Page 283 - DMGT408DMGT203_Marketing Management

Marketing Management/Essentials of Marketing

Notes An organisation must analyse its selling methods to determine whether they are using the most
efficient means possible to reach their customers. Selling methods are analysed using marketing
effort analysis as it allows a firm to directly calculate the comparative performance of alternative
selling methods.

12.3.4 Remuneration of Salesmen

A majority of compensation plans for sales force combine two or more payment methods. The
most widely used combinations are:
1. Salary plus commission
2. Salary plus bonus
3. Salary plus commission plus bonus
The purpose of a combination plan is to eliminate the weaknesses of individual components
and, at the same time, retain their strengths. The salary element is usually most popular in
reputed, more experienced companies that enjoy stable sales. These days, more emphasis is put
on the commission component by companies that are concentrating on expanding their business.
There has been a recent trend by companies to emphasise incentive over salary. The salary/
commission combination is extremely popular, especially when earnings are divided equally
between the two. The sales staff has the benefit of security and the company can offer strong
incentives to the staff to excel. In addition, if salary is an important part of the compensation
package, the company can exert considerable control over the salesperson.

Note In the Indian economy and culture where a young man is looking for a job and its
inherent security, getting people to work only for commission is very difficult. Eureka
Forbes continued to operate on the same terms for the last many years as strategy but,
thereafter its sales staff as well as support staff is working on salary. So commission only
method works well where it is used to employ people as part time workers e.g. insurance
sector, textiles, etc. The other reason why it is difficult to get people to work for commission
only is the attitude of the companies.
There are many companies who appoint people only on commission basis, the person
works very hard to establish the product and when he is about to earn high returns on
sales because of contacts that he has developed, the company terminates his contract and
appoints another salesman on low salary or asks the same salesman to accept revised
terms. Because of this, the commission only method is used only to get commission agents
and not salesmen for consumer goods companies.

Task Visit the sales office of an Indian FMCG Company. Meet the sales executives
and learn how the performance of salespersons is evaluated. Prepare a
report using the information collected.

Self Assessment

State whether the following statements are true or false:

6. The fundamental objective of the selection process is to gather information about the
applicants for the sales job.

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