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Exam 4 Study Guide - Marketing 481 Exam 4 Study Guide 14...

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Marketing 481 Exam 4 Study Guide: Chapters 12, 13, 14 Chapter 12: Sales Force Compensation (17 Test Questions) I. Sales Force Compensation: (Pg. 358) - Compensation – is defined as all monetary payments as well as benefits used to remunerate employees for their performance. - Three Main Methods Firms Use to Financially Compensate Their Salespeople: 1) Straight Salary – the salesperson receives a fixed amount of money at regular intervals, such as weekly or monthly. 2) Straight Commission – the salesperson receives an amount that varies with results, usually sales or profits. 3) Combination – the salesperson receives a mix of salary and commission. II. Compensation Plans: Know Which Ones Are Non-Incentive (Pgs. 358 – 359, Table 12.1) - Non-Incentive Based Compensation Plans: 1) Hourly Wage – is fixed pay per hour worked. 2) Straight Salary – is fixed salary paid in intervals as per contract. III. Compensation Plans: Know How to Respond to Different Plans (Pg. 359) - The effect of various compensation plans on company profits involve several types of salespeople: 1) Creatures of Habit – they try to maintain their standard of living by earning a predetermined amount of money. 2) Goal-Oriented Individuals – they prefer recognition as achievers by peers and by superiors and tend to be sales-quota-oriented, with money serving mainly as a by-product of achievement. 3) Satisfiers – they perform just well enough to keep their jobs. 4) Trade-Offers – they allocate their time according to a personally determined ratio of work and leisure that is not influenced by opportunities for increased earnings. 5) Money-Oriented Individuals – they seek to maximize their earnings. These people may sacrifice personal relationships, personal pleasures, and even health to increase their income. IV. Developing Compensation Plans: Know the Steps (Pg. 360, Figure 12.1) 1) Prepare Job Descriptions 2) Establish Specific Objectives 3) Determine General Levels of Compensation 4) Develop the Compensation Mix 5) Pretest the Plan 6) Administer the Plan 7) Evaluate the Plan V. Know the Factors that Determine the Basic Level of Pay for the Sales Force: (Pg. 363 & Slide 16) - The Most Significant Factors that Determine the Basic Level of Pay for the Sales Force Include: 1) The Skills, Experience, and Education Required To Do the Work Successfully 2) The Level of Income for Comparable Jobs in the Company 3) The Level of Income for Comparable Jobs in the Industry 4) Flexibility to Adjust to Area Living Costs 5) Ceiling on Salesperson Earnings or Restrictions Against Earning More Than Bosses VI. Advantages and Disadvantages of Straight Salary: (Pgs. 369 – 370) - Advantages of Straight Salary: 1) Provides security to salespeople, since they know their basic living expenses will be covered. 2) Helps develop a sense of loyalty to the company.
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3) Increases flexibility in territorial assignments because salespeople are less likely to become attached to certain sales territories and customers.
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