high-tech business this is considered to be more than half the battle won.1 In cases where a competitors product was specified, vendors should realize that there is a good chance that they have already lost the sale.2 At the point, the instructor can say something like, Well, clearly the selling approach is not right. What about the economics of a CSAS purchase? Does SaleSoft have a good story to tell the customer? How much value does a customer get from PROCEED? What are the benefits of CSAS? Case Exhibit 1 fleshes out the benefits of CSAS. Case Exhibit 7 provides more numbers that students can use to calculate these benefits. There are three sources of benefits detailed out in Exhibit 7: sales cycle reduction, startup time reduction for new employees, and employee turnover reduction. For Company A (a financial services firm), this translates into $7.5 million in additional sales. Additional Sales due to Sales cycle reduction= = 6 x $120m = $6 million / year 120 Additional Sales due to reduction in start-up time for a new sales rep = Days reduced in startup x ($ sales / rep / year) x Days to startup x (# of new reaps) # days to startup Workdays / year =14 x $120m x 60 x 24 = $1.1 million / year 60 120 300 Selling time reduction x ($ sales/ year) Avg. selling time

1*

I have had executives come back to me after class with their versions of ladders and how they just realized what was missing in their own sales approach. 2 In my own personal experience, I have found that vendors that do a win / loss analysis of orders, very often find a dramatic difference in the probability of winning a bid when the specifications have been designed to favor a competitors product as compared to when the specifications are more favorable to their own product

Additional sales due to reduction in sales rep turnover = (% reduction) x (current turnover) x ($ sales / rep) x Days to startup Workdays / year

= 0.1 x 24 x ($1m) x 60 = $480,000 / year The total additional sales for Company A from using CSAS are = $7.6 million w/o PROCEED Sales Costs (at 30$ of sales) Selling Costs (at 30$ of sales) on $127.6 million $38.28 million with PROCEED $127.6 million $36 million * + commissions $7.6 million = 36 + .1 x 7.6 = $36.76 million Difference 38.28 36.76 = $1.52 million *-$120 million x .30 = $36 million. Using PROCEED, cost of sales remains the same as it would be if sales volume were $120 million w / o PROCEED. We can also get to this number by working directly from the savings. If we assume that selling costs dont change, then the company saves 30 percent (row 3 of Exhibit 7) of the additional sales in costs less commissions of 10 percent. Thus, the firm gets $7.6 x .20 = $1.52 million in the first year after implementing PROCEED. The Costs of implementing CSAS for Company A are: Initial Costs = H/w + PROCEED license fee + start up + Implementation & training costs + annual costs of internal resources = $1.5 m + $600k + $200k + $180k + $150k = $2.63 million Thus, the pay back time for the CSAS investment is around 1 years. For Company B, the results are even more dramatic and the pay back period is less than a year. For company B that is in computer h/w, the analysis is as follows: Additional Sales due to Sales cycle reduction = = 15 x $350m = $29.16 million / year 180 Selling time reduction x ($ sales / year) Avg. selling time

Additional Sales due to reduction in start-up time for a new sales rep = Days reduced in startup x ($ sales / rep / year) x Days to startup x (# new reaps) # days to startup Workdays / year = 20 x $350 x 90 x 88 = $8.2 million / year 90 250 300 Additional sales due to reduction in sales rep turnover = (% reduction) x (current turnover) x ($ sales / rep) x Days to startup Workdays / year = 0.15 x 88 x ($1.4m) x 90 300 The total additional sales for Company B from using CSAS are = $42.9 million w/o PROCEED Sales Selling Costs (at 35% of sales) $392.9 million $137.5 million with PROCEED $392.9 million $122.5 million + commissions on $42.9 million = 122.5 + .04 x 42.9 = $124.2 million 137.5 124.2 = $13.3 million

Difference

We also get this by working directly from the savings: if we assume that selling costs dont change, then the company saves 35 percent (row 3 of Exhibit 7) of the additional sales in costs less commissions of 4 percent. Thus, the firm gets $13.3 million in the first year after implementing PROCEED. The Costs of implementing CSAS for Company B are: Initial Costs = H/w + PROCEED license fee + start up + Implementaiton & training costs + annual costs of internal resources = $3.6 m + $1.44m + $450K + $430k + $350k = $6.27 million Thus, the pay back time for the CSAS investment is less than half a year (.47 years).

Using the above information, the instructor can draw a stacked column of the benefits and call it the value column or the value line. Executives are very likely to get in at this point with their own versions of bars, pies, stars, and other ways in which their firms represent customer value

At this point, the instructor can push the class by saying something like, "I think that SaleSoft has a good selling story. Not only is the firm going to get additional sales, it will have reduced sales rep turnover and higher sales rep morale. In addition, the investment pays for itself in less than 6 months for Company B. The economics and other benefits that we spoke about should make this an easy sell, shouldn't it?" There will be a skeptic who is primed to get into this discussion now (and there will always be one, don't worry) saying that the value line is just a part of the selling story. Using Exhibit 5 ("Typical Concerns Regarding CSAS Solutions") that provides a breakdown of specific concerns about the benefits of CSAS for each member of the DMU, this student will bring up several issues highlighting the following: 1. The value of PROCEED needs to be sold at every level of the organization. Not every person in the DMU cares about the sources of benefits as defined by the value line. 2. The CEO and CFO need to be convinced that the system will work and that SaleSoft will not go out of business leaving them with no support. Further, there will be arguments that the three sources of benefits are very hard to measure and unrealistic. 3. The VP MIS needs to be convinced that the operation of the system will be as promised.

4. The Sales managers and VP Sales need to be assured that their salespeople will use the system well. 5. The Sales Reps need to be reassured that the system will benefit them. This sets the stage for the instructor to say something like, "So creating these value lines is not the end. We also need to take this value line and convert it into a legitimate selling story that our sales reps can take to their customers." At this point, the instructor can mention to the students that this is a potental area where things can break-down between marketing and sales. Marketing develops value propositions with all these benefits quantified. However, when they then toss it over to Sales to take it to their customers, Sales find it very difficult to manage. The next thing you know, there is a breakdown in the initiative. I reiterate the fact that it is here the most large companies are facing problems in implementing their new strategic marketing initiatives. Marketing is so consumed by figuring out the process of where and how they create customer value that sometimes they dont pay attention to what they need to do to help Sales develop a strategy to extract the value that they have created. Next, the instructor can move the discussion along by shifting the focus from PROCEED to TH. How does TH compare to PROCEED? Selling TH is different from PROCEED in several ways. First, unlike PROCEED, TH is focused only on sales. This signficiantly reduces the number of people involved in the buying cycle as well as the need to build consensus between the traditionally diverse sales, marketing, and services departments of customer firms. TH delivers enormous value to Sales VPs of firms that are involved in selling big-ticket items with long, and complex selling cycles. These Sales VPs find it difficult to provide their firms with accurate forecasts, which in turn affects the firms ability to plan operations and resources. Thus, TH might be an easier sell than PROCEED. Looking at the value line created for PROCEED, students will point out that all the benefits listed for PROCEED are also applicable to TH. Compared to PROCEED, TH needs minimal customization (customizing the program requires only small alterations such as changing the number and names of segments in the opportunity pipeline). Some students will point out that TH might not really by a TH for PROCEED, since it appears to be addressed to a market segment that is not the same as the PROCEED product. Not all PROCEED prospects would necessarily want to start their automation efforts with TH. Also, not all TH users might be interested in the complete PROCEED product. This is the point where the instructor needs to run a discussion on what is the role of TH, how does one design a TH product, and what is the link between TH and the customer acquisition and retention process.

What is a Trojan Horse? How does it facilitate customer acquisition and retention? TH is a good solution in situations where the complete product is very expensive and involves a high level of risk for customers. In these cases, customers might not be willing to make the investments in the vendor. As is the case with PROCEED, vendors are able to generate interest in the product but are not able to convert this interest into actual sales. In these situations, if there is an opportunity to unbundle the complete product into distinct products that can be sold and used independently, and it is also possible for the customer to add modules over time without risking any loss in past investments, then TH can be a very effective tool for the vendor. TH provides with an opportunity to penetrate a customer account faster and more economically. A good TH product will also facilitate and ensure future sales of other products to the customer. For the customer, TH offers an opportunity to reduce the risk and the investments involved. The customer is able to use the TH product and experience the benefits fro that product before making any further investments. It also gives the customer a chance to assess the capabilities of the vendor to support and serve them over time. TH also provides the vendor with an opportunity to make some money relatively quickly. Vendors can use TH to create a barrier to entry for competitors by increasing the switching costs to the customer. Designing the TH product involves the integration of product bundling/unbundling issues with pricing issues. In designing a TH product, the vendor should be careful not to design a TH that becomes an end in itself such that customers do not see the need to buy the full product. How much of the functionality of the full product should be incorporated in the TH product? What should the price of the TH product be compared to the full product? How should the vendor manage the migration of customers from the TH product to other products? Exhibit 1 provides a set of PowerPoint slides that I use to discuss these issues in greater detail. Based on what we have discussed, how will you price TH? Based on customer value, one could potentially make the case that TH should be priced at the same level as PROCEED, i.e., $2,400 per user. This is base on the fact that the value line for TH is the same as that of PROCEED. Some students will point out that this price is difficult to justify given that SaleSoft is having trouble selling PROCEED at $2,400. Other students will suggest that if SaleSoft were to go after prospects that had never seen PROCEED or used a CMS product, then it is possible for SaleSoft to price TH at $2,400 or even higher. Using competition as a basis, given that TH is closer to a CMS product, students are likely to suggest a price anywhere from $200 to $400. Finally, in the case, Miller has suggested a price of $1,000, and Tanner has suggested a price of $400 per user. Students that suggest a low price will point to the fact that SaleSoft has to minimize customer resistance and reduce marketing and sales costs. At a price of $400 per user to below, they will suggest that TH will sell like hot cakes. They will quote Tanner who says, at this price, our salesforce will have to just go out and pick up these orders.

Those that suggest a price closer to $1,000 per user will argue that at a lower price, SaleSoft is leaving money on the table. Given the enormous benefits TH provides customers, these students, like Miller, will want to charge a higher price to extract a reasonable value for themselves. It is also possible to do the following break even calculations to determine the price of TH. TH Cost = Development cost + Init. Marketing cost + ongoing marketing costs = $200,000 + $500,000 + $200 / user At $1,000 (as per Miller), SaleSoft would need = 700,000 = 875 users to break even 1000 - 200 And at $400 (as per Tanner), SaleSoft would need = 700,000 = 3500 users to break even 400 - 200 Using the results of this analysis and information from Exhibit 7 that suggests that SaleSoft can expect to get 200 users per prospect, one can conclude that SaleSoft needs 875 / 200 = 5 customers at $1000/seat and 3,700 / 200 = 18 customers at $400 per user to break even. The instructor can then ask the students how many prospects they think SaleSoft is likely to be able to get in the next 9 to 12 months. This is also the ideal spot for the instructor to draw the attention of students to Exhibit 8. What do you think of the way this firm has been organized? Do you think the organization has been set up to sell PROCEED? Would it need to be changed if TH were introduced? How do you think SaleSofts organization structure will affect its ability to sell PROCEED or TH? A look at Exhibit 8 suggests that a plurality of employees comprise the development department, with the next largest number of individuals working in support services. Both the sales and the marketing departments are small, with only five and four members, respectively. It is interesting to point out that Miller seems to recognize this when he points out that SaleSoft has neither the resources to have separate sales forces for the two products nor the will in the sales department to sell PROCEED if TH is available. Students will look at all this information and suggest that this firm is still organized to develop productsnot to sell them. They will suggest that Miller completely re-organize the firm and build up selling capability very quickly. The instructor can push students on this point

by asking the following question, If you are an entrepreneur in a high tech industry and have been developing products for a while, when will you change the organization? How will you change it? It is very easy to say that Miller should do it. However, students have to understand that this is a non-trivial issue. The instructor can highlight that the transaction from being product development oriented to becoming marketing/sales oriented is a very tough one and is usually the place where many high tech startup firms falter. In these businesses, the need to innovate continuously and develop new product only complicates issues further. What Happened? As the case points out, Miller and Tanner were looking for an additional $2 million of venture capital. Late in 1995, they decided to use the TH proposal as their trump card to get more investments from the venture capitalist (VCs.). As a condition to giving more money, the VCs demanded that SaleSoft put the PROCEED project on the back burner and push ahead with the TH product. SaleSoft made a big announcement that it had now positioned itself as an Opportunity and Pipeline Management company. The VCs did not allow the organizational structure to be changed in any manner since they saw this as major and unnecessary expense. As a result, when asked to sell the TH product, the firms sales reps took the standalone TH product to the same set of prospects to whom they had been trying to sell PROCEED. Two things happened as a consequences. First, competitors that were trying to sell CSAS to these prospects immediately seized upon this chance. They started telling the prospects that if they wanted a sales forecasting and opportunity pipeline manager, then possibly TH was a good bet. However, if they were looking for a complete CSAS solution (which these prospects were) then TH wouldnt cut it. Further, with SaleSoft calling itself the pipeline manager, it was more or less clear that SaleSoft had pulled out of the CSAS marketplace. The other thing that happened was that these prospects had moved so far down the buying cycle that they were not willing to go back and put everything on hold and shift their attention to buying TH. Add to this the competitive reaction and there is little doubt about what happened. TH sales did not take off quickly and Miller and Tanner had to back to the drawing board to think of how they were going to manage the whole process. Teaching Process One way to manage the wealth of information in the case is to break up the discussion into several times. Theme 1: As the case revolves around a binary decision, the best way to begin the discussion is with a comparison of PROCEED and TH. There is usually an even split in class with support for both products. The instructor can lead the class to the next theme by pointing out that people who support TH appear to suggest that SaleSoft will not be successful if it continues to sell PROCEED, and those who support PROCEED appear to suggest that SaleSoft is on the verge of getting a major break in PROCEED sales. Clearly, it is the interpretation of the current PROCEED sales that is at the heart of their analysis of both sides.

Theme 2: Here, the instructor needs to walk the class through details of the different stages in the CSAS purchase process (or buying cycle). It is important that the instructor needs to push the discussion on who is involved in each stage, their needs, and what they are looking for in that stage of the buying cycle. Having done that, the instructor then can ask the class to map SaleSofts selling cycle onto the customers buying cycle. It becomes evident that SaleSoft enters the picture very late in the game and is at the mercy of consults. Once this issue has been identified, the instructor can transition the class to the next theme by asking the following question, Okay, we have found that SaleSoft is very late in getting into the game. That is clearly not good, but lets live with that for the moment. At least, do they have a good selling story to tell? Does PROCEED deliver value to a customer? Theme 3: The third theme is all about understanding and quantifying the benefits of PROCEED to the customer and revolves around the numbers in Exhibit 7 of the case. The instructor can build a column, (or, a line) of benefits to a customer. With the customer value line developed, the instructor can get details on costs to a customer of buying PROCEED. The instructor can then summarized by saying something like With these kind of numbers and a pay back period of less than a year, customers should be lining up at SaleSofts door to buy the product. But thats not what is happening. Whats wrong with our analysis? This leads to the idea that it is not enough to come up with these value lines, it is also important for the firm to figure out how it is going to sell these benefits to the customer. Will a customer see this value? Are there other factors that were not considered? Theme 4: Next, the instructor can move the discussion to the other side and ask how students see TH solving all these problems. The associated decision that needs to be addressed is about how to price the TH product. The instructor should then ask the students if they think that the TH product should be sold to PROCEED prospects. Most of the students will say that the TH product has to be sold to a different set of customers and that it is good for those customers who dont want to buy PROCEED today but might be prospective customers for PROCEED in the long-run. The instructor should capture this issue on the board since it will be very useful to go back to in the summary. The instructor can also choose to use this time to do a short lecture on the role of TH: how does TH help manage customers better over time? When is it useful to think about a TH product? What factors should be considered in the design of a good TH product? etc. Linked to the pricing decision of the TH product is the issue of whether SaleSoft has the capability to sell this product. This leads to the next theme in the case discussion. Theme 5: The instructor can then bring the attention of the class to the organization chart in case Exhibit 8. The instructor can initiate this part of the discussion by asking a question like, What do you think about this organization? What is it designed to do? The discussion then revolves around the issue of whether one should organize proactively, or reactively in developing markets. How should a start-up firm that is still focused on product development develop an organization that will take care of market development? SaleSofts organizational structure, not atypical for a start-up firm, might make it difficult for the firm to be successful in a mass marketing strategy.

Theme 6-7: Here the instructutor can tell the class what happened and ask them how they would respond to SaleSofts decision to market the TH product. It is important to get the customer and competitors veiwpoint here. Finally, the instructor can do a short 5-10 minute lecture that summarizes the learning from this case discussion. Some Additional Thoughts For the last three years, I have visited the Sales and Marketing Automation Conference that is held in Boston every year. It is amazing to see the turnover of firms in this business. More than half the firms seem to be new ones. Interestingly, the people in the booths seem familiar. They just have changed jobs and work for new firm every time I see them. During one visit with Professor Ben Sharpiro, we asked several vendors to tell us more about their product, and who were their main competitors. The most common answers were (a) we are the only ones who have truly integrated sales and marketing automation software in the business, and (b) we really dont think we have any competitoin. In the last twenty minutes of the class, I tell students that SaleSoft decided to launch TH and that it did not change its organization very much. I then ask them to tell me what they thought would happen. Students very quickly get to the point that SaleSoft must have gone back to its PROCEED prospects with this new product. Next, I ask them how this customer would react. Most say that there will be a signficant customer resistance to this move by SaleSoft. However, there are some who think that these prospects have not bought because they have doubts about CSAS. I take these comments as they come and then ask students to tell me how competitors would react to this move by SaleSoft. There are a few students who come up with the point that the competition can do best by acknowledging that the TH product is good but something that the customer really doesnt want, and also that SaleSoft would be unlikely to deliver a CSAS product to the customer in the long-run. After this discussion, I run a short 10 minute lecture on the role of TH in helping vendors manage customers more effectively and link product line management (bundling) issues with pricing (value extraction)especially when the products are expensive, complex, and require major changes on the customers part, and customers are risk averse. Managing the product line across customer life cycles and providing customers with a clear-cut migration path that reduces their risks and maximizes value to them will always ensure that vendors retain customers. TH also can be very effective in providing vendors with resources in the beginning that will help them survive and support themselves in the market development stages. Exhibit 1 of this teaching note is a PowerPoint slide presentation that I use to discuss the role of TH in managing customers and managing the firm. Issues to Manage There are a few issues that the instructor will need to watch out for. First, it is possible that some students raise the issue that cost of converting the existing modules of PROCEEDs Sales System appears to be too high. That it is difficult to understand how SaleSoft did not anticipate this when developing the system. This is an issue that cannot be

answered satisfactorily using information in the case. The instructor can manage this issue by directing the students to the information on the page where Miller clearly explains why this happened. Second, some students try to take the easy way out and suggest that Miller should sell SaleSoft to a large software firm that is seeking to enter this market. The instructor can address this by saying, What would Miller think of your idea? Miller says he brought order to chaos in manufacturing and is going to do the same in selling, marketing, and service. How are you going to make him walk away from what he sees as a tremendous opportunity?" Students quickly understand the passion that the entrepreneur has in his baby. I also ask students whether this is the time to sell the firm. Given the current situation, would Miller be able to get a good price for the firm, or would he be better off getting some more sales before trying to sell the company.

Exihibit 1 The Role of Trojan Horse in Managing Customers and Managing the Firm

Case 16 Arrow Electronics, Inc.1 Synopsis In the spring of 1997, Jan Salsgiver, president of the Arrow/Schweber group, a subsidiary of Arrow Electronics is reviewing a proposal from Express Parts Internet Distribution Services with her colleagues Skip Streber, senior vice president for sales at A/S, and Steve Kaufman, CEO of Arrow. Express had developed an Internet based trading system that would allow distributors to post inventories and prices on a bulletin board that customers could access to compare prices and place orders. Salsgiver needed to give her recommendations on how to adapt their business model to the new equation put forth by Express. In other words, by being on an Internet-based trading system, how will Arrow address the issue of creating value for the customer in a way that they will select their product over their competition and the suppliers. She must also address the issue of how Arrow will use the Internet to its advantage and Arrow's strategy for building and maintaining relationship with suppliers and customers using the new technology. Use The Internet is seen as the new way to conduct business. The majority of the transactions on the net are being conducted between the business to business category. E-commerce is still in its infancy and is still a topic of speculation. This case can be used to explore the obstacles in developing and implementing new ways of doing business on the web. This new medium gives the power of information in the hands of the customer. Another issue is developing and implementing new ways of managing customer relationship especially when you do not see your customer. In principle, using the Internet is a great way of reaching out to new customers whom you could have never reached before. But, the issue still remains of how to lock the customers into a longterm agreement with volume commitments. There are several factors that can act as an impediment in building a lasting relationship with the customer. Businesses that transact on the Internet are realizing that they have to keep up and improve on the service level they have promised or else they will lose out their business to someone else who is either providing a better service or a faster one. Further, the services and solutions provided should be innovative. This case analysis helps students develop a better understanding of how to develop, and effectively manage customers in the dynamic environment of Internet. The case is also rich in understanding what information is required to develop a web-site where one can conduct transactions. Finally the case has a lot of information on trends in customer-distributor-supplier relations through the '90s.
1

This case solution was prepared by Stephen Samuel.

Given the complexity of the situation and the information provided, the case is best taught in a second year MBA electives such as Internet Marketing, Service Management or Business Marketing. It also works very well with executives, since it deals with customer management an issue that is very important to every sales and marketing executive who deals with customers in a business-to-business context. Objective The teaching of the case involves the following objectives: 1. Understanding the role of service in differentiating commodity products. 2. Identifying the factors that determine the success or failure of long-term collaborative customer and supplier relationships in business markets on the Internet. 3. Defining the notion of customer value and mapping its changing nature over time in a longterm relationship. 4. Understanding the role of Express Parts Internet Distribution Service and Arrow's use of its homepage in acquiring and retaining customers. 5. Developing a process model for initiating and implementing an Internet service program. 6. Exploring the difficulties involved in managing a portfolio of customers over the Internet. 7. Understanding trends in business transactions over the Internet. Teaching Questions 1. What is your action plan? Do you recommend that Arrow be proactive and build its own web-site and conduct transactions besides joining hands with Express Parts Internet Distribution Services, or would you prefer that Arrow adopt a passive approach? 2. By being on an Internet-based trading system, how is Arrow going to address the issue of creating value for the customer so they will select their product over their competition and the suppliers? 3. How can Arrow use the Internet to its advantage? 4. What strategies should Arrow adapt to develop and maintain competitive advantage in doing business on the Internet?

Analysis What is your action plan? Do you recommend that Arrow be proactive and build its own web-site and conduct transactions besides joining hands with Express Parts Internet Distribution Services, or would you prefer that Arrow adopt a passive approach? Proactive vs. Reactive strategies Pursue a Proactive approach The offer from Express could potentially affect Arrow's relationship with its current customers as they would switch to buying parts they require from Express. By building the home page, Arrow will ensure that they will maintain this relationship by having a customized page for each customer. The competition over the web is going to be more intense. We need to get as many customers to sign on. Actively pursuing customers improves our chances of becoming a first-tier supplier to the customer. Being proactive gives more control over the profile of the customers we choose to work with. Ordering on the site will help in getting larger and more predictable orders and the customers can be offered better prices. The new medium of managing customers will help to get more information on the customer, reduce inventory and predict the customer requirements better.

Take a Reactive Stance Arrow will be able to add on new customers only when they are selected. Arrow will lose out on its current customers who will switch to buying parts from Express. Arrow will now be a supplier to Express. As the customer does not see the distributor's name, Arrow will not be able to capitalize on its brand name or the relation it has made with its customers. It will help in reaching out to new customers in new regions.

By being on an Internet-based trading system, how is Arrow going to address the issue of creating value for the customer so that they will select their product over their competition and the suppliers? By allowing transactions on its homepage, Arrow can add value to its suppliers by generating demand for their product in new regions to new customers. In the course of monitoring its relationships with its customers, Arrow obtains information about customer needs and translates that knowledge into explicit demand. As with the suppliers, Arrow adds value to its customers both in general and in the particular features of the services it provides. It can customize pages for its loyal customers wherein they can order online. Customers can use Arrow's web site to track their orders. Arrow can post the pages of service information for their customers, including the guides that Arrow's Field Application Engineers use to diagnose problems. With the help of the web site, Arrow can offer customers a one-stop solution to their need for electronic parts in a similar manner that Express Parts is doing currently. It can get smaller distributors to supply and deliver parts to customers on its behalf. Business customers can get their own password-controlled area inside Arrow's site, where they can display the different semiconductors and passive components, review recent purchases and electronically page Arrow's sales representatives. These specific value added services will aim at trimming the procurement costs, with the customers ordering online. Arrow can also extend its Web site to its own suppliers, so that the manufacturers can better schedule production and further reduce inventories. How can Arrow use the Internet to its advantage? There are several reasons why Arrow should initiate the Internet trading program on its web site as well as have a presence on the site with Express Parts Internet Distribution Service. 1. With distributors like Express Parts using the web as another source of distribution, it will soon be the order of the day to order online for electronic parts. Thus, it becomes imperative on Arrow's part to use the Internet to its own advantage. 2. It offers an opportunity to create a sustainable competitive advantage with its customers and suppliers. By getting the customer to order online through their customized page, Arrow builds customer value and enhances cooperation. This can potentially lower the customer's price sensitivity and temptation to switch. Online reps can be a part of every sales pitch to major customers. And the sales reps will run the customer-specific areas for that customer. A group of these customers can be allocated to Field Application Engineers. They will act as

technical support for the sales force when customers want detailed design assistance or problem solving on specific product design issues. 3. Arrow can also learn a lot about its customers by watching how they use the Web site, particularly the customized web pages. Arrow sales reps can monitor their customers' browsing for potential problems or prospects. 4. Arrow can try to use the web to exchange more and more timely information with its suppliers. With its direct model giving it a clearer view of actual sales, Arrow can manage a low inventory. And better forecasts can help its suppliers shrink their inventories as well, with the end consumer reaping some of the savings. The goal is a "virtual" corporation, where suppliers can "see" their products being purchased. What strategies should Arrow should adapt to develop and maintain competitive advantage in doing business on the Internet? Suppliers: The suppliers have two fundamental needs - they need the distributors to win business in their commodity products to help them grow and gain both profit and market share and they need them to represent their new technologies and products to the customers. It is also very critical to help customers design the supplier's new proprietary devices into their product. Arrow generated demand by helping customers engineer end products and making Arrow's suppliers' chip integral to these designs. Arrow's web site can be used to its advantage. Arrow can predict the demand and market the new proprietary devices to the customers. This can be based on the information that has been collected from the sites that the customers have been visiting on its web site and their purchase pattern. Once they have information on the customer of a requirement - be it in case of searching for information on a product/design or a purchase, the customer can be sent information regarding the same. This can be followed by a visit by the Field Application Engineer along with a Field Sales Representative. By being proactive, Arrow will be able to generate more demand for its supplier in terms of new products, new markets and getting to help customers design the suppliers' new proprietary devices into their products. Customers: The mid and small-sized Original Equipment Manufacturers accounted for 56% of Arrow's sale. With the help of the Internet, Arrow can now look at the large OEM's as well. The Internet solution for ordering online through customized pages will attract the large OEM's. Online purchase will help in reducing the inventory costs, which will help pass on the cost benefit to the customer. Therefore Arrow will be at a competitive advantage against its competitors. It will be able to quote a better price because of its better inventory management system. That will help customers to reduce on their procurement cost. Once the customer starts ordering through their customized pages, they will start designing new proprietary devices that are offered on-line. There is a switching cost associated with this process.

The online customized pages help Arrow to understand the customer's needs better and therefore serve them better. It can build an additional service to encourage the customers to exchange information about the products and designs they use. This will help to build an onlinecommunity. This can be extended to building a two-way relationship over the web with both the customers and the suppliers. You can also have a forum that brings users together to talk about their views of the electronic industry. Finally, there could be a closer collaboration with the suppliers. This site could be made accessible only to the suppliers. This site will provide them exact information about Arrow's requirements and allows them to see their quality results in real time. The key benefits that can come from a system like this are tuning one's business to exactly meet customers' needs, precisely in the way they want-an element of customization which provides a much better use of assets. By linking the suppliers and the end users together; the finished goods inventory is dramatically reduced; and they now have much better information about what their customers want to buy. The fixed assets are reduced as operations are streamlined and fixed infrastructure declines. Teaching Strategy In order to facilitate a proper analysis of the wealth of issues discussed in this case, the instructor might want to break the discussion into several themes. Theme 1: The best place to start this case is with an action plan. The central question is whether Arrow should join Express Parts Internet Distribution Service or to start transactions on their homepage. Theme 2: The next part of the discussion focuses on the role of Arrow as a distributor, how Arrow adds value to its customers and suppliers. Theme 3: The instructor needs to get students to recommend the strategies that Arrow should adapt to get a competitive advantage in doing business on the Internet.

Case 17 Aladdin Knowledge Systems Synopsis In May 1996, Aladdin Knowledge Systems, an anti-piracy hardware and software security firm, had just purchased its German competitor FAST Software Security AG and the major FAST distributor in the US, Glenco. As a result of the merger, Aladdin's Hardware Against Software Piracy (HASP) now overlaps with FAST's Hardlock product offering. HASP and Hardlock each have loyal customers and distributors in ten countries. Aladdin's founder, president, and CEO, Yanki Margalit, must decide whether or not and how to integrate the worldwide marketing, sales, and distribution of HASP and Hardlock. Should Aladdin push HASP forward as a global brand and phase out the Hardlock name? Should they choose a primary brand for each country? Should they allow HASP and Hardlock to continue to compete against each other? Positioning Growth in high tech markets is very often through mergers and acquisitions. This case allows for a detailed analysis of the benefits and problems associated with a growth through acquisitions strategy. What is it that a firm buys when it buys a competitor? Is it the technology, customer base, distribution channels, or a combination of all three? The case also highlights the complexities involved in merging product lines when the market shares, relative positioning, and the go-to-market strategies for products vary across countries. At HBS the case is taught in the "Global Nature of Business Marketing" module of the second-year elective in Business Marketing. The case is also suitable for a Marketing Strategy or International Marketing Management course. This note was prepared by Professor Das Narayandas with the assistance of Research Associate Sara Frug for the sole purpose of aiding classroom instructors in the use of Aladdin Knowledge Systems, HBS case No. 598-018. It provides analysis and questions that are intended to present alternative approaches to deepening students comprehension of business issues and energizing classroom discussion. Copyright 1998 by the President and Fellows of Harvard College. Used with permission.

Objectives 1. Understanding the motivations and complexities involved in acquiring a global competitor. 2. Developing a global marketing strategy to integrate an acquisition by Analyzing the performance and prospects of products in the context of their individual markets. Assessing the needs of newly acquired customers. Evaluating synergies and incompatibilities between product lines.

Evaluating the role of distributors in the selling process. Teaching Suggestions The heart of this discussion is the acquisition of a competitor and the integration of the two competing product lines. One way to manage the information in the case is to break the discussion into a set of themes. Theme 1: As the case has a strong strategic focus, the discussion can begin with a point-bypoint argument for one of the options posed in the discussion at the end of the case. There is usually support for each of the strategies. Many students are likely to come up with a variant to one of the three strategies suggested in the case or a combination of these strategies. The instructor can use these points to push the discussion toward specific analyses of what prompted Aladdin to buy Hardlock and what they gained in this acquisition. Theme 2: This part of the discussion should focus on what it is that Aladdin bought when they acquired HASP. Was it the customer base? Was it the product/technology? Was it the distribution channel? This is a very important point and the instructor should be patient in getting the various points of view. There will be a need to understand the product, buyer behavior, and perceptions of the channel members. It is also useful here for the instructor to distinguish between the general reasons for deciding to acquire a competitor, and the selection of a specific target. Pushing the latter discussion, the instructor can make the transition to the third theme by asking a question such as, "There are various views on what it is that Aladdin bought when they acquired HASP. Rather than trying to resolve that issue, let us decide what the acquisition decision supported when we take a closer look at the effects of the acquisition in each of the relevant markets?" Theme 3: The third theme involves a deeper understanding of the ten markets in question. This discussion revolves around the data in case Exhibits 8 and 9. Key points to tease out here include the dominant brand (if there is one), market share for each brand, revenues generated from each brand, and the nature of the distribution process in each market. Students may group

like countries together and analyze that way, which can also work so long as the relevant distinctions are kept clear. From here, the instructor can push the discussion to the more detailed development of Aladdin's marketing strategy for the future. Theme 4: At this point, the instructor needs to go back to the action plan and take a closer look at what Aladdin needs to do going ahead. Theme 5: The instructor may choose here to speak about the short-term and more long-term effects of the acquisition that are not covered in the case. The main issue here is the balance between the pressure to respond to the short-term demands of the stock market, and the importance of forming a viable long-term strategy. Assignment Questions 1. 2. Why did Aladdin buy FAST? Who are the customers for each product? How do they buy these products? How does this affect the nature of the customer acquisition and retention process? Who will be affected by the acquisition? What synergies do you see in this acquisition? How do HASP and Hardlock measure up on a country-by-country analysis? What is your plan? How should Aladdin go about merging its business with FAST? Should it phase out Hardlock?

3. 4. 5. 6. Analysis 1.

Why did Aladdin buy FAST?

There are several ways in which this issue can be answered. The Competitive Angle: The market for anti-piracy software is $120 million in 1995 and is expected to grow by 20% during the next year. Before the acquisition, Aladdin was a somewhat distant second to Rainbow Technologies, an American software company that generated $50.8 million in software sales in 1995 compared to Aladdins $11.3 million before merger income. Rainbow is rumored to be in merger discussions with the number four competitor, Software Security, Inc. Such a purchase could put Aladdin even farther behind in overall market share and

the US market in particular. The decision to purchase a smaller competitor is thus presented here as a reactive stance, attempting to preserve market share against the threat of the market leader. The choice of FAST over other competitors: The second phase of the decision involves choosing the particular competitor to acquire. This process is detailed in the comments of Margalit and others toward the end of the case. Three types of arguments are used here. The first is an argument based on the market share analysis presented above. Instead of picking the number-three competitor in US market share, Aladdin elects to go with the firm with a broader base. In addition to shoring up Aladdins number two stake in the US market, the acquisition of FAST makes Aladdin the share leader in Europe. If Rainbow chooses to purchase Software Security, Inc., Aladdins overall competitive position will not be altered tremendously it will remain second in the US market and first in Europe. There is also the organizational angle. In the case, Margalit points to the cultural fit between Aladdin and FAST, insofar as each firm has an entrepreneurial culture and young management teams. Software Securitys management team is not as well aligned with that of Aladdin. The second argument is product based. In comparing FASTs Hardlock with Software Securitys UniKey and Activator lines, Margalit considers the latter product offerings to be weaker. (Case Table B gives the National Software Testing Laboratories test results for HASP, Hardlock, and Activator. In most measures and overall ratings, Hardlock exceeds Activators performance, coming closest overall to HASPs ratings.) The third argument is one of manufacturing and development efficiencies. This is not detailed in the case but some students are likely to bring it up. They will suggest that although the products are different, there might be an opportunity to benefit from scale economies once the two lines are merged. The fourth argument is customer/market based. FAST has a significant customer base that Aladdin has access to through the acquisition. Students will argue that customers are unlikely to switch vendors and hence provide a captive market for future sales. FAST also provides Aladdin access to the German market and enhances Aladdins position in the US market. The case also presents several reasons against the decision to acquire FAST. First, there are some that see the software security market maturing, as evidenced by the slowdown in growth during the past year. Second, they believe the smartcard technology and license management would have been better areas for investment. Finally, some students will wonder about the fact that it is an Israeli company buying a German firm (In the video, Margalit points out that this was not an easy sell.) 2. Who are the customers for this product? How do they buy these products? How does this affect the nature of the customer acquisition and retention process?

Customers that buy software security products are firms that sell relatively expensive software

and that are interested in protecting their revenue streams. The software security customer base is composed of approximately 70% software publishers and developers, 15% vertical market software developers, and 15% multinationals. In small firms, presidents and sales managers make the decision to purchase software security, while in large firms, technical specialists evaluate alternatives. Purchasers generally choose between two product lines and rarely mix technologies because of compatibility problems. Price was a very important factor since it was not passed on to the end customer. The security product delays the rate at which software is going to be pirated it does not eliminate piracy completely. Sooner or later someone is going to break the code and render the security system useless. This is where the upgrades become important. As mentioned in the case, by installing the upgrade a customer changes the insides of the lock and changes the combination key that opens the lock. Thus, upgrades extend the useful life of the product. The instructor could use a diagram, like the one below, to capture this issue.

It should be noted that the customer does have to make some adjustments to their software system that integrates their product with the chosen vendor's products. The software developer who purchased the hardware and licensed the software would insert checks for the HASP key into the source code so that when the system was running, the program could check whether the correctly coded HASP key was connected. As mentioned in the case, customers rarely mixed security technologies from several vendors since, once installed, dongles could not easily be retrofitted to fit alternative programs. If the customer chooses to switch products when introducing an upgrade, then they will have to supply the new dongle to all their customers that buy the upgrade a cost that their customers might not be willing to pay for and an expense that the firm might not be willing to

absorb. Thus, it in unlikely that a customer is going to switch vendors once the initial decision has been made. From this analysis, it becomes clear that customers that have invested time in evaluating different software security products and chosen to use a specific product, they are unlikely to switch. There are several reasons that need to be understood here. There is a chance that customers might consider switching products when introducing new products. 3. Who will be affected by the acquisition?

The issue is more serious for FAST employees, distributors and customers. For example, one issue to focus on here is the somewhat precarious position Hardlock customers are finding themselves in at the moment. Having invested in a software security system, they may now be hearing from Aladdins competitors that Hardlock may disappear. If Aladdin wishes to keep these customers, they must convince Hardlock customers that their interests will be protected and that the firm will be there for the long haul. The same line of argument holds true for distributors. In countries where there are distributors for both products, unless the firm takes quick actions, FAST distributors are likely to think that they will lose the franchise. Having developed customers for the Hardlock product, these distributors will be staring at the prospect of losing their customers to their competitors. It is possible that they lose interest and stop supporting the product. It is also possible that they approach other competitors of Aladdin and try to sell competing product lines. Finally, FAST employees can get disenchanted and leave if they get the feeling that the FAST product is not going to be supported in the future by Aladdin. In summary, unless Aladdin develops a clear cut product market plan and communicates this quickly to customers and distributors, it stands to lose a significant portion of the investment it made in acquiring FAST. 4. What synergies do you see in this acquisition?

