Collegiate Promotions Discussion

Please reply by 9/22/2021 so I can send you my peers posts

Please read the case and answer the questions at the end. Please respond to two of your peers. Do you agree or disagree?

Collegiate Promotions distributes products that are marketed to students and alumni of major universities. High-selling products include coffee mugs and T-shirts that bear collegiate logos. In order to distribute its products, Collegiate Promotions has adopted an independent sales representative model. The sales representatives work for themselves and are not actual employees of Collegiate. They have independent contractor status.

Becoming an independent sales representative is easy. An interested person pays a $300 fee to obtain catalogs and other literature needed to advertise and sell the line of products. The sales representative then begins to write orders for products. A sales representative can sell to anyone through any channel. This means that there are no protected territories, so several sales representatives are often working in the same geographic location. Many representatives also sell through Internet websites.

Collegiate Promotions does not set an absolute price for its products. Instead, it uses a wholesale plus pricing strategy that allows sales representatives to sell within a relatively broad range. The range is normally 30 to 50 percent higher than wholesale. For instance, if the wholesale price of a coffee mug is $10, then the representative can choose to sell the mug at a price anywhere between $13 and $15. The sales representative receives a commission of half the amount charged over the wholesale price. If the mug sells for $13, the representative receives $1.50. If the mug sells for $15, the representative receives $2.50. Because they are independent contractors, the sales representatives receive no other compensation.

Questions:

Do you think the compensation system at Collegiate Promotions is effective?

Why would a sales representative try to sell at the top of the price range? Why at the bottom of the price range? Do you predict that most sales are made at the top or bottom of the range of possible prices?

How does the lack of geographically protected sales areas affect salespersons’ behavior?

How committed do you think the independent contractors are to Collegiate Promotions? What are some positive features of the independent contractor status for the organization? What might be some positive features for the independent representatives? Would you expect sales representatives to have long-term associations with the company?

Second peer below

1. Do you think the compensation system at Collegiate Promotions is effective? Yes, I believe the system at Collegiate promotions is effective because of the following. From a business standpoint a sales representative is paying them $300 to obtain the catalogs and are willing to go out and sell the product for the company. By doing this the company is able to hire a large task force without having to pay a base salary besides commissions to the sales representatives. A Sales rep who is highly qualified to move items quickly and aggressively will likely be ok with getting only commission on the items they sells. These employee are able to sell where they feel more comfortable