Page 156 - DMGT205_SALES_MANAGEMENT

Sales Management

Notes
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Case Study Sales Incentives

ucknow Electronic manufactured power-generating equipment and were in business
only for about five years. They sold directly to consumers as well as through a
Ldistribution network. They expanded their sales force to cover greater coverage of
market and to expand their activities in the entire country. The objectives were to increase
sales revenue by 30% over the previous year.
The marketing manager felt that to achieve these objectives, the salesmen have to be
motivated and there is an urgent need of introducing an incentive programme. For this he
suggested that the goals be set in consultation with the sales managers. The principle of
MBO (Management by Objectives) was suggested. The power generating business was
highly competitive and although the company had a fixed price list, the sales managers
would tend to ask for reduction in price on the approved list. In deciding whether or not
the concessions should be given, a lot of valuable time of the marketing managers was
being wasted and he wanted to stop this practice. The only way he could discourage
salesmen from asking concessions was to give them price flexibility (a range of price over
which they could quote their clients a price that would win business). There was a danger
that the sales people would arbitrarily drop prices to generate more revenue at lower
prices and obtain greater incentives as bonus.
The marketing manager after discussing with sales managers devised an incentive
programme as under.
(a) Incentives bonus would only start after the sales persons have achieved 80% of their
targets.

(b) Although flexible pricing was allowed but it was to be exercised by the discretion of
the sales person himself in genuine cases.
(c) If the goods were sold at the minimum price the incentive would also be minimised.
It would increase in proportion to sales at higher prices.
The marketing manager presented this incentive programme to the sales force expecting
enthusiastic support. However, there was no positive response from sales force.

Questions
1. Due you feel this incentive programme will achieve the results expected by the
marketing manager?

2. Can you suggest an alternative incentive programme to motivate the sales force?
3. Why was there no positive reaction from the sales personnel on the incentive
programme?

10.4 Developing a New Attitude in Selling

If ever there was a business that cried out for a new way of selling, it is that of moving cars from
the showroom floor to the driveways of America. The familiar but widely despised old approach
is known among automotive historians as the Hull-Dobbs method, named after Memphis dealers
Horace Hull and James Dobbs, who reputedly created it following World War II. In the old Hull-
Dobbs drill, customers exist to be manipulated, first by the salesman, who negotiates the

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