Both HASP and Hardlock are at the high end of software security, earning the highest marks in independent product tests. Both products are considered to be of excellent quality, with Hardlock enjoying a reputation for the sophistication of its dongle and HASP reaping the benefits of technological advances and a highly reliable manufacturing process. The two products could theoretically address the needs of similar customers. Where the products differ is in their positioning in the various markets. Hardlock has a reputation as more of a premium product, with prices running about 20% higher than those for HASP. HASP, is usually positioned as the value product. Nevertheless, with HASP prices ranging from $20 to $100 per unit, price is clearly flexible, and given anticipated reductions in manufacturing costs for Hardlock, it should be possible to cut the real difference further.

Another important point that is likely to come up here is the relationship between the nature of the product, the nature of the acquisition, and customer management. If software security products were completely interchangeable, then purchasing a competitor would mean purchasing a manufacturing apparatus and distribution infrastructure that could be assimilated into the company to increase efficiency and therefore market share by increasing ability to offer a low price. On the other hand, if the entire value to the customer were in the value added by the manufacturer and distributor, then the firm would be purchasing long-term customers who are likely to be very loyal if their service is maintained and are likely to jump ship if it is not. 5. How do HASP and Hardlock measure up on a country-by-country analysis?

See TN-Exhibit 1 for sales and market share figures derived from Case Exhibits 8 and 9. Countries dominated by Hardlock: Germany Hardlock commands a 75% market share of the German market, and Hardlock sales alone comprise nearly 20% of the combined firms total revenues. In the German market, Hardlocks reputation is primarily one of quality, whereas HASPs is primarily one of value. Although the list price for both is similar, HASP is often sold at a heavily discounted price through a franchised distributor. The market share for HASP can be measured at between 8% in revenues and 16% in units sold. Italy Hardlock outsells HASP in Italy two to one and has a strong, forward-looking distributor. HASP distribution is weak. Aladdins primary investment in the Italian market is in maintaining the presence of local manufacturing assembly of HASP products. Countries dominated by HASP: Israel As Aladdins home country, the Israeli market is heavily dominated by HASP which is distributed directly through Aladdin. Hardlocks market share is 6%. Software piracy is high enough to have led to the founding of Aladdin, and the concentration of high-tech firms suggests that the market will remain stable if not increase.

Japan HASP dominates the Asia-Pacific market, boasting greater compiler and operating system compatibility and outselling Hardlock four-to-one. Sales in this market account for 10% of Aladdins revenues. The wrinkle in this market is that newly acquired Glenco is responsible for Hardlock distribution in Asia, and dismantling this distribution structure could require some restructuring. UK The UK market is characterized by price sensitivity, making HASP an easier sell. HASP currently generates about twice as much revenue as Hardlock and is distributed through a wholly owned subsidiary. With its purchase of FAST, Aladdin inherited a 50% stake in a UK Hardlock distributor. Nevertheless, this distributor is more interested in FASTs multimedia products than software security. Russia Sales in Russia account for slightly over 1% of Aladdin revenues, though the high rate of software piracy in this area makes it an attractive target. Using a specialized distributor, HASP dominates the Russian market with a 50%-60% market share. Hardlocks market share is about 16%. Countries without a clear leader: US The US market has the highest software sales of all the markets in question. Combined US sales for HASP and Hardlock account for 43% of Aladdins revenues, with HASP providing 60% of US sales dollars. Both are sold through subsidiaries. Glenco, purchased by Aladdin in the wake of the FAST acquisition, specializes in selling Hardlocks products in the US as well as the AsiaPacific and Latin American markets. The US market is characterized by price sensitivity and stiff competition from number-one software security company Rainbow Technologies. HASP is currently positioned as the value product, with prices running 5% to 10% below those of Rainbow, whereas Hardlock commands a price premium, positioned as a high-end product. France Sales of HASP and Hardlock are nearly even in France. Distribution for the two product lines is separate, and both distributors are focused primarily upon other products. Nevertheless, the high rate of software piracy in France compared to the rest of western Europe makes it a potentially lucrative market.

Spain HASP and Hardlock are approximately equal in unit sales. Although Hardlock revenues are higher, distributors are somewhat disgruntled, so either product could take off. Benelux Although Hardlock has twice HASPs annual revenues, HASP sales are growing 60% annually, six times as fast as Hardlock sales. 6. What is your plan? How should this company go about merging its business with FAST? Should it phase out Hardlock?

Using a detailed country by country analysis, several plans are usually put forward that are a combination of the strategies suggested in the case. Students will support their judgments on a combination of customer, product, and distribution issues. The argument for phasing out Hardlock is made on the basis of crowding in the software security market. One group of Aladdin executives argues that having a single brand would allow the firm to increase the efficiency of advertising dollars and immediately cut the costs to advertise Hardlock. This strategy is supported in varying degrees as a form of the strategy of picking a winner, discussed below. The argument for picking a winner in each country also depends upon considerations of efficiency. Since each brand already has its own marketing apparatus, choosing a single brand allows for continuity while eliminating duplications of effort. Students supporting this strategy will also focus on streamlining operates and development in addition to eliminating inefficient distributors. Some students will also favor HASP when the two brands are close to even in a particular country. The argument for marketing both products as before is based more on a customer- and distributor- retention strategy than the latter two options. The rationale behind this strategy is that one of the major aspects of the FAST acquisition is the acquisition of Hardlock market share. Further, students will point out that customers are unlikely to switch products and will expect continued support from the vendor. Finally, since customers generally consider two options when deciding upon a software security solution, students will recommend that Aladdin could hold onto the Hardlock business, or even grow it by keeping the brands separate and continuing to develop and market each. Postscript Aladdin decided to do several things. In the US and UK market, they have scaled back on promoting the Hardlock product. Existing Hardlock customers continue to be supported. However, most of the promotion is for the HASP product. Yet, if a customer calls in asking for the Hardlock product, the firm does not try to move them towards the HASP product. The firm has made sure that employees in both organizations have felt no change after the acquisition.

Hardlock employees have been assured that there will be no change in the support and commitment. In Germany and Italy, Hardlock continues to be aggressively supported and its market share has not gone down at all. There has been some trouble with distributors. In several small country markets where Hardlock was weaker, the Hardlock distributor either dropped the line altogether or cut back on sales effort. This affected sales in the short-run. In some countries, the Hardlock distributor sold the business to the HASP distributor. Some of these HASP distributors were not interested in taking on additional lines and tried to convert customers to using the HASP linea task that they found to be very difficult. The firm did combine development and manufacturing operations and was able to achieve significant savings internally. In the two quarters following the acquisition, earnings dropped and Aladdin stock prices fell. However, a year after the acquisition, most of the issues had been ironed out and the firm began to record significant increases in profitability. Exhibit TN-1 Country by Country Analysis The following chart summarizes information given in and derived from case Exhibits 8 and 9. Market Total Market (units) (000) 500 2,717 117 400 480 50 460 367 80 87 % Total Aladdin Revenues 23% 43 3.7 5.4 10 1.2 5.5 3.4 2.4 1.5 Dominant Brand HASP Revenues ($000) 2,400 14,625 2,000 1,575 5,000 500 2,125 600 500 300 HASP Market Share (units) (000) 16% 22 85 11 20 50-60 18 5 25 12 Hardlock Revenues ($000) 11,200 10,350 150 1,575 1,100 175 1,050 1,400 900 600 Hardlock Market Share (units) (000) 66-75% 12 6 9 5 10 7 10 25 18

Germany US Israel France Japan Russia UK Italy Spain Benelux

Hardlock HASP HASP HASP/ Hardlock HASP HASP HASP Hardlock HASP/ Hardlock Hardlock

SECTION IX TEST BANK

Chapter 1 Sales Management: Its Nature, Rewards, and Responsibilities MULTIPLE CHOICE QUESTIONS D 1-1 4 What are the five functions of sales management? A. scheduling, organizing, selling, closing, and appraising B. planning, training, selling, closing, and appraising C. forecasting, motivating, selling, evaluating, and appraising D. planning, staffing, training, leading, and controlling E. planning, motivating, selling, evaluating, and revising 6 To sales managers, _____ is the conscious, systematic process of making decisions about goals and activities that an individual, group, work unit, or organization will pursue in the future and the use of the resources needed to attain them. A. management B. goal-setting C. forecasting D. organizing E. planning 6 As a sales manager for a large text book publishing company, Donnie has been systematically determining how many issues of each of the books on the publisher's fall list will be sold, where they will be sold, and what resources need to be assigned to assure that his goals are met. Donnie is engaged in the sales management function of: A. planning B. evaluating C. leading D. forecasting E. goal-setting 6 Which of the following sales managers is involved in a planning activity? A. Antony is working on a method to reduce his companys raw material inventory by 10 percent before the end of the year. B. Anissa is evaluating the members of her sales force to see if they achieved their quarterly quotas. C. Burt is interviewing job candidates for a new technical sales position. D. Erika is seeing if her sales force exceeded the amount budgeted for collateral sales material. E. Sheridan is writing a job description to be used in recruiting a computer technician.

E 1-2

A 1-3

A 1.4

D 1-5

6 To sales managers, _____ refers to activities undertaken to attract, develop, and maintain effective sales personnel within an organization. A. organizational development B. resource-allocation C. evaluating D. staffing E. organizing 6-7 Tiffany is the sales manager for an office supply wholesale company. As such, she is placing a newspaper ad for a new salesperson for the Dallas region. Once she locates and hires a suitable individual, she will need to train the person on how to sell everything from computers to pencils. Tiffanys activities are associated with the _____ functions of sales management. A. goal setting and organizing B. staffing and training C. staffing and controlling D. hiring and appraising E. planning and evaluating 6-7 A sales manager who is performing the staffing function could be: A. placing a want ad in a local newspaper to find people who meet standards specified in the job description B. trying to influence his or her sales force to reach certain organizational goals C. monitoring the sales activities of her or his sales force D. teaching a newly hired sales rep the skills and knowledge needed to succeed E. creating performance appraisals to match the job applicant's existing skills 7 To sales managers, _____ is the effort put forth by an employer to provide the salesperson job-related culture, skills, knowledge, and attitudes that result in improved performance in the selling environment. A. staffing B. leading C. training D. organizing E. evaluating

B 1-6

A 1-7

C 1-8

A 1-9

7 Garrett is a new salesperson for Peoria-Allen, a company that wholesales restaurant supplies. She has spent the last month with her sales manager. They have visited all of Garrett's customers. The manager has explained the distribution process to Garrett, introduced her to the employees she will be in close contact with, and made sure that Garrett has the knowledge she needs to sell restaurant supplies. Which sales management function was her sales manager performing? A. training B. role-playing C. controlling D. lecturing E. organizing 7 For the sales manager, _____ is the ability to influence other people toward the attainment of objectives. A. organizing B. training C. appraising D. leading E. controlling 7 Aaron Bach was able to use the sales management function of _____ to motivate his sales force to increase sales by more than 4 percent during the last six months. A. organizing B. training C. appraising D. leading E. controlling 7 To the sales manager, _____ means monitoring sales personnel's activities, determining whether the organization is on target toward its goals, and making corrections as necessary. A. leading B. planning C. management by objectives D. organizing E. controlling 7 A sales manager who is performing the function of controlling would be: A. screening job applicants B. setting organizational goals C. monitoring sales of a new product

D 1-10

D 1-11

E 1-12

C 1-13

D. writing job descriptions for a new sales position E. introducing a new salesperson to the organizational culture E 1-14 7 A sales manager who is performing the function of controlling might: A. set performance standards that indicate progress toward long-term goals B. use an information system to advise salespeople on their performance C. provide salespeople with feedback on their sales and returns D. modify an organizational objective that proved to be impossible to achieve E. do any of the above 7 Gerda has been given the performance figures for the salespeople in the Southwestern district of her organization. She is comparing their actual sales with forecasted sales as well as looking at whether each salesperson was able to meet his or her sales quota while keeping sales expenses five percent lower than the previous year. Gerda is engaged in: A. leading B. planning C. management by objectives D. organizing E. controlling 8 An organization like Procter & Gamble that is designed to achieve a profit goal is said to be: A. goal-directed B. environmentally-organized C. asocial D. decentralized E. horizontally-structured 8 Because organizations have a _____, the tasks to be performed are divided up and the responsibility for their performance is assigned to organization members. A. hierarchical arrangement B. deliberated structure C. task-directed D. specialization orientation E. dynamic organization 8 Organizational _____ is the degree to which the organization achieves a stated objective. A. effectiveness B. reliability C. efficiency D. validity

E 1-15

A 1-16

B 1-17

A 1-18

E. synergy A 1-19 8 How well a manufacturer of garden tools achieves its goal of a 15 percent market share before 2002 is a measure of the company's organizational: A. effectiveness B. reliability C. efficiency D. validity E. synergy 8 Organizational _____ refers to the amount of resources used to achieve an organizational goal. A. effectiveness B. reliability C. efficiency D. validity E. synergy 8-9 In times past, the most common method used to increase sales was to hire more people and to spend more money. This method lacked organizational: A. effectiveness B. reliability C. efficiency D. validity E. synergy 9 Which of the following is NOT an example of a strategic manager? A. the Southeastern regional sales manager for Frito-Lay B. the vice-president of finance for Healthdyne Technologies C. the CEO of McDonalds D. the vice-president of marketing for Brown & Williamson E. the national sales leader for ECC International, a British company 9 Top managers are also called _____ managers. A. functional B. tactical C. logistical D. strategic E. operational 9

C 1-20

C 1-21

A 1-22

D 1-23

1.24

Middle mangers are also called _____ managers. A. functional B. tactical C. logistical D. strategic E. operational 10 According to the text, what recent trend has had the most direct impact on middle managers? A. information overload B. cultural diversity C. networking D. corporate downsizing and restructuring E. affirmative action 10 The primary concern of _____ managers is the application of rules and procedures to achieve efficient sales, profits, and customer service and to motivate subordinates. A. tactical B. functionalor C. staff D. strategic E. operational 10 First-line managers are also called _____ managers. A. functional B. tactical C. logistical D. strategic E. operational 10 (Figure 1.4) The management function of _____ is primarily the province of top managers with time devoted to the function decreasing for middle and first-line managers. A. organizing B. staffing C. planning D. training E. motivating

D 1-25

E 1-26

E 1.27

C 1-28

B 10 (Figure 1.4) 1.29 Which of the management functions are first-line managers most likely to perform? A. planning and controlling B. training, leading, and staffing

C. D. E. A 1-30

planning, staffing, and leading controlling and staffing training and planning

11 (Figure 1.5) The path to a career in sales management most often begins with a position as a(n): A. salesperson B. office employee C. sales trainer D. production worker E. district sales manager 11 (Figure 1.5) Usually, the first sales management position a person earns is that of a(n) _____ manager. A. area sales B. zone sales C. district sales D. key account sales E. regional sales 12 Salespeople in small companies: A. are seldom promoted to a sales manager's position B. advance much more slowly than those in larger companies C. advance much more quickly than those in larger firms D. do not sell to key accounts E. cost more to train than those in larger companies because they perform so many nonselling functions 12 Iris is twenty-eight years old and considering her first job as a salesperson. She wants to be a sales manager before she is thirty. What kind of company is most likely to offer her that opportunity? A. a large national insurance company B. a small regional manufacturer C. an international book publishing company D. a foreign-based oil company with subsidiaries in 20 countries E. Bank of America 12 It is generally felt that successful managers must have the following three types of skills: A. technical, people, and conceptual and decision B. motivational, attitudinal, and behavioral C. behavioral, strategic, and tactical D. strategic, tactical, and diagnostic E. conceptual and decision, motivational, and behavioral

C 1-31

C 1-32

B 1-33

A 1-34

A 1-35

12 "I predict that new sales manager Crawford will one day have my job," said Mr. Bigg, CEO of Enormous Enterprises. "He has a remarkable ability to see the 'big picture.' I don't think we've ever had a sales manager who better understood how his responsibilities fit into the overall scheme of things." Crawford is strong on which managerial skill? A. conceptual and decision B. diagnostic C. technical D. people E. selling 12 (Figure 1.6) Generally, top management needs more _____ skills than managers below them in the organizational hierarchy. A. conceptual and decision B. technical C. diagnostic D. people E. selling 12-13 Sales manager Chris Smith's ability to lead, motivate, and build subordinates' morale is widely known throughout the company. Chris is strong on which managerial skill? A. conceptual and decision B. technical C. diagnostic D. people E. selling 13 Sales manager Karen Hedges is skilled in all phases of selling and has great depth of product knowledge. She is strong on which managerial skill? A. conceptual and decision B. technical C. diagnostic D. training E. people

A 1-36

D 1-37

B 1-38

B 13 1.39 Generally, first-line managers need more _____ skills than managers above them in the organizational hierarchy. A. conceptual and decision B. people C. technical D. selling

E. diagnostic D 1-40 13 Regardless of how high you rise into management, _____ skill will always be important to your success. A. conceptual and decision B. technical C. diagnostic D. people E. dispassionate 13 When a salesperson becomes a new sales manager, which of the following is likely to change? A. relationships B. goals C. responsibilities D. job skill requirements E. all of the above 15 When Carla was first promoted to the position of sales manager, the change from thinking and behaving like a subordinate to thinking and behaving like a boss was not immediate. Instead she passed through seven stages. The first stage in her transformation was: A. immobilization B. depression C. internalization D. minimization E. acceptance of reality

E 1-41

A 1-42

B 15 1.43 Which of the following is NOT one of the stages that a new sales manager typically passes through as he or she learns to behave like a boss instead of a subordinate? A. immobilization B. socialization C. internalization D. depression E. minimization or denial of change C 1-44 15 A new sales manager does not immediately change from thinking and behaving like a subordinate to thinking and behaving like a boss. The final stage in the transformation process is: A. immobilization B. minimization

C. internalization D. searching for meanings E. acceptance of reality E 1-45 15 One of the biggest problems facing most new managers is: A. the change in pay scale B. the number of salespeople that need managing C. their length of experience in sales D. the annual sales volume of the firm E. their lack of preparation 15 Tergiva Cox is a new first-level sales manager for a company that manufactures restaurant fixtures. If she is a typical new sales manager, her biggest problem in acclimating to her new position will be her: A. increased span of control B. increased travel requirements C. lack of sales experience D. inability to forecast the firm's annual sales volume E. lack of preparation 16 One key to making a successful transition into management is for the new manager to have a learning attitude. This means he or she is: A. willing to enroll in an MBA program to enhance his or her managerial skills B. willing to change, adapt, and seek help when needed C. prepared to make radical changes in how his or her area of responsibility is operated D. quick to develop a successful group of subordinates E. willing to accept his or her new responsibility as trainer of the salespeople supervised

E 1-46

B 1-47

TRUE FALSE QUESTIONS T 1-48 4 Sales management is the attainment of sales force goals in an effective and efficient manner through planning, staffing, training, leading, and controlling organizational resources. 6-7 Staffing involves the recruiting, selecting, and socializing of people into sales group and providing the new salespeople with the skills, knowledge, and attitudes needed to perform the sales job. 7

F 1-49

1-50 F 1-51

C. K. relied on the management function of leading to convince his salespeople to work Saturdays until the sales quota for their division had been achieved. 8 A shoe manufacturer that sold twice as many pairs of shoes with three salespeople as did its competitor with five salespeople would be said to have great organizational effectiveness. 9 A top manager is also called a tactical manager. 9 The vice president of human resource management for a multinational organization is a good example of a strategic manager. 10 Operational managers operate with a short time horizon. 11 The beginning managerial level is usually the regional sales manager. 12 Advancement for salespeople in large companies is usually more rapid than for salespeople in small firms. 12 It is generally felt that to be successful, managers must have delegating, motivating, and training skills. 13 The higher the managerial level, the more the manager needs good technical skills. 15 One of the biggest problems experienced by most new managers is their lack of preparation for the job. This is made worse by the expectation of most companies that a new sales manager will function effectively from the outset. 15 During the final phase of the promotion process the person incorporates the new meanings into his or her behavior; this phase is called mobilization.

F 1-52 T 1-53 T 1-54 F 1-55 F 1-56 F 1-57 F 1-58 T 1-59

F 1-60

T 16 1.61 Having realistic expectations about what a management position is like plays a large part in determining how quickly new managers adjust. F 16

1-62 T 1-63

Sales force automation is a brand-new concept. 17 Sales management is both a art and a science.

SHORT ANSWER QUESTIONS 1.64 List the five functions of management. Ans: planning, staffing, training, leading, and controlling Page: 4 1.65 What are the two activities associated with staffing? Ans: people planning and employment planning Page: 7 1.66 What is an organization? Ans: a social system that is goal directed and has a deliberate structure Page: 8 1.67 On which two functions of management do top managers spend the LEAST amount of their time? Ans: training and staffing Page: 10 1.68 What is the title most generally assigned to a beginning sales manager? Ans: district sales manager Page: 11

1.69 List the three categories of skills needed to perform the management functions. Ans: conceptual and decision skills, people skills, and technical skills Page: 12 1.70 When a salesperson is promoted to a managerial position, he or she goes through several predictable stages. What is the first phase of this transistion? Ans: immobilization Page: 15

Chapter 2 Social, Ethical, and Legal Responsibilities of Sales Personnel MULTIPLE CHOICE QUESTIONS D 2-1 26 The text would consider a business socially responsible if it only: A. serves its customers in a profitable and lawful manner B. serves its customers and employees in an ethical and lawful manner C. encourages managers to monitor the off-duty behavior of employees D. has managers who make choices and take actions that will contribute to the welfare of society as well as to that of the organization E. pursues profits as a short run objective 26 A(n) _____ is any group or individual within or outside an organization with a stake in the organization's performance. A. stakeholder B. organizational ombudsman C. proxy D. environmental representative E. environmental ombudsman 26 Which of the following would be an example of a stakeholder for a manufacturer of explosive? A. mining companies who buy explosives from the manufacturer B. employees who work for the company's research and development division C. banks who loaned the company money to computerize some of its assembly lines D. the community in which the manufacturer does much of its product development E. all of the above

A 2.2

E 2-3

E 26 2.4 Which of the following is an example of a stakeholder for a children's amusement park in Englewood, Colorado? A. the children who enjoy the park B. parents who schedule their children's parties at the amusement park C. the company that supplies the candy sold at the amusement park D. the accountant who calculates the firm's revenues and expenses E. all of the above

B 2-5

26 The acronym CCC GOMES is an easy way to remember: A. the types of ethical behaviors that managers must oversee B. the various organizational stakeholders C. the types of information that should be included in an effective code of ethics D. the various unethical dealings that salespeople can become involved in like misrepresentation E. the steps to creating an ethical work environment 27 The text identified four main areas of responsibility an organization has to the various groups who have an interest in its activities. According to the text, which of the following is NOT one of those areas of responsibility? A. economic B. discretionary C. technical D. ethical E. legal 27 The text identified the main areas of responsibility an organization has to the various groups who have an interest in its activities. In interacting with the organization's stakeholders, a manager would most frequently deal with issues in which area? A. economic B. discretionary C. technical D. ethical E. legal

C 2-6

A 2-7

B 27-28 2.8 Which of the following statements about an organization's areas of social responsibilities is true? A. Ethical responsibilities are imposed by local town councils, state government, and federal regulatory agencies. B. A business has an economic responsibility to stay in business and make a profit. C. Discretionary responsibilities are required by law. D. Social responsibility defines what society deems as important with respect to appropriate corporate behavior E. Discretionary responsibility creates the most problems for a manager because of the number of times such issues arise.

E 2-9

27-28 An organizational decision maker who acts with equity, fairness, and impartiality and respects the rights of individuals is said to be: A. image-oriented B. goal-oriented C. following "the letter of the law" D. financially conservative E. ethical 28 Many people believe businesses should go beyond the social responsibilities mandated by economics, law, or ethics. They believe firms should contribute to the community's welfare. These people want firms to exercise _____ social responsibility. A. mandated B. de facto C. designated D. discretionary E. derived 28 Because it goes beyond societal expectations to contribute to the community's welfare, _____ responsibility is the highest criterion of social responsibility. A. de facto B. mandated C. de jure D. discretionary E. derived 28-29 Which of the following is an action an organization can take to demonstrate social responsibility? A. strive to make profits on an ongoing basis B. admit mistakes C. take public stands on social issues D. monitor the social environment E. any or all of the above 28-29 Which of the following is an action a corporation can take to demonstrate social responsibility? A. refuse to take corrective action before it is required B. avoid taking public stands on social issues C. strive to make profits on an ongoing basis D. shun publicity concerning any socially damaging mistakes E. never publicly admit making a mistake

D 2-10

D 2-11

E 2-12

C 2-13

E 2-14

28-29 An aluminum can manufacturer can demonstrate social responsibility by: A. working to establish industry-wide recycling standards for all types of aluminum products B. trying to eliminate pollution before it has an adverse effect on the community C. helping turn an old garbage dump into a safe playground D. publicly admitting that it had a chemical run-off that polluted a creek near its main factory as soon as it happened and paying to have crews clean-up the creek E. doing any or all of the above 29 Two major influences on the ethical behavior of sales personnel are: A. employees and the organizations for which they work B. competitors and supervisors C. push and pull strategies D. first-line supervisors and codes of ethics E. how the company advertises itself and what its competitors do 29 On the job, David Loyd acts purely in his own best interest. He follows the company's rules because if he doesn't, he may be fired. At what level of moral development is David functioning? A. self-serving B. principled C. conventional D. discretionary E. preconventional 29 Maryann Cox considers herself a responsible person. She upholds moral and legal laws and conforms to the expectations of others. Maryann is functioning at what level of moral development? A. elective B. principled C. conventional F. discretionary G. preconventional

A 2-15

E 2-16

C 2-17

B 2-18

29 "I don't care what the boss said. It's wrong, and I'm not going to do it. If I get fired, then that's just the way it will have to be." The salesperson who just made this statement to a co-worker is apparently working at the _____ level of moral development. A. mandated B. principled C. conventional D. post-conventional E. preconventional 29 Most sales managers operate at what level of moral development? A. conscientious B. principled C. conventional D. discretionary E. preconventional 30 According to the text, ethical behavior is defined as: A. encouraging exchanges between the firm and its customers B. treating others fairly C. doing whatever it takes to meet your sales quota D. making sure you never encounter an ethical dilemma E. minimizing competitor retaliation 30 Beth, who majored in English, has just been hired for a sales position with a large consumer products company that expects its salespeople to exhibit ethical behavior. When Beth asked you what ethical behavior is, you told her that to behave ethically she should: A. make sure each action she takes is legal B. demonstrate loyalty to her company and to her associates C. follow the letter of the law, if not its intent D. get the job done by someone E. make sure she earns the highest possible commission 30 Bill Isley sells ultra-light planes. He has been told he must make a major sale during the next six months or he will be fired. He knows he can guarantee a $3 million sale to a South American nation if he buys the government official overseeing the purchase a $300 hand-tooled leather briefcase. Bill is experiencing a(n): A. cultural impasse B. cultural enigma C. cultural roadblock D. ethical inequity

C 2-19

B 2-20

B 2-21

E 2-22

E. ethical dilemma E 2.23 30 Rudy sells large lighted signs for arenas and other sports venues. He has been entertaining a group of businessmen from Brazil for three days because he hopes to sell them $8 million in signs. The businessmen have told Rudy that if he will help them avoid paying Brazilian import duties on the signs, they will readily sign the contract. Rudy is experiencing a(n): A. cultural impasse B. ethical inequity C. cultural roadblock D. ethical enigma E. ethical dilemma 30 Which of the following statements about ethical dilemmas is true? A. Ethical dilemmas occur because many ethical standards are rigidly codified. B. Friends are never the cause of an ethical dilemma. C. Cultural differences between different parts of the world may cause a salesperson to face an ethical dilemma. D. Ethical dilemmas occur when right and wrong can be clearly identified. E. Deciding whether to pad an expense account will not result in an ethical dilemma. 31 According to the text, all of the following are ethical considerations commonly faced by sales managers EXCEPT: A. level of sales pressure to place on a salesperson B. whether to be honest with a salesperson C. employees' rights D. decisions concerning a salesperson's territory E. the salesperson's relationship with his or her spouse 32 A house account is: A. a large account handled by someone from the home office or a key account salesperson B. a small account which a salesperson typically handles by telephone from his or her home C. an account located in the same city as the salesperson's place of residence D. the same thing as a "leased department" E. an account that the salesperson asks the sales manager to remove from his or her territory, usually because of its low sales volume

C 2-24

E 2-25

A 2-26

D 2-27

32 Anne Maddox is a commission salesperson whose territory for the last three years has been the entire state of Iowa. Through hard work, she has greatly increased her company's business in the state. Now her manager has decided to split the state into two territories. Anne can expect: A. to be given several new key accounts to sell to B. an increase in her earnings C. to keep all the customers she had before this management decision D. a decrease in her earnings E. to be fired for her past performance 33-34 Which of the following statements about termination-at-will is true? A. Early in the twentieth century, many courts were adamant in their strict application of the common law rule to terminate-at-will. B. Recently court decisions have been concerned with the rights of the individual. C. Employers have the right to terminate sales personnel for poor performance. D. Employers must now maintain accurate records of excessive absenteeism, unsafe conduct, etc. and inform employees on where they stand. E. All of the above statements about termination-at-will are true. 34 In the early 1980s, court decisions and legislative enactments limited the power of the employer to terminate-at-will. Under the new limited power, which of the following actions would be an acceptable reason to terminate a salesperson? A. poor performance B. the use of sales puffery C. engagement in cooperative acceptance D. any absenteeism E. weak organizational skills 34 The right of employees to be treated fairly and with respect regardless of race, sex, national origin, physical disability, age, or religion is called: A. affirmative action B. empathy C. employee privilege D. cooperative acceptance E. ethical consideration

E 2-28

A 2-29

D 2-30

C 2-31

34 Bo Hartz has just taken a sales job for a pharmaceutical company. He has been given a pile of company literature to go through before he reports for sales training on Monday. Among the material he has are the company's code of ethics. As you look at this code, you notice that the company guarantees every employee the right to be treated fairly and with respect regardless of race, sex, national origin, physical disability, age, or religion while on the job. You know that the company is guaranteeing Bo: A. workplace equity B. freedom from external and internal discrimination C. cooperative acceptance D. freedom from termination E. sunshine employment 34 As a sales manager, your first step in handling a sexual harassment complaint is to: A. put the employee lodging the complaint at ease B. make sure everyone in the company realizes an investigation is occurring C. carefully examine the accused's personnel folder D. terminate the alleged offender before more damage can be done E. hire a good lawyer 34 When a company takes proactive measures to ensure employees are not discriminated against, it receives the benefit of: A. an image as a good employer B. reduced legal fees C. attracting good employees D. less frequent recruitment effort E. all of the above 35 Which of the following sales personnel activities is considered ethical behavior? A. splitting commissions with fellow employees in order to win a contest B. taking the family to a Pirates baseball game and writing it off on the expense account C. using the company Internet to run an on-line travel agency in your free time D. attending college in the evening but taking an afternoon off to prepare for class E. none of the above activities

A 2-32

E 2-33

E 2-34

C 2-35

35 Which of the following would be an example of a salesperson who is moonlighting unethically? A. a consumer products salesperson who takes a weekend MBA program B. a textbook salesperson who sells arts and crafts on weekends C. an industrial equipment salesperson who tries to sell vacation real estate to some of his present customers D. a supermarket clerk handing out samples of Tombstone pizza E. a pharmaceutical salesperson donating empty file folders to a school project 35 Al Dean is a salesperson who is enrolled in a night MBA program. From time to time, he takes off most of the day before his night class meets to prepare assignments that are due that evening. From an ethical standpoint, it is correct to say Preston Al is: A. guilty of misrepresentation B. misusing company assets C. cheating D. moonlighting E. doing none of the above 36 Which of the following statements about bribery is true? A. Bribes always involve money. B. A purchasing agent who demands $500 in cash before he will sign an agreement to buy is engaged in bribery. C. Commission salespeople cannot be placed in a position where they might be tempted to pay a bribe. D. The difference between a business gift and a bribe is quite clear. E. A purchasing agent who asks for a 10 percent reduction in delivery charges before she will sign an agreement to buy is engaged in bribery. 37 The refrigerator salesperson says to the prospective new customer, "Your going to love my company's refrigerators." The salesperson's statement is an example of: A. sales puffery B. an illegal act C. a de facto misrepresentation D. a warranty of fact E. a breach of warranty

D 2-36

B 2-37

A 2-38

E 2-39

37 Which of these statements about misrepresentation and sales puffery is true? A. When salespeople loosely describe their good or service in glowing terms, those statements can be relied upon by the potential buyer. B. Generally, the more knowledgeable the customer, the greater the chances the court will interpret an incorrect statement by a salesperson as an actionable misrepresentation. C. When a salesperson makes claims of a "factual nature" regarding a service's inherent capabilities, the law treats these comments as sales puffery. D. A salesperson's opinion about the quality of the product being sold is known as sales puffery, and is legally actionable. E. The salesperson's company may be sued if the salesperson engages in misrepresentation. 37 Which of these statements about misrepresentation and sales puffery is true? A. According to the law, all puffery is misrepresentation. B. Generally, the more knowledgeable the customer, the greater the chances the court will interpret an incorrect statement by a salesperson as an actionable misrepresentation C. When a salesperson makes claims of a "factual nature" regarding a service's inherent capabilities, the law treats these comments as statements of fact and warranties D. Moonlighting is a form of misrepresentation. E. The salesperson may be sued for misrepresentation, but not the company for which the salesperson works 37 Which of the following statements, if false and made by a salesperson to an individual who bought the product being sold, would be most likely to have legal consequences? A. "You're going to enjoy this new carpeting for years!" B. "We are the tri-state area's low price leader." C. "We offer a 100 percent order-fill rate. You'll never experience a back-order." D. "Our pizza is the best around." E. "Your own mother can't care for you as well as our staff." 37-38 Which of these statements about sales puffery is true? A. The difference between sales puffery and a statement of fact is easy to distinguish. B. Each incident can be analyzed according to a predetermined set of explicit rules. C. Generally, the less knowledgeable the customer, the greater the chances the court will interpret a statement as actionable. D. Statements of puffery should be taken at face value. E. Puffery typically occurs when a salesperson deliberately makes erroneous statements.

C 2-40

C 2-41

C 2-42

B 2-43

38 If a salesperson incorrectly told a customer, _____, then a customer would have the legal right to sue the salesperson's employer. A. "This refrigerator will run for ever." B. "Our customer service people love talking to our customers." C. "This lotion will make your skin feel moist." D. "This mace pen will protect you from any muggers." E. "This is a safe, dependable helicopter." 38 Alfonso is a little worried about all the talk he's heard recently about lawsuits due to misrepresentation and breach of warranty. Which of the following would be a good suggestion to him to help him "stay legal"? A. Be accurate when describing a product's capabilities. B. Thoroughly educate all customers before making a sale. C. Avoid making exaggerated claims about product safety. D. Know the technical specifications of the products you sell. E. Do all of the above. 38 If a supplier gives some customers promotional allowances and support while not making other customers aware of the existence of these opportunities, the company is, under certain circumstances, in violation of the Robinson-Patman Act. The name for this practice is: A. price discrimination B. demarketing C. price unbundling D. exclusive dealing E. promotional pricing

E 2-44

A 2-45

D 39 2.46 The Clayton Act: A. prohibits sexual harassment B. allows some customers to receive price reductions while others do not C. removed the employer's ability to terminate-at-will without justification D. prohibits tie-in sales and exclusive agreements but only if they substantially lessen competition E. defines sales puffery

B 39 2.47 "I'll sell you our top-selling cleaning products only if you'll agree to also stock our cleaning brushes." This statement made by a salesperson to a hardware store owner is a violation of the Clayton Act prohibition of ______ because the salesperson's actions substantially lessen(s) competition. A. misrepresentation B. tie-in sales C. augmented service contracts D. a green River dealership E. kickbacks C 2-48 39 If a manufacturer requires that its wholesalers and retailers buy merchandise only from it, the contract is a(n) ______ contract, and if the contract tends to lessen competition, it is prohibited under the Clayton Act. A. reciprocity B. product discrimination C. exclusive dealing D. wholesome E. price discrimination 39 I'll tell you what," said Magee. "I'll buy all my cleaning supplies from your company if you'll make sure your employees get all your company's printing done by mine." Magee is proposing: A. reciprocity B. receivership C. a tie-in sale D. an insurance policy E. misrepresentation 39 Cooling-off laws apply only to: A. sales over $24.99, made door-to-door B. sales made in out-of-town offices, regardless of value C. sales for which verbal guarantees are given D. sales over $50, made door-to-door E. sales made over the Internet

A 2-49

A 2-50

E 2-51

39 A cooling-off law: A. gives the buyer three weeks to cancel the contract, return any merchandise, and obtain a full refund B. covers items sold through wholesale outlets C. deals with purchases between $25.00 and $50.00 D. is in effect in all states E. covers some door-to-door transactions

A 39 2.52 For which of the following purchases would Avary be most likely to need the protection of cooling-off law? A. the purchase of $200 worth of pots and pans from a door-to-door salesperson B. the purchase of Girl Scout cookies from a Brownie selling door-to-door C. the purchase of a set of dining room furniture from a manufacturer's store D. the department store purchase of a beauty cream guaranteed to make the user look 20 years younger E. the supermarket purchase of a case of cat litter D 2-53 39 Green River ordinances: A. were first passed in response to a drought in the Green River area of Wyoming, and allow cities to pass laws against the sale of products that are damaging to the public well-being by doing such things as depleting the water supply B. hold salespeople legally responsible if the items they sell damage the environment C. allow car dealers to charge different prices to different consumers provided they advertise "make your own best deal" D. require persons selling directly to consumers to pay a license fee and be licensed by the city unless the sellers are also residents of the city in which they are doing business E. state that if asked by a consumer, a door-to-door salesperson must show the documented laboratory evidence to support product performance claims 39 A Green River Ordinance requires that: A. if they are not residents, persons selling directly to consumers be licensed by the city where they are selling and pay a license fee B. a bond be paid by all persons selling directly to consumers C. only door-to-door salespeople be licensed D. all industrial and consumer salespeople in a city need to be licensed E. every person who comes to your door selling an item valued at more than $25.00 have a license

A 2-54

E 2-55

40 Which of the following describes a method management can use to help their organizations act ethically? A. formally encourage whistle-blowing B. establish a control system C. carefully select its leaders D. establish and follow a code of ethics E. do all of the above

C 40 2.56 What can management do to foster a climate that encourages ethical behavior by the sales force? A. encourage its front-line supervisors to take the lead in developing an ethical climate B. encourage moonlighting C. discipline wrongdoers D. prohibit whistle-blowing E. do all of the above D 2-57 40 A(n) _____ is a formal statement of a company's values concerning ethics and social issues. A. law of equity B. tying agreement C. fairness principle D. code of ethics E. ethical ombudsmen

E 40 2.58 The two types of codes of ethics are: A. centralized and decentralized B. image-based and mission-based C. formal and informal D. external and internal E. policy-based and principle-based C 2-59 40 A code of ethics that _____ would be classified as a principle-based statement. A. told how to handle proprietary information B. affirmed equal opportunities C. defined fundamental values D. defined conflict of interest E. stated employees were expected to obey laws

B 41 2.60 Some corporations employ an individual to serve as sort of an organizational conscience, listening to and investigating ethical complaints and keeping top management aware of potential ethical issues. This person is called a(n): A. ethical delineator B. ethical ombudsman C. moral advocate D. ethics manager E. corporate whistle blower D 2-61 41 All employees who observe or become aware of criminal practices or unethical behavior should be encouraged to report the incident to their superiors, to a higher level of management, or to an appropriate unit of the organization. This reporting process is called: A. a breach of trust B. tattling C. a warranty trust D. whistle blowing E. principle-based responsiveness

A 41 2.62 When an employee of Alaska Air observed mechanics falsifying maintenance reports, he immediately informed his supervisor. When the supervisor took no action, the Alaska Air employee informed the FAA. The report made by the Alaska Air employee to his supervisor and to the FAA is an example of: A. whistle-blowing B. a violation of a warranty trust C. preconventional moral development D. organizational discrimination E. an ethical dilemma A 2-63 41 According to the text, the single most important factor in improving the climate for ethical behavior in a sales force is: A. the actions taken by top management B. the establishment of a procedure for whistle-blowing C. effective goal-setting programs D. quick disciplinary action against offenders E. the development of training seminars on ethical practices and procedures

C 2-64

41 The most critical factor in improving the climate for ethical behavior in a sales force is: A. local government action B. federal legislation C. the role of top-level managers in guiding the organization D. hiring only ethical salespeople E. consumer watchdog groups

TRUE-FALSE QUESTIONS T 2-65 26 Most people cannot agree on which actions a business should take to improve society's welfare.

F 26 2.66 Stakeholder is a term used to describe groups inside the organization who have a stake in its performance; stockholder is a term used to describe groups outside the firm who have an interest in its performance. T 2-67 F 2-68 27 Businesses have a responsibility to make a profit in order to serve society. 28 When a supermarket places a full-page newspaper ad in support of Black History month with the hope of attracting more African-American shoppers, the supermarket chain can be said to be showing its discretionary social responsibility. 29 The text suggests an appropriate way for sales managers to convey their feelings about ethical behavior by members of the sales force is the "Hear No Evil, See No Evil, Speak No Evil" approach. 29 If it's not illegal, it must be ethical. 30 Ethics is defined by the text as "principles of right or good conduct, or a body or such principles." 30 Simply put, ethical behavior refers to treating others fairly. 31-32 An ethical sales manager should set realistic and obtainable goals.

F 2-69

F 2-70 T 2-71 T 2-72 T 2-73

T 32 2.74 If management decides to increase the number of territories in a given area, there is a possibility the earnings of the salesperson working that location will decrease. F 2-75 F 2-76 32 Key accounts are synonymous with house accounts. 33 If a salesperson has a drug or alcohol problem bad enough to require professional help, the appropriate action of the sales manager is to remove the individual from his or her territory. 34 Although discrimination on the basis of a person's sex is illegal, there are no laws against sexual harassment. 35 The company assets that are most often misused are automobiles, expense accounts, samples, and damaged merchandise credits. 36 At times the distinction between giving a buyer a gift and bribery is difficult to make. 37 Salespeople assume legal obligations--with accompanying risks and responsibilities-every time they approach a customer. 37 A salesperson who exaggerates about product capabilities may be guilty of misrepresentation. 38 When a customer relies on a salesperson's statements, purchases the product, and then finds it fails to perform as promised, the supplier can be sued for sales puffery. 38 The difference between sales puffery and statements of facts is easy to distinguish. 38 Generally, the more knowledgeable the customer, the greater the chances the court will interpret an incorrect statement by a salesperson as an actionable misrepresentation rather than sales puffery. 38 A company that has gone to great lengths to thoroughly educate its customers can use the customer's knowledge as a defense in a misrepresentation law suit.

F 2-77 T 2-78 T 2-79 T 2-80 T 2-81 F 2-82 F 2-83 F 2-84

T 2-85

F 2-86 F 2-87 T 2-88 F 2-89 F 2-90 T 2-91 F 2-92

39 It is always illegal to require a buyer who wants a particular line of merchandise to buy other products that are not wanted in order to get the desired line. 39 The Clayton Act prohibits sexual harassment. 39 Exclusive dealing occurs when wholesalers are required to purchase products from one producer or else they will lose the right to carry any of that producer's products. 39 A cooling-off law gives the buyer three weeks to cancel the contract, return any merchandise, and obtain a full refund. 40 The two types of codes of ethics are image-based and mission-based. 41 A person who engages in whistle-blowing is correctly referred to as an ethical ombudsman. 41 The single most important factor in improving the climate for ethical behavior in a sales force is a consumer watchdog groups.

SHORT ANSWER QUESTIONS 2.93 Companies have four major areas of responsibilities to their stakeholders. What are they? Ans: economic responsibilities, legal responsibilities, ethical responsibilities, and discretionary responsibilities Page: 27-28 2-94 What level of moral development is an individual who is acting in his or her own best interest without concern for moral and legal rules? Ans: preconventional Page: 29 2.95 Briefly define ethical behavior. Ans: treating others fairly Page: 30

2.96 What term is used to describe actions of a salesperson who sells real estate on the side while he is supposed to be selling his employer's products? Ans: moonlighting Page: 35 2.97 What is the name of the law that prohibits tie-in sales if they lessen competition? Ans: the Clayton Act Page: 39 2.98 What are the two different types of codes of ethics? Ans: principle-based codes and policy-based codes Page: 40 2.99 What is the single most important factor for improving the climate for ethical behavior in a sales force? Ans: the action taken by top-level managers Page: 41

Chapter 3 Building Relationships through Strategic Planning MULTIPLE CHOICE QUESTIONS A 3.1 52 _____ involves making decisions about the organization's major targets or end results that relate to its long-term survival, value, and growth. A. Strategic planning B. Contingency planning C. Environmental planning D. Tactical planning E. Objective planning 52 To meet its objective of a 12 percent increase in market share next year, the management of Neiman Marcus Pets, which sells tuxedos and princess coats for dogs, would develop a plan of action and resource allocation to achieve this goal. This plan is called a(n): A. strategy B. tactic C. option D. objective E. schematic 52 A(n) _____ answers the question, "How are we going to carry out our strategy?" A. mission statement B. tactic C. balance sheet D. organizational objective E. motive 52 Which of the following is the best example of an operational plan for a retail nursery that wants to increase its sales by five percent over the next two years? A. add gardening tools, pots, and instructional courses to its product mix B. run annual contests to increase customer awareness C. increase its advertising budget by 20 percent D. conduct a 20-percent-off sale on all bedding plants during the first two weeks in May E. build a Web site

A 3.2

B 3.3

D 3.4

D 3.5

53 An organization's _____ states the basic purpose and values of the organization, as well as its scope of operation. A. strategy B. tactics C. logistics D. mission E. statement of purpose 53 Ideally, the _____ of an organization clarifies the long-term direction of the company and its strategic intent. A. strategic vision B. strategic plan C. tactical plan D. primary marketing objective E. financial plan 53 Which of the following statements about an organizational mission statement is true? A. To be effective, a mission statement must be broad. B. An organization's mission statement and its strategic vision are completely synonymous with each other. C. The mission statement evolves from an organization's strategic goals. D. The mission statement should be written as if the company were going to adopt a mass marketing strategy. E. The mission is a statement of the organization's reason for existence. 53 "The Hospital Corporation of America (HCA) is an international health care company committed to the delivery of quality patient care at a reasonable cost. Founded in 1968 with one hospital HCA now operates the leading health care provider network of hospitals in more than 480 communities worldwide." This is an example of a(n): A. strategic plan B. mission statement C. ogistical plan D. sales objective E. marketing plan

A 3.6

E 3-7

B 3.7

E 3.8

53 The company's mission, visions, values, objectives, strategies, and tactics and the way they are interrelated are often referred to as a(n): A. corporate culture B. tactical statement C. organizational culture D. Gantt chart E. strategic plan 53 To develop a strategic plan, an organization's top management must know: A. the number of employee resources available and their allocation B. where the organization wants to be in the next five years C. the types of sales promotion that are appropriate for the organization D. the details of the organizational marketing mix E. all of the above 55-56 The basic tasks of an organization's marketing department are to: A. maximize sales of existing products to existing markets B. develop and sell new products C. provide the quality of service needed for customers to be satisfied and to continue doing business with the organization D. develop new markets for existing or new products E. do all of the above 56 The four elements of the marketing mix are: A. price, production, promotion, and distribution B. personal selling, advertising, sales promotion, and public relations C. production, sales, management, and distribution D. product, price, promotion, and distribution E. planning, production, distribution, and sales 56 Which of the following is the BEST example of a good? A. an airplane ride B. a text book C. a massage D. a flying lesson E. a medical examination

B 3-9

E 3-10

D 3-12

B 3-13

E 3-14

57 Which of the following is an example of a product? A. a taxicab ride B. a piano lesson C. a laptop computer D. a management training seminar E. all of the above 57 The development of package design, brands, and service policies is associated with the ______ element of the marketing mix. A. product B. presentation C. price D. place E. promotion 58 Customers cannot taste, smell, fell, see, or hear a service before they buy it due to the _____ characteristic of services. A. inseparability B. intangibility C. perishability D. heterogeneity E. fluctuating demand 58 Due to the _____ characteristic of service, services are created and dispensed simultaneously. A. inseparability B. intangibility C. perishability D. heterogeneity E. fluctuating demand 58 In spite of the _____ characteristic of services, Caribbean cruises, hotel reservations in Paris, and life insurance are whole services that are typically sold by a seller who represents the service provider. A. inseparability B. intangibility C. perishability D. heterogeneity E. fluctuating demand

A 3.15

B 3.16

A 3.17

A 3.18

D 3.19

58 Because of the _____ characteristic of services, Pete cannot be certain that Zoe will benefit as much from a time management seminar as he did. A. inseparability B. intangibility C. perishability D. heterogeneity E. fluctuating demand 58 For which of the following services is the service characteristic of fluctuating demand and perishability likely to have the LEAST affect? A. physical therapy B. dog grooming C. manicure D. child day care E. life insurance 59 During the late nineteenth century when peddlers and their wagons were fairly common sights, it was not uncommon for a peddler to charge a very rural customer $.50 for a mirror and to charge another customer who lived nearer to town $.15 for the same mirror. This example describes how early salespeople dealt with the _____ element of the marketing mix. A. price B. product C. production D. promotion E. destination 59 The owner of A Woman's Touch makes wooden cooling racks for pies, cookies, and cakes. Customers can buy her products by ordering them through the mail. She also sells the racks at craft fairs in the Midwest. This activity is associated with which element of the marketing mix? A. production B. presentation C. direction D. distribution E. promotion

E 3.20

A 3.21

D 3.22

E 3-23

60 (Figure 3.6) A producer of linen napkins and tablecloths can distribute its products by: A. selling it directly to household consumers B. selling it directly to a retailer who sells it to household consumers C. selling it directly to a wholesaler who sells it to a retailer who sells it to household consumers D. selling it to a wholesaler who sells it to an industrial user E. selling to any of the above 60 The owner of A Woman's Touch makes and sells wooden racks for cooling cakes, cookies, and pies. She believed that an article about her and her company in Taste of Home cooking magazine is important to the growth objectives she set for her company. The article in the magazine is an example of a _____ activity. A. product B. promotion C. price D. distribution E. personal selling 60 All marketing managers know personal selling is a part of the _____ element of the marketing mix. product promotion price distribution publicity 62 _____ marketing is the creation of customer loyalty. A. Transaction B. Relationship C. Value-added D. Transformational E. Continuous 62 Relationship marketing is based on the idea that: A. important customers need continuous attention B. a salesperson can never really know too many people C. the burden of quality rests with the seller of the product D. a salesperson should first identify prospects from his or her friends and family then seek referrals from them E. your buyer's competitors may be your best prospects

B 3.23

B 3.24 A. B. C. D. E. B 3-26

A 3-27

B 3.28

62 Twenty percent of a salesperson's customers produce 80 percent of his or her sales. With which type of selling would a salesperson continuously work to improve the operations, sales, and profits of that profitable 20 percent? A. transformational selling B. partnering C. co-oping D. benefit selling E. need-defining 62 When you visit your local campus bookstore, your purchase of a textbook is an example of _____ selling. A. benefit B. relationship C. partnership D. transformational E. transaction 62 At Jolley Ford, Trisha Allyen contacts her customers to determine if they are satisfied with their purchase and have any future needs. This is an example of _____ selling. A. benefit B. relationship C. partnership D. involved E. transaction 62 A salesperson who works continually to improve his or her customers' operations, sales, and profits is practicing: A. benefit selling B. relationship selling C. partnering D. involvement selling E. transaction selling

E 3.29

B 3.30

C 3.31

E 3-32

62 The 80/20 principle: A. is a territorial management concept that favors a salesperson putting 80 percent of his time on planning and 20 percent on action B. refers to the fact that eighty salespeople require twenty sales managers to keep the appropriate 4-to-1 ratio of supervisors to employees C. indicates that no matter how hard a salesperson tries 80 percent of the customer's potential business ends up going to competitors D. is a territorial management concept which favors a salesperson putting 80 percent of her time on action and 20 percent on planning E. refers to the idea that a small portion of a firm's customers account for a large portion of its profitable sales 63 _____ is the most dramatic force shaping an organization's internal and external marketing efforts today. A. A bull market B. Technology C. Globalization D. Environmental concerns E. Decentralization 63 To determine the appropriate role for the sales force in the firm's promotional efforts, the marketing manger must determine: A. how much selling effort is necessary to gain and hold customers B. whether the sales force is the best marketing tool in terms of costs and results C. what type of sales activity will be necessary D. whether the firm can gain strength relative to its competition with its sales force E. all of the above 64 Two main functions of personal selling are to: A. support advertising and collect past due accounts B. talk and listen C. provide service and generate income D. meet quotas and maintain customer records E. implement and control all marketing activities 64 Unlike advertising, personal selling: A. cannot arouse buying action or complete a sale B. is a lower cost method of promotion C. cannot deliver profitable sales D. can be adjusted on the spot E. reaches mass audiences very effectively

B 3.32

E 3.33

C 3-35

D 3.36

D 3.37

64 _____ is the subjective assessment customers arrive at by comparing the service level they believe an organization ought to deliver to the service level they perceive they received. A. The marketing concept B. Total quality management C. Relationship marketing D. Service quality E. Total system management 66 Dwayne is a sales manager for a SBU that sells x-ray equipment to airports. He is planning a sales strategy for his area of responsibility. He has begun by noting that although his salespeople are highly motivated and enthusiastic, they are young and inexperienced. His x-ray equipment is priced lower than most of its competitors, but so are commission rates paid. In what stage of sales strategy planning is Dwayne? A. definition of the present situation B. evaluation of the plan's performance C. selecting strategies D. selecting goals E. selecting tactics 66 Preparation of a multiyear strategic plan for the sales force requires answering four questions. Which of the following is NOT one of those questions? A. What is the sales department's present condition? B. What industry trends are apparent? C. What is the cost of the product being sold? D. What are the organization's most important objectives? E. What are the organization's strategies? 67 In terms of financial planning, the two principal concerns of most sales departments are: A. selling and overhead expenses B. cost of goods sold and selling expense C. cost of goods sold and revenue produced D. revenue produced and selling expense E. selling revenue and costs of material and labor 67 The difference between revenue produced and selling expense equals: A. gross margin B. net margin C. contribution to profit from the sales effort D. marginal revenue

A 3.38

C 3-39

D 3-40

C 3-41

E. net profit E 3-42 67 One of the basic objectives of any sales force is to: A. supplement the firm's advertising efforts B. forecast sales for the next five years C. forecast sales for the next twelve months D. maintain accurate expense records E. transmit information received from customers to the firm 67 Which of the following is a method that measures whether the sales force has attained its sales objectives? A. contribution to profits B. return on assets managed by the sales force C. sales/cost ratio D. market share E. any of the above are appropriate measures 67 As a sales manager, you have decided to use a sales/cost ratio to measure how well your sales force is meeting its objectives. This method will require that you: A. be sure the sales force has the major impact on sales--not price, advertising, or sales promotion B. divide sales force expenses by dollar sales volume C. subtract current sales expenses from all expenditures made to help in the selling effort D. be concerned about both the direct and indirect costs of goods sold E. determine the territorial percentage of sales made and divide by the gross margin 67 As a sales manager for the Berkshire Jam Company, you need to determine how well your sales force it meeting its objectives. Which method would you be using if you decide to divide sales force expenses by dollar sales volume? A. market share method B. brainstorming C. sales/cost ratio D. sales activity method E. the objective method 67 To use the market share method of measuring sales force objectives, management must: A. be sure the sales force has the major impact on sales--not price, advertising, or sales promotion B. divide sales force expenses by dollar sales volume C. subtract current sales expenses from all investments made to help in the selling effort D. consider all direct and indirect costs in its calculations

E 3-43

B 3-44

C 3-45

A 3-46

E. determine the territorial percentage of sales made and divide by gross margin D 3-47 68 Which of the following is an example of an appropriate or typical objective a sales manager might use for his or her sales force? A. lost accounts per month B. dollar output per line per month C. share of market quarterly D. days training per year E. all of the above 68 Which of the following statements about objectives is true? A. Objectives must state how activities are to be done. B. Objectives must be qualifiable. C. Objectives must be achievable. D. Objectives must not challenge a salesperson to perform beyond his or her normal ability. E. All of the above statements about objectives are true 68 The sales manager wants to set the following sales objective: "To have zero lost accounts for the upcoming 12-month period." This sales objective is: A. measurable B. not very challenging C. qualitative D. easily achieved E. a well-designed sales objective 69 Objective-based thinking should help the sales manager: A. estimate market potential B. reflect on your past accomplishments C. establish corporate goals D. determine your present situation E. identify and prioritize those activities that are important 70 People are more committed to ideas they have helped to create than they are to ideas forced upon them. The text suggests one method of involving the salespeople in creating ideas for strategies and tactics is through: A. situation analysis B. brainstorming C. objective-based thinking D. subjective-based thinking E. prospecting

A 3-48

A 3-49

E 3-50

B 3-51

D 3-52

70 When determining next year's sales plans, a sales manager needs to establish progress checkpoints: A. because without these checkpoints he or she will be unable to analyze the firm's marketing mix B. so each of his or her salespeople can have a copy of the plan C. to implement the strategic sales force technique D. so minor problems can be identified and corrected before they become major problems E. to determine if his or her plan will generate enough sales to cover the costs of implementing it 71 _____ involves examining your markets and determining the roles and activities of sales personnel necessary to service these markets. A. Target marketing B. Segmentation planning C. Strategic sales force planning D. Market forecasting E. Market analysis

C 3-53

TRUE FALSE QUESTIONS F 3-54 F 3-55 T 3-56 T 3-57 F 3-58 F 3-59 52 A tactic is a pattern of actions and resource allocations designed to achieve the goals of an organization. 53 An organization's strategic vision is identical to its mission statement. 54 (Figure 3.2) An organization's operational plan is derived from its strategic plan. 54 The act of selling is only one part of a firm's marketing activities. 56 A bag of cat food, an airplane ticket, a wicker chair, an antique ottoman, and a Caribbean cruise are all examples of goods. 57 (Figure 3.5) According to the good-service continuum, services like a meal at a restaurant, Alaskan cruises, and tutoring are all examples of relatively pure services.

F 3-60 T 3-61 T 3-62 F 3-63 F 3-64 F 3-65 T 3-66 F 3-67 F 3-68 T 3-69 T 3-70 F 3-71

58 Motels on the beach in Florida and physical therapy both are services, and both demonstrate the service characteristic of fluctuating demand equally well. 59 Organizational customers for goods and services can be broken down into two groups-for-profit and not-for-profit organizations. 60 The company's sales force is one segment of the firm's promotional effort. 60 (Table 3.2) Credit terms, discounts, coupons, list prices, and promotional allowances are all price elements of the marketing mix. 62 The emphasis in relationship marketing is on selling customers today rather than on what will happen tomorrow. 62 The ultimate outcome of relationship marketing is the building of a transaction relationship between the seller and the buyer. 62 When a company defines its own business as growing the business of its partner, it is partnering. 63 Downsizing is the most dramatic external environmental force shaping an organization's marketing efforts today. 64 The main functions of personal selling are to generate revenues and to provide services to help satisfy customers. 65 Before a sales manager can plan a sales strategy, he or she must have a complete understanding of the organization's marketing strategy. 66-67 When a sales manager does his or her strategic planning, financial planning is part of that job. 67 The difference between selling expenses and the organization's profits from its sales effort is equal to the revenue produced.

T 3-72

67 To use the market share method of measuring sales force objectives, management must be sure the sales force has the major impact on sales--not price, advertising, or sales promotion. 68 To be effective, objectives must state what is to be done and how it is going to be accomplished. 69 Objective-based thinking requires that everything the sales manager and the sales force do should be directed at achieving the next year's objectives. 71 Although some people try to make a big production of it, effective sales management basically boils down to whether the sales manager can achieve his or her sales quota. 71 The strategic sales force planning process involves examining the relevant markets and determining the roles and activities of sales personnel necessary to service these markets.

F 3-73 T 3-74 F 3-75 T 3-76

SHORT ANSWER QUESTIONS 3-77 What type of planning is occurring when the manager of a fast food restaurant schedules counter salespeople for the next week? Ans: operational planning Page: 52 3-78 What is the first step in strategic planning? Ans: establish a mission and vision for an organization Page: 53 3-79 Ans: How does a product differ from a good? A good is a physical object that can be purchased. A product refers to both goods and services. Page: 56 3-80 Ans: Why is the selling of services the most challenging of all the sales jobs? because of the characteristics of services--intangibility, inseparability, heterogeneity, and perishability and fluctuating demand Page: 58

3-81 Ans:

What is the goal of the marketing mix? to have the right product, at the right price, at the right time, and with the right promotional effort Page: 61 3-82 What is of relationship marketing? Ans: to create customer loyalty Page: 62 3-83 What is wrong with the following objective: "To increase the amount of sales training so that no customers are lost?" Ans: Students should answer that the objective is not achievable given the time and financial resources typically available for training, Page: 68

Chapter 4 The Market-Driven Sales Organization MULTIPLE CHOICE QUESTIONS E 4-1 78 _____ is the deployment of resources to achieve strategic objectives. A. Controlling B. Governing C. Directing D. Maneuvering E. Organizing 78 _____ is the division of labor into specific departments and jobs, formal lines of authority, and mechanisms for coordinating diverse organizational tasks. A. Deployment B. Formalization C. Specialization D. Centralization E. Functionalization 78 To meet the strategic objectives of the organization, the management at Berkshire Jam Company must decide how to deploy the firm's available resources--its employees, raw materials, supplies, finances, and so forth. This activity is called: A. controlling B. governing C. directing D. maneuvering E. organizing 78 To design the best possible sales force for a manufacturer of wood-burning stoves, its sales manager must: A. design sales jobs around its customers B. set up the sales force organizational structure C. determine what activities its salespeople must perform D. examine its customers in each market E. do all of the above

A 4.2

E 4-3

E 4-4

D 4-5

79 According to the text, salespeople work in two basic types of markets: A. consumer and retail B. business and industrial C. institutional and wholesale D. consumer and business E. organizational and institutional 79 Which of the following is the least complex and least difficult category of sales job? A. textbook salesperson calling on professors B. advertising time salesperson for a local radio station C. salesperson who takes orders at the counter of the local Wendy's D. salesperson who delivers snacks to local convenience stores E. salesperson who sells advertising time for a national TV network 79 Which of the following sales job categories is less complex and less difficult than the other jobs? A. medical detailer B. textbook salesperson C. creative sale of tangibles D. delivery salesperson E. engineering salesperson 80 Which of the following sales job categories is more complex and more difficult than the others? A. medical detailer B. inside order taker C. creative sale of tangibles D. outside order taker E. creative sale of intangibles 80 Which of the following sales jobs would be categorized as the MOST complex and difficult? A. a salesperson who sells advertising time on a cable television channel B. a pharmaceutical salesperson C. a counter person at McDonald's D. a store clerk at a JCPenney department store E. a person who sells souvenirs at a football stadium

C 4-6

D 4-7

E 4-8

A 4-9

D 4.10

80 Which of the following would NOT be classified as an order taker? A. someone selling magazine subscriptions B. a salesperson who delivers dairy products to a supermarket C. the counter person at a Subway Sandwich Shop D. an insurance salesperson E. a salesperson selling textbooks to college instructors 80 Which of the following sales job categories would be an example of an order getter? A. pharmaceutical salesperson calling on physicians B. salesperson for a local vinyl-siding company C. salesperson who takes orders at the counter of the local Pizza Hut D. salesperson who delivers bread to local supermarkets E. an engineering salesperson who concentrates on the technical aspects of a sales project

B 4-11

C 80 4.12 The main problem with many order takers is that they create only one distinction in the customer's mind. That distinction is: A. product features B. possession utility C. price D. product benefit E. product utility E 80 4.13 An order getter salesperson has a double selling problem. The first of these problems is how to: A. develop the technical knowledge necessary to do the job B. create goodwill for his or her employer C. create an effective demonstration for an intangible product D. establish a solid rapport with each potential customer E. create discontent in the prospect with regard to what he or she already has B 80 4.14 Xavier sells health club memberships at a kiosk in a local mall. He is a creative salesperson in a highly competitive market. One of the main problems he faces is how to: A. become friends with each prospective customer B. convince people that other weight loss methods and health benefiting products are not as effective as membership in his health club C. determine the target market for the health club D. create a list of prospects E. create a sales presentation, which will reach all potential customers

D 80 4.15 An order getter salesperson has a double selling problem. The second of these problems is how to: A. develop the technical knowledge necessary to do the job B. create goodwill for his or her employer C. create an effective demonstration for an intangible product D. overcome the most powerful and obstinate resistance E. create a sales presentation, which will reach all potential customers B 82 4.16 When organizing the firm's sales operation, a sales manager should think of a sales territory as: A. a group of customers with a functional relationship B. a group of customers within a geographical area assigned to a given salesperson C. a section of a larger distribution area that falls under the firm's exclusive distribution rights D. the total number of salespeople assigned to call upon a given customer E. the type of customers in which a salesperson wishes to specialize E 4-17 82 As territory manager, a salesperson is expected to do all of the following EXCEPT: A. provide solutions to customers' problems B. help customers use products after purchase C. provide his or her company with market information D. build goodwill with customers E. prepare sales presentations for the members of his or her sales force

A 83 4.18 The formal, coordinated process of communication, authority, and responsibility for sales groups and individuals is referred to as: A. organizational design B. corporate interposition C. organizational development D. staff hierarchy E. managerial development E 4-19 137 One of the purposes of job design is to improve an individual's quality of work life. An individual's work life includes: A. his or her pay and promotions B. his or her skills, abilities, and experiences C. his or her tasks, behaviors, duties, functions, and responsibilities D. his or her intrinsic satisfaction E. all of the above

D 4-20

83 The relatively fixed, formally defined relationship of jobs within the firm is called: A. organizational design B. corporate interaction C. schematic organization D. organizational structure E. staff hierarchy 84 Which of the following statements does NOT accurately describe a pure line organization structure? A. A pure line organization is simple. B. A pure line organization provides low overhead. C. Decisions can be made rapidly in a pure line organization. D. Communication is quick in a pure line organization. E. A pure line organization promotes functional specialization. 84 Turner's Country Foods produces a variety of cornmeal mixes which it sells at craft fairs. Its organization structure would be described as simple, having low overhead, and requiring everyone to be a "jack-of-all-trades." This definition indicates the Turner's Country Foods has a _____ organization. A. pure line B. line and staff C. geographically-specialized D. customer-specialized E. hybrid 84 Berkshire Jam Company has outgrown its simple organization structure where all executives did a little bit of everything. The firm is being reorganized into functional groupings. Berkshire's OLD structure was an example of a _____ organization. A. hybrid B. pure line C. line and staff D. heterogeneous E. staff-directed 84 The _____ organizational design groups work according to the characteristics of the tasks to be performed. A. pure line B. homogeneous C. functional D. staff E. heterogeneous

E 4-21

A 4-22

B 4-23

C 4-24

D 4-25

84 Another name for the functional organizational design is the _____ organization. A. line B. staff controlled C. heterogeneous D. line and staff E. homogeneous 84-85 Berkshire Jam Company has outgrown its simple organization structure where all executives did a little bit of everything. The firm is being reorganized into functional groupings. Berkshire's NEW structure is an example of a: A. schematic organization B. line organization C. line and staff organization D. heterogeneous organization E. staff-directed organization

C 4-26

A 85 4.27 Tuttle Aluminum and Bronze Company is the leading designer and manufacturer of aluminum railings, such as found in sports stadiums. Recently the Eastern division sales manager of the Tuttle Company directed all salespeople in that division to mail their weekly activity reports no later than the Monday following the week on which they were reporting. The sales manager is: A. using line authority B. serving as a resource advisor to the sales force C. using functional authority D. serving as a promotional manager E. using staff authority E 4-28 85 Century Industries makes custom food concession trailers. As part of her job, Bernice advises Century top management on issues related to demographic and psychographic trends that determine which snack foods are in and which are out of fashion. When Bernice provides her recommendations, she is: A. using line authority B. serving as an expert witness C. using functional authority D. serving as a corporate mediator E. using staff authority

A 85-86 4.29 Century Industries makes custom food concession trailers. The Century Industries is organized into four divisions: the Eastern division, the Midwestern division, the Southern division, and the Canadian division. This is an example of:

A. B. C. D. E.

geographical specialization product specialization horizontal integration customer specialization functional specialization

E 86 4.30 Which of the following describes an advantage an organization experiences when it uses geographic specialization? A. better market coverage B. higher quality customer service C. improved control of sales force activities D. improved ability to direct salespeople's efforts E. all of the above C 86 4.31 A paint company that manufactures and sells mildew-resistant paint in the Southeast, heatresistant paint in the Southwest, and arctic paints for Canada and the Northern U.S. would most appropriately use a _____ organizational structure. A. nonterritorial B. horizontal integration C. geographical specialization D. customer specialization E. functional specialization D 86 4.32 Which of the following conditions would make a product specialization approach to organizational design useful? A. The products sold are relatively simple and uncomplicated. B. The products sold are extremely similar. C. All product lines are distributed through identical trade channels. D. Different products are sold to similar markets. E. Each geographic area needs to be treated as a separate profit center. A 86 4.33 When products are very technical, or the firm sells a large number of similar but separate products, or product lines are distributed through entirely different trade channels, the text recommends a ______ organizational structure. A. product specialization B. horizontal integration C. geographical specialization D. customer specialization E. functional specialization C 87 4.34 The drawbacks associated with the use of a product specialization organizational structure:

A. B. C. D. E.

include decreased emphasis on customer service include the inability to respond to changes in local conditions are the same as those for geographical specialization include the inability to provide complete market coverage are completely difference from those associated with customer specialization and geographic specialization

D 87 4.35 A company with several separate and distinct markets accounting for major portions of its sales will often organize on the basis of these markets. This approach is called a: A. product specialization B. horizontal integration C. geographical specialization D. customer specialization E. functional specialization D 87 4.36 Tuttle Aluminum and Bronze Company is the leading designer and manufacturer of aluminum railings that is used in stadiums, parking garages, amusement park queue houses, and zoos. Separate sales forces are used for each of the four types of customers. This approach to the market is called a: A. product specialization B. horizontal integration C. geographical specialization D. customer specialization E. functional specialization A 88 4.37 ______ are used when the regular sales force lacks the knowledge, selling and negotiating skills, coordinating abilities, and/or time needed to deal successfully and profitably with large accounts that purchase centrally. A. Key account salespeople B. Staff salespeople C. Systems salespeople D. Approved supplier E. Missionary salespeople D 4-38 89-90 Amazon.com joined Living.com to create "a place where you can find and discover anything and everything you might be looking to buy online." Amazon.com gave Living.com $145 million and received an 18 percent stake in Living.com. Amazon.com and Living.com have created a(n): A. bartering syndicate B. strategic alliance C. acquisition D. countertrade

E. network affiliation B 4-39 89-90 Whirlpool, the giant appliance manufacturer, entered into a formal relationship with Wollin Products, a plastic manufacturer with about $50 million in annual sales. More than a third of Wollin's sales are parts for Whirlpool washing machines. This formal relationship for the purpose of jointly developing better washing machines is called a(n): A. bartering syndicate B. strategic alliance C. acquisition D. countertrade E. network affiliation 90 Team-based organizations: A. are long-lived B. operate according to traditional vertical lines of authority C are composed of a defined group of individuals who bring together expertise from different parts of the organization D. seldom have any contact with the organization's customers E. are accurately described by all of the above 90 Century Industries markets customized food concession trailers. When the company presents its sales presentation to a customer, a representative from the marketing department, a representative from the manufacturing department, and a representative from customer service are all in attendance. This scenario should lead you to conclude that Century Industries: A. would not engage in strategic alliances B. is not globalized C. uses a customer specialization organizational structure D. is a team-based organization E. is accurately described by all of the above

C 4-40

D 4-41

E 91 4.42 _____ refers to the quality of collaboration across groups. A. Autonomy B. Decentralization C. Internal specialization D. Functionalization E. Coordination E 91-92 4.43 Which of the following statements about coordination is true? A. Coordination refers to the quality of collaboration across groups. B. Without coordination, companies find it difficult to satisfy their customer needs.

C. Coordination is especially important in a global organization. D. Coordination is required whether a company has a functional, divisional, or team organizational structure. E. All of the above statements about coordination are true. TRUE FALSE QUESTIONS T 78 4.44 The right organizational structure cannot guarantee good results, but the wrong one can be expected to harm results. T 4-45 T 4-46 F 4.47 79 In some categories of sales positions, salespeople are NOT expected to sell. 80 Creative salespeople are often faced with selling to numerous people to get one order. 81 Although selling of different kinds of products requires different product knowledge, basic selling skills are readily transferable; hence, a person who is successful in one category of selling can expect to succeed in the others. 82 The salesperson's sole job is to make presentations to prospects and current customers; a salesperson who performs any other activity is wasting his or her time. 82 As part of their task of providing their companies with information, salespeople help their customers to solve problems. 83 Two of the more important purposes served by job design are to increase productivity and to improve each individual's quality of work life. 84 The "one-man-show" type of organization structure is called an open organization. 84-85 Staff positions are found in functional organizations. 85 A staff manager is never given line authority. 86

F 4-48 F 4-49 T 4-50 F 4-51 T 4-52 F 4.53 T

4-54 It is unusual to find a large company organized solely on the basis of product specialization. T 4-55 F 4-56 86-87 If possible, an organization should avoid using the product specialization form of organization structure. 87-88 The idea of using the key account approach to selling was developed after firms learned the personal bond between the people performing the buying and selling roles was the most important variable in most business-to-business selling. 88 Use of district managers to deal with key accounts may seriously hamper how the sales manager interacts with his or her territorial salespeople. 90 A strategic alliance is formed whenever two companies agree--informally or formally--to work toward creating a better product. 90 Cross-functional teams are typically short-lived. 91 Coordination refers to the quality of collaboration across groups.

T 4-57 F 4-58 T 4-59 T 4-60

F 92 4.61 A lack of coordination does not affect a company's external environment. SHORT ANSWER QUESTIONS 4.62 According to the text what is the most complex and most difficult of all the sales positions? Ans: the creative sale of intangible products Page: 80 4.63 What single attribute do order takers typically use to distinguish the product they are selling from that of their competitors? Ans: by price Page: 80 4.64 What is another name for the functional organizational design? Ans: the line and staff organization Page: 84

4.65 What kind of authority is being exerted when a sales manager orders his salespeople to increase sales of the company's newest product line? Ans: line Page: 85 4.66 What kind of specialization is being used by a company that sells a spicier sauce to areas with a large Hispanic population than to areas with a largely northern European population? Ans: geographic Page: 86 4.67 What has happened when Tuttle Aluminum and Bronze Company, the leading designer and manufacturer of aluminum railings in the U.S., forms a strategic alliance with Western Metal Fabricators, the premier designer and manufacturer of steel railings? Ans: The two companies have formed a formal relationship created with the purpose of the joint pursuit of mutual goals. Page: 90

Chapter 5 Forecasting Market Demand and Sales Budgets MULTIPLE CHOICE QUESTIONS A 5.1 100 An ongoing, future-oriented structure designed to generate, process, store, and later retrieve information to aid decision making in an organization's marketing program is called a: A. marketing decision support system (MDSS) B. market information system (MIS) C. decision support system (DSS) D. marketing management support system (MMSS) E. management information system (MIS) 101 A(n) _____ is called the estimated dollar or unit sales for a specific, future time period based on a proposed marketing plan and an assumed market environment. A. sales forecast B. assumptive expectation C. market predictor D. market forecast E. economic potential 101 The appropriate time span for a sales forecast is: A. three months B. six months C. one year D. two years E. any of the above, depending on the firm's needs 101 A sales forecast should NOT be used to: A. determine the company's business and marketing plans B. determine the quantity and timing of needs for personnel, equipment, and raw materials C. help determine the amount of capital needed to operate the business D. determine the organizations production schedule E. provide a basis for sales quota assignments

A 5-2

E 5-3

D 5-4

C 5-5

101 Which of the following statements about sales forecasting is true? A. Marketing plans should not be allowed to influence a firm's sales forecast. B. Sales forecasts are developed after sales budgets. C. The forecasting process refers to a series of procedures used to develop a sales forecast. D. The amount of raw materials purchased by the firm is a major input to the sales forecasting process. E. Before making the sales forecast, the sales manager should check with the production manager to see how much the factory plans to make. 101 According to the text, the forecasting process begins: A. when the company is first chartered B. after the appropriate marketing research determines customer buying motives C. immediately after the forecast period begins D. when a forecast objective is determined E. after the determination of the independent and the dependent variables 101 Bubba Kindling, the manager of Smokin' Tires, NevaFlat dealer in Asphalt, Alabama, has noticed sales of tires at his store go up or down according to the number of traffic tickets the local police department writes in the previous month. It appears Bubba has discovered a(n): A. sales potential B. market index C. market anomaly D. market factor E. economic forecaster 101 David Larson sells antique tools on ebay, an Internet auction. He has noticed that there are more bidders for his merchandise when more than 6 inches of snow falls in the Midwestern States. He believes that the bad weather condition makes people less mobile and more willing to sit in front of their computers and bid on items for sale on ebay. It appears that David has discovered a(n): A. sales potential B. market index C. market anomaly D. market factor E. economic forecaster

D 5-6

D 5.7

D 5.8

D 5.9

101 A(n) _____ is simply a market factor expressed as a percentage relative to some base figure, such as net sales in a particular year. A. economic potential B. sales forecast C. economic index D. market index E. market forecast 101 When industry sales have a potential to increase, a useful market index should: A. rise B. fall C. remain unchanged D. report this increase only after it becomes a reality E. do none of the above 102 The two broad categories of sales forecasting are the: A. participative and the autocratic methods B. breakdown and the buildup methods C. company-specific and the industry-specific procedures D. centralized and decentralized methods E. strategic and tactical procedures 102 (Figure 5.2) LaVonda works for a company that provides management and marketing expertise for sports facilities and team franchises and helps them to develop and implement comprehensive marketing plans. She is working on next year's sales forecast for her firm. She begins by examining such external environments as the general economy, activity within the sports industry, and government actions that may affect sports, such as new taxes or OSHA regulations, to determine which factors may influence sales. Which broad category of forecasting is LaVonda using? A. linear programming B. buildup C. resolute assumption D. national E. breakdown

A 5-10

B 5-11

E 5-12

D 102 (Figure 5.2) 5.13 The first step in the breakdown method for forecasting sales is to: A. determine the target market B. ask salespeople their opinion about upcoming sales C. identify the methods to be used for selling products D. study the general environment forecast E. identify the products to be sold

B 103 5.14 Arvis is employed by a company that manufactures lighted signs for the Department of Transportation. As a part of developing a sales forecast for next year, Arvis has estimated the maximum possible sales his firm could reach under current conditions will be 730,000 units. This number is an example of a(n): A. user expectations forecast B. company sales potential C. company sales forecast D. industry sales forecast E. industry sales potential B 103 5.15 Another name for market potential is: A. user expectations forecast B. industry sales forecast C. company sales potential D. market index E. internal sales forecast E 5-16 103 Company sales potential is: A. always stated as a dollar figure B. often referred to as the "industry share" C. the estimated sales for all sellers in the entire market over a specified time under given conditions D. equal to a company's sales forecast E. the company's share of the estimated sales for an entire industry

B 103 5.17 Clorox bleach has 60 percent of the estimated sales for the entire liquid bleach market. This figure of 60 percent is called Clorox's: A. company sales potential B. market share C. industrial sales potential D. industrial sales forecast E. maximum sales potential

C 5-18

103 To forecast how many rose bushes it will sell to wholesalers next year, J&M Roses has each of its regional salespeople predict how many miniature roses, tree roses, bush roses, and landscape rose bushes they think they will sell during the year based on their understanding of regional conditions. J&M Roses uses the _____ approach to sales forecasting. A. correlation B. top-down C. buildup D. breakdown E. expotential 103 Airborne is the U.S.s leading manufacturer of World War II leather pilot jackets. To forecast how many jackets it will sell next year, it looks at the number of subscribers to magazines published by the VFW, the American Legion, and other veteran organizations and assumes that about 3 percent of that number will buy a jacket. It also looks at the number of World War II movies being released during the next year. For each World War II-related movie, Airborne expects its sales to increase by another 1 percent. Airborne is using the _____ approach to sales forecasting. A. correlation B. top-down C. buildup D. breakdown E. expotential

C 5-19

D 103 5.20 The two categories of sales forecasting methods are: A. the sales force composite and the executive opinion B. test markets and trend analysis C. correlation analysis and market factors analysis D. the survey method and the mathematical method E. the external method and the internal method A 5-21 103 (See Figure 5.4) Which of the following is NOT an example of a survey method of sales forecasting? A. exponential smoothing B. users expectation C. sales force composite D. executive opinion E. build-to-order

B 5-22 A.

103 (See Figure 5.4) Which of the following is an example of a survey method of sales forecasting? trend analysis B. user's expectation C. nave models D. moving average E. test markets 104 _____ is the original method of sales forecasting and is still the most widely used, regardless of company size. A. Correlation analysis B. Trend analysis C. Test marketing D. Sales force composite E. Executive opinion 104 Executive judgment forecasting are best used when the: A. sales volume is erratic B. market boundaries are poorly defined F. risks of serious error in forecasting are high G. budget for sales forecasting is greater than normal E. executives who forecast have a true understanding of the market and customers' needs 104 Which of the following statements about the Delphi method of forecasting is true? A. The Delphi method involves observational research. B. The Delphi method can be used to overcome the tendency of dominate individuals to determine group opinion. C. The first consideration in using the Delphi method should be determine the problem. D. The Delphi method uses average consumers with no particular expertise. E. The Delphi method is classified as a mathematical modeling method.

E 5-23

E 5-24

D 5-25

E 104 5.26 A land developer asked a panel of experts to respond to a series of questionnaires about land usage and land potential for an area just north of a large metropolitan area. Each new questionnaire administered depended on the responses from the previous questionnaire. The approach enabled the panel members to have access to the information contributed by other respondents and prevented anyone from dominating the group. The land developer was using: A. correlation analysis B. trend analysis C. test marketing D. a sales force composite E. the Delphi method

D 105 5.27 Which of the following buildup method of sales forecasting would be most likely used for selling a $3 million oil drilling platform? A. correlation analysis B. trend analysis C. test marketing D. a sales force composite E. the Delphi method B 5-28 105 The _____ method of forecasting is based on polling actual and potential customers and asking them about their future buying plans. A. Delphi B. user's expectations C. correlation D. nave E. test market 105 A manufacturer of wicker furniture used users expectations to calculate its sales forecast. The forecast predicted sales of $140,000, but only $90,000 was actually sold. This example reveals one of the disadvantages of the users expectations method. It is: A. the inability of customers to predict their future buying habits B. the negative influence of reference groups C. the potential for mathematical error with all buildup methods D. the inability of some salespeople to close a sale E. the tendency of salespeople to overestimate sales 105 When a company uses _____ to measure consumer acceptance of new products, it executes its marketing program in a limited number of locations rather than nationally in order to judge its effectiveness. A. correlation analysis B. trend analysis C. test markets D. sales force composite E. inferential testing

A 5-29

C 5-30

E 5-31

105 _____ is a popular method of measuring consumer acceptance of new products, like a tooth whitener or a over-the-counter sinus infection remedy. A. Time series projection B. Correlation analysis C. Executive opinion D. Regression analysis E. Test market 105 A manufacturer of a new vaccine that will completely protect cats from feline leukemia might decide to not use test markets because test marketing: A. uses computer simulations and not real market situations B. is costly and time-consuming C. is too simplistic and produces results that are overly optimistic D. results are always unreliable E. is mathematically-complex 106 Time series projection is: A. an objective method of forecasting sales B. a subjective method of forecasting sales C. based on a need for qualitative forecasting D. easy to use E. a survey method of forecasting sales 106 Sales for roller coaster rides and carousels for amusement parks are higher in the winter when many parks are closed than during the tourist season. In terms of the components of the classical approach to trend analysis this would be an example of a(n) _____ component. A. trend B. erratic C. cyclical D. seasonal E. naive 106-107 The classic approach to time series analysis recognizes four components. Which of the following is NOT one of those components? A. trend B. erratic C. cyclical D. seasonal E. horizons

B 5-32

A 5-33

D 5-34

E 5-35

C 5-36

107 The impact of economic booms and recessions is accounted for in which component of time series analysis? A. trend B. erratic C. cyclical C. seasonal D. naive 107 NevaFlat Tire Company's time series analysis of sales to automobile manufacturers was effected by a lengthy strike three years ago at the factory of one of its major customers. The strike is an example of which component of time series analysis? A. dependent B. erratic C. regulated D. deregulated E. yclical 107 It is December. The owner of a company that manufactures and markets pickled garlic knows that sales last year were $100,000 and that sales this year were $80,000. What must she do to use the naive method of forecasting? A. Assume what happened in the immediate past will happen again in the immediate future. B. Quantify the cyclical nature of the sale of pickled garlic. C. Quantify the seasonal nature of the sale of pickled garlic. D. Assume its sales representatives are acting as order getters instead of order takers. E. Assume there are no intangible benefits gained from the use of pickled garlic.

B 5-37

A 5-38

A 5-39

107 It is December. The owners of Wilson Video Store know sales last year were $400,000 and that sales this year were $380,000. If they use the naive method of forecasting, what are predicted sales for next year? A. $361,000 B. $380,000 C. $400,000 D. $421,053 E. cannot be calculated

C 5-40

107 Compute a three year moving average forecast for period 5, given the following data: Period Sales 1 4 2 7 3 8 4 9 A. 6 B. 7 C. 8 D. 9 E. 10 108 Management would like to use the historical sales data from the last five years to forecast next year's sales, but they are concerned that the older data may not reflect the current situation as well as the more recent data. Which of the following methods of forecasting would be most appropriate to their needs? A. exponential smoothing B. regression analysis C. the ratio method of forecasting D. correlation E. trend projections 108 The management at Eastern Acoustic Works (EAS), one of the worlds leading developers of professional loudspeakers, uses past data to predict future sales, but less weight is placed on data as it gets older. Which forecasting method is being used at EAW? A. exponential smoothing B. regression analysis C. the ratio method of forecasting D. trend projections E. correlation 108 In some respects, the _____ method of forecasting sales is a formalization of the eyeballfitting technique. A. exponential smoothing B. regression analysis C. ratio D. trend projections E. least squares

A 5-41

A 5-42

E 5-43

A 5-44

108 The least square technique of sales forecasting: A. is more accurate than the eyeball-fitting technique B. uses past sales data as well as sales force size C. is a statistical method used to incorporate independent factors that are thought to influence sales into the forecasting procedure D. uses two or more independent factors E. is most appropriately used in high-technology industry 108 _____ is a statistical method used to incorporate independent factors thought to influence sales, such as population and advertising, into the forecasting procedure. A. Exponential smoothing B. Regression analysis C. The ratio method of forecasting D. Trend projections E. Correlation

B 5-45

E 111-112 5.46 The sales force budget: A. is the amount of money available or assigned for a definite period B. depends on the sales forecast C. is a valuable resource that the sales manager redistributes among lower-level managers D. is based on estimates of expenditures during a specific period and the amount of revenue the organization expects to generate E. is accurately described by all of the above B 5-47 112 What are the three major reasons for formulating a budget? A. accountability, delegation, and responsibility B. planning, coordination, and control C. compensation, assignments, and accountability D. managing, marketing, and manufacturing E. production, inventory, marketing 112 Which of the following did the text identify as a major purpose of a budget? A. control B. staffing C. structure D. to provide incentive E. none of the above

A 5-48

C 5-49

112-113 Which of the following statements about the methods of developing sales force budgets is true? A. No firms today use an arbitrary percentage of sales. B. The sales force budget must be inflexible. C. Executive judgment may be used in developing the sales force budget. D. Managers are seldom expected to stay within the sales force budget due to the variability of the external environment. E. Sales force budgets never include costs for Social Security, entertainment, travel, product samples, and stock options.

TRUE-FALSE QUESTIONS F 5-50 F 5-51 100 A marketing decision support system is of least value in a large company where information is likely to get lost or distorted as it becomes widely dispersed. 101 The estimated dollar or unit sales for a specific, future time period based on a proposed marketing plan and an assumed market environment is called the sales expectation.

T 101 5.52 Forecasting the future is always a matter of probabilities. F 5-53 F 5-54 F 5-55 T 5-56 F 5-57 F 5-58 101 If the assumptions on which a sales forecast is made change, the forecast will usually still be accurate. 103 Company sales potential is often referred to as the industry share. 103 The terms company sales forecast and company sales potential are synonyms. 104 Executive opinion is the original method of sales forecasting and is still the most widely used, regardless of company size. 105 The Delphi approach to forecasting may be biased by salespeople purposefully distorting figures to serve their personal best interests. 105 The sales force composite method is a breakdown approach to sales forecasting.

T 5-59 F 5-60 T 5-61

105 Forecasts based solely on user's expectations tend to be overly optimistic. 105-106 According to the text, marketers most often use the ten largest cities in the U.S. for test market sites to ensure a large enough sample participates in the test market. 106 Companies often change product features and promotional themes as a result of the data obtained from test-market situations.

F 107 5-62 The primary advantage of time series projection is that it is based on qualitative forecasting. F 5-63 108 Exponential smoothing is very similar to linear regression.

T 111 5.64 The sales force budget is the amount of money available or assigned for a definite period of time, usually one year. F 5-65 112 Executive judgment has no appropriate role in the development of the sales force budget.

T 113 (Table 5.3) 5.66 Sales force budgets may include costs for Social Security, entertainment, travel, product samples, and stock options. Short Answer Questions 5.67 How is a market index expressedas a fraction, dollar amount, percentage, or some other unit? Ans: percentage Page: 101 5.68 List the two basic methods of sales forecasting? Ans: the breakdown and the buildup method Page: 102 5.69 What is another name for market potential? Ans: industry sales forecast Page: 103

5.70 What is the most widely used sales forecasting method? Ans: executive opinion Page: 104 5.71 List the four basic survey methods used for sales forecasting. Ans: executive opinion, sales force composite, the Delphi method, and build-to-order Page: 104 5.72 Three years ago, Outdoor Sports International had $4.5 million in sales. Two years its sales were $5 million. Last year it had sales of $6 million. This years sales were also $6 million. Use the nave method to forecast next years sales. Ans: $6 million (6 * (6/6)) Page: 107

Chapter 6 Design and Size of Sales Territories MULTIPLE CHOICE QUESTIONS D 6-1 120 A sales territory comprises: A. all of the customers who do business with a certain company B. the salespeople who fall under the jurisdiction of a particular sales manager C. the actual sales made by individual salespeople, not the sales potential D. the group of customers assigned to a salesperson E. all of the geographic areas in which an international company sells its product 120-121 Which of the following statements about sales territories is true? A. The establishment of sales territories typically duplicates sales efforts to increase the probability of a sale. B. Sales territories must have geographic boundaries. C. Sales territories are intended to insure thorough coverage of the market. D. A sales territory typically contains no potential customers. E. A sales territory is assigned to a sales manager. 120-121 According to the text, one of the reasons for establishing sales territories is to: A. increase company costs and lower company profits B. improve customer relations C. match the wants of the salesperson with the needs of the customers served D. facilitate utilization of the undifferentiated selling approach E. increase the salesperson's flexibility in managing territorial coverage 120-121 Which of the following is NOT a typical reason for establishing sales territories? A. to better match salespeople to customers B. to increase the usefulness of the canned sales presentation C. to improve customer relations D. to evaluate performance E. to obtain thorough coverage of the market

C 6-2

B 6-3

B 6-4

C 6-5

120-121 Which of the following is NOT given by the text as an important reason for establishing sales territories? A. to establish each salesperson's responsibilities B. to obtain thorough coverage of the market C. to facilitate the implementation of SBO D. to evaluate performance E. to reduce sales expense 120-121 Which of the following is NOT listed in the text as a reason to establish sales territories? A. to facilitate utilization of the undifferentiated selling approach B. to better establish a salesperson's responsibilities C. to aid in reaching the firm's objectives D. to provide company salespeople the opportunity to meet their personal needs E. to provide the company's CEO with an easy method to check on individual sales effort 121 According to the text, the higher the similarity between the customer and the salesperson, the: A. less likely the salesperson will have a long sales call B. more likely sales revenue will not support sales expense C. more likely an initial sale can be made over the telephone D. more likely the sales effort will be successful E. less likely it is that the sales manager will be concerned about time management 121 Because Louis Arkahian was raised on Long Island, he is: A. less likely to make long sales calls B. more likely to be successful selling in rural South Carolina than his more rural peers C. more likely to be successful selling in New York City than in rural Alabama D. more likely to make an initial sales call over the telephone E. less likely to have developed good time management skills 122 Which of the following does the text give as one reason why having established sales territories could be viewed as a disadvantage? A. Salespeople may be more motivated if they are not restricted to a certain territory B. The company may be too large to be concerned with segmenting the market into sales areas C. Customer goodwill is created when customers receive regular sales calls D. Personal friendships can lower the average number of sales calls E. None of the above is a disadvantage; sales territories are always a good idea

A 6-6

D 6-7

C 6-8

A 6-9

E 6-10

122 According to the text, which of the following statements describes a reason why a company might NOT want to establish sales territories? A. Management may not want to take the time. B. Personal friendship may be the basis for attracting customers. C. The salespeople may be more motivated if they are not restricted by territorial boundaries. D. The company may be too small to be concerned about segmenting the market into sales areas. E. All of the above are reasons for not establishing territories. 122 "To increase the number of weekly sales calls by ten percent," is an example of a: A. product mandate B. derived allocation C. sales objective D. future product allocation E. product mandate 123 Territorial boundaries can be based on: A. trading areas B. major accounts C. metropolitan statistical area D. cities and ZIP code areas E. any of the above 123 Territorial boundaries are NOT based on: A. trading areas B. ZIP code areas C. states D. derived demand E. metropolitan statistical areas 123 The nucleus around which sales territories are formed is: A. metropolitan statistical areas B. product demand C. salesperson's ability D. the interstate highway system E. customers and prospects

C 6-11

E 6-12

D 6.13

E 6-14

D 6-15

123 Which of the following is NOT identified by the text as one of the main influences on a salesperson's work load? A. intensity of market coverage B. nature of the job C. products sold D. amount of compensation E. whether the salesperson is expected to perform any missionary selling 123 A firm using _____ distribution sells its product in every outlet where final customers might reasonably look for it. A. exclusive B. positive C. intensive D. penetrating E. selective 123 For which of the following products would a sales manager be most likely to use intensive distribution? A. Bose automotive music system B. decorative thermometers C. Butterfinger candy bar D. Betty Crocker brownie mix E. magazine for American Legion members 123 A firm that sells its product through only a limited number of intermediaries in a given market is using _____ distribution. A. exclusive B. passive C. intensive D. discriminating E. selective 123 For which of the following products would a sales manager be most likely to use selective distribution? A. Wrigley's chewing gum B. Tiffany jewelry C. Elmer's rubber cement D. People magazine E. La-Z-Boy reclining chair

C 6-16

C 6-17

E 6-18

E 6-19

A 124 6.20 For which of the following products would a sales manager be most likely to use exclusive distribution? A. Rolls-Royce automobiles B. Kraft macaroni and cheese C. car insurance D. Marks-A-Lot permanent markers E. Wrigley's chewing gum A 6-21 124 A firm that sells its product through only one intermediary in a given market is using _____ distribution. A. exclusive B. passive C. intensive D. aggressive E. selective 124 Which distribution strategy would be expected to require the greatest number of sales territories? A. exclusive B. aggressive F. intensive G. penetrating E. selective 124 To calculate the needed sales force size, a sales manager can use the _____ approach and divide forecasted sales by the average number of sales per salesperson. A. breakdown B. buildup C. target market D. top-down E. bottom-up 124 The first step to consider when determining a firm's basic territories is: A. determine the number of accounts for each territory B. determine the sales volume needed for each territory C. determine the total number of territories the firm will have D. forecast sales and determine sales potentials E. select type of marketing research to use

C 6-22

A 6-23

D 6-24

C 6-25

125 There are six steps to consider when determining a firm's basic territories. Once a sales manager has forecasted sales and determined sales potential, he or she should: A. determine if there are any key accounts B. eliminate all unprofitable accounts C. determine the sales volume needed for each territory D. determine the ideal number of sales territories E. calculate time required for each sales call 125 The purpose of grouping accounts into categories such as key, regular, and unprofitable is to: A. increase the profitability of a territory B. standardize the selling approaches used by members of the sales force C. insure equal time is spent with all of the firm's customers D. insure equal treatment of the firm's prospects E. minimize draw accounts

A 6-26

C 125 6.27 Another name for a company's extra-large accounts is: A. house accounts B. revenue accounts C. key accounts D. undifferentiated accounts E. breakeven accounts D 125 6.28 The letters in the acronym ELMS stand for: A. ethically-lead marketing system B. economically leading market segments C. every labor makes sales D. extra large, medium, and small E. ethics learned equals more sales E 6-29 125 The 80-20 principle: A. is a territory management concept that favors a salesperson putting 80 percent of his time on planning and 20 percent on action B. refers to the fact that eighty salespeople require twenty sales managers to keep the appropriate 4-to-1 ratio of supervisors to employees C. is a territory management concept that favors a salesperson putting 20 percent of her time on planning and 80 percent on action D. indicates that no matter how hard a salesperson tries, 80 percent of customers' potential business ends up going to competitors E. refers to the idea that a small portion of a firm's customers account for a large portion of its profitable sales

C 6-30

126 Usually the frequency of sales calls will increase as the: A. complexity of the products sold decreases B. number of orders placed diminishes C. future sales potential increases D. number of product lines sold decreases E. size of the territory increases 126 Maeve O'Reilly believes her company should increase the number of sales territories it has. In fact, she thinks it should keep adding territories until the last one added just covers the cost of adding it. Obviously, this sales manager would advocate the _____ method of revising her firm's number of territories. A. intensive B. ELMS C. average cost D. total cost E. incremental

E 6-31

E 127 6-32 To use the incremental approach to determine basic territories, a sales manager must know: A. the likes and dislikes of the company's key accounts A. how and when follow-up-service must be offered B. the average purchase size of each customer D. the point at which the product will become obsolete E. all selling costs C 6.33 128 There are six steps to consider when determining a firm's basic territories. In the final step, the: A. salesperson draws a routing schedule B. sales manager gets approval from top management C. territorial boundary lines are drawn D. sales manager calculates the sales forecast for each territory E. salesperson visits each customer in the assigned sales territory

A 6-34

129 To help the salespeople he supervises improve their effectiveness, Tyler Parks works with them as they schedule their sales calls and determine the best routes to use moving about their territories. In other words, Tyler helps them develop their: A. customer contact plan B. break-even travel plan C. key account analysis D. routing reports E. incremental territory analysis 129 As part of his territory management activities, Elliot Rose plans to visit a customer's place of business on a certain day and time. This activity is called: A. account grouping B. scheduling C. customer time allocation D. territory sales planning E. routing 129 _____ is the establishment of a travel pattern to be used by the salesperson in working his or her assigned territory. A. Account grouping B. Account time allocation C. Territory sale planning D. Routing E. Scheduling 129 A routing report: A. states where the salesperson will be working in the future B. states where the salesperson worked on the day for which it was submitted C. should be filled out at the conclusion of each week D. is required by most companies especially when overnight travel is not necessary to cover the territory E. includes only travel time 129 Last night Aprille was preparing a statement to send to her sales manager that showed she planned to be in Nashville on Monday and Tuesday, Murfreesboro on Wednesday, Shelbyville on Thursday, and Tullahoma on Friday. Aprille was working on her: A. time management form B. routing report C. market coverage D. scheduling portfolio E. sales coverage summary

B 6-35

D 6-36

A 6-37

B 6-38

B 6-39

129-130 In theory, a company gives its salespeople strict formal route plans to enable the company to: A. deter competitive salespeople from calling on customers B. establish communications between management and the sales force concerning location and activities of individual salespeople C. set aside time for cold calls D. prevent the salesperson from having to spend several nights a week on the road E. do all of the above 131 (See Figure 6.2) Which of the following is an example of a basic routing plan? A. criss-cross B. spherical C. rectangular D. cloverleaf C. all of the above 131 Which of the following statements about using the telephone for territory coverage is true? A. The telephone should never be used for handling complaints. B. It is appropriate to use the telephone to deal with key accounts C. Assign large accounts, those that contribute more than 5 percent of business, primarily to telephone selling. D. Telephones should not be used as sources of leads. E. If possible, the telephone should be used to replace some personal visits to geographically distant accounts 131 The telephone can be used by salespeople to save time and money. Which of the following statements about its correct usage is true? A. Larger accounts can be more easily maintained through telephone contact than by individual sales calls. B. Smaller accounts cannot be easily serviced over the telephone because sales to them need to be increased. C. Complaints should always be handled in person. D. Telephone usage can facilitate order processing. E. Telephones are the best way to monitor a salesperson's activities.

D 6-40

E 6-41

D 6-42

D 6-43

132 _____ is the establishment of standards of performance for the individual territory in the form of qualitative and quantitative goals. A. Incremental implementation B. Workload control C. Territorial assignment] D. Territorial control E. Quota aggregation 133 _____ are those left vacant until new salespeople are assigned to them. A. Open sales territories B. Unassigned areas C. Undifferentiated markets D. Vacant territories E. Non-key areas 133 _____ refers to the lost sales due to both the vacancy and the time required for a new salesperson to produce at average. A. Orphaned selling B. Account orphans C. Market trickle D. Incubation time E. Sales leakage 133 The sales manager for Minerva Publishing Company was concerned that there was no salesperson in the company's Midwestern territory. Then when the company finally hired someone to fill the position, it took another seven months before the territory was producing the same revenue as the other territories in the firm. The sales manager was actually worried about: A. orphaned selling B. account orphans C. market trickle D. incubation time E. sales leakage

A 6-44

E 6.45

E 6.46

TRUE FALSE QUESTIONS T 6.47 120 A sales territory comprises a group of products or a geographical area assigned to a salesperson.

T 6-48 F 6-49

121 Fewer overnight trips and contacting the most productive customers regularly can reduce sales expenses and improve a firm's sales-cost ratio. 121 Generally, it is a good idea to maximize the difference between the salesperson and the customers he or she serves because the differences help the salesperson control the sales interview. 122 Even small companies that do not segment their market into sales areas typically find the establishment of sales territories necessary.

F 6-50

F 123 6-51 The design of a firm's sales territories has little influence on its success in the marketplace. T 6-52 F 6-53 F 6-54 123 Workload is the quantity of work expected from sales personnel. 123-124 A salesperson for a convenience product would probably be able to cover a geographically larger territory than would a salesperson for a specialty product. 124 The incremental approach to determine the number of sales territories needed by a firm divides the total number of sales force calls by number of calls a typical salesperson can be expected to make. 125 The ELMS system refers to a method of designing the most profitable routing plans. 126 No territory should ever have more than one key account. 126 Another name for the incremental method of determining sales territories is the bottomup approach. 128 When assigning salespeople to particular sales territories, it is appropriate to consider the personal desires of the salespeople themselves. 129 Scheduling refers to the travel pattern a salesperson uses in working his or her territory.

F 6-55 T 6-56 F 6-57 T 6-58 F 6-59

F 6-60 T 6-61 F 6-62 T 6-63 F 6-64 T 6-65 T 6-66

129 A routing report is usually filed twice each month. 130 The first step for a salesperson who is attempting to do route planning is to plot the location of his or her customers on a map. 130 The critical factor in route planning is to minimize the number of miles traveled. 132 Territorial control is the establishment of standards of performance for an individual territory in the form of qualitative and quantitative quotas or goals. 133 If set correctly the first time, territory boundaries can be left unchanged from one decennial U.S. census to the next. 133 Sales leakage refers to the lost sales due to both the territory vacancy and the time required for the new salesperson to produce at average. 133-134 A prime benefit of computerized territory design is the increased speed with which options can be evaluated.

SHORT ANSWER QUESTIONS 6.67 List the three influences that determine workload? Ans: the nature of the job, the intensity of market coverage, and the type of product sold Page: 123 6.68 What intensity of market coverage would be used for light bulbs, chewing gum, nail clippers, and candy bars? Ans: intensive Page: 123 6.69 What is the first step in the process for designing sales territories? Ans: forecast sales and determine sales potential Page: 124 6.70 What is the formula used in the breakdown approach to designing sales territories? Ans: sales force size = forecasted sales divided by average sales per salesperson Page: 124

6.71 What is the formula used in the incremental approach to designing sales territories? Ans: total sales force customer calls divided by individual customer calls equals the number of sales territories Page: 126 6.72 What is the primary reason why many sales managers find the incremental approach to designing sales territories difficult to use? Ans: the difficulty associated with calculating marginal costs Page: 127 6.73 What the three basic routing patterns used by salespeople? Ans: straight-line, major-city, and cloverleaf Page: 131 6.74 What causes sales leakage? Ans: open sales territories and the time required to get a new salesperson to produce at average Page: 133

Chapter 7 Sales Objectives and Quotas MULTIPLE CHOICE QUESTIONS B 7-1 142 A quota is: A. a strategic target B. an expected performance objective C. set only by top management D. a type of sales promotion used to increase sales for cyclical products E. described by all of the above 142-143 Which of the following statements about quotas is true? A. Quotas are strategic statements of expected performance by salespeople. B. Quotas are concerned with end results only; specific activities are the responsibility of the salesperson. C. In large industrial products firms, quotas are often the most important input used for creating marketing plans. D. Many salespeople find quotas to be motivational. E. To be effective, quotas should be static rather than ever-changing. 143 Vimal Kasuda sells computer-assisted design software for professional and amateur woodworkers. Her sales manager has just informed her that her quota will be 6 percent higher next year because the company that employs her wants to increase its market share. If she attains this goal, she will receive a bonus. In this example, Vimal's sales manager is using the quota to: A. provide a performance target B. control Vimal's activities C. evaluate her performance D. provide formal feedback E. get her opinion 143 At the end of each day Arturo Valenzuala fills out a call report which he sends to his sales manager, who can then see if Arturo has met his quota for number of calls per day. Arturo's sales manager is using the quota system to: A. provide a performance target B. provide control C. to determine horizontal tactics D. establish industry standards E. to do none of the above

D 7-2

A 7-3

B 7-4

A 7.5

143 Andi is a salesperson at a furniture store. Her quota for next month is 5 bedroom sets, three dining room sets, and 8 living room sets. This is an example of a(n) _____ quota. A. sales volume B. net profit C. expense D. gross margin E. activity 143 Robin sells for International Paper Company. Her ____ quota for next month is $53,000. A. sales volume B. net profit C. expense D. gross margin E. activity

A 7-6

E 144 7.7 The two types of profit quotas are the: A. sales quota and activity quotas B. revenue and expense quotas C. contribution margin and the gross margin quotas D. selling and nonselling quotas E. gross margin and net profit D 7-8 144 A sales quota based on the number of dollars generated after subtracting the cost of goods sold is a _____ quota. A. dollar sales volume B. expense C. net profit D. gross profit E. payback 145 A sales quota based on the number of dollars generated after subtracting both the cost of goods sold and the salesperson's personal expenses is a _____ quota. A. dollar sales volume B. expense C. net profit D. gross profit E. payback 145

C 7-9

7-10

"Slade," his sales manager said, "Your expenses are grossly out of line compared to the rest of the sales force. They're too low, and that appears to be hurting your ability to sell." Slade is surprised because he thought the cutback would actually help him meet his _____ quota for the period. A. balanced B. quality C. payback D. net profit E. gross profit 145 One drawback to using _____ quotas is that sales personnel generally do not set prices and have no control over manufacturing costs. A. profit B. dollar sales volume C. expense D. activity E. unit sales volume 145 A company that set limits on how much expense money salespeople are allowed based on a percentage of the territory's sales volume would be said to be using a(n) _____ quota: A. balanced B. payback C. expense D. net profit E. gross profit 146 Hewlett-Packard (H-P) manufactures ultrasound diagnostic equipment. Because such equipment requires service after the sale, H-P might consider using _____ quotas. A. sales volume B. net profit C. expense D. gross margin E. activity 146 Because of their after-the-sale service responsibilities, salespeople for _____ are most likely to use activity quotas. A. Coca-Cola B. DeBeer diamonds C. International paper D. Phillips electronic equipment E. Colgate-Palmolive

A 7.11

C 7-12

E 7-13

D 7-14

C 7-15

146 _____ quotas typically should not be the basis for rewards. Rather they help the manager better understand why the salespeople did or did not meet their sales volume quota. A. Payback B. Net profit C. Activity D. Gross margin E. Project

C 146 7.16 A radio station that wanted to reward its salespeople who sell ad time on the basis of how many cold calls they made in a week and how many new customers they sold to monthly would be most likely to use _____ quotas. A. payback B. net profit C. activity D. gross margin E. project A 7-17 147 _____ refers to feelings about any differences between what is expected and actual experience with a purchase. A. Customer satisfaction B. Perceived quality C. Product differentiation D. Product Value E. Total quality

B 147 7.18 To measure customer satisfaction, organizations typically: A. use experiential research B. construct questionnaires to ask for customer feedback C. use focus groups D. survey their salespeople E. use secondary data C 7-19 147 Which of the following is an easy method an organization can use to keep track of all customer satisfaction data? A. hire an outside consultant B. make each salesperson keep up with their own customer data C. use a Customer Satisfaction Index (or Rating) D. create a functional department to manage satisfaction data E. place primary responsibility for customer satisfaction information gathering in the human resources department

B 7-20 is:

147 For larger national U.S. corporations, the most commonly used method for setting quotas A. B. C. D. E. computer models, tempered by executive judgment sales forecasts, plus market and territory potentials market and territory potentials, tempered by sales force judgment last year's results plus this year's sales forecast divided by two sales forecasts only

C 7-21

148 Jennifer Barlow sells refrigerator units to supermarkets, convenience stores, and florists. Her sales manager has advised her that she, as well as all of the other salespeople in the firm, must help the company increase its sales by 12 percent this year. Which general approach to quota setting is being used? A. a quota based on territorial potential, not territorial size B. a quota based on executive judgment C. a quota based on the organization's sales forecast, not individual potential D. a quota based on territorial size, not territorial potential E. a combination approach to quota setting 148 According to the text, for which of the following products would the selling organization be most likely to base its quotas on executive judgment? A. Phillips flat-screen television B. Lay's potato chips C. vanilla ice cream D. 3M adhesive tape E. bricks

A 7-22

D 150 (Table 7-4) 7.23 Regional plans determine: A. which regions, markets, and products to emphasize B. the projected return on time invested C. the dollar allotment for promotion D. which accounts to emphasize and who is responsible for each account E. all of the above C 7-24 150 (Table 7-4) Who is generally responsible for all precall planning? A. national sales manager B. district manager C. sales representative D. regional sales manager E. marketing vice president 152-153 (Figure 7.2)

7-25

To successfully implement annual objectives, there are four key areas of concern. Which of the following is NOT one of the areas of concern listed in the text? A. territorial management B. product management C. call management D. account management E. self-management

E 153 7.26 A tactical plan for managing accounts that are described as stars is to: A. ignore these accounts B. develop a new approach for dealing with these accounts C. divest yourself of these accounts D. maintain the present share of business from these accounts E. spend more time and effort on these accounts C 153 7.27 A tactical plan for managing accounts that are described as dogs is to: A. ignore these accounts B. develop a new approach for dealing with these accounts C. divest yourself of these accounts D. maintain the present share of business from these accounts E. spend more time and effort on these accounts D 7-28 153 Accounts with a low and declining potential, that occupy more time than can ever be justified, and that show no promise of improvement are referred to as: A. problem children B. question marks C. cash cows D. dogs E. stars 153 Salespeople to achieve a performance rating of excellence must excel in achieving three different types of annual objectives. These objectives are categorized as: A. day-to-day, weekly, and monthly B. regular, problem-solving, and innovative C. star, cash cow, and problem D. strategic, tactical, and operational E. profit, activity, and sales volume 158 For objectives and quotas to be fully accepted by the sales force, a quota plan should be SMART. The letters in the acronym SMART represent: A. Sales-oriented, Marketable, Adequate, Reward-worthy, and Time specific

B 7-29

D 7-30

B. C. D. E. D 7-31

Specific, Motivated, Acceptable, Reciprocal, and Territorial Sales-oriented, Moral, Acceptable, Reciprocal, and Territorial Specific, Measurable, Attainable, Realistic, and Time specific Systematic, Motivated, Attainable, Reciprocal, and Timely

158 "Leonard, I expect your sales volume to be a little better next month," said his sales manager. What is most clearly wrong with the preceding statement as a sales quota? A. It's not challenging. B. It's not reasonable. C. It's not attainable. D. It's not specific. E. It's not for a definite time period. 158 The sales manager told Liz, "During the next six months, I want you to improve your relations with the R&M purchasing agent, or else I will have to give the account to another sales rep." With which of the goals illustrated in the SMART acronym is this objective most in conflict? A. The objective is not specific. B. The objective is not sales-oriented. C. The salesperson is given no motivation to achieve this objective. D. The objective is too time-specific. E. The objective is not long-term oriented. 158 Her sales manager told Ruth that he wanted her to decrease her sales expenses by 5 percent, or else he would have to lower her commission rate by 3 percent. With which of the goals illustrated in the SMART acronym is this objective most in conflict? A. The objective is not specific. B. The objective is not sales-oriented. C. The salesperson is given no motivation to achieve this objective. D. The objective is not time-specific. E. The objective is not long-term oriented. 158 Which of the following is an appropriate question for you as a sales manager to ask yourself about quotas you are setting for your subordinates? A. Are the quotas clear and concise? B. Have I made a distinction between long-run and short-run expectations? C. Is there a direct relationship between the quotas and the rewards available? D. Are the quotas measurable? E. All of the above are appropriate questions for a sales manager to ask. 158 A properly set salesperson's sales quota should:

A 7-32

D 7-33

E 7-34

C 7-35

A. B. C. D. E. B 7-36

measure his or her improvement in relations with customers encourage lackadaisical behavior specify when the intended result is to be accomplished avoid congruence with the goals of the organization do all of the above

158-159 At the individual level, selling by objectives (SBO) is a process whereby the: A. manager applies the corporate objectives to each sales territory without regard to sales potential B. manager and salesperson identify common goals, define major areas of responsibility, and agree on expected results C. salesperson is expected to engage in feedback only if he or she has not met the average quota D. manager uses executive judgment to determine the quota criteria E. salesperson uses the corporation's objectives to set territorial size 158-159 Which of the following statements about selling by objectives (SBO) is true? A. With SBO, the sales manager sets goals for the next period. B. Typically no objectives are vetoed when using SBO. C. Motivation for salespeople is increased because they help set the objectives they must attain. D. Mutual understanding between a manager and a salesperson is unnecesary in setting objectives. E. The main drawback to SBO is the lack of connection between the objectives set and the rewards received by the salesperson. 158-159 Which of the following statements about selling by objectives (SBO) is true? A. The salesperson typically has no input in SBO. B. The main drawback to SBO is the lack of connection between the objectives set and the rewards received by the salesperson. C. SBO is simply a philosophy and is therefore very difficult to implement. D. Upper management typically retains the power to veto objectives set using SBO. E. All of the above statements about SBO are true.

C 7-37

D 7-38

TRUE FALSE QUESTIONS T 7-39 T 7-40 142 Quotas are tactical rather than strategic. 142 Quotas are dynamic rather than static.

T 7-41 T 7-42 F 7-43 F 7-44 F 7-45 F 7-46 F 7-47 F 7-48 T 7-49 T 7-50 F 7-51 T 7-52 T 7-53

142 Because they guide the behavior of salespeople, quotas provide control. 143 Quotas may be used to change the activities of salespeople or the products they emphasize in their selling activities. 143 Quotas should not used as a motivational tool. 144-145 The gross margin quota is determined by subtracting cost of goods sold and salesperson direct selling expenses from sales volume. 146 Activity quotas are least important in cases where salespeople must perform important nonselling duties. 146 Most experts recommend using activity quotas as a basis for rewarding sales force members. 147 Customer satisfaction refers to feelings about any differences between what is expected and actual experience with the purchase. 147 The most commonly used combination of quotas is a sales volume quota together with an expense quota. 148 The use of past experience to set quotas ignores sales potential. 148 No matter what method is used for setting quotas, executive judgment should always be part of the process. 149 The process of setting sales quotas varies significantly from organization to organization. 150 (Table 7.4) Sales representatives are usually responsible for territorial sales plans. 152 The two basic steps to take to successfully implement a sales strategy are the organizing of the jobs and then the definition of the annual objectives.

F 153 7-54 With an account that is described as a cash cow, a salesperson should abandon the account. T 7-55 T 7-56 154 Sales objectives that are classified as regular deal with expenses, leads, sales calls, growth in order size, and reports. 155 To get maximum commitment to achieving sales objectives, sales managers should establish those objectives by personal, face-to-face discussion rather than by an exchange of memoranda. 156 Individual meetings with each sales representative are unnecessary when using the selling by objective (SBO) process. 158 To be fully acceptable to the sales force, objectives should be Sales-oriented, Measurable, Attainable, Reward-oriented, and Time-specific. 158 The basic selling by objectives (SBO) process is a two-way approach to quota setting.

F 7-57 F 7-58 T 7-59

SHORT ANSWER QUESTIONS 7.60 What are the two types of profit quotas? Ans: gross margin and net profit Page: 144 7.61 Miller was told by his sales manager that one of his objectives for the next year should be to "Attend one three-day product training seminar." What kind of quota does this exemplify? Ans: activity quota Page: 146 7.62 What is the most common method of setting quotas in the large national companies in the U.S.? Ans: the use of sales forecast plus market and territory potentials Page: 147 7.63 When should a company use executive judgment for setting its sales quotas? Ans: when little information exists, such as with a new territory or new product Page: 148

7.64 There are four major areas in which objectives need to be established for each salesperson. List them. Ans: territorial management, account management, call management, and self-management Page: 153 (Figure 7.2) 7.65 When setting objectives for individual salespeople, there are three different types of objectives that the sales manager needs to establish. List them. Ans: (1) regular, ongoing, and recurring objectives, (2) problem-solving objectives, and (3) innovative or creative objectives Page: 154 7.66 A good objective and quota plan is SMART. What do the letters in the acronym SMART represent? Ans: Specific, Measurable, Attainable, Realistic, and Time specific Page: 158

Chapter 8 Planning for and Recruiting Successful Salespeople MULTIPLE CHOICE QUESTIONS A 8-1 168 ____ refers to the activities undertaken to attract, develop, and maintain effective sales force personnel within an organization. A. Sales human resource management B. Sales management planning C. Sales force objectives management D. People-oriented sales management E. Territorial staffing resource management 168 Sales human resource management consists of two activities. They are: A. people planning and employment planning B. people planning and people evaluation C. hiring people and completing paperwork for the government D. recruiting and hiring E. hiring and firing 168 (Figure 8.1) Employment planning involves: A. writing job descriptions B. determining job specifications C. recruiting and selecting D. determining how many people to hire E. all of the above 168 (Figure 8.1) People planning involves: A. the determination of the number and type of people to hire B. the selection of intrinsic and extrinsic rewards C. the implementation of leadership models D. recruitment and selection E. employee socialization

A 8-2

C 8-3

A 8-4

A 8-5

168 Why do many sales managers engage in formal sales personnel planning systems? A. to achieve more effective and efficient use of human resources B. to supplement formal time and territory management systems C. to satisfy a need for corporate control D. to decrease the performance of the sales force E. it is a means of replacing the personnel department 168 Why do many sales managers engage in formal sales personnel planning systems? A. to improve sales force performance B. because of the increased usage of SBO C. to supplement formal time and territory management systems D. to satisfy a need for corporate control E. it is a means of bypassing the corporate human relations department 168 A sales manager wishes to gain more effective and efficient use of the salespeople who work for her. The activity which must precede all others if that desire is to be realized is: A. the creation of measurable sales quotas B. people planning C. the establishment of a method of evaluation D. the development of an effective sales training program E. deciding on what product to focus sales efforts

A 8-6

B 8-7

E 168 8-8 One important step in the people planning element of sales force human resources planning is to: A. get approval of the Federal Equal Opportunity Commission B. analyze the size of competitive sales forces C. equalize the work of the currently hired salespeople D. develop promotion policies E. determine the size sales force needed E 8-9 170 Mulligan Engineering Company sells replacement parts for amusement park rides. It is expanding its operation into the Canadian provinces. Who within the company would be involved in determining the number and type of salespeople it will need to hire? A. its national sales manager B. its marketing vice president C. its southeastern sales manager D. its human resource department manager E. all of the above

D 8-10

170 The primary or basic determinant of how many salespeople a firm will employ is the: A. level of compensation offered B. number of sales managers it has C. number of people who apply for sales jobs D. number of sales territories and sales positions E. corporate human resources department

E 170 (Figure 8.3) 8-11 To forecast how many sales people will be needed using a sales force people-forecast model,: A. any upcoming hirings, promotions, and transfers in must be subtracted from current sales force personnel B. all employee hirings, promotions and transfers in must be added to all forecasted employee quits, terminations, promotions, transfers out, and retirements; this sum must be subtracted from the number of current employees C. employee quits, terminations, promotions, transfers out, and retirements must be ignored D. future sales force personnel are forecasted by looking at operational objectives E. the current number in the sales force must be added to the upcoming hirings, promotions, and transfers in; quits, terminations, promotions, transfers out and retirements must be subtracted from that sum B 8-12 171 A _____ defines the specific roles or activities to be performed in a sales position and determines the personal qualifications necessary to get the job. A. job pictogram B. job analysis C. job design D. job specification E. job inventory 171 In order to properly develop a job description, you must first conduct a: A. job pictogram B. job mapping C. job plan D. job stipulation E. job enumeration

B 8-13

C 8-14

171 The first step in a job analysis is to: A. select the jobs to be analyzed B. determine the appropriate extrinsic and intrinsic rewards C. examine the total sales force and the fit of each job and determine how each job relates to other jobs D. collect the necessary information concerning what people actually do in their jobs E. budget for the job analysis process 172 Elise has been given the job of writing a job description for a new e-commerce position in her company's marketing department. She should first conduct a: A. job mapping B. job analysis C. job design D. job specification E. job inventory 172 A complete _____ is a formal, written statement describing the nature, requirements, and responsibilities of a specific job. A. job description B. job specification C. job plan D. job design E. job enumeration 172 A _____ identifies people qualifications the organization feels are necessary for successful performance of a particular job. A. job projection B. job analysis C. job design D. job specification E. job inventory 172 _____ convert job descriptions into qualifications the organization feels are necessary for successful performance of the job. A. Job specifications B. Task inventories C. Strategic job designs D. Personnel inventories E. Job provisions

B 8-15

A 8-16

D 8-17

A 8-18

D 8-19

173 Why do successful salespeople need empathy? A. in order to be self-starters B. so they will have that "killer instinct" C. to communicate with their sales managers and their customers D. so they can identify and understand the customer's situation E. in order to find good sales prospects 173 (Table 8.2) In trying to hire the best possible salespeople, sales managers look for certain characteristics that seem to be common in successful salespeople. Which of the following was identified by the text as one of those characteristics? A. responds well to close supervision B. non-competitive C. need for material things D. lethargy E. aloofness 173 (Table 8.2) In trying to hire the best possible salespeople, sales managers look for certain characteristics which seem to be common in successful salespeople. Which of the following was identified by the text as one of those characteristics? A. requires little supervision B. likable C. good physical appearance D. need for material things E. all of the above 173 The ultimate goal of a sales manager who is staffing a sales organization should be to: A. select people who will "fit in" B. minimize recruiting costs C. hire the very best people he or she can D. minimize overall salary costs E. ensure recruits will be satisfied with their new jobs 175 The set of activities and processes used to legally obtain a sufficient number of individuals in such a manner that the people's and the sales force's best interests are taken into consideration is called: A. sales evaluation B. recruitment C. personnel enrichment D. sales training E. human resource planning

C 8-20

E 8-21

C 8-22

B 8-23

B 8-24 the:

176 The principal government agency responsible for monitoring discriminatory practices is A. B. C. D. E. Civil Rights Administration Equal Employment Opportunity Commission Federal Bureau of Investigation Equal Rights Commission Civil Service Commission

A 8-25

176-177 Discrimination is allowed if an employer can show that a given action is "reasonably necessary to the operation of that particular business or enterprise," and the employment decisions are based on: A. bona fide occupational qualifications B. general financial status of the individual C. open ended qualifications D. a needs assessment E. military discharge status

A 8-26

176-177 The Hewes Company makes parachutes. Because a salesperson working for Hewes may be asked to demonstrate his or her product, someone who has a fear of heights will not be hired as a salesperson. This form of discrimination is an example of a: A. bona fide occupational qualification B. work-specified criterion C. open-ended qualification D. needs assessment E. closed working system 176-177 Discrimination in employment practices is allowed: A. if very few people apply for the job B. when there is a reasonable doubt that the operation is necessary for that particular business C. if the prospective employee cannot speak English D. if a bona fide occupational qualification exists E. when applications for the job opening are only accepted from persons already employed by the firm in other jobs

D 8-27

D 8-28

177-178 Broadly speaking, the equal opportunity legal criteria are based on two questions, (1) Are employment practices equally applied, and do they have the same effect on all potential employees, regardless of race, sex, religion, or national origin? and (2): A. What percentage of management positions are occupied by white males? B. Are adequate records of employment practices kept? C. How many formal complaints have been filed against this employer in the past five years? D. Are the employment practices job-related? E. After thorough investigation, what percentage of complaints against this employer have proved to be true? 178 (Table 8.5) During an interview, a job recruiter can legally ask: A. "Do you have any children at home?" B. "If you have no phone, how can we reach you?" C. "Do you own your own home?" D. "How tall are you?" E. "Have you ever been arrested, convicted, or prior to employment spent time in jail?"

B 8-29

E 178 (Table 8.5) 8-30 During an interview, a job recruiter can legally ask all of the following questions EXCEPT: A. "By whom were you referred for a position here?" B. "Are you over 18?" C. "Are you a veteran?" D. "If you have no phone, how can we reach you?" E. "How heavy are you?" E 8-31 179-180 Which of the following is an example of an internal source of recruits? A. friends of employees B. current employees C. former employees D. former applicants E. all of the above are internal sources 179-180 Which of the following is an external source of recruits? A. walk-ins B. friends of employees C. transfers D. former employees E. former applicants

A 8-32

C 8-33

180 Why does the recruiting for positions above the initial entry level sales position almost always come from within the sales force? A. Present salespeople know nothing about the operation of the organization. B. Present salespeople are kept insecure by the fear of promotion. C. Internal promotions is an excellent motivational tool. D. External promotions are less expensive than internal promotions. E. External promotions lead to the selection of better qualified job candidates. 180 Which of the following is an internal source of recruits? A. walk-ins B. transfers C. internships D. newspaper advertisements E. employment agencies 180 When compared to the realistic job preview, the traditional job preview: A. sets realistic job expectations B. matches the company's need with the job C. prevents job dissatisfaction D. has a high rate of job offer acceptance E. does all of the above 180 A realistic job preview: A. sets initial job expectations too high B. results in higher job satisfaction C. results in more frequent turnover D. better matches job to the company's needs E. does not present the unattractive features of the job

B 8-34

D 8-35

B 8-36

E 180 8.37 The realistic job preview: A. reduces the flow of highly capable applicants B. produces higher rates of turnover than traditional job previews C. produces lower levels of satisfaction for the recently hired D. sets very high job expectation levels E. inoculates the new salesperson against disappointment with the realities of a job

E 8-38

181 To create a qualified labor pool, an organization needs to know: A. how job candidates obtain information regarding job availability B. what attracts people to a specific job C. the positive and negative attributes of a particular job D. why a particular individual would take a specific job E. all of the above 182 Recruiting programs can be evaluated according to: A. the number of applicants B. the ratio of minority and female applicants to total applicants C. the ratio of offers accepted to offers extended D. qualified applicants as a percentage of total applicants E. all of the above 182 Recruiting programs can be evaluated according to: A. how many people acted as recruiters B. the ratio of offers accepted to offers extended C. the total number of interviews conducted divided by the number of applicants D. the number of offers extended divided by the number of offers accepted E. all of the above

E 8-39

B 8-40

TRUE FALSE QUESTIONS T 8-41 F 8-42 168 Hiring the right person for the job is critical for the success of the sales force. 168 The entire personnel process of matching the right people to the right sales jobs and placing them in the right sales territory is called territorial resource management.

F 168 8-43 The most important ingredient in developing a successful sales force is proper supervision. T 8-44 T 8-45 168 Many sales managers engage in formal sales personnel planning systems because it allows them to achieve a more efficient and more effective use of human resources. 170 Sales managers throughout the sales organization are responsible for the various activities in the staffing of the sales force.

F 8-46 F 8.47 T 8-48 F 8-49 F 8-50 T 8-51 F 8-52 F 8-53 F 8-54 F 8-55 T 8-56 T 8-57 F 8-58

171 The formal study of jobs is called job derivation. 171 The first step in a job analysis is to select the jobs to be analyzed. 171 Job analysis is used to determine the personal qualifications needed to perform a job. 172 Job descriptions convert job specifications into the qualifications the organization feel necessary for the successful performance of the job. 172 A job description defines the specific roles or activities to be performed in a sales position and determines the personal qualifications necessary to get the job. 173 Successful salespeople need both physical fitness and intelligence. 173 Most sales managers believe personal appearance is not an important selection factor because appearance can always be changed. 175 Recruitment should decrease the number of job applicants at minimum costs to the firm. 175-176 Since government regulations focus on recruiting practices, they have little direct impact on selection. 176 The principle government agency responsible for monitoring discriminatory employment practices is the Civil Rights Administration. 176-177 Discrimination is allowed if a bona fide occupational qualification exists. 178 (Table 8.5) During a job interview, an interviewer cannot ask the color of an applicant's hair or eyes. 179 Recruiting persons for sales jobs is typically the responsibility of the human resources department.

T 8-59 T 8-60 F 8-61

180 Current employees are a source of job applicants in two ways--they can refer their friends to the organization, or they can apply for a transfer/promotion themselves. 180 Hiring an already trained salesperson from outside the organization is often cheaper and easier than hiring a new trainee. 180 In a realistic job preview, the job is typically viewed as attractive, stimulating, and challenging.

SHORT ANSWER QUESTIONS 8.62 Sales human resource management is composed of two elements. What are they? Ans: people planning and employment planning Page: 168 8.63 What are the three activities associated with employment planning? Ans: recruitment, selection, and socialization Page: 168 (Figure 8.1) 8.64 What is the relationship between job descriptions and job specifications? Ans: Job specifications convert job descriptions into qualifications the organization feels are necessary for the successful performance of the job. Page: 172 8.65 What is a bona fide occupational qualification? Ans: some characteristic that is reasonably necessary to the operation of that particular business or enterprise Page: 176-177 8.66 How does a realistic job preview differ from the traditional job preview? Ans: The realistic job preview gives the applicant pertinent information about the job without distortion or exaggeration. Page: 180

Chapter 9 Selection, Placement, and Socialization of Successful Salespeople MULTIPLE CHOICE QUESTIONS B 9-1 190 _____ is concerned with ensuring job demands match an individual's skills, knowledge, abilities along with his or her preferences, interests, and personality. A. Selection B. Placement C. Application D. Training E. Coaching 190 Better selection of the sales force produces less turnover which in turn: A. increases training costs to keep salespeople current B. increases staffing costs as fewer territories are needed C. means the sales manager will have to spend more time on sales reports D. has no effect on costs E. saves the cost associated with sales managers' time

E 9-2

E 191 9.3 The success of a sales force's selection and placement procedures depends on: A. the organization's job analyses B. sales human resource planning activities C. the use of performance evaluations as feedback D. the organization's recruitment process E. all of the above D 9-4 191 _____ determine the type of information the company should gather from job applicants and to some extent the method used to gather the information. A. Maturity levels B. PIPs C. The sales manager's personal interests D. Performance criteria E. SKAs

B 9-5

191 Sam Godwin is a sales manager for a company that sells computer-assisted manufacturing software. He is trying to determine what bits of information, such as computer skills, programming languages, and marketing knowledge, he will need to accurately predict how successfully a job applicant will perform on the job. The text referred to these bits of information as: A. applicant descriptors B. predictors C. employment guidelines D. job performance criteria E. performance evaluators 192 SKAs are employee tests used to measure one's: A. stamina, knowledge, and aptitude B. suitability, key personality features, and applicability C. stamina, key personality features, and aptitude D. skills, knowledge, and ability E. skills, knowhow, and applicability 192 PIPs are employee tests used to: A. determine whether the applicant should participate in an assessment center B. determine the level of sales training needed C. measure one's personality, interests, and preferences D. measure one's physical ability, income goals, and performance potential E. create a job description for future recruits 192 (Figure 9.2) Krysten wants to work for a small manufacturing company that makes pottery molds, and she knows it needs to hire a new sales representative. She should expect the first step in the company's selection process to be: A. the application B. discussions with current employees C. a review of one's skills, knowledge, and ability D. the initial interview E. the preparation of one's resume

D 9-6

C 9-7

A 9-8

C 9-9

192 To get the job as a delivery salesperson for a snack food company, an applicant must have a current driver's license. In terms of the selection process, this requirement falls into the _____ classification of hiring information. A. SKAs B. aptitude C. other characteristics D. BFOQ E. PIPs 192 To get a job as a salesperson for a company that sells text books to high schools and middle schools, an applicant must have an undergraduate degree in education. In terms of the selection process, this requirement falls into the _____ classification of hiring information. A. SKAs B. other category C. other characteristics D. BFOQ E. PIPs 194 Which of these statements is true about application blanks? A. Typically, all questions have the same weighted value. B. Application blanks are unaffected by legal constraints. C. Neatness is unimportant in the filling out of application forms, only accuracy matters. D. Questions not related to job qualifications should not be included on the application blank. E. All of the above statements about application blanks are true. 194 When filling out an application blank for a sales job for a company that markets plastic, a job applicant can expect to answer questions about all of the following EXCEPT: A. his education B. his personal characteristics C. his work experience D. his physical characteristics E. the hiring compnay's history 194 Application blanks are used to collect information about: A. education B. personal characteristics C. work experience D. physical characteristics E. all of the above

B 9-10

D 9-11

E 9-12

E 9-13

D 9-14

194 Why should Pete attach a professionally taken photograph of himself on his resume when he applies for the job of assistant to the director of an upcoming Civil War movie? A. to show he could play an extra, if necessary B. to indicate he has creative aptitude C. to show he has had previous training in applying for jobs D. to help the interviewer relate written information on Pete's resume to his appearance, personality, and general impression E. to make his resume bulkier 195 (Table 9.1) You are a sales manager conducting a series of personal interviews with job candidates. Which one of the following is one of the reasons these interviews are important to you? A. They act as a screening device to create a pool of qualified applicants. B. They determine the applicant's SKAs. C. They determine what the compensation and rate of promotion will be if you take the job. D. They allow you to meet your potential boss and determine if there is a match. E. They provide an opportunity to confirm information found in the ad for the position. 195 The nucleus of the staffing process is the: A. interview B. job specifications C. job references D. application blank E. job description 195-196 Recently Tania had a job interview for a sales position in which she was asked if she would be willing to relocate if the job should require it. Although she wanted to explain that her willingness would depend upon whether a promotion was involved and the climate of the new locale, she was only allowed to answer "yes" or "no", and was not permitted to add information to her answer. Tania most likely had a(n) _____ interview. A. structured B. unrestrained C. survey D. unplanned E. unstructured

A 9-15

A 9-16

A 9-17

E 9-18

196 You left the job interview thinking, "I really did most of the talking. The interviewer just asked me a lot of open-ended questions, and I really don't know any more about whether I might want to work for that company than when I went in." The interviewer was using a(n) _____ type of interview. A. structured B. focus-group C. semistructured D. stress E. unstructured 196 Why is the unstructured interview often inappropriate for a first interview? A. The interviewer cannot gather any in-depth information about the applicant. B. It requires a skilled interviewer, and the applicant is often uneasy with this approach. C. The applicant is not allowed to qualify his or her answers in an unstructured interview. D. The series of multiple choice questions asked during such an interview are very timeconsuming. E. Several selection tests must be administered before reaching the unstructured interview stage. 196 What type of interview preplans only the major questions allowing the interviewer the flexibility to customize the interview to the individual? A. unrestrained B. observational C. semistructured D. evolving E. unstructured 196 During the course of her interview, Jayne Nunn was asked how she had learned about the job vacancy at Protean Plastic, what her qualifications were for the position, and how she thought she could help the company become more successful. Sometimes when she answered these questions, the interviewer would follow up with more specific questions related to her initial reply, encouraging her to explain her answers. Thus, the interview was customized to her. Jayne was experiencing a(n) _____ interview. A. unrestrained B. freestyle C. semistructured D. evolved E. unstructured

B 9-19

C 9-20

C 9-21

E 9-22

196 Why do sales recruiters prefer not to use the stress interview? A. It makes the applicant too dependent upon the sales manager. B. It increases communication beyond what is normally necessary. C. It has a highly structured format. D. The correlation between how an individual handles stress in the interview and how he or she will handle stress on the job is too high. E. It makes the applicant defensive. 196-197 In a patterned or structured interview, the recruiter: A. begins by asking open-ended questions to set the pattern B. may not permit the applicant to qualify his or her answers C. must be highly skilled to use this approach effectively D. customizes the interview to the individual applicant E. does not use preplanned questions 197 In preparing for the job interview, the interviewer should: A. ask open-ended questions B. summarize to the job applicant what the job entails C. administer employment tests to current members of the sales force D. spend some time reviewing the applicant's resume E. do all of the above 198 Which of the following is an example of an open-ended question that might be asked of a job applicant applying for the position of receptionist for a regional sales office? A. What skills do you bring to this job that will make you a valuable employee? B. Do you type? C. Do you object to a dress code? D. Do you object to making coffee some mornings when the managers have scheduled a sales meeting? E. Are you left-handed or right-handed? 198 The relationship between how much time the interviewer and the interviewee each spend talking is an important part of how an interview with a job applicant is conducted. The text suggests that in a good interview: A. the interviewer should talk most of the time B. the interviewer should talk a little over half the time C. the split should be even between the interviewer and the interviewee D. the interviewee should talk a little over half the time E. the interviewee should talk most of the time

B 9-23

D 9-24

A 9-25

C 9-26

B 198 9.27 To end the interview, the interviewer should: A. avoid mentioning specifics about the job that is being applied for B. tell the applicant exactly what is going to happen in the next step of the application process C. in no way indicate to the job applicant whether employment is likely D. not let the interviewee ask any questions E. do none of the above A 9-28 198 Postinterview activities include: A. the recording of any promises made to the job applicant B. a summarization of what will be discussed in the interview C. the assessment of the standardized interview questions D. a review of the information provided by the applicant's resume E. employment tests 198 According to basic interview guidelines, the interviewer should: A. collect information that relates both directly and indirectly to job performance B. note the company's policy on hiring of minorities C. always remember that the weaknesses of a job applicant can be offset by his or her strengths and potential D. make a decision within the first ten minutes of the job interview E. do all of the above 199 To be useful, employment tests should be both: A. efficient and effective B. systematic and efficient C. formal and informal D. valid and reliable E. direct and indirect 199 Aptitude tests for salespeople are intended to measure: A. what is known about a subject, like engineering or computer technology B. mental interest in a sales career C. a person's maturity D. a person's self confidence and motivation E. an individual's natural ability for selling

C 9-29

D 9-30

E 9-31

A 9-32

199 Knowledge tests: A. can measure the computer programming skills of a person who is applying for a sales position with IBM B. measure mental intelligence C. can be used to measure a person's maturity D. determine a person's self confidence and motivation E. measure an individual's natural ability for selling

A 199 9.33 The polygraph test: A. is sometimes called a lie detector test B. is strictly forbidden by the federal government C. is used by all Fortune 500 companies D. is considered to be more reliable than any other kind of employment test E. can be administered by any human resource personnel E 9-34 200 Why do many companies prefer not to use tests to select future members of their sales force? A. Many sales managers do not understand the testing process, and only use tests because the home office requires them to. B. In some instances, tests are used as the sole screening criterion. C. Applicants can fake responses to get the "correct" test result. D. Tests may have a cultural bias and discriminate against some groups. E. All of the above are reasons why companies prefer not to use testing as a selection tool. 201 A(n) _____ is a centralized organizational unit within a firm; its purpose is to evaluate all qualified applicants in a comprehensive and uniform manner. A. human resource placement area B. testing center C. categorization department D. assessment center E. applicant mastery department 202 Which of the following is a benefit of an effective hiring policy? A. ability to meet individual territory sales potential B. decreased absenteeism C. improved morale D. increased customer satisfaction E. all of the above

D 9-35

E 9-36

D 9-37

202 Which of the following is a benefit of an effective hiring policy? A. increased sales force turnover B. decreased customer satisfaction C. increased training time requirements D. decreased sales force operating costs E. all of the above 202 Which of the following is the best example of a real cost associated with a selection and placement decision? A. costs associated with rejecting a person who would been a success on the job B. loss of customers because the company hired someone with weak people skills C. costs incurred while replacing an unreliable salesperson D. loss of equipment due to the hiring of an unethical salesperson E. cost of new employee induction and orientation

E 9-38

A 202-203 9.39 Which of the following is the best example of an induction and orientation costs associated with the selection and placement decision? A. administrative costs of adding the employee to the payroll B. costs from undesirable job behaviors C. facilities for training D. personnel testing evaluation costs E. salaries of training and development staff E 9-40 203 Which of the following statements about socialization is true? A. Research has shown that socialization has no effect on reducing job anxieties. B. The socialization process uses a great deal of the sales manager's time and increases a company's overall costs. C. Socialization has no effect on employee turnover. D. Socialization is always an easy process. E. Socialization is concerned with the roles played rather than with the jobs salespeople occupy in a company.

A 203 9.41 Which of the following is a benefit associated with an effective hiring policy? A. improved morale B. increased turnover costs C. decreased customer satisfaction D. inability to meet territorial sales potential E. increased training time

B 9-42

203 _____ is defined as the process by which salespeople learn the sales culture and behaviors appropriate for their roles in the organization. A. Orientation B. Socialization C. Social responsiveness D. On-the-job training E. Groupthink 204 Making sure a new salesperson is properly and thoroughly socialized into the organization is in the sales manager's best interest because it: A. will save the manager time later B. will save the organization money C. reduces the new salesperson's fear of failure D. gives the new person a positive image of the company E. does all of the above 204 The Pygmalion effect is most likely to effect: A. employee testing B. how an employee is selected for interview C. how an employee is socialized into an organizational culture D. the type of close used by the interviewer E. the use of open-ended questions during an interview 204 The _____ is established when the sales manager conveys to the new salesperson the belief that he or she will do well. A. halo effect B. mirroring phenomenon C. Pygmalion effect D. transition orientation E. sales ego

E 9-43

C 9-44

C 9-45

C 358 9.46 When Beth was hired as the new sales representative for a company that manufactures and markets supercomputers, her sales manager told her that he was convinced she was the best applicant for the position and that she would definitely succeed in her new job. The sales manager was using the: A. halo effect B. mirroring phenomenon C. Pygmalion effect D. transition orientation E. sales ego

TRUE-FALSE QUESTIONS F 190 9.47 Placement is concerned with matching actual sales to the commission requirements of individual salespeople. T 9-48 F 9-49 T 9-50 T 9-51 F 9-52 F 9-53 190 Whenever a person changes job assignments, the fit between the individual and the job is important. 190 Often the costs involved with selecting a new employee equal less than 10 percent of a new hire's annual salary plus relocation costs. 191 Performance criteria determine the type of information to obtain from job applicants and to some extent the method used to gather the information. 191 Predictors are various pieces of information about a person that help predict whether that person will be successful in a sales job. 192 (Figure 9.2) The first step in the process of selection is the checking of references. 193 Demonstrating job-relatedness for personality, interest, and preferences is generally easier than for skill, knowledge, and ability.

T 194 9-54 Questions not related to job qualifications should not be included on the application blank. F 9-55 F 9-56 T 9-57 195 All interviewers receive special training for their jobs; this training enables them to interpret information correctly and avoid unreliable or snap decisions. 195-196 In a structured interview, the recruiter begins by asking open-ended questions in order to set the interview structure. 196-197 During an interview, interviewers often put more importance on the nonverbal cues than on the verbal.

F 9-58 F 9-59 T 9-60 F 9-61 T 9-62 T 9-63 F 9-64 T 9-65 T 9-66

197 A good interviewer remains aloof throughout the interview. 198 The interview is the only method the company has for obtaining information about a job applicant. 199 The purpose of testing is to determine whether applicants have traits the company feels will lead to successful selling. 199 Aptitude tests can measure the computer programming skills of a person who is applying for a position at IBM. 199 Polygraph tests are seldom used to screen applicants for sales jobs at large companies that must be sure of the honesty of their outside sales representatives. 199-200 Employment tests are often misused and not understood. 201 The EEOC advocates the use of aptitude and intelligence tests as a valid way to determine who should and should not be hired for sales positions. 202 Almost all companies require their prospective employees to undergo physical examinations. 203 Socialization is concerned with the roles played by salespeople rather than with the jobs they occupy.

SHORT ANSWER QUESTIONS 9.67 What do the letters SKA represent? Ans: skills, knowledge, and ability Page: 192 9.68 What is the first stage in the sales personnel selection process? Ans: the application Page: 192

9.69 List the three general types of job interviews. Ans: patterned or structured, unstructured, and semistructured Page: 195 9.70 Why are references sometimes not a valid measure of how well a job applicant will perform at his or her job? Ans: People tend to play down the faults of others, and they may not know them well enough to give an informed reference. In addition, a person might be a good worker for one supervisor, and not for another one. Page: 201 9.71 When does an salesperson's socialization take place? Ans: the entire length of a person's employment Page: 203 9.72 What is the Pygmalion effect? Ans: It is the self-fulfilling prophecy of telling someone he or she will succeed. Page: 204

Chapter 10 The Management of Sales Training and Development MULTIPLE CHOICE QUESTIONS A 10-1 216 _____ is the effort put forth by an employer to provide the opportunity for the salesperson to receive job-related culture, skills, knowledge, and attitudes that result in improved performance in the selling environment. A. Sales training B. Orientation C. Revitalization D. Acculturation E. Socialization 216 Companies engage in sales training to: A. increase absenteeism and turnover B. increase selling costs C. decrease sales volume D. change or reinforce behavior that makes salespeople more efficient E. do all of the above

D 10-2

C 217 10.3 A company engages in sales training to: A. eliminate the need for feedback from its sales force B. decrease customer satisfaction C. help salespeople become managers D. eliminate the need for costly orientation processes E. help in the creation of strategic plans A 10-4 217 Which of the following statements about sales training is true? A. Sales training is an ongoing commitment. B. Environmental changes should have no effect on sales training. C. During the last thirty years, there has been no need to reengineer training. D. No new sales training techniques have been developed since the 1960s. E. Employers only like to budget for formal training and do little informal training.

B 10-5

217 Which of the following is NOT a specific purpose for sales training? A. to provide product knowledge B. to lower fixed costs C. to inform salespeople D. to obtain feedback from salespeople E. to increase salespeople's job satisfaction 217 _____ involves identifying activities management feels the salespeople should perform to produce the desired results. A. SWOT analysis B. Environmental audit C. Training analysis D. Needs assessment E. Outcome measurement 218 A successful training effort should: A. strive to reach a large audience with as little information as possible B. be focused on those performance areas that offer the highest opportunity for payback C. cover all facets of selling D. strive to reach a small audience with as much information as possible E. focus on areas where performance is lowest 218 According to Bruce Scagel, which of the following is NOT one of the four principles necessary to ensure a successful training effort? A. Efficiency: Training should be produce the greatest results for the least amount of effort. B. Value: Training should be focused on performance areas the offer the highest opportunity for payback. C. Duration: Training should be ongoing. D. Focus: Training should be focused on a limited number of very important performance areas. E. Mass: Training should provide the maximum payoff that is possible. 218 A successful training effort should: A. focus on the individual's needs rather than those of the majority B. be unconcerned with maximum payoff through training and development C. be ongoing D. focus on all areas with which the trainee will come in contact E. last no longer than one month

D 10-6

B 10-7

A 10.8

C 10-9

C 218 10-10 What step follows the organizational analysis for a company that is planning its sales training? A. salesperson analysis B. product analysis C. operational analysis D. territorial analysis E. needs assessment D 218 10-11 During operational analysis, _____ are analyzed to determine the specific abilities that will be part of training. A. learning curves B. application forms C. mission statements D. job descriptions and job specifications E. work norms B 218-219 10-12 During the _____, managers are asked to analyze all the job descriptions and specifications to determine the specific abilities that will become part of training. A. external assessment B. operational analysis C. market assessment D. environmental audit E. situational assessment C 219 10-13 A _____ might reveal that a salesperson is having problems discussing certain technical aspects of products with their customers. A. performance test B. concept test C. difficulty analysis D. sales presentation test E. vendor assessment C 219 10.14 SCM sells all types of commercial saws. It is in the process of preparing a sales training program for its 32 salespeople. A _____ indicated that its salespeople were having trouble convincing customers that SCM saws were as durable as those made by a German competitor. A. performance test B. sales concept test C. difficulty analysis D. sales presentation test E. value analysis

D 219 10.15 What step follows the sales personnel analysis for a company that is planning its sales training? A. product analysis B. functional assessment C. environmental analysis D. customer analysis E. competitive audit A 220 10.16 _____ is a continuous process aimed at constantly revising the training program to keep it current. A. Needs assessment B. Territorial analysis C. Organizational analysis D. Product analysis E. Job assessment E 220 10-17 The new sales trainer for Marquette, a manufacturer of patient monitoring systems, is deciding what to include in a sales training session. What sources can he use to gather this information? A. Hewlett-Packard, one of its leading competitors B. a hospital that uses Marquette's systems C. company sales personnel D. a hospital supply company that provides the systems to emergency care centers E. all of the above E 220 10.18 Allied Insurance specializes in business liability insurance. Its sales trainer is deciding what should be included in the company's new sales training program. What sources can she use to gather this information? A. experienced Allied Insurance salespeople B. the company's key accounts C. other insurance companies that target the same market D. small companies that require highly individualized policies E. all of the above

D 220 10-19 _____ is used to identify the reasons lower performing salespeople don't achieve their sales goals. A. The competition B. Success analysis C. A job description D. Failure analysis E. Learning curve analysis D 220 10-20 _____ is used to identify factors that appear to cause salespeople to be ineffective. A. The exit interview B. Success analysis C. A job description D. Failure analysis E. Learning curve analysis B 220 10-21 _____ was used to determine why Marcus LaFontaine was able to sell his company's product lines to 90 percent of the potential customers that he called on annually when the other salespeople in the company had sales rates of around 40 percent. A. The exit interview B. Success analysis C. A job description D. Failure analysis E. Learning curve analysis A 221 10-22 Matt Kinder was unhappy with his job, so he recently quit. After he had turned in his resignation, he met with the head of the personnel department who asked him to identify his reasons for quitting. This is an example of what commonly occurs during a(n): A. exit interview B. demotion C. dismissal D. failure analysis E. training analysis E 221 10-23 Which of the following factors should be used in the selection of the sales training method to be used with new and experienced employees? A. the trainer's expertise B. availability of training materials C. training objectives to be accomplished D. the number of trainees E. all of the above

C 221 10-24 Interactive multimedia training is _____ than conventional employee instruction. A. more valid and more reliable B. slower C. less expensive D. less effective E. less individually-oriented A 222 10-25 Tammy Neal is a newly recruited salesperson. As part of her training, she had to "sell" her company's product to another trainee who was acting as if he was a typical buyer. This training technique is the _____ approach. A. role playing B. case study C. demonstration D. gaming E. theatrical A 222 10-26 Alex is undergoing sales training. His trainer has asked him to pretend to sell office furniture to a hypothetical office manager. The trainer's request illustrates how _____ can be used in training. A. role playing B. distance learning C. demonstration approach D. gaming E. the theatrical approach E 222-223 10-27 Frequently used methods for training salespeople include: A. electronic performance support systems (EPSSs) B. on-the-job training C. role playing D. distance learning E. all of the above B 223 10.28 The best and most frequently used method for sales training is: A. electronic performance support systems (EPSSs) B. on-the-job training C. role playing D. distance learning E. interactive multimedia training

D 224 10-29 Sales managers feel a person goes through three stages before true changes in behavior occur as a result of training. These stages in the correct order are: A. preconscious usage, conscious usage, and subconscious usage B. introductory usage, growth usage, and natural usage C. awkward usage, growth usage, and actual usage D. awkward usage, conscious usage, and natural usage E. introductory stage, growth stage, maturity stage D 224 10-30 Alana Mero is currently involved in an on-the-job sales training program. She is not sure the training will work for her, and she does not understand how this training can predict how customers will react to her personnally. At what phase in the behavior changing process is Alana? A. the growth usage B. the introductory usage C. the preconscious usage D. the awkward usage E. the potential usage C 224 10-31 Joe Tanaka learned a new closing technique at a sales meeting a couple of weeks ago. He has made an effort to deliberately use it whenever appropriate since then. He believes he is becoming more proficient with it. At what phase in the behavior changing process is Joe? A. the natural usage B. the cognizant usage C. the conscious usage D. the matrity usage E. the growth usage A 224 10-32 At a seminar a few months ago, Saralyn learned a five question technique for handling objections. At first she wasn't sure it would work, but she forced herself to learn the questions and to use them when dealing with her customers. Now, when the situation calls for that behavior she can use it without having to think about it beforehand . To her it is now a comfortable and unforced method for dealing with objections. At what phase in the behavior changing process is Saralyn? A. the natural usage B. the maturity usage C. the conscious usage D. the established usage E. the cognizant usage

E 224 10-33 Randy Stein has been selling sports equipment for Foote Industries for 14 years. Foote has recently added a line of first aid equipment and Randy has received training on how to sell the new line. When she went back on the road, Randy expected to become as proficient in selling the new line as she was in selling the company's original products, but she feels that no learning is taking place. In other words, it is getting no easier for her to sell the new product line. In terms of the learning curve, Randy is experiencing a(n): A. communication gap B. S-shaped curve C. need for knowledge acquisition D. training evaluation E. plateau C 224 10-34 When does a plateau in the learning curve typically appear during the sales training process? A. immediately after the conscious usage stage B. during the natural usage phase C. during the awkward usage phase following initial training D. after the conscious usage stage begins but before the awkward stage is concluded E. during the knowledge rejection stage A 224 (Figure 10.3) 10-35 To visualize the way a salesperson goes through the learning process, you should visualize a curve shaped like: A. the letter S B. a horizontal line C. a cloverleaf D. the letter V E. a reversed letter L A 224 10-36 A major barrier to movement up the learning curve is: A. lack of reinforcement B. curbstone counseling C. an overly zealous sales manager D. the need for role-playing E. fear of the unknown E 224 10-37 The rate of learning change by salespeople is influenced by: A. the trainee's attitude B. the frequency with which training occurs C. the degree to which the material is technical D. the extent to which follow-up and OTJ training are given E. all of the above

C 225 10-38 Centralized training programs: A. seldom involve standardized training content B. are best when conducted at the "curbstone" C. are designed to supplement the basic training done by sales personnel in the field D. cost less than decentralized programs E. are described by all of above A 225 10-39 Which of the following statements describes an advantage of centralized training? A. Centralizes training allows for the standardization of training content. B. No time in the territory is lost with centralized training. C. Training sessions are typically shorter with centralized training than with decentralized training. D. Centralized training involves all levels of the management hierarchy. E. Centralized training integrates all functional departments of the organization. C 225 10-40 Decentralized training programs: A. provide the sales force with a common body of knowledge B. are designed to take place at the home office and to supplement the basic training done by sales personnel in the field C. may be conducted anywhere D. cost more than centralized programs E. typically involve long sessions in which the trainees get to know each other D 225 10-41 Which of the following statements describes an advantage of decentralized training? A. Decentralized training costs more than centralized training. B. Decentralized training permits salespeople to escape the humdrum job of selling for a short while. C. Decentralized training is seldom used outside the training facilities. D. Decentralized training costs less than centralized training. E. Decentralized training limits the interaction between salespeople. A 225 10-42 Which of the following statements describes a disadvantage of decentralized training? A. In decentralized training, a branch manager may not be an able trainer. B. the use of experienced trainers in decentralized training provides great flexibility in training content. C. Decentralized training requires higher fixed cost. D. Decentralized training generates the additional cost of renting a place to hold the training sessions at resort sites away from the territories and the home office. E. With decentralized training, salespeople's geographical territories are such that they only see one another during meetings and training programs.

A 226 10-43 Which of the following is responsible for the creation, administration, and coordination of a firm's sales management and sales force training and development programs? A. corporate staff trainers B. regular sales force personnel C. the vice-president of sales D. the personnel department E. technical support personnel D 226-227 10-44 When choosing a senior sales representative or sales manager to serve as a sales trainer, the company should look for success in selling and: A. at the number of years of selling experience the individual has B. for membership in an outside organization like Toastmasters C. for a college degree in business D. for effective communication skills E. for a college degree in a technical area related to the company's product offerings B 227 10-45 The sales culture: A. is one of the most expensive benefits a firm can purchase for its salespeople B. is the set of key values, ideas, beliefs, attitudes, customs, and other capabilities and habits shared or acquired as a sales group member C. is formally defined in the firm's organization chart D. alters itself rapidly in response to changes outside the organization E. requires an analytical, conceptual approach to attain its designer's vision D 228 10-46 The first step in evaluating the success of a sales training program is to determine: A. measurement methods B. consequences of measurements C. the method of information collection D. what should be measured E. the importance of the training D 228 10-47 As a sales manager Lila Greer wants to evaluate the success of a recent sales training program. Her first evaluative step should be to determine: A. measurement methods B. consequences of measurements C. the method of information collection D. what should be measured E. the importance of the training

E 229 10-48 The first step in evaluating the success of a sales training program is to determine what should be measured. The components that should be determined during this step include: A. what the participants say about the training program B. what knowledge was learned during the training C. if the training actually involved some change in behavior D. whether the training accomplished what it was supposed to accomplish E. all of the above C 229 10-49 All of the following are examples of data collection techniques sales trainers can use to gather information about the success of a training program EXCEPT: A. interviews B. questionnaires C. experiential research D. company data E. observational research B 229 10-50 What is the most popular method for collecting data during a sales training evaluation? A. interviews B. questionnaires C. tests D. company data E. observations E 229 10-51 The advantage of using _____ for evaluating sales training programs is flexibility. A. observations B. questionnaires C. on-site testing D. role playing E. interviews A 229 10-52 To evaluate sales training, a trainer may go into the field to see if trainees are using the techniques and information they were shown. This method of evaluation is called: A. observation B. experimentation C. sales inspections D. on-site training E. sampling

C 230 10-53 As a recent marketing graduate, your sales manager has asked you to recommend the best method to determine whether your firm's sales training is actually contributing to sales. You should suggest: A. a mail opinion questionnaire be sent to some of the firm's better customers B. an after-only test following the next training session C. a before-after with control group D. a simple before-after measurement E. the company discontinue other promotional activities so the true impact of the sales force on sales can be observed E 230 10.54 What is the simplest method used to determine if a firm's sales training has actually contributed to its sales? A. before/after B. survey C. before/after with control group D. personal interview E. after only TRUE-FALSE QUESTIONS F 216 10-55 The only purpose for sales training is to improve general sales volume. T 217 10-56 Needs assessment serves as a guide to planning training programs. T 218 10-57 A successful training program should strive to reach the most people with the most necessary development initiatives. F 219 10-58 A vendor analysis uncovers and analyzes problems salespeople experience. T 220 10-59 The needs assessment serves as a guide to planning training programs. F 220 10-60 If designed correctly, sales training will not need to be revised. T 221 10-61 People often do not respond truthfully to questions during an exit interview because they want to get a good job recommendation from the company they are leaving.

F 221 10-62 Most trainers view attempts to have salespeople do "homework" before the first training session as a waste of time. F 221 10-63 Interactive multimedia training is faster, more effective, and more expensive than conventional employee instruction. F 222 10-64 Distance learning is much less personal than conventional multimedia training method. T 222 10-65 In role playing, the trainee acts out the sale of a product or service to a hypothetical buyer. F 223 10-66 Negative criticism during on-the-job training provides one of the most effective methods of training a new salesperson. T 223-224 10-67 Millions of dollars spent on sales training are wasted because there is no long-term behavioral change in the sales personnel trained. T 224 10-68 One goal of sales training is to move a salesperson from knowledge acquisition to the natural usage stage. T 225 10-69 A salesperson may receive some form of training any place, any time of day or night. F 225 10-70 Centralized training programs may be conducted anywhere in the field. F 225 10-71 Decentralized training is expensive due to the cost of travel, meals, and facilities. T 226 10-72 Training continues throughout the professional salesperson's career. T 226-227 10-73 The three basic sources of sales trainers are corporate staff personnel, regular sales force personnel, and specialists from outside the company. F 227 10.74 Functional culture is the set of key values, ideas, beliefs, attitudes, customs, and other capabilities and habits shared or acquired as a sales group member.

T 228 10-75 Top management must support the company's sales training program if it is to be effective. F 228 10-76 The evaluator of a sales training program need only look at on-the-job results to determine if the training was effective and useful. T 229 10-77 Questionnaires are the most popular instrument used by trainers to evaluate the sales training programs. T 229 10-78 Interviews are the most flexible technique for evaluating sales training programs. F 230 10.79 The simplest method for evaluating the effectiveness of a sales training program is the after/before method. SHORT ANSWER QUESTIONS 10.80 Who is John H. Patterson? Ans: the father of sales training Page: 216 10.81 What is the first step when developing a sales training program? Ans: a needs assessment Page: 217 10.82 What is the name of the type of interview that usually takes place after someone has quit their job? Ans: exit interview Page: 221 10.83 What is the best and most frequently used method of job training? Ans: on-the-job training Page: 223 10.84 What is the first step in a sales training evaluation? Ans: determine what should be measured Page: 228 10.85 What is the simplest method for evaluating sales training? Ans: the after-only method Page: 230

Chapter 11 Contents of the Sales Training Program: Sales Knowledge and the Selling Process MULTIPLE CHOICE QUESTIONS A 11-1 240 _____ is defined as a relatively permanent change in behavior occurring as a result of experience. A. Learning B. Reaction C. Consequence D. Practice E. Proficiency 240 Training: A. is part of an individual's total learning experience B. tends to imply a long-term event C. is a relatively permanent change in behavior occurring as a result of experience D. is completely different from education E. is described by all of the above 242 According to the text, information can be of two types: A. procedural and attitudinal B. internal and external C. motivational and psychological D. operational and behavioral E. intuitive and diagnostic 242 Smarte Carte, Inc. recently introduced computerized, electronic lockers for use in bus stations, schools, ariports, etc. Salespeople were trained on how the system operates, its features, and benefits, and ways to sell the new lockers. Smarte Carte used _____ training to provide its salespeople with product information. A. diagnostic B. operational C. procedural D. behavioral E. intuitive

A 11-2

D 11-3

B 11-4

C 11-5

242 Training involving operational types of procedures: A. will be useful to new salespeople only B. should not become a habitual behavior for salespeople C. will be instantly used on the job D. is not useful when there is a need to perform some type of evaluation E. is typically used in the area of sales skills development 242 Dylan Persky sells men's clothing to retail stores. Hiss sales manager wants Dylan to incorporate visual aids into his sales presentation. Dylan, a fourteen-year sales veteran, does not want to change. His sales manager is trying to engage Dylan in _____ training. A. diagnostic B. operational C. procedural D. behavioral E. intuitive 242 Martin has sold bathroom and kitchen fixtures for twelve years. Last month his sales manager asked Martin to submit his orders via a laptop computer. Martin does not like computer technology and is somewhat intimidated by it. To get Martin to use the laptop computer, his sales manager will have to engage in _____ training. A. diagnostic B. operational C. procedural D. behavioral E. intuitive 243 When a salesperson is hired, the first job-related information he or she receives is typically about the: A. company that hired him or her B. physical characteristics of the product sold C. skills needed to manage a territory D. company's customers E. company's advertising program 243 The foundation of sales knowledge development is: A. product knowledge B. an understanding of the company's pricing strategy C. an understanding of each member of the channel of distribution D. company knowledge E. knowledge of the competition

D 11-6

D 11.7

A 11-8

A 11-9

C 243 11-10 _____ are commonly used to provide salespeople with sales knowledge. A. Public relations articles B. Call reports C. Sales meetings D. Trade journals E. Customers E 244 11-11 As part of their knowledge about the company's channel of distribution, salespeople need to know: A. when channel members will see salespeople B. the product lines each channel member carries C. the likes and dislikes of a channel member's customers D. the channel member's pricing policies E. all of the above D 244 11-12 According to the text, salespeople are boundary spanners. This means salespeople: A. have to cover a lot of territory B. sell in both the business-to-business and consumer markets C. have to perform many selling and non-selling activities D. are in the middle between the customer and the employer E. are accurately described by none of the above E 247 11-13 Personal computers can help a salesperson to: A. improve the organization of his or her selling time B. improve speed and accuracy in finishing and sending orders to the company C. help develop more effective presentations D. be more productive E. do all of the above A 247 11.14 Where would a salesperson, who makes wise use of his computer, look to find information about the date of a customer's last order, the customer's delivery preferences, and the name of the customer's assistant? A. a contact management program B. a spreadsheet C. a tickler file D. a geographic information system E. a calendar management program

C 248 11-15 As a salesperson, the most vulnerable asset you have to manage is your: A. product B. personal appearance C. time D. company resources E. leads D 248 11.16 Which type of sales force automation would be most likely to help a salesperson who is creating a new route that will accommodate three new customers? A. a contact management program B. a spreadsheet C. a tickler file D. a geographic information system E. a calendar management program E 250-251 11.17 Internet sites set up by the company can help its salespeople in servicing and selling customers. The long-term benefits of using such an Internet site include: A. the building of customer loyalty B. the fact that it saves customers money C. the speed with which transactions can be processed D. the lowering of sales costs E. all of the above D 250-251 11.18 Internet sites set up by the company can be very useful to its salespeople. Which of the following is NOT one of the ways that salespeople can benefit from an Internet site? A. the creation of improved relationships between the salespeople and their customers B. the lowering of variable sales costs C. reduction of transaction processing costs for the customer D. lowering of the company's fixed costs E. provides the convenience, simplicity, and immediacy that customers demand B 251 11-19 Which two key elements are involved in sales skill development? A. operational training and behavioral training B. persuasive communications and the selling process C. customer empathy plus time and territorial management skills D. product knowledge and communication skills E. market segmentation and product knowledge

D 251 11-20 "To be more persuasive, Madeleine," said her sales manager, "when you are working with a customer remember a KISS for him.'" The sales manager was telling Madeleine: A. to use her good looks to get orders B. to flirt a little to keep the prospect interested C. to care about the prospect as a person and not just as a potential commission D. that simple, straight-forward presentations are best E. to let the customer know he is respected by everyone who works at her company A 252 (See also Figure 11.2) 11-21 The sales process begins with: A. prospecting B. the precall plan C. qualifying D. preapproach E. the demonstration B 253 (Figure 11.2) 11-22 _____ is a part of the presentation step of the selling process. A. The approach B. The demonstration C. The close D. Qualifying E. The trial close C 253 (Figure 11.2) 11-23 Which of the following is a part of the presentation step of the selling process? A. the approach B. meeting objections C. dramatizations D. prospecting E. the trial close B 253 11-24 As part of his job, a salesperson is _____ when he is looking for people who need and can buy the product he sells. A. mining B. prospecting C. selling D. scanning E. preapproaching

C 253 11-25 A _____ is the name of a person or business that might be a prospect. A. canvasser B. contract C. lead D. trial buyer E. buying potential A 254 11-26 Jim Keeler moved from selling hospital supplies to working in the purchasing department of a large hospital. The customers that Jim used to call on are now categorized as: A. orphans B. illegitimate C. resourceless D. fair game E. sponsorless A 254 11-27 Miguel was a salesperson for United Designs, a manufacturer of garden accessories. His biggest customer was Pike's Nursery. Yesterday Miguel took another job as the sales manager of a large wholesale nursery. In terms of the other salespeople for United Designs, Pike's Nursery is: A. an orphan B. sponsorless C. left adrift D. fair game E. illegitimate A 254 11.28 Which of the following is NOT an example of one of the four main sources of names for a prospect pool? A. competitors B. customers C. orphans D. referrals E. leads C 255 (Figure 11.4) 11-29 There are four steps to planning sales calls. The first of these involves the: A. development of a customer profile B. development of a sales presentation C. determination of the call objective D. establishment of customer empathy E. outlining of customer benefits

C 255 (Figure 11.4) 11-30 Jerry Rosenblum sells paper. He is planning a sales call on a company that manufactures envelopes. During the first step of this process, he should: A. develop a customer profile B. develop a personalized sales presentation C. determine the call objective D. study postal regulations as they relate to envelopes E. learn all he can about the envelope industry C 255 11-31 A sales call objective: A. should be directly beneficial to the channel members B. can be as vague as necessary C. should be measurable D. needs to be qualitative rather than quantitative E. is unnecessary on a follow up sales call A 256 11-32 What is the first step for developing a customer benefit plan? A. Select the features, advantages, and benefits of the product. B. Develop the marketing plan. C. Develop a business proposition. D. Do a value analysis E. Developed a suggested purchase order C 256 11-33 During which stage of the process for developing a customer benefit plan would a salesperson of industrial generators be most likely to conduct a value analysis? A. while developing the marketing plan B. while individualizing his presentation C. while developing a business proposition D. as he develops a suggested purchase order E. before determining his product's FABs E 256 (Table 11.3) 11-34 Darrel sells canned goods to restaurants. His company has a local distribution center. The seller's location is an example of a(n): A. advantage B. product profile C. utility D. benefit E. feature

D 256 (Table 11.3) 11-35 Because the company Jade sells for offers weekly delivery to her clients, it can keep its inventory costs and its prices lower than its competitors'. This savings is an example of a(n): A. advantage B. product profile C. utility D. benefit E. feature B 257 11-36 The first major part of the sales presentation is called the sales opener or the: A. entry B. approach C. access D. entrance E. advent A 257 11-37 The approach method most commonly used by salespeople is also the weakest. It is called the _____ approach. A. introductory B. product C. customer benefit D. functional E. curiosity A 257 11-38 As the salesperson enters the prospect's office, she says, "Hello, my name is Laura Sams, and I represent Marquette Monitoring Equipment." This is an example of the _____ approach. A. introductory B. product C. customer benefit D. functional E. curiosity C 257 11-39 A salesperson walks into a prospect's office and says, "How would you like to save $1000 on the purchase of your next diesel truck?" This is an example of the _____ approach. A. introductory B. product C. customer benefit D. functional E. curiosity

E 257-258 11-40 A salesperson for ergonomically designed furniture walks into a prospect's office and says, "Do you know why 3,000 secretaries no longer have backaches?" This is an example of the _____ approach. A. introductory B. product C. customer benefit D. functional E. curiosity E 257-258 11-41 Which of the following approaches is NOT commonly used by salespeople? A. introductory approach B. customer benefit approach C. product approach D. curiosity approach E. orphan customer approach B 257-258 11-42 Haj Dhura is a salesperson for United Designs, a manufacturer of garden accessories. When she calls on a customer, she often introduces herself by asking, "Do you know which garden accessory is most commonly found in the gardens located in the Southeast?" This type of approach is referred to as a(n) _____ approach. A. interrogative B. curiosity C. functional D. introductory E. combination A 259 11-43 Velma sells Milorganite fertilizer. To show the client that the fertilizer company's claims about its products are true, she shows them a _____ from the Environmental Protection Agency that states that Milorganite fertilizer meets the EPA's "exceptional quality" standards. A. proof statement B. copy of its stockholders' report C. performance analysis D. publicity piece about fertilizers E. benefit statement

B 259 11-44 To show his clients that what he is saying is true and that he can be trusted, Steve should use: A. curiosity dramatizations B. proof statements C. prospect participations D. benefit approaches E. presentation mixes D 259-260 11-45 The ______ method of sales presentation is very structured and has as its basic assumption that the prospect's needs can be stimulated by exposure to the product, or have already been stimulated because the prospect has sought out the product. A. need awareness B. benefit-feature C. FABs D. stimulus response E. need-satisfaction D 260 11-46 Which of the following is a shortcoming associated with the formula sales presentation method? A. The formula sales presentation method requires too much prospect participation. B. The formula sales presentation method assumes the salesperson shares control with the prospect. C. The formula sales presentation method requires the memorization of several different "pitches." D. The formula sales presentation method includes product features not important to buyer. E. None of the above describes a shortcoming of the formula sales presentation method. A 260 11-47 With which method of sales presentation is the AIDA approach most associated? A. formula B. benefit-feature C. FABs D. need-creation E. need-satisfaction B 260 11-48 AIDA stands for: A. assumptions, interests, diagnosis, action B. attention, interest, desire, action C. awareness, intent, desire, activity D. attention, innovations, definitions, agreement E. assumptions, interest, diagnosis, activity

E 260 11-49 Ravinia recommends to the salespeople who work for her that they use an interactive sales presentation. In other words, Ravinia recommends the _____ presentation method. A. formula B. benefit-feature C. FABs D. stimulus response E. need-satisfaction A 261 11-50 Kathy Eure sells the landscaping services of a large nursery to developers. At the conclusion of her sales presentation, Kathy may ask the prospect, "What kind of flowers of do you prefer?" This is an example of a: A. trial close B. sales call objective C. dramatization D. preapproach E. marketing plan A 262 11-51 One method of handling objections is to turn the objection into a benefit or a reason to buy. This is called the _____ method of handling objections. A. boomerang B. forestalling C. benefit-feature D. bird dogging E. trial and error B 263 11-52 After his sales presentation, Milt Presley says, "Let's see, Mr. McPhail, you said you liked our fast delivery, credit policy, and co-op advertising program. Is that correct?" This an example of a(n) _____ close. A. boomerang B. summary C. complement D. assumptive E. minor decision

C 263 11.53 At the end of her sales presentation, Kelly said, "It's obvious that you know a lot about running an amusement parks and that is why I think you should buy my company's stuffed animals. As you very well know, they are inexpensive when bought in case lots, yet made with the quality that will keep your customers happy." Kelly was using a(n) _____ close. A. boomerang B. summary C. complement D. assumptive E. minor decision D 263 11-54 Nikki works for Lebanon Lawn & Garden which sells lawn and garden products, grass seeds, and bird food. She concluded her sales presentation by saying, "I can tell from your merchandising skills that you are committed to extending the season for your retail garden supply store, so I'll write up your order for our deluxe bird seed display. This is an example of the _____ close. A. suggestive B. boomerang C. adaptive D. compliment E. functional D 263 11-55 After finishing his sales presentation and before the prospect had said anything about buying his product, Alvin said, "I'll call in your order for a office chair right now." This is an example of a(n) _____ close. A. boomerang B. summary C. complement D. assumptive E. minor decision E 263 11-56 Which of the following is the BEST example of an assumptive close? A. "I suggest you buy two dozen cases of our ant killer." B. "Mr. Kinney, I think you will like our low prices and just-in-time delivery service." C. "Do you want the 36-inch or 26-inch long handles on those hand shovels?" D. "Let me introduce you to our product by sending you a free case of our lawn pesticides." E. "I am going to send you three cases of our Song & Beauty bird seed."

D 263 11-57 After a brief sales presentation, rather than attempting a trial close, Arno Greski says to the prospect, "I'll have this shipped tomorrow." This an example of a(n) _____ close. A. boomerang B. summary C. complement D. assumptive E. minor decision D 263 11.58 The final step in the selling promise is: A. handling objections B. the close C. the thank-you note D. follow-up service E. none of the above because it varies from customer to customer E 264-165 11.59 In order for a salesperson to be successful when selling abroad, he or she should: A. learn about the host's culture and values B. learn the host's language C. develop relationships and trust before getting down to business D. slow down E. do all of the above TRUE-FALSE QUESTIONS F 242 11-60 Procedural learning involves new product information, how to call in orders, new territorial forms to complete, and other new procedures. F 243 11-61 When a salesperson is hired, the first job-related information he or she receives is typically about the competition. T 243 11-62 Professional salespeople listen, teach, clarify, and consult. F 244 11-63 Salespeople are called intermediaries because they are in the middle between the customer and the employer. F 246 (Table 11.1) 11-64 Salespeople find the personal computer most useful when they are creating their sales presentations.

T 247 11-65 Sales forces use technology to enhance their personal productivity, their communications skill, and their order processing and ability to service their customers. T 248 11-66 A geographic information system allows salespeople to view and manipulate customer and prospect information on an electronic map. F 251 11.67 One of the ways that salespeople benefit from their company's implementation of an Internet site is through the reduction of fixed and variable sales costs. F 253 11-68 The sales process begins with pre-call planning. T 254 11-69 Customers whose salesperson has left the company are called orphans. T 255 11-70 Salespeople should have an objective in mind when they meet with a customer, and this objective should be specific, measurable, and directly beneficial to the customer. F 256 11-71 The first step in developing a customer benefit plan is to create a marketing plan. F 257 11-72 In the company identification approach, the salesperson might begin by saying, "My name is Margaret Ussery, and I work for United Designs, the world's largest manufacturer of garden accessories." F 257 11-73 The product approach is the most common sales opener and also the weakest. F 258 11-74 The basic purpose of the presentation is for the salesperson to give the prospect a good impression of himself or herself. T 259 11-75 Proof statements are especially useful in showing your prospect that what you are saying is true and that you can be trusted. T 260 11-76 The memorized sales presentation allows too little prospect participation.

F 260 11-77 A formula sales presentation is also called the need-satisfaction method of selling. T 261 11-78 The trial close may take place anywhere during the selling process. F 262 11-79 The postponing method of handling objections turns the objection into a benefit or a reason to buy. F 263 11-80 Closing is the process of helping people deal with objections. F 263 11-81 A furniture salesperson was using the after-the-sale summary when she asked the prospect, "Why don't you buy the cherry desk to go with the rest of the office furniture you have just purchased?" F 264 11-82 According to the text, it is easier to find new customers than to keep old ones satisfied. T 264-265 11.83 Cultural differences often make selling to people in other nations more difficult. SHORT ANSWER QUESTIONS 11.84 In the learning process involved in the training of individual salespeople, what must be gained first so that the process will be effective? Ans: knowledge Page: 241 (Figure 11.1) 11.85 What is the most important type of knowledge for a new salesperson to gain? Ans: product knowledge Page: 243 11.86 Sales force automation breaks down into three broad areas of functionality. List them. Ans: personal productivity, communications, order processing and customer service Page: 247 11.87 What is the salesperson's most vulnerable asset? Ans: time Page: 248

11.88 What are the two key elements involved in sales skills development? Ans: persuasive communication and the selling process Page: 251 11.89 What is the weakest approach technique commonly used by salespeople? Ans: the introductory approach Page: 257 11.90 What is another name for the memorized sales presentation? Ans: the stimulus-response method Page: 259 11.91 What do the letters in the acronym AIDA represent? Ans: attention, interest, desire, action Page: 260

Chapter 12 Motivating Salespeople toward High Performance MULTIPLE CHOICE QUESTIONS C 12-1 275 According to the text, when considering motivation, four questions must be answered. Which of the following is NOT one of those questions? A. What arouses salespeople's behavior? B. What influences the intensity of behavior arousal? C. What actions should be avoided because they will cause the salesperson's motivation level to decrease? D. What directs the salesperson's behavior? E. How can aroused behavior be maintained over time? 275 According to the text, _____ refers to the arousal, intensity, direction, and persistence of effort directed toward job tasks over a period of time. A. assurance B. confidence C. encouragement D. conviction E. motivation 275 The _____ is basically seven broad classes of motivational ingredients which influence the arousal, intensity, direction, and persistence of people's behavior. A. AIDA mix B. sales motivational mix C. motivational portfolio D. sales incentive mix E. sales catalyst 275 The sales motivational mix refers to both: A. extrinsic and intrinsic outcomes B. organizational and territorial rewards C. psychological and group rewards D. qualitative and quantitative outcomes E. objective and subjective rewards

E 12.2

B 12-3

A 12-4

A 12-5

275 Which of the following is an example of an intrinsic outcome? A. feeling of accomplishment B. recognition C. challenging work assignments D. sales contests E. sales meeting 275 (Table 12.1) Which of the following is an example of a special financial incentive that may be used by a sales manager to motivate salespeople? A. contests B. quotas C. salary D. commissions E. sales training 275 (Table 12.1) Which of the following is clearly a type of nonfinancial reward which can be used as a method of motivation? A. challenging work assignments B. a low sales quota C. a large sales territory D. a sales contest E. a Las Vegas sales meeting 275 (Table 12.1) Recognition is part of which element of the sales manager's motivation mix? A. the basic compensation plan B. special financial incentives C. the sales culture D. nonfinancial rewards E. performance evaluation 275 _____ refers to the integrated pattern of salespeople's values, ideas, beliefs, attitudes, customs, and any other capabilities and habits shared as a member of the sales group. A. A code of ethics B. Organizational psychology C. Sales internalization D. Organizational physiology E. Sales culture

A 12-6

A 12-7

D 12-8

E 12-9

C 276 12-10 The most effective way to implement a strategy that uses rites and ceremonies to provide a reward for performance is: A. at company picnics B. at company sponsored sporting events C. at monthly and yearly (national) sales meetings D. through the marketing concept and customer involvement E. at private meetings at the office of the district or regional sales manager D 276 12-11 Stories are an important part of an organization's sales culture because they: A. are not easily imitated by the competition B. are always part of the corporate strategy C. create a source of intrinsic rewards D. are a medium through which primary organizational values can be communicated throughout the sales force E. dramatize the best methods of handling objections D 276 12-12 Each year our collegiate chapter of the American Marketing Association gives a plaque to the most outstanding member of that year. The plaque is an example of a(n): A. dramatization B. demonstration C. intrinsic outcome D. symbol E. story E 276 12.13 Which of the following is an example of a symbol that an organization might use to convey the organization's sales culture? A. a plaster eagle given to the salesperson who travels the furthest annually B. the relating of the adventures of a salesperson who refused to take "no" for an answer C. a four-leaf clover given to every new salesperson D. the company slogan, "Remember our customers are people, too" E. all of the above A 277 12-14 Organizations use slogans to: A. communicate their culture B. handle customer objections C. disseminate the philosophy of their competitors D. enhance the firms' integrated marketing communications E. do all of the above

A 278 12-15 The _____ is used to explain salespeople's work behavior. It deals with such questions as "What is the probability of success?" and "Will I be rewarded for success?" A. expectancy theory B. motivation model C. equity theory D. contingency model E. correlation model E 278 (Figure 12.1) 12-16 In making their decision about whether to expend extra effort to produce a higher level of sales, salespeople often ask themselves: A. "What is my probability of success?" B. "Will I be rewarded for success?" C. "Are the rewards fair?" D. "Are the rewards worth it?" E. all of the above questions A 279 12-17 Valence for rewards refers to: A. the value the salesperson places on the reward B. the extrinsic value of the reward as defined by upper management C. a formula used to calculate the monetary value of motivators D. the incentives used to increase motivation levels E. the method the salesperson uses to calculate the probability the reward will lead to the achievement of a higher performance level B 279 12-18 An agricultural supply company offered a $1,000 bonus to the first salesperson to sell more than $100,000 worth of merchandise. One of its salespeople recently inherited $750,000. In terms of the expectancy theory, the bonus has a very low _____ for this individual. A. instrumentality B. valence C. self-actualization impact D. expectancy E. equity

B 279 12-19 Sherman's wife is a successful dentist. The company he sells for just added a dental plan that provides two free teeth cleanings annually. In terms of the expectancy theory, the dental plan has a very low _____ for Sherman A. instrumentality B. valence C. self-actualization impact D. expectancy E. equity D 279 12-20 According to the expectancy theory, expectancy multiplied by instrumentality then multiplied by valence equals: A. action B. job satisfaction C. learning D. motivation E. equity A 279 12.21 Wintertite Company sells down filled clothing and sleeping bags. Its sales manager has just announced that the sales rep who has the greatest increase in net dollar sales this quarter over last quarter will win a one-week vacation for four to Aspen, Colorado. Charles Lee sincerely believes that if he increases his sales efforts by 10 percent, he can win that contest. In terms of the expectancy theory, this strong belief that he can win is an example of: A. instrumentality B. valence C. equity D. referent power E. an intrinsic reward C 280 12-22 From time to time while she drives from one sales appointment to another, Lily thinks about how much effort her job requires and the compensation she receives for those efforts. She also compares her situation to the workloads and rewards of other members of the sales force. Lily's thoughts illustrate: A. an expectancy model B. trend analysis C. equity theory D. a contingency model E. a correlation model

C 280 12.23 According to the _____, a salesperson develops a ratio of job "inputs" to "outcomes," which he or she compares to the perceived ratio of other salespeople. A. expectancy model B. trend analysis C. equity theory D. contingency model E. correlation model B 280 12-24 Abbie Bowman, sporting goods salesperson, is unhappy. She really worked hard last period and now has learned other members of the sales force, who put in a great deal less effort, received rewards equal to the one she got. According to equity theory, Abbie is most likely to do which of the following? A. apply for her boss' job B. convince herself that equity really does exist C. convince herself that equity does not matter D. increase her income through falsified expense vouchers E. work harder B 281 12-25 Sales managers should be aware of equity theory because it points to a real need for management to: A. move salespeople from "hygiene seeking" to "motivation seeking" B. evaluate salespeople's performances effectively and to reward them accordingly C. move salespeople from "motivation seeking" to "hygiene seeking" D. push salespeople to perform at above-average levels E. do none of the above A 282 12-26 A sales force with _____ is likely to exhibit job satisfaction. A. few grievances and lawsuits B. high turnover C. poor mental and physical health D. high absenteeism E. none of the above

D 282 12.27 Which of the following is NOT one of the categories used to define a Quality of Work Life (QWL) program? A. a societal environment that fosters personal identity, freedom from prejudice, a sense of community, and upward mobility B. a work role that minimizes infringements on personal leisure and family needs C. a chance for personal growth and security D. expectations of increased levels of productivity without any intrinsic or extrinsic rewards E. adequate and fair compensation E 282 12-28 Job turnovers: A. may be either voluntary or involuntary B. are consequences of unmet expectations and unfulfilled needs C. refer to someone leaving their present job D. are exemplified by promotions and transfers E. are accurately described by all of the above B 282-283 12-29 Jessica Towers recently left her sales job to pursue a career in education because she was dissatisfied with the intrinsic rewards she received for the amount of effort she put forth in selling. This is an example of: A. an uncontrollable termination B. voluntary turnover C. an equitable termination D. a negotiated turnover E. contingency turnover D 283 12-30 Personal factors in the salesperson's behavioral model include: A. organizational rewards B. competition C. the economy D. energy E. none of the above B 283 12.31 Environmental factors in the salesperson's behavioral model include the: A. sales culture B. economy and competitors C. salesperson's aptitude for selling D. organization's evaluation procedures E. organization's compensation practices C 284

12-32 _____ is defined as the actual accomplishments of a salesperson. A. Payoff B. Motivation C. Performance level D. Intrinsic reaction E. Reactive behavior B 284 12-33 Intrinsic rewards come from: A. the salesperson's employer B. the salesperson himself C. the salesperson's co-workers D. the salesperson's family E. all of the above B 285 12-34 Sales performance is a function of: A. equity and motivation B. ability and motivation C. rewards and attitudes D. sales culture and ability E. expertise and ability C 286 12.35 _____ are those things seen in the environment that appeal to the salesperson's motives and have enough worth to motivate purposeful behavior to obtain them. A. Environmental offerings B. Accomplishments C. Incentives D. Environmental bonuses E. Environmental assets B 286 12-36 Which of the following is an example of a low motivator? A. job advancement B. retirement programs C. freedom to manage oneself D. performance evaluation E. leadership

D 286 12-37 Which of the following is an example of a high motivator? A. fringe benefits B. retirement programs C. company policy and procedures D. performance evaluation E. more supervision A 286 12-38 Low motivator incentives: A. prevent dissatisfaction B. are used to produce positive attitudes C. can encourage role ambiguity D. cost very little to implement into a sales strategy E. satisfy ego and self-actualization needs B 286 12-39 High motivator incentives: A. prevent dissatisfaction B. are used to produce positive attitudes C. can encourage role ambiguity D. cost very little to implement into a sales strategy E. satisfy ego and self-actualization needs B 286 12-40 Which of the following statements about incentives is true? A. Fringe benefits is a much better motivator than job advancement. B. A sales manager would do well to explore different aspects of incentives for each member of the sales team C. More supervision is a much higher motivator than training and sales meetings. D. In most cases, negative incentives motivate more successfully than positive incentives. E. All salespeople prefer short-range incentives significantly more than long-range incentives. E 289 12-41 Avram Hersey faces a difficult situation. He is a new district sales manager for a tire manufacturer, and Ian is a new salesperson in his district. Avram needs to know what motivates Ian, but Ian seems unwilling to share his motives. The text would say this problem exists because _____ do not yet exist between Avram and Ian. A. sentimental feelings B. rapport, knowledge, and reference C. dignity, authority, and knowledge D. trust and love E. respect, rapport, and confidence

A 289 12-42 Salespeople are in a fairly unique position because they represent their employers' interests and their customers' interest, too. This situation between customers and the company is called a(n): A. boundary position B. asset position C. restricted operating position D. tightrope E. balancing act A 289 12.43 Adam Grotski sells golfing equipment to retailers. He has developed a close, personal relationship with several of the store owners that he calls on regularly. Sales at his company have been gradually declining over the last three years. Adam's sales manager has asked his salespeople to pressure their customers and get the storeowners to place larger orders. Adam is reluctant to take advantage of his friends. This situation illustrates one of the problems salespeople face because they occupy a(n): A. boundary position B. asset position C. restricted operating position D. tightrope E. balancing act C 289-290 12-44 Salespeople experience _____ when they do not possess the information necessary to perform their jobs. A. cognitive dependence B. job conflict C. role ambiguity D. job deprivation E. role conflict C 289-290 12-45 As a new ad salesperson for a cable television channel, Sean is unsure what his company expects of him in his job as an ad salesperson. He's not sure about how he should do his job, nor of how his work is perceived by his supervisor. Sean is experiencing: A. cognitive dependence B. job conflict C. role ambiguity D. job deprivation E. role conflict

D 290 12-46 A major cause of role ambiguity is: A. a dependence on extrinsic rewards B. the personal nature of an individual's motives C. an inability to move past the exploration phase of one's career D. the lack of effective coaching and counseling by the sales manager E. an inability to meet the needs of customers D 290 12-47 Mike Pizzaro finds himself caught between the demands of his sales manager and the demands of his key account. Often what one wants is completely inconsistent with the desires of the other. For example, his manager wants him to cut expenses, and his key account expects Mike to take him out to lunch each time Mike calls on him. The conflict caused by the incompatibility of the expectations of his manager and his most important account is hurting his performance on the job. Mike is experiencing: A. role ambiguity B. stress reduction C. dysfunctional ethics D. role conflict E. job distraction C 291 12-48 Motivation: A. is a cure-all managerial action plan for sure success B. can cure problems brought about by ineffective training C. cannot cure problems caused by lack of planning D. is best when delivered as a general method of improving sales rather than tailored to each individual's idiosyncrasies needs E. works equally well with all salespeople TRUE-FALSE QUESTIONS T 275 12-49 Motivation refers to the level or amount of energy directed by someone toward some single task or goal. F 275 12-50 Intrinsic outcomes include the basic compensation plan and special financial incentives. T 276 12-51 Sales managers can use ceremonies and rites to provide dramatic examples of what the company values. T 277 12-52 Slogans are an effective way of communicating an organization's sales culture.

F 278 12-53 According to the expectancy model, a salesperson develops a ratio between inputs into the job and outcomes (or what is received) and compares this ratio with his or her perception of other salespeople's ratios. F 279 12-54 A salesperson who has a high level of motivation cannot fail to meet the job's performance requirements. T 280 12.55 The equity theory is in operation when Meredith sincerely believes that even though she has put forth just as much effort as her co-workers, she is receiving less rewards. F 282 12-56 Job satisfaction is best thought of as the CAUSE of behavior performance rather than as a result of it. F 282 12-57 Even critics of Quality of Work Life (QWL) programs admit the programs make employees work harder because QWL programs do an excellent job of tying rewards directly to individual performance. F 282-283 12-58 All turnovers are involuntary. T 285 12-59 Sales performance is a function of motivation and ability. T 286 12-60 Rewards for success, leadership, performance evaluations, and company policy and procedure are all examples of high motivators. T 289 12-61 A major cause of role ambiguity in salespeople is an ineffective job by their sales managers. T 290 12-62 Role conflict can be caused by the salesperson's manager, family, customers, and company. T 290 12-63 In the final analysis, all motivation is self-motivation. F 291 12-64 Motivation works equally well with all salespeople.

T 291 12-65 Motivation cannot cure problems caused by lack of planning. SHORT ANSWER QUESTIONS 12.66 List the two categories of rewards that are part of the sales motivational mix. Ans: intrinsic rewards and extrinsic rewards Page: 275 12.67 What are the components of the expectancy theory? Ans: Motivation = Expectancy x Instrumentality x Valence Page: 279 12.68 What are the two types of turnover discussed in the text? Ans: voluntary and involuntary Page: 283 12.69 Write the formula for determining sales performance. Ans: Sales Performance is a function of Ability multiplied by Motivation. Page: 285 12.70 When the sales manager was explaining to Roger about his new selling job, he made the following statement, "We expect you to be in a boundary position." What did the sales manager mean? Ans: Roger will be involved in meeting the needs of his customer and the needs of his employer. Page: 289 12.71 Clyde's wife wants him to spend every night at home. Clyde's company expects him to spend at least two nights a week on the road. What is the name for the type of problem that Clyde is experiencing? Ans: role conflict Page: 290

Chapter 12 Motivating Salespeople toward High Performance MULTIPLE CHOICE QUESTIONS C 12-1 275 According to the text, when considering motivation, four questions must be answered. Which of the following is NOT one of those questions? A. What arouses salespeople's behavior? B. What influences the intensity of behavior arousal? C. What actions should be avoided because they will cause the salesperson's motivation level to decrease? D. What directs the salesperson's behavior? E. How can aroused behavior be maintained over time? 275 According to the text, _____ refers to the arousal, intensity, direction, and persistence of effort directed toward job tasks over a period of time. A. assurance B. confidence C. encouragement D. conviction E. motivation 275 The _____ is basically seven broad classes of motivational ingredients which influence the arousal, intensity, direction, and persistence of people's behavior. A. AIDA mix B. sales motivational mix C. motivational portfolio D. sales incentive mix E. sales catalyst 275 The sales motivational mix refers to both: A. extrinsic and intrinsic outcomes B. organizational and territorial rewards C. psychological and group rewards D. qualitative and quantitative outcomes E. objective and subjective rewards

E 12.3

B 12-3

A 12-4

A 12-5

275 Which of the following is an example of an intrinsic outcome? A. feeling of accomplishment B. recognition C. challenging work assignments D. sales contests E. sales meeting 275 (Table 12.1) Which of the following is an example of a special financial incentive that may be used by a sales manager to motivate salespeople? A. contests B. quotas C. salary D. commissions E. sales training 275 (Table 12.1) Which of the following is clearly a type of nonfinancial reward which can be used as a method of motivation? A. challenging work assignments B. a low sales quota C. a large sales territory D. a sales contest E. a Las Vegas sales meeting 275 (Table 12.1) Recognition is part of which element of the sales manager's motivation mix? A. the basic compensation plan B. special financial incentives C. the sales culture D. nonfinancial rewards E. performance evaluation 275 _____ refers to the integrated pattern of salespeople's values, ideas, beliefs, attitudes, customs, and any other capabilities and habits shared as a member of the sales group. A. A code of ethics B. Organizational psychology C. Sales internalization D. Organizational physiology E. Sales culture

A 12-6

A 12-7

D 12-8

E 12-9

C 276 12-10 The most effective way to implement a strategy that uses rites and ceremonies to provide a reward for performance is: A. at company picnics B. at company sponsored sporting events C. at monthly and yearly (national) sales meetings D. through the marketing concept and customer involvement E. at private meetings at the office of the district or regional sales manager D 276 12-11 Stories are an important part of an organization's sales culture because they: A. are not easily imitated by the competition B. are always part of the corporate strategy C. create a source of intrinsic rewards D. are a medium through which primary organizational values can be communicated throughout the sales force E. dramatize the best methods of handling objections D 276 12-12 Each year our collegiate chapter of the American Marketing Association gives a plaque to the most outstanding member of that year. The plaque is an example of a(n): A. dramatization B. demonstration C. intrinsic outcome D. symbol E. story E 276 12.14 Which of the following is an example of a symbol that an organization might use to convey the organization's sales culture? A. a plaster eagle given to the salesperson who travels the furthest annually B. the relating of the adventures of a salesperson who refused to take "no" for an answer C. a four-leaf clover given to every new salesperson D. the company slogan, "Remember our customers are people, too" E. all of the above A 277 12-14 Organizations use slogans to: A. communicate their culture B. handle customer objections C. disseminate the philosophy of their competitors D. enhance the firms' integrated marketing communications E. do all of the above

A 278 12-15 The _____ is used to explain salespeople's work behavior. It deals with such questions as "What is the probability of success?" and "Will I be rewarded for success?" A. expectancy theory B. motivation model C. equity theory D. contingency model E. correlation model E 278 (Figure 12.1) 12-16 In making their decision about whether to expend extra effort to produce a higher level of sales, salespeople often ask themselves: A. "What is my probability of success?" B. "Will I be rewarded for success?" C. "Are the rewards fair?" D. "Are the rewards worth it?" E. all of the above questions A 279 12-17 Valence for rewards refers to: A. the value the salesperson places on the reward B. the extrinsic value of the reward as defined by upper management C. a formula used to calculate the monetary value of motivators D. the incentives used to increase motivation levels E. the method the salesperson uses to calculate the probability the reward will lead to the achievement of a higher performance level B 279 12-18 An agricultural supply company offered a $1,000 bonus to the first salesperson to sell more than $100,000 worth of merchandise. One of its salespeople recently inherited $750,000. In terms of the expectancy theory, the bonus has a very low _____ for this individual. A. instrumentality B. valence C. self-actualization impact D. expectancy E. equity

B 279 12-19 Sherman's wife is a successful dentist. The company he sells for just added a dental plan that provides two free teeth cleanings annually. In terms of the expectancy theory, the dental plan has a very low _____ for Sherman A. instrumentality B. valence C. self-actualization impact D. expectancy E. equity D 279 12-20 According to the expectancy theory, expectancy multiplied by instrumentality then multiplied by valence equals: A. action B. job satisfaction C. learning D. motivation E. equity A 279 12.22 Wintertite Company sells down filled clothing and sleeping bags. Its sales manager has just announced that the sales rep who has the greatest increase in net dollar sales this quarter over last quarter will win a one-week vacation for four to Aspen, Colorado. Charles Lee sincerely believes that if he increases his sales efforts by 10 percent, he can win that contest. In terms of the expectancy theory, this strong belief that he can win is an example of: A. instrumentality B. valence C. equity D. referent power E. an intrinsic reward C 280 12-22 From time to time while she drives from one sales appointment to another, Lily thinks about how much effort her job requires and the compensation she receives for those efforts. She also compares her situation to the workloads and rewards of other members of the sales force. Lily's thoughts illustrate: A. an expectancy model B. trend analysis C. equity theory D. a contingency model E. a correlation model

C 280 12.24 According to the _____, a salesperson develops a ratio of job "inputs" to "outcomes," which he or she compares to the perceived ratio of other salespeople. A. expectancy model B. trend analysis C. equity theory D. contingency model E. correlation model B 280 12-24 Abbie Bowman, sporting goods salesperson, is unhappy. She really worked hard last period and now has learned other members of the sales force, who put in a great deal less effort, received rewards equal to the one she got. According to equity theory, Abbie is most likely to do which of the following? A. apply for her boss' job B. convince herself that equity really does exist C. convince herself that equity does not matter D. increase her income through falsified expense vouchers E. work harder B 281 12-25 Sales managers should be aware of equity theory because it points to a real need for management to: A. move salespeople from "hygiene seeking" to "motivation seeking" B. evaluate salespeople's performances effectively and to reward them accordingly C. move salespeople from "motivation seeking" to "hygiene seeking" D. push salespeople to perform at above-average levels E. do none of the above A 282 12-26 A sales force with _____ is likely to exhibit job satisfaction. A. few grievances and lawsuits B. high turnover C. poor mental and physical health D. high absenteeism E. none of the above

D 282 12.28 Which of the following is NOT one of the categories used to define a Quality of Work Life (QWL) program? A. a societal environment that fosters personal identity, freedom from prejudice, a sense of community, and upward mobility B. a work role that minimizes infringements on personal leisure and family needs C. a chance for personal growth and security D. expectations of increased levels of productivity without any intrinsic or extrinsic rewards E. adequate and fair compensation E 282 12-28 Job turnovers: A. may be either voluntary or involuntary B. are consequences of unmet expectations and unfulfilled needs C. refer to someone leaving their present job D. are exemplified by promotions and transfers E. are accurately described by all of the above B 282-283 12-29 Jessica Towers recently left her sales job to pursue a career in education because she was dissatisfied with the intrinsic rewards she received for the amount of effort she put forth in selling. This is an example of: A. an uncontrollable termination B. voluntary turnover C. an equitable termination D. a negotiated turnover E. contingency turnover D 283 12-30 Personal factors in the salesperson's behavioral model include: A. organizational rewards B. competition C. the economy D. energy E. none of the above B 283 12.32 Environmental factors in the salesperson's behavioral model include the: A. sales culture B. economy and competitors C. salesperson's aptitude for selling D. organization's evaluation procedures E. organization's compensation practices C 284

12-32 _____ is defined as the actual accomplishments of a salesperson. A. Payoff B. Motivation C. Performance level D. Intrinsic reaction E. Reactive behavior B 284 12-33 Intrinsic rewards come from: A. the salesperson's employer B. the salesperson himself C. the salesperson's co-workers D. the salesperson's family E. all of the above B 285 12-34 Sales performance is a function of: A. equity and motivation B. ability and motivation C. rewards and attitudes D. sales culture and ability E. expertise and ability C 286 12.36 _____ are those things seen in the environment that appeal to the salesperson's motives and have enough worth to motivate purposeful behavior to obtain them. A. Environmental offerings B. Accomplishments C. Incentives D. Environmental bonuses E. Environmental assets B 286 12-36 Which of the following is an example of a low motivator? A. job advancement B. retirement programs C. freedom to manage oneself D. performance evaluation E. leadership

D 286 12-37 Which of the following is an example of a high motivator? A. fringe benefits B. retirement programs C. company policy and procedures D. performance evaluation E. more supervision A 286 12-38 Low motivator incentives: A. prevent dissatisfaction B. are used to produce positive attitudes C. can encourage role ambiguity D. cost very little to implement into a sales strategy E. satisfy ego and self-actualization needs B 286 12-39 High motivator incentives: A. prevent dissatisfaction B. are used to produce positive attitudes C. can encourage role ambiguity D. cost very little to implement into a sales strategy E. satisfy ego and self-actualization needs B 286 12-40 Which of the following statements about incentives is true? A. Fringe benefits is a much better motivator than job advancement. B. A sales manager would do well to explore different aspects of incentives for each member of the sales team C. More supervision is a much higher motivator than training and sales meetings. D. In most cases, negative incentives motivate more successfully than positive incentives. E. All salespeople prefer short-range incentives significantly more than long-range incentives. E 289 12-41 Avram Hersey faces a difficult situation. He is a new district sales manager for a tire manufacturer, and Ian is a new salesperson in his district. Avram needs to know what motivates Ian, but Ian seems unwilling to share his motives. The text would say this problem exists because _____ do not yet exist between Avram and Ian. A. sentimental feelings B. rapport, knowledge, and reference C. dignity, authority, and knowledge D. trust and love E. respect, rapport, and confidence

A 289 12-42 Salespeople are in a fairly unique position because they represent their employers' interests and their customers' interest, too. This situation between customers and the company is called a(n): A. boundary position B. asset position C. restricted operating position D. tightrope E. balancing act A 289 12.44 Adam Grotski sells golfing equipment to retailers. He has developed a close, personal relationship with several of the store owners that he calls on regularly. Sales at his company have been gradually declining over the last three years. Adam's sales manager has asked his salespeople to pressure their customers and get the storeowners to place larger orders. Adam is reluctant to take advantage of his friends. This situation illustrates one of the problems salespeople face because they occupy a(n): A. boundary position B. asset position C. restricted operating position D. tightrope E. balancing act C 289-290 12-44 Salespeople experience _____ when they do not possess the information necessary to perform their jobs. A. cognitive dependence B. job conflict F. role ambiguity G. job deprivation H. role conflict C 289-290 12-45 As a new ad salesperson for a cable television channel, Sean is unsure what his company expects of him in his job as an ad salesperson. He's not sure about how he should do his job, nor of how his work is perceived by his supervisor. Sean is experiencing: A. cognitive dependence B. job conflict C. role ambiguity D. job deprivation E. role conflict

D 290 12-46 A major cause of role ambiguity is: A. a dependence on extrinsic rewards B. the personal nature of an individual's motives C. an inability to move past the exploration phase of one's career D. the lack of effective coaching and counseling by the sales manager E. an inability to meet the needs of customers D 290 12-47 Mike Pizzaro finds himself caught between the demands of his sales manager and the demands of his key account. Often what one wants is completely inconsistent with the desires of the other. For example, his manager wants him to cut expenses, and his key account expects Mike to take him out to lunch each time Mike calls on him. The conflict caused by the incompatibility of the expectations of his manager and his most important account is hurting his performance on the job. Mike is experiencing: A. role ambiguity B. stress reduction C. dysfunctional ethics D. role conflict E. job distraction C 291 12-48 Motivation: A. is a cure-all managerial action plan for sure success B. can cure problems brought about by ineffective training C. cannot cure problems caused by lack of planning D. is best when delivered as a general method of improving sales rather than tailored to each individual's idiosyncrasies needs E. works equally well with all salespeople TRUE-FALSE QUESTIONS T 275 12-49 Motivation refers to the level or amount of energy directed by someone toward some single task or goal. F 275 12-50 Intrinsic outcomes include the basic compensation plan and special financial incentives. T 276 12-51 Sales managers can use ceremonies and rites to provide dramatic examples of what the company values. T 277 12-52 Slogans are an effective way of communicating an organization's sales culture.

F 278 12-53 According to the expectancy model, a salesperson develops a ratio between inputs into the job and outcomes (or what is received) and compares this ratio with his or her perception of other salespeople's ratios. F 279 12-54 A salesperson who has a high level of motivation cannot fail to meet the job's performance requirements. T 280 12.56 The equity theory is in operation when Meredith sincerely believes that even though she has put forth just as much effort as her co-workers, she is receiving less rewards. F 282 12-56 Job satisfaction is best thought of as the CAUSE of behavior performance rather than as a result of it. F 282 12-57 Even critics of Quality of Work Life (QWL) programs admit the programs make employees work harder because QWL programs do an excellent job of tying rewards directly to individual performance. F 282-283 12-58 All turnovers are involuntary. T 285 12-59 Sales performance is a function of motivation and ability. T 286 12-60 Rewards for success, leadership, performance evaluations, and company policy and procedure are all examples of high motivators. T 289 12-61 A major cause of role ambiguity in salespeople is an ineffective job by their sales managers. T 290 12-62 Role conflict can be caused by the salesperson's manager, family, customers, and company. T 290 12-63 In the final analysis, all motivation is self-motivation. F 291 12-64 Motivation works equally well with all salespeople.

T 291 12-65 Motivation cannot cure problems caused by lack of planning. SHORT ANSWER QUESTIONS 12.72 List the two categories of rewards that are part of the sales motivational mix. Ans: intrinsic rewards and extrinsic rewards Page: 275 12.73 What are the components of the expectancy theory? Ans: Motivation = Expectancy x Instrumentality x Valence Page: 279 12.74 What are the two types of turnover discussed in the text? Ans: voluntary and involuntary Page: 283 12.75 Write the formula for determining sales performance. Ans: Sales Performance is a function of Ability multiplied by Motivation. Page: 285 12.76 When the sales manager was explaining to Roger about his new selling job, he made the following statement, "We expect you to be in a boundary position." What did the sales manager mean? Ans: Roger will be involved in meeting the needs of his customer and the needs of his employer. Page: 289 12.77 Clyde's wife wants him to spend every night at home. Clyde's company expects him to spend at least two nights a week on the road. What is the name for the type of problem that Clyde is experiencing? Ans: role conflict Page: 290

Chapter 13 Compensation for High Performance MULTIPLE CHOICE QUESTIONS C 13-1 301 There are three interrelated elements of rewards for salespeople. One of the elements is direct financial rewards and includes: A. salary, commission, and career advancement B. merit salary increases, commission, and better territory C. merit salary increases, bonuses, and commissions D. larger sales territories, bonuses, insurance, and a certificate of achievement E. commissions, recognition dinners, trophies, and personal development opportunities 301 There are three interrelated elements of rewards for salespeople. One of the elements is nonfinancial compensation and includes: A. recognition dinners, certificates of achievement, and features in sales newsletters B. larger accounts and sales territories C. personal development opportunities, merit salary increases, and promotions D. promotions, certificates of achievement, and larger sales territories E. retirement programs, insurance, and certificates of achievement 301-302 Compensation has six basic purposes in influencing motivation. Which of the following is NOT one of those basic purposes? A. to retain salespeople B. to provide a bridge between sales force objectives and the individual salesperson's expectations C. to reinforce salespeople's behavior D. to interpret the actions of competitor's salespeople into sales dollar volume E. to serve as direct feedback about how the organization values the salesperson's performance 302 As a sales manager, you should know the pay satisfaction of your subordinates is based A. the size of each territory and the number of sales calls each must make B. the difference between the salesperson's perception of what pay should be and the amount actually received C. the sales forecast for each individual territory D. the difference between the raise received and the rate of inflation E. none of the above

A 13.2

D 13-3

B 13-4 on:

C 13-5

302-303 Even though Delores Mulholland works for an experienced sales manager, she is not satisfied with the pay she receives as a salesperson for a wholesale hardware company. Which of the following is the most likely source of Delores's dissatisfaction? A. the difference between the amount she earned and the rate of inflation B. the size of her territory C. the difference between her perception of what her pay should be and the amount she actually receives D. the sales forecast for her territory E. the number of sales calls she makes each week 302-303 Sales manager should be aware that salespeople are satisfied with the rewards they receive based on: A. current economic conditions within the organization B. their position within the organizational chart C. their level of need according to Maslow's hierarchy D. the style of leadership used E. how much reward is achieved in relation to how much reward is expected 304 The first step in determining how a firm's sales force compensation program will be structured is to determine the: A. wage level relative to salespeople in other organizations in the industry B. salesperson's individual wage C. wage structure for the sales force D. number of new customers in each sales territory E. necessary administration procedures 304 Which of the following is NOT one of the major factors affecting how compensation is structured for a sales force? A. wage level in relation to salespeople in other organizations in the industry B. salesperson's individual wage C. wage structure for the sales force D. number of new customers in each sales territory E. administrative procedures 304 The pay differential among different sales levels within an organization is the: A. pay equity B. pay hierarchy C. discretionary pay D. wage structure E. pay ratio

E 13-6

A 13-7

D 13-8

D 13-9

A 305 13-10 The human resources manager of Freeborn Tool Company is evaluating the firm's retirement and disability benefits as well as the life insurance program offered to the sales force. He is analyzing: A. part of the long-range compensation program B. the corporation's major objectives C. the effectiveness of the Freeborn recruiting program D. part of the firm's appraisal process E. part of the firm's return-on-investment (ROI) C 305 13-11 Long-term compensation plans: A. include bonuses and contests B. should be evaluated and modified quarterly C. should be well thought out, so that few changes will be needed from year to year D. must be developed so that short-term compensation plans will not be necessary E. are not described by any of the above D 305 13.12 Which of the following is the BEST example of a short-term compensation plan? A. a dental plan that provides annual teeth cleaning for all sales personnel B. a corporate-administered retirement plan C. pay levels set for each promotion D. competition among salespeople for who can sell the most product in six months; winner gets $1,000 E. disability benefits in the case of a salesperson being injured while on the job E 305 13-13 What or who is the key link in the compensation communication network? A. the company newsletter B. national sales meetings C. the human resources department D. trade journals E. the sales manager B 305-306 13-14 Soon after Megan O'Casey was hired to sell antique reproductions, her sales manager held a one-on-one meeting in which he explained her role in achieving organizational objectives, the fact that her future with the company depended on her sales ability, and the limitations of the company's compensation plan. The sales manager was giving Megan a(n): A. pep talk B. compensation message C. on-the-job training preamble D. welcome to the company statement E. explanation of sales culture

E 307 13-15 For pay to positively influence salespeople's performance, the organization must make sure: A. the performance-appraisal system is free from potential bias B. enough money is set aside for incentive pay to make extra effort worthwhile C. sales territories have equal potentials D. managers are trained in giving feedback E. all of the above conditions exist B 307 13-16 Jack Knighten owns a small manufacturing company and needs his salespeople to keep in contact with nonproductive accounts and routinely call on customers who purchase the company's products from a wholesaler. He should use the: A. salary plus commission over quota B. straight salary C. straight commission D. salary plus commission on all sales E. salary plus commission plus pay incentives D 307 13-17 When a salesperson receives a specific dollar amount of pay at regular intervals regardless of how much or how little he or she sells, that individual is being compensated using a ______ plan. A. straight commission B. salary and commission C. unstructured commission D. straight salary E. salary and bonus B 307 13.18 From management's point of view, what is the advantage of a straight salary compensation plan? A. With a straight salary plan, selling costs are kept in proportion to sales. B. The straight salary plan is simple and economical to administer. C. With a straight salary plan, salespeople have the assurance of positive feedback. D. A straight salary plan links performance to leadership style. E. The advantage of a straight salary compensation plan is accurately described by none of the above.

C 307-309 13-19 Which of the following statements describes a reason why a sales manager might NOT prefer the straight salary compensation plan over other types of compensation plan? A. With a straight salary plan, salespeople offer less resistance to reassignment of accounts. B. With a straight salary plan , sales costs are relatively fixed. C. With a straight salary plan, the more productive salespeople are favored. D. With a straight salary plan, salespeople are less likely to use high-pressure sales tactics. E. With a straight salary plan, management can direct selling duties that may not immediately result in sales. D 309 13-20 If the sales manager does not want the salespeople employed by his financial services company to use high-pressure selling techniques, she should use a _____ plan. A. straight commission B. salary and commission C. structured commission D. straight salary E. salary and bonus B 309 13-21 Which of the following statements describes one of the advantages associated with the use of the straight salary compensation plan? A. With a straight salary plan, salespeople feel in competition with each other rather than with salespeople of the firm's competitors. B. With a straight salary plan , sales costs are a relatively fixed proportion of sales. C. There is a lack of direct money incentive with a straight salary plan. D. Salary is not distributed in proportion of sales made with a straight salary plan. E. With a straight salary plan, salespeople tend to emphasize the products that are easiest to sell. C 309 13-22 Which of the following statements describes a disadvantage inherent in the straight salary compensation plan? A. With a straight salary plan, the salesperson experiences the uncertainty and insecurity of low or no pay. B. With a straight salary plan, salespeople develop little loyalty to the firm. C. With a straight salary plan, payments are not distributed in proportion to sales made. D. As sales increase with a straight salary plan,, so do the company's compensation costs. E. With a straight salary plan, commission rates must be constantly adjusted to reflect economic conditions.

C 309 (Table 13.1) 13.23 A company that is most likely to use a straight salary compensation plan would: A. be described as a selling company--not a service company B. have a small market share of a technologically-complex market C. have a dominant share in a mature, stable market D. have few, if any, house accounts E. use strongly decentralized selling B 309 (Table 13.1) 13-24 A company that successfully uses a straight salary compensation plan most likely: A. has very few, if any, house accounts B. has a highly defined and stable customer base C. emphasizes selling over service D. has decentralized its selling effort E. has a small percentage of the market in a growth industry D 309-310 13-25 For which of the following selling jobs is the straight salary compensation plan LEAST appropriate? A. pharmaceutical salesperson B. the person who stocks the novelty racks at a convenience store C. the person selling supercomputers that are used to track weather systems D. established insurance salesperson E. a Frito-Lay route person A 310 13-26 Keisha Brown sells encyclopedias door-to-door. Last week she received no pay because she was unable to sell any books. Under what compensation system does Keisha work? A. straight commission B. salary and commission C. unproductive commission D. straight salary E. salary and bonus E 310 13-27 Misha sells garden benches, birdbaths, statuary, etc. to garden supply companies. She receives an advance against the commissions she is expected to earn in the coming month. This payment is called a ______ against commission. A. recession B. prepaid evaluation C. bonus D. regression E. draw

C 310 13.28 Under a(n) _____ commission plan, Marvela would receive a 10 percent commission on her first $100,000 sales, and an 8 percent commission on all sales over $100,000. A. progressive B. drawing C. regressive D. evaluative E. reversionary D 310 13-29 Guaranteed drawing accounts: A. are used exclusively in industries where selling requires extensive missionary selling B. are actually straight salary compensation plans C. can be used effectively in routine selling jobs D. are actually a salary plus commission compensation plan E. are methods of doling out prerequisites as they are needed by the individual salesperson E 310-311 13-30 Which of the following describes an advantage a straight commission compensation plan has over a straight salary plan? A. the level of after the sale service provided to buyers B. the level of company control over salesperson activities C. the level of financial security provided to salespeople D. the level of recruiting costs E. the level of incentive provided for the salesperson A 311 13-31 A new firm with limited capital resources needing a large number of salespeople would most likely adopt which method of compensating its sales force? A. straight commission B. salary and commission C. structured commission D. straight salary E. salary and bonus B 311 13.32 Under a straight commission compensation plan,: A. salespeople are typically eager to change or split territories B. selling costs are greater even though a greater sales volume is produced C. salespeople develop a great loyalty for their employer D. high-pressure sales techniques do not occur E. job turnover is low and job satisfaction is high

E 312 (Table 13.2) 13-33 A company that successfully uses a straight commission compensation plan most likely: A. sets challenging quotas for its salespeople B. has a clearly defined customer base C. uses a customer-oriented business strategy D. has a dominant share in a mature industry E. is accurately described by none of the above E 312 13-34 A straight commission plan is appropriate when: A. the company uses a lot of part-time salespeople B. there is little missionary work involved C. the company wants selling costs to be directly related to sales D. the company cannot afford to pay salaries E. any of the above are true C 312 13-35 Irina is a sales manager who is in the process of setting up a salary-plus-incentive plan. She needs to determine: A. whether to include unemployment compensation in the plan B. how top-level management is compensated C. when incentives should be paid D. whether to include social security payments in the plan E. all of the above B 313 13-36 Under a combination salary plan, the incentive pay is typically calculated: A. as an end-of-year bonus B. only on sales beyond some predetermined quota C. on all gross sales D. on all net sales E. using none of the above C 314 13.37 _____ results when more than one person or department is involved in a sale, and all parties receive a portion of the incentive pay. A. A draw account B. Incentive-oriented commission C. Split credit D. A short-term compensation plan E. A spiff

D 314 13-38 Of the following individuals who work for a drill bit manufacturer, who should receive incentive payments? A. Milt Glisson, the design engineer B. Ron Self, the legal advisor C. Janet Fugue, the proposal preparer D. Betsy Patchett, the salesperson E. Jason McMillen, the applications engineer C 314 13-39 Which of the following is NOT one of the more popular combination salary plans? A. salary and group bonus B. salary, commission, and bonus C. commission plus contest D. salary and individual bonus E. salary and commission D 315 13.40 At the end of the year, Leonora Gonzalez received a $300 Christmas bonus. This is an example of a(n): A. productivity bonus B. administered drawing account C. drawing account dividend D. nonproductivity bonus E. installment commission A 315 13-41 At the end of his company's fiscal year, Arvin Wilson was awarded $450 on the basis of the number of new accounts he has acquired during the year. This is an example of a(n): A. productivity bonus B. fringe benefit C. drawing account dividend D. nonproductivity bonus E. installment commission B 315 13-42 Productivity bonuses can be based on all of the following EXCEPT: A. number of units sold B. number of years with the company C. gross margins on products sold D. number of new accounts acquired E. sales performance appraisal by the sales manager

B 315 13-43 The real estate industry's "Million Dollar Club" is an example of a _____. It is offered, in addition to regular compensation, in order to make the salespeople work harder and earn the annual rewards. A. fringe benefit B. sales contest C. pay increment D. severance pay E. drawing account A 315 13-44 Which of the following statements describes an advantage that can be gained through the use of sales contests? A. Sales contest are an effective motivational method to intensify salespeople's work efforts. B. Sales contest are easily measurable in objective terms. C. Sales contest encourage salespeople to use high pressure selling tactics. D. Sales contest always boost morale because everyone likes a good competition. E. Sales contests are an excellent example of a long-term compensation plan. E 316 13-45 It is generally effective to allow first-line field sales managers (like district managers) to participate in the company's incentive program. The compensation awarded to these managers should be based on (1) total district performance, and (2): A. product knowledge B. expense control C. number of years in a management position D. total number of years with the company both as a salesperson and a manager E. the performance of the individual members of the sales force supervised by that manager E 317 13-46 According to the text, an effective expense plan should be: A. understandable B. cost effective C. convenient D. fair for the salesperson and the company E. all of the above

A 317 13-47 Freeborn Manufacturing Company requires its salespeople to pay all their own expenses. What kind of problems may this type of plan present for Freeborn Manufacturing? A. a loss of control over the activities of its salespeople B. a potential confrontation with IRS C. a need for a list which defines items which can be expensed D. an increase in fixed expenses E. all of the above are potential problems E 318 13-48 A company that decided to partially pay its salespeople's expenses would discover that compared to other approaches to handling expenses, under this plan: A. it is easier to project selling expenses over time B. they have increased control over the activities of their sales force C. it is easier to budget for selling expenses D. there is less conflict over what is and what is not an appropriate expense E. all of the above are true E 318 13-49 Which of the following describes a disadvantage of the partial payment of expenses plan? A. The partial payment of expenses plan does not consider geographical differences. B. The partial payment of expenses plan is inflexible. C. The partial payment of expenses plan requires time to administer. D. The partial payment of expenses plan may not reimburse the salesperson for expenses that were necessary. E. All of the above are disadvantages of the partial payment of expenses plan A 319 13-50 Which of the following is an example of a fringe benefit that is required by law? A. worker's compensation B. retirement program C. profit-sharing plan D. vacation time E. life insurance E 319 13.51 Which of the following is NOT an example of a fringe benefit a salesperson can legitimately expect to receive? A. financial counseling B. health insurance C. unemployment compensation D. retirement programs E. drawing account

D 319 13-52 Rarely does a firm make a complete shift from one type of compensation package to another. When it does, it is usually because: A. the government was concerned about potentially illegal pay practices B. the company no longer wants to use compensation as a motivational tool C. the company has added a new product line and wants to make salaries a controllable expense D. the company wants to implement a salary-plus-incentives plan to gain more control over its sales force E. the competition modified its compensation plan E 319-320 13-53 When an organization is planning to modify its compensation plan, it needs to collect information concerning: A. which product lines are the most profitable B. what activities the sales force typically perform C. the minimum, median, and maximum compensation paid by the competition D. any and all problems its sales force must deal with on a regular basis E. all of the above C 320 13-54 A compensation plan can become obsolete if: A. bonuses are based on the relative profitability of products B. the bonus structure is based on cost-of-living adjustments C. the bonuses are pooled, and all members of each district receive the same size bonus D. total pretax compensation is adjusted to keep pace with inflation E. any of the above are true B 321 (Table 13.5) 13-55 A possible sales compensation problem exists if: A. the company has too many key accounts B. salespeople are exhibiting uneven sales performance C. salespeople are concentrating on achieving organizational goals D. the company is experiencing low sales force turnover E. any of the above occurs TRUE-FALSE QUESTIONS T 301 13-56 The most important means of motivating a sales force is a sales reward system. T 301 13-57 Compensation provides sales personnel with a means of bridging the gap between sales force objectives and the individual salesperson's expectations and aspirations.

T 302 13-58 Any good compensation program should help in recruiting and hiring qualified salespeople. T 303 13-59 A productivity bonus of $500 is an example of how compensation can be used as feedback. T 303 13-60 An effective reward system must always begin with developing objectives. F 305 13-61 Long-term compensation plans include bonuses and contests. F 305 13-62 If pay is going to influence salespeople's performance, the organization must make sure the most successful salespeople get the best territories. T 307 13-63 The straight salary plan can provide a sense of security that a person may require for effective selling because it ensures a regular income. F 309 13-64 Straight salary compensation has a tendency to increase work norms. T 309 13-65 When sales decline, a firm using the straight salary method of compensation most often cuts its sales expenses by dismissing its newly hired salespeople. T 310 13-66 The three basic elements of a straight commission plan are the level at which commissions begin, the percentage rate of commission, and which performance unit to use. F 310 13-67 A regressive commission plan increases commission rates as sales increase. F 310 13-68 Drawing accounts are used exclusively in industries where sales jobs require extensive missionary selling. T 310 13-69 Many sales managers believe a straight commission payment plan provides maximum incentive for their salespeople. F 311

13-70 Salespeople under a straight salary plan are more reluctant to split territories or move from their present territory to a new territory than are salespeople paid under other compensation systems. T 312 13-71 The issue of how to handle returned goods and bad debts is more of an administrative problem for firms that pay using a commission than for firms paying a straight salary. F 313 13-72 For the purposes of equity, incentives should always be calculated as a percentage of base salary. T 314 13.73 Effective salary administration is just as important under an incentive plan as it is under a straight salary compensation plan. T 315 13-74 A bonus is something given in addition to what is usually earned over an extended period of time. F 315 13-75 Sales contests are typically not considered to be a part of a compensation plan. F 317 13-76 When the expense plan calls for the company to pay all of a salesperson's expenses, the company never has to encourage its salespeople to economize. T 317 13.77 When the expense plan calls for the company to pay all of a salesperson's expenses, the company retains little control over that salesperson's activities. F 319 13-78 Fringe benefits that are legally required include unemployment compensation, paid vacation, retirement programs, and worker's compensation. T 320 13-79 In designing a new compensation program, a sales manager should collect information on competitors' plans, product profitability, and sales force activities. F 321 13-80 New compensation plans cannot be pretested.

SHORT ANSWER QUESTIONS 13.81 What are the four basic compensation decisions that affect how compensation is structured for the sales force at the corporate level? Ans: wage level, wage structure, salesperson's individual wage, and administration procedures Page: 304 13.82 From a sales manager's point of view, what is the primary disadvantages of a straight salary compensation plan? Ans: the lack of direct monetary incentive to sell Page: 309 13.83 What are the two basic types of commission compensation plans? Ans: straight commission plan and draw against commission Page: 310 13.84 What are the two types of bonuses discussed in the text? Ans: nonproductivity and productivity bonuses Page: 315 13.85 What are the two basic methods that companies use to partially pay the expenses salespeople incur while selling? Ans: give the salesperson a lump sum to be spent over a specified period of time or set a maximum amount of reimbursement Page: 318 13.86 The sales manager for Humphry Industries has developed a new compensation plan, which she is planning on introducing at the start of the next fiscal year. What three activities does she need to plan to do if the new compensation plan is to succeed? Ans: pretest the plan, sell the plan to the sales force, and constantly evaluate the plan Page: 321-322

Chapter 14 Leading the Sales Team MULTIPLE CHOICE QUESTIONS A 14-1 332 Leadership is the ability to: A. influence other people toward the attainment of objectives B. sell C. find new sales prospects and turn them into customers D. perform administrative tasks E. use computer-based inventory control systems 332 The attainment of organizational goals in an effective and efficient manner through planning, organizing, staffing, directing, and controlling organizational resources is called: A. delegation B. power assignment C. leadership D. marketing E. planning 332 A traditional leader using traditional management techniques: A. creates an atmosphere of change B. will often stress the impersonal aspects of performance C. has more commitment to his or her subordinates than to the firm D. tends to be less predictable and may not conform to organizational norms E. motivates people to do more than normally expected 333 According to the text, leaders do NOT possess: A. a strong sense of purpose B. the ability to learn C. a strong risk-avoidance mechanism D. a self-knowledge E. an ability to establish human relationships based on trust, respect, and caring

E 14-2

B 14-3

C 14-4

E 14-5

333 Effective leaders are: A. risk-avoiders B. self-centered C. easily distracted D. inefficient communicators E. none of the above 333 The study of leadership has identified six factors important to the attainment of acceptable levels of performance. Which of the following is one of those factors? A. the organizational mission B. the type of organizational structure C. the sales manager himself or herself D. the reward system E. the number of staff people involved 334 _____ is the ability to influence the behavior of others. A. Motivation B. Power C. Control D. Authority E. Delegation 335 Legitimate power is based on an individual's: A. ability to recommend punishment or bestow rewards B. formal position in the organization D. special skill regarding the task performed by followers D. personality E. ability to command respect and admiration from his/her subordinates 335 To help meet your college expenses, you have taken a job flipping burgers at a fast-food restaurant. Your boss is a 17 year old high school junior who has worked there almost two years. You are expected to take orders from this younger person because she has _____ power. A. reward B. expert C. coercive D. observable E. referent

C 14-6

B 14-7

B 14-8

B 14-9

A 335 14-10 One of your teachers offers a participation bonus in her class. You really don't like to take part in class discussions, but you need the points, so you talk. Your behavior is being influenced by _____ power. A. reward B. legitimate C. coercive D. expert E. referent C 335 14-11 If Max Avram does not met his sales quota this month, his sales manager has the _____ power necessary to fire him. A. reward B. leadership C. coercive D. expert E. referent D 335 14-12 Deanna Stein is a "superstar" salesperson in her region. She has demonstrated skill and knowledge in her work. The other salespeople often go to her for advice on how to close a sales. Deanna has _____ power. A. reward B. legitimate C. coercive D. expert E. referent E 335 14-13 _____ power is based on the followers' respect and admiration toward the leader. A. Reward B. Legitimate C. Coercive D. Expert E. Referent D 335 14.14 _____ is the most likely behavioral outcome when leaders rely on reward and legitimate powers. A. Negativity B. Empathy C. Resistance D. Compliance E. Rebellion

E 336 14-15 Which of the following has a direct influence on the sales manager's natural leadership style? A. his or her personality characteristics B. his or her needs and motives C. the amount of power the sales manager possesses D. his or her past experiences E. all of the above D 336 14-16 A leader who describes the duties and responsibilities of an individual or group is exhibiting _____ behavior. This includes telling people what to do, how to do it, when to do it, and who is to do it. A. achievement-oriented B. relationship C. instrumental D. task E. referent D 336 14-17 As a sales manager, Sawyer Kingston tells his sales force which customers to call on, when they call on them, and how they should make their sales presentations to individual prospects. In addition, he often uses various techniques to determine that they have followed his instructions. Sawyer is exhibiting _____ behavior. A. achievement-oriented B. relationship C. instrumental D. task E. referent B 336 14-18 _____ includes listening, providing clarification, getting to know the individual's motives and goals, and giving positive feedback to help reinforce a person's self-image. A. Achievement-oriented behavior B. Relationship behavior C. Instrumental behavior D. Task behavior E. Referent behavior

B 336 14-19 Amos Whiting is a recent marketing graduate of a small state college. He has just been hired by Freeport Manufacturing Company as a salesperson. Because he is new at selling and did not have a sales course in college, the appropriate leadership behavior for his sales manager to adopt when dealing with Amos is: A. persuading B. telling C. consulting D. delegating E. joining A 336-337 14-20 Wilberforce Company's sales manager Sonia Nijisky is training Travis Lee, her new key account salesperson. Travis has been recently promoted to the job, and is not yet completely able to carry out the tasks of his new assignment. Sonia has decided how Travis should handle his job, and is seeking his cooperation by explaining how to handle these accounts and why her approach is the right one. Her appropriate leadership style is: A. persuading B. telling C. consulting D. delegating E. joining B 337 (Figure 14.4) 14-21 Andrea Ling is a task-oriented sales manager who likes to make all decisions for the members of her sales force. Which leadership style would she be most likely to use? A. persuading B. telling C. consulting D. delegating E. joining B 337 (Figure 14.4) 14-22 Four basic leadership styles form the leadership continuum. It includes all of the following EXCEPT: A. tells B. controls C. delegates D. persuades E. participates

C 337 (Figure 14.4) 14-23 Which of the following leadership styles is most typical of a sales manager who has chosen to use the relationship-oriented leadership approach and has a low task orientation? A. persuading B. telling C. participating D. delegating E. joining E 337 (Figure 14.4) 14-24 Which quadrant of the leadership style matrix is characterized by the salesperson and the sales manager making decisions together? A. tells B. controls C. delegates D. persuades E. participates C 337-338 14-25 Rory Jackson has worked as a sales rep for a pharmaceutical company for 22 years and is highly self-motivated. Which of the four basic leadership styles from the leadership continuum should his sales manager use when dealing with Rory? A. tells B. controlls C. delegates D. persuades E. participates D 338 14-26 How does a sales job differ from a production manager job or a financial analyst job? A. Only the sales job is a line position. B. The production manager is not affected by group norms. C. The salesperson needs the highest level of technical skills. D. The salesperson operates will little or no direct supervision. E. The salesperson is unaffected by the corporate culture. A 338 14-27 A sales manager who is actually overseeing and directing the day-to-day activities of salespeople is engaged in: A. supervision B. counseling C. encumbering D. detailing E. coaching

A 338-339 14-28 Which of the following is a direct supervisory method? A. sales meetings B. expense reports C. sales analysis reports D. compensation E. call reports B 338-339 14-29 Sales managers have several methods to directly supervise their subordinates. Which of the following is an example of a direct supervisory method? A. call reports B. the telephone C. sales analysis reports D. compensation E. expense reports E 339 14-30 _____ is defined as intensively training someone on the job intensively through instruction, demonstration, and practice. One of its main elements is the joint sales call. A. Supervision B. Counseling C. Encumbering D. Detailing E. Coaching D 339 14-31 The main element of the coaching activity is the: A. presession preparation B. summary and critique C. postcall discussion D. joint sales call E. precall customer analysis E 339 14.32 Coaching: A. is specifically planned for strengthening selling skills B. is the most important link in the continuous sales training process C. is designed to help a person become more efficient D. has been described as the single most important training technique available to a sales manager E. is accurately described by all of the above

E 339-340 14-33 A coaching fact sheet should include: A. a description of the session itself B. the coaching objective C. a written record of what action is deemed necessary as a result of the session D. a brief description of the situation that prompted the coaching E. all of the above E 341 14-34 Throughout the joint sales call, the sales manager should be making notes about: A. the salesperson's attire B. the condition of the salesperson's car C. the loudness of the salesperson's voice D. how well the salesperson is groomed E. all of the above D 341 14-35 On a joint sales call the sales manager's primary responsibility is to: A. do the selling, so the salesperson can see the proper way to handle a sales call B. close the sale C. become involved only if the salesperson begins to have trouble D. be an observer, so the salesperson can increase his or her own effectiveness E. avoid giving the salesperson specific ideas on the handling of tough customers because it reduces the salesperson's training benefit A 343 14-36 Jake Moody and his sales manager Whitney Lovell have just completed a joint sales call during which Jake made what Whitney believes are two serious but easily corrected errors. In the car, immediately after the sales call, Whitney should hold a(n) _____ with Jake. A. curbstone conference B. sales culture discussion C. corrective appraisal D. instructional monologue E. revisionary dialogue A 343 14.37 A(n) _____ is a brief post-call discussion between a sales manager and a salesperson. It is usually held in the car. A. curbstone conference B. sales culture discussion C. corrective appraisal D. instructional monologue E. revisionary dialogue

B 344 14-38 The sales manager uses _____ to help the salesperson become a better-adjusted human being in the workplace. A. supervision B. counseling C. acculturation D. group norms E. coaching B 344 14.39 The purpose of _____ is not merely to deal with the immediate problem but to help the employee learn methods for coping with future difficulties. A. supervision B. counseling C. group norms D. coaching E. acculturation B 345 14.40 Which of the following activities can be called negative counseling? A. directive guidance B. exhortation C. giving suggestions D. reassurance E. social reinforcement E 346 14.41 Bill is having problems dealing with a new purchasing agent in his territory. The agent has been hired to work for a company that was once one of Bill's biggest accounts. Bill is convinced that the purchasing agent does not like him, and therefore, he will never be able to sell to that particular business again. Bill's sales manager called Bill into the sales office and began asking him a number of open-ended questions, such as "What does the agent do to make you think he does not like him?", "How have you responded to what the agent has said to you?", "Do you think the agent is feeling stress from his new job?", and so forth. What kind of counseling is Bill's sales manager using? A. social reinforcement B. directive guidance C. career counseling D. directive guidance E. nondirective guidance

D 346 14-42 Louse is the newest member of the sales force. Her sales manager is working to make her feel a part of the group. He is spending a great deal of time trying to build a cohesive, cooperative work team with Louise as one of its important members. He is engaged in _____ counseling. A. performance B. career C. personal adjustment D. social adjustment E. organizational C 346 14.43 Lorenzo's work is suffering from depression, which is the result of his recent separation from his wife. His sales manager has advised Lorenzo to seek out the services of a marriage counselor and has even found ways to let Lorenzo attend the sessions in the middle of the workday without the time lost adversely affecting Lorenzo's performance. Lorenzo's sales manager is engaged in _____ counseling. A. performance B. career C. personal adjustment D. social adjustment E. organizational A 347 14-44 In deciding what leadership style to adopt, the sales manager must consider the individual characteristics and behavioral patterns of the individual salesperson. Which is the most important of these individual characteristics and patterns? A. the individual's performance level B. the individual's personality characteristics C. the level of past experience the individual has D. the amount of power individual has E. the level of needs the individual is trying to fill A 348 (Table 14.2) 14-45 What leadership style would be appropriate for use with a new salesperson who has not yet developed high ability or high motivation? A. tells B. controls C. delegates D. participates E. persuades

E 348 (Table 14.2) 14-46 What leadership style would be appropriate to use with a highly motivated recent college graduate who has no experience in or knowledge of sales? A. tells B. controls C. delegates D. participates E. persuades B 351 14-47 Which of the following statements about group norms is true? A. Norms are standards established by the organization. B. All groups develop norms that serve to regulate members' behaviors. C. Norms tend to move the individual members of the group towards a degree of nonconformity. D. Norms typically do not define what is appropriate behavior. E. The more important a norm is to a group, the less likely a member's behavior will be guided by that norm. C 351 14-48 Because Tom Yeats sold three times as much as his sales quota required him to sell, the other members of the sales force ostracized him. He was not invited to their Christmas party and is never included in the group's football pool. It is obvious that Tom violated the sales force's _____ when he sold so much more than his quota. A. preconceived notion of efficiency B. reward power C. norm D. formalized organizational policy E. expert power E 352 14-49 All of the following are situational factors that can directly influence the sales manager's behavior and effectiveness EXCEPT: A. time pressure B. factors within the organization itself C. the problem faced D. the task being faced E. a competitor's change in its organizational structure

E 352 14-50 The top management of Whitbury Equipment Company is concerned about the company's falling sales. The division sales manager has been told that her division must increase its market share by 5 percent during the next quarter. What style of leadership would be appropriate for her to use? A. laissez-faire B. democratic C. participative D. relationship E. task TRUE-FALSE QUESTIONS T 332 14.51 A sales manager uses leadership to attempt to influence the activities of salespeople to carry out work requirements that allow them to reach their goals. F 334 14-52 A true leader is able to put his or her own needs and motives out of the picture when deciding what leadership style to adopt. F 335 14-53 Legitimate power is based on an individual's personality characteristics that command subordinates' respect. T 335 14-54 An individual's choice of leadership style is influenced by the type of leaders for whom he or she has worked in the past. F 336 14-55 The tells leadership style is characterized by above average amounts of both task behavior and relationship behavior. T 337 (Figure 14.4) 14-56 Quite often the sales manager's leadership style is based on the salesperson. F 338 14-57 Supervision is described by the text as the most important training technique available to the sales manager. T 339 14-58 Coaching refers to training someone one the job intensively through instruction, demonstration, and practice.

F 341 14-59 The primary responsibility of a sales manager on a joint sales call is to close the sale. T 344 14-60 A sales manager can use counseling to help the members of his or her sales force become better-adjusted human beings within the work environment. F 345 14-61 The most effective form of counseling for a salesperson is the lecture. F 347 14-62 While the sales manager's leadership style is unaffected by the individual salesperson's performance level, it is affected by the manager's own personality, needs and motives, power, and past experiences. F 348 14-63 Once a sales manager finds a leadership style that works, he or she should keep it, regardless of changes in the work environment. T 349 14-64 Due to the lack of challenge, motivation, knowledge, and skills, some experienced salespeople often reach a performance plateau. F 350 14-65 Salespeople with lower performance levels usually require a "tell" or "delegate" leadership style. T 351 14-66 Group norms can influence how effective a sales manager is at performing his or her job. F 352 14-67 A relationship leadership style works best when the home office tells the sales force members they must increase sales by 20 percent within the next six months. F 353 14-68 Time pressures should have no effect on the type of leadership style used. SHORT ANSWER QUESTIONS 14.69 What is leadership? Ans: the ability to influence other people toward the attainment of objectives Page: 332

14.70 What type of leadership style is characterized by high task and high relationship behavior? Ans: persuades Page: 336-337 14.71 What are the three most common methods for directly supervising employees? Ans: the telephone or e-mail, sales meetings, and working with each salesperson Page: 338-339 14.72 List the four activities that are part of coaching. Ans: (1) presession preparation, (2) the joint sales call, (3) post-call discussion, and (4) summary and critique Page: 339 14.73 What kinds of counseling is occurring when the sales manager talks to a salesperson about how his need for over-achievement is hurting his relationship with his family? Ans: performance and personal adjustment Page: 346-347 14.74 What kind of leadership behavior is appropriate with a salesperson with both low ability and low motivation? Ans: tells Page: 348

Chapter 15 Analysis of Sales and Marketing Costs MULTIPLE CHOICE QUESTIONS D 15-1 364 Which of the following statements about a marketing audit is true? A. The marketing audit does not affect the methods of marketing used on the corporate level. B. The marketing audit is accomplished at a single point in time. C. The marketing audit evaluates each individual department and program. D. The marketing audit is usually performed by persons without direct control or responsibility for marketing activities. E. All of the above statements about the marketing audit are true. 364 Which of the following statements about a marketing audit is true? A. The marketing audit should be performed by the marketing department because that is the department responsible for carrying out the marketing activities. B. The marketing audit appraises the entire industry in a systematic manner. C. The marketing audit evaluates the degree of integration of the marketing functions with company operations. D. The marketing audit should be accomplished in a month. E. The marketing audit is designed to correct sales forecasting errors. 364-364 The sales force audit: A. is another name for an internal SWOT analysis B. should be done randomly to catch any problems with the system C. requires a sales forecast be done at the same time D. involves the same six factors as the marketing cost audit E. is accurately described by all of the above 365 The 80/20 principle states that: A. the majority of the company's sales will come from cold calls B. the majority of the company's profits may come from a very small number of the company's accounts or products C. 80 percent of a salesperson's time should be spent in selling activities with the remaining 20 percent allotted to nonselling activities D. the majority of the accounts in any geographical area are located in a close proximity to each other E. smaller accounts require 80 percent more time and energy that larger accounts

C 15-2

D 15-3

B 15-4

E 15-5

365 The 80/20 principle: A. is a territorial management concept that favors the salesperson putting 80 percent of his time on planning and 20 percent on action B. refers to the fact that eighty salespeople require twenty sales managers to keep the appropriate 4-to-1 ratio of supervisors to employees C. indicates that no matter what a salesperson tries, 80 percent of a customer's potential business ends up going to competitors D. is a concept of territorial management which favors the salesperson putting 80 percent of her time on action and 20 percent on planning E. refers to the idea that a small portion of a firm's customers account for a large portion of its profitable sales 366 Why do some companies carry product lines that have comparatively low sales and are generally unprofitable? A. in order to increase fixed costs B. the product can be sold for less than the variable cost of making the product line C. to decrease the number of shares of corporate stock D. to enhance a selling feature in the more profitable selling areas E. to test the efficiency of the marketing department 366 The _____ refers to the effect that averaging, summarizing, and aggregating data can have on presenting the true sale or profit picture and underlying problems. A. 80/20 principle B. profit margin analysis C. profit/sales effect D. iceberg principle E. net sales volume analysis 368 Hunter is the sales manager for a company that sells retail store fixtures. He lost all track of time when he began a detailed examination of his company's sales data--assimilating, classifying, comparing, and drawing conclusions. Hunter was engaged in a(n): A. marketing audit B. profit margin analysis C. sales analysis D. iceberg principle E. sales force audit

D 15-6

D 15.7

C 15-8

A 368 15.9 Sales data may be classified into many categories that serve as a basis for management's analysis. The classification system selected should be based upon: A. what breakdown will provide the most relevant and meaningful sales information to management B. whether the customers can be identified by name and classified C. how many product lines the company is selling D. how the sales are made and the type of salespeople used by the company E. the order size and the number of product lines E 369 15-10 Sales analysis can be used to: A. modify the sales territory structure B. evaluate the market position C. evaluate the channels of distribution D. plan sales force activities E. do all of the above D 369 15.11 Sales analysis CANNOT be used to: A. develop sales force measures B. establish sales forecasting systems C. modify sales territory structure D. create group norms E. modify channels of distribution D 369 15-12 The first indication of how well a firm is doing in the marketplace is: A. sales by territory B. net profit C. gross margin D. total sales volume E. net sales volume B 369 15-13 A net sales volume analysis begins with a(n): A. net profit margin analysis B. look at the total volume of sales for the company C. analysis of the consumer price index D. study of the effect of the 80/20 principle on company sales E. marketing audit

A 370 15-14 The retail sales index: A. is a relative measure of the dollar volume of retail sales that normally occur in a particular district B. is based on the consumer price index C. is done annually by the U.S. Department of Consumer Affairs D. should not be used to uncover an iceberg effect E. is accurately described by all of the above B 372 15-15 Which of the following statements about marketing cost analysis is true? A. The marketing cost analysis is the analysis of costs that affect the calculation of sales forecasts. B. The marketing cost analysis is an integral part of the decision-making process concerning adjustments in the marketing mix. C. The marketing cost analysis is the analysis of costs that affect sales volume in order to minimize distribution costs. D. One primary reason for performing a marketing cost analysis is to support the iceberg principle. E. The marketing cost analysis is also called the promotional cost analysis. A 372 15.16 The _____ is the analysis of costs that affect sales volume, with the purpose of determining the profitability of different segment operations. A. marketing cost analysis B. segmentation analysis C. sales volume audit D. environmental assessment E. SWOT analysis D 372-373 15.17 Marketing cost analysis can be invaluable in determining the answers to all of the following questions EXCEPT: A. Which customers are unprofitable because of order size or geographic location? B. What profit contribution does each salesperson make? C. What is the minimum order size that can be filled profitably? D. What services do customers want that they are not now receiving? E. What distribution channel will be the most profitable for the company to use? E 373 15-18 Marketing cost analysis can serve as the basis for management decisions about: A. salespeople B. products C. physical distribution D. optimum order sizes E. all of the above

A 373 15.19 Production costs: A. are incurred in processing a product from its raw elements to a finished state B. are incurred in channeling a product into the ultimate consumer's hands C. include costs incurred in getting orders but not in filling the orders D. include the costs of shipping, distribution, warehousing, and material handling E. are described by all of the above B 374 15-20 Marketing costs are often referred to as _____ costs. A. natural B. distribution C. structural D. activity E. planning E 374 15-21 Which of the following is an example of a distribution cost for a manufacturer of garden equipment? A. the money spent to mail promotional literature to interested dealers B. the cost of shipping an order to a retailer C. the cost of extending credit to a retailer D. the expense incurred with holding newly manufactured equipment in a warehouse E. all of the above are examples of distribution costs A 374 15.22 Which of the following is an example of a marketing cost for a manufacturer of camping equipment? A. the cost of a sales promotion aimed at sporting goods retailers B. the purchase of the fabric to make tents C. the cost of the labor needed to manufacture a sleeping bag D. the cost of operating the manufacturing facility E. the cost of maintaining the manufacturing equipment

E 374 15-23 Why has more attention been paid to controlling the costs of production and not to controlling marketing costs? A. Accountants are primarily concerned with controllable areas for which standards have been set; marketing efforts are not that predictable. B. There has traditionally been a lack of communication between marketing management and accountants. C. Conventional methods of cost analysis are inapplicable to marketing. D. Comprehensive analysis of marketing data was unavailable prior to the advent of the computer. E. All of the above are reasons why there has historically been little control over marketing costs. D 375 15-24 In performing a marketing cost analysis, management finds it necessary to allocate marketing costs to different various functional marketing categories. Another name for these categories is: A. iceberg centers B. the marketing mix C. indirect costs D. functional marketing groups E. natural cost groups C 375 15-25 Warehousing, advertising, general administration, and sales promotion are all examples of: A. natural accounts B. direct costs C. functional marketing groups D. marketing subsets E. indirect costs E 375 15.26 Which of the following would be an example of a natural account for a manufacturer of mobile homes? A. wooden trusses B. leasing of trucks for hauling mobile homes to retail sites C. commissions for salespeople D. office supplies E. all of the above

E 375 15-27 The full cost approach to determining profitability is also called the: A. iceberg approach B. contribution margin approach C. ROI procedure D. liquidity technique E. net profit approach B 375-376 15-28 There are two methods of determining corporate profitability. They are the: A. marketing audit and the sales force audit B. full cost approach and the contribution margin approach C. controllable cost analysis and sales volume analysis D. net profit approach and the net sales approach E. variance analysis and the full cost approach E 376 (Table 15.8) 15-29 When doing a marketing cost analysis by region, management would consider the expense account of salespeople in the region as a(n) ______ cost. A. production B. standard C. direct D. uncontrollable E. controllable B 376 (Table 15.8) 15-30 A marketing cost analysis is being done regionally. A sales promotion for a company's line of hand gardening tools would be an example of a(n) _____ cost. A. fixed B. indirect C. direct D. standard E. external A 376 (Table 15.8) 15-31 The marketing manager's salary is an example of a(n): A. fixed cost B. direct cost C. standard cost D. indirect cost E. variable cost

B 602 (Table 15.8) 15-32 The estimated cost of producing one yard of grosgrain ribbon is $.13. This cost is an example of a(n) _____ cost. A. controllable B. standard C. indirect D. variable E. external D 376 15-33 What is the basic shortcoming associated with the full cost approach to determining marketing profitability? A. The full cost approach fluctuates in relation to level of activity that actually occurs. B. The full cost approach omits production and nonproduction costs. C. The full cost approach can be used to determine the profitability of identifiable segments. D. The full cost approach includes costs that are not controllable by the marketing division manager. E. The full cost approach includes the direct costs but not the indirect costs. D 381 15-34 ROI is a measurement used to determine how effectively the assets of a given operation are being used. The letters ROI stand for: A. rate of investment B. rate of income C. risk of interest D. return on investment E. return on income A 381 15.35 Return on investment (ROI) is: A. also called return on assets B. calculated by dividing total assets used by net profit C. used to determine how well a company is turning its inventory D. calculated by multiplying contribution margin by total assets used E. also called net contribution B 382 15.36 Which three ways of increasing marketing productivity were identified by the text? A. increase sales, reduce fixed and variable costs, increase profit margin B. increase sales, reduce costs, eliminate unprofitable products C. modify sales territories, reduce distribution costs, reduce marketing costs D. increase sales, reduce fixed costs, increase profit margin E. increase sales, reduce costs, increase control over external factors

E 382 15-37 The effectiveness of cost analysis is often limited by: A. unclear cause-effect relationships B. how difficult it is to isolate certain variables C. the marketing manager's ability to request and appropriately use data D. how expensive and time-consuming it can be E. all of the above C 382-383 15-38 Variance analysis would be most suitable for which marketing costs? A. regional advertising expenses B. sales force commissions C. order-filling costs D. sales force salaries E. variance analysis is equally suited for any marketing costs D 383 15-39 Variance analysis identifies: A. factors that make the full cost approach to determining corporate profitability more effective than the net profit approach B. problems with territorial size C. products that are unprofitable D. the factors that cause the discrepancy between standard and actual costs E. the factors necessary to make an accurate sales forecast TRUE-FALSE QUESTIONS F 364 15-40 The marketing audit should be performed by the marketing department because it is responsible for carrying out the marketing activities. T 364 15-41 A sales force audit involves the same six factors measured by a marketing audit. F 365 15-42 The iceberg principle refers to the tendency of a company to earn most of its profits from a minority of its customers. T 366 15-43 The marketing effort must be based on the actual or potential sales volume, gross margin, or profit, not directed arbitrarily by territory, customer, or product.

F 366 15-44 The iceberg principle states that organizations typically ignore the 20 percent of their customers who provide them with 80 percent of their business unless a marketing cost analysis is performed. T 368 15-45 The major use of sales analysis is to detect strengths and weaknesses in the sales effort. T 369 15-46 Sales analysis can be used to evaluate and modify channels of distribution. T 371 15-47 Even though a sales analysis shows a particular salesperson has been failing to achieve his sales goals, it may not be his or her fault. F 371 15-48 The success of a given marketing program should be evaluated solely by the level of total sales volume generated. F 372 15-49 The ultimate goal of all marketing managers is to maximize sales volume. F 373 15-50 A marketing cost analysis should not be used to determine optimum order size or inventory level because those are correctly determined by a customer analysis. T 374 (Figure 15.1) 15-51 Marketing costs should be broken down into two categories: order-getting and orderfilling costs. F 375 15.52 Another name for the full cost approach for determining profitability is the net contribution approach. T 376 15-53 The basic shortcoming of the full cost approach to determining overall corporate profitability is that it includes costs that do not affect marketing decisions and is not controllable by the marketing division manager. F 376 15-54 A direct cost is also classified as an uncontrollable cost. T 376-377 15-55 With the contribution margin approach to determining the profitability of identifiable segments, nonassignable costs and fixed costs are not allocated to the segments.

F 381 15-56 Return on investment (ROI) is also called net profitability. F 382 15-57 The only way a firm has for determining whether it should continue to carry unprofitable divisions or products is a marketing audit. T 383 15-58 Generally in cost analysis, standard costs are established as bases for comparisons with actual costs, but marketing costs are somewhat difficult to standardize because they are often generated from nonrepetitive activities. SHORT ANSWER QUESTIONS 15.59 What is another name for the marketing cost analysis? Ans: the distribution cost analysis Page: 372 15.60 In terms of a marketing cost analysis, what kind of costs are order-getting and order-filling costs? Ans: marketing or distribution costs Page: 374 15.61 What is another name accountants give to functional marketing groups? Ans: activity groups Page: 375 15.62 List the two basic approaches for determining both the overall corporate profitability and the profitability of identifiable segments? Ans: the full cost (or net profit) approach and the contribution margin approach Page: 375-376 15.63 What do the letters ROI represent? Ans: return on investment Page: 381 15.64 What does a variance analysis reveal to sales and marketing managers? Ans: the factors that cause the discrepancy between standard and actual costs Page: 383

Chapter 16 Evaluation of Salespeople's Performance MULTIPLE CHOICE QUESTIONS B 16-1 390-391 Performance appraisals can be used for all of the following EXCEPT: A. to strengthen individual weaknesses B. to understand environmental factors that might adversely affect performance C. to provide a format for dialog between manager and salesperson D. to influence decisions on demotions E. to help establish the validity of employment decisions 390-391 Performance appraisals can be used to: A. help determine equitable salary and bonus incentives based on merit or results B. influence decisions on demotions, firings, and layoffs C. outline what is expected from salespeople D. help establish the legal validity of employment decisions E. accomplish all of the above 391 The many purposes for performance appraisal can be condensed into two general categories: A. authoritative and participative B. extrinsic and intrinsic C. controlling and planning D. evaluative and developmental E. quantitative and qualitative 391 Which of the following is one of the evaluative purposes of performance appraisals? A. decisions on legal compliance B. goal setting C. motivation D. training E. employee feedback

E 16-2

D 16-3

A 16-4

C 16-5

391 Which of the following is one of the developmental purposes of performance appraisals? A. promotions B. compensation C. goal setting D. legal compliance E. penalties

B 391 (Table 16.1) 16.6 The _____ aspects of performance appraisals include the use of management by objectives (MBO) and self-learning. A. procedural B. developmental C. expectancy D. participartive E. evaluative A 16-7 391 (Table 16.1) Which of the following methods would be used in the developmental method of evaluating performances? A. management by objectives (MBO) approach B. expectancy theory C. SWOT analysis D. equity approach E. affirmative action 391 (Table 16.1) Which of the following methods would be used in the evaluative method of evaluating performances? A. SWOT analysis B. graphic appraisal scale C. on-the-job training D. total quality management E. role playing 392 The performance level a salesperson attains results from a combination of the individual's efforts and ability. Ability reflects: A. the individual's skills B. the individual's information C. the individual's training D. the individual's talents E. all of the above

B 16-8

E 16-9

A 392 16-10 After job analysis, a job _____ is developed which states the specific nature, requirements, and responsibilities of the specific job. A. description B. narration C. depiction D. specification E. explanation D 392-393 16-11 A _____ converts job descriptions into the people qualifications the organization feels are necessary for successful performance of the job involved. A. task delineation B. job map C. job analysis D. job specification E. needs assessment A 392-393 16-12 _____ for a sales position might include people skills, selling experience, education, and other abilities. A. Job specifications B. Needs assessments C. Job evaluations D. Job analyses E. Job descriptions B 393 16-13 Charles, a political science major, has been hired to sell refrigeration equipment. He knows you are taking a sales management course, and he wants you to tell him who will be responsible for evaluating his performance. You tell him: A. a professional evaluator from the human resources department B. his immediate superior, the sales manager C. an outside consultant D. the head of the human resources department E. any of the above may appraise his performance because who should to do the evaluation differs from situation to situation A 394 16-14 A salesperson should be evaluated at the end of every: A. performance cycle B. fiscal cycle C. standard cycle D. quota period E. sales criteria period

B 395 16-15 What is the longest period of time that can pass before a greeting cards salesperson should undergo her next formal performance evaluation? A. two years B. one year C. six months D. three months E. two months E 395 16.16 Performance criteria should be: A. measurable B. discriminating C. practical D. relevant E. all of the above B 395 16.17 Performance criteria should be: A. subjectively determined B. practical and relevant C. dynamic D. general as opposed to specific E. non-discriminative A 395 16.18 Is there anything wrong with a company whose primary performance criteria revolve around its sales force adhering to "The Golden Rule?" A. Yes, it is not measurable. B. Yes, it is not relationship-oriented. C. Yes, it is not discriminating. D. Yes, it is not sales-oriented. E. No, there is nothing wrong with this performance criterion. C 397 16-19 Which of the following is an example of quantitative performance criteria? A. sales skills B. territory management C. quotas obtained D. team spirit E. self-improvement

D 397 16-20 Which of the following is an example of qualitative performance criteria? A. daily number of orders B. average sales calls per day C. ratio of selling costs to sales D. territory management E. goods returned E 397 16-21 The text identifies _____ as examples of performance appraisal forms. A. graphic appraisal scales B. descriptive statements C. behaviorally anchored rating scales D. management by objectives E. all of the above E 398 16-22 Which of the following is the most commonly used form for evaluating salespeople's performance? A. management by exception B. descriptive statements C. behaviorally anchored rating scales D. management by objectives E. graphic appraisal scales E 398 16.23 This morning Barrett's supervisor is filling out the appraisal form on how well Barrett has done over the last six months. The supervisor is rating Barrett's selling skills on a scale of 1 to 5 with 1 being poor and 5 being excellent. With this information you know that Barrett's supervisor is using a _____ performance rating form. A. management by exception B. descriptive statements C. behaviorally anchored rating scales D. management by objectives E. graphic appraisal scales B 398-399 16-24 Lucky Lady, Inc. manufactures women's lingerie. It has only 5 salespeople. Which of the following methods for evaluating its salespeople's performance could the company use more efficiently than its competitor Hanes, a large manufacturer of women's lingerie? A. management by exception B. descriptive statements C. behaviorally anchored rating scales D. management by objectives E. graphic appraisal scales

D 399 16-25 _____ is a results-based evaluation program. Salespeople are given goals, and their results are compared with their objectives to evaluate performance on a performance index. A. Management by exception B. Descriptive statements C. Behaviorally anchored rating scales D. Management by objectives E. Graphic appraisal scales C 399 16.26 The _____ method of performance appraisal represents an attempt to improve evaluations that use descriptive cues or adjectives by providing evaluators with detailed explanations of exactly what each rating means. A. management by exception B. descriptive statements C. behaviorally anchored rating scales D. management by objectives E. graphic appraisal scales A 399-400 16-27 The behaviorally anchored rating scales method of performance appraisal: A. reduces the probability of rating errors B. is less reliable than other appraisal methods C. provides poor feedback for salespeople D. limits the appraiser's ability to explain his or her evaluative system E. is less valid than other appraisal methods E 400 16.28 The behaviorally anchored rating scales method of performance appraisal: A. provides good performance feedback to the salesperson on what job factors are being evaluated B. lets the salesperson know what is expected to achieve a high rating C. makes sure the salesperson knows how he or she was rated D. makes managers more comfortable when they are rating subordinates' performances E. does all of the above B 401 16-29 Anna is a sales manager who is reluctant to evaluate any one salesperson as being much better or much worse than the others. She likes to rate all her salespeople at about the same level. She is guilty of the: A. halo effect error B. central-tendency error C. averaging error D. error of leniency E. masking tendency error

E 401 16-30 With which of the performance appraisal methods is the central tendency error most likely to occur? A. management by exception B. descriptive statements C. behaviorally anchored rating scales D. management by objectives E. graphic appraisal scales D 401 16-31 Travis supervises 15 salespeople. Because he wants everyone to like him, he usually rates all of his salespeople as either superior or outstanding on their performance appraisals. Travis is guilty of the: A. halo effect error B. central-tendency error C. averaging error D. error of leniency E. masking tendency error C 401-402 16-32 Jason Goodrich's sales manager worked with him last week and was very impressed with Jason's customer relations. Jason has a high sales-expenses ratio and a low customer call average. However, because of the good experience the sales manager had with Jason, these shortcomings are overlooked. This is the result of the: A. error of leniency B. central-tendency error C. halo effect D. error of strictness E. mirroring effect C 401-402 16-33 Fiona is the only retail sales clerk in a medium-sized department store that has not been the subject of a customer complaint. Even though her sales are some of the lowest, she continually receives high performance appraisals from the store manager. The store manager's judgment is being affected by the: A. error of leniency B. central-tendency error C. halo effect D. error of strictness E. mirroring effect

B 401-402 16-34 When a sales manager gives a subordinate high ratings on all aspects of the evaluation form on the basis of a single positive experience, a _____ is said to have occurred. A. recent performance error B. halo effect C. central-tendency error D. symbolic effect E. phoenix effect C 403 16-35 Within the last performance cycle, Arabella was transferred from her old sales territory that she had covered for ten years and moved to a new territory. As a result of having to learn her territory, her sales were down, but her sales manager did not consider any extenuating circumstances when evaluating her. Her sales manager gave Arabella a low appraisal and is guilty of a: A. central-tendency error B. halo effect C. recent performance error D. error of leniency E. error of strictness E 403-404 16.36 When a supervisor is reviewing a subordinate's performance appraisal with him or her, the supervisor should: A. be objective B. set goals and standards C. be honest D. be consistent E. do all of the above A 403-404 16.37 When a supervisor is reviewing a subordinate's performance appraisal with him or her, the supervisor should: A. follow company policy B. do it quickly C. avoid saying anything negative about the subordinate D. wait till a later time to set up goals for the next performance period E. rely on vague references if that is all that is available TRUE-FALSE QUESTIONS T 391 16-38 The evaluative purposes of performance appraisal includes compensation, promotion, and legal compliance.

T 391 (Table 16.1) 16-39 When the purpose of the performance appraisal is developmental, it's concerned with the future performance of the employee. F 393 16-40 The primary evaluator of a salesperson should be a trained evaluator from the human resources department. F 395 16-41 A maximum of one formal evaluation should be completed yearly for each salesperson. T 395 16-42 The problem with using communications skills as part of performance criteria is that communications skills are not measurable. T 395 16-43 Each criterion used in a performance appraisal should be relevant to job performance. F 396-397 16-44 A salesperson's results and activities should not be used as performance criteria because he or she can control their outcome and level of influence. T 397 16-45 An excellent example of a qualitative performance criterion is the salesperson's ability to find selling points. F 398 16-46 The graphic appraisal scale evaluation form typically requires the sales manager to provide detailed, written descriptions of each salesperson's performance. F 398 16-47 The descriptive method of performance appraisal is would be easier for a company with a sales force of 20 to use than with a sales force of five. F 399 16-48 The management by objectives method is the most commonly used form for evaluating salespeople's performance F 399 16-49 Behaviorally anchored rating scales are also called descriptive talent-skills tables. T 401 16-50 The central tendency error occurs most often when graphics rating scales are used.

F 401 16-51 When a sales manager gives a subordinate high ratings on all aspects of the evaluation form on the basis of a single positive experience, a masking error is said to have occurred. T 403-404 16-52 When appraising a subordinate, a supervisor should be consistent, honest, and follow company policy. F 407 16-53 The final step in the performance evaluation process is to develop mutually agreed upon objectives. T 407 16-54 A consistent performance-evaluation system can protect an employer from a charge of discrimination. SHORT ANSWER QUESTIONS 16-55 The main purposes of performance appraisals can be condensed into two general categories. What are they? Ans: evaluative and developmental Page: 391 16-56 Who should be the primary evaluator of any salesperson? Ans: his or her direct supervisor Page: 393 16-57 When should salespeople be evaluated? Ans: at the end of each performance cycle, whether it's related to a specific goal or job activity Page: 394 16-58 What is the most commonly used form for evaluating salespeople's performance? Ans: the graphic appraisal scale Page: 398 16-59 What is another name for the behaviorally anchored rating scales (BARS)? Ans: behavioral expectation scales Page: 399 16-60 What type of error is occurring when a supervisor rates all of his or her employees as average on all performance criteria? Ans: central tendency error Page: 401

SECTION X TRANSPARENCY MASTER