I believe that the compensation system at Collegiate Promotions is not an effective system because of the following:
a. The compensation structure is straight commission based, and sometimes straight commission based employee’s think of themselves as free agents and they have little loyalty to the organization. Because the employee’s pay is based on how many products they sell, they may act unethically towards the customers and other salespeople in an attempt to become the best salesperson and get top pay. Unethical acts could include lying, cheating, misrepresenting the company, and other deceptive acts.
b. With the straight commission based structure, turnover may be high because ...view middle of the document...
Lower prices might result in more sales in the long term, which means more consistency with the commission pay.
III. I predict that most sales will be at the bottom of the range for the following reasons.
a. Consumers love to feel like they are getting a bargain or good deal. Pricing the products at the bottom, gives the impression that you are offering the consumer a discounted price, and in turn they purchase more of the product.
b. The lower the prices are, the more the products appear attractive, and the more the consumers may want to purchase the items. If the prices are low, then the consumer may purchase more of the items than they would if the products were priced higher.
c. Prices have to match the economy, and with the declining economy, rising costs of fuel, and other basic necessities, it is important that prices are adjusted to fit in with the economy. Consumers will purchase lower priced items because of our economic situation.
IV. The lack of geographically protected sales areas will affect a salesperson’s behavior in the following ways:
a. The salesperson will have no consideration of other salespeople that might be selling in the same area. They might try to sway their customers with lower prices and better discounts.
b. Instead of fostering a cooperative attitude where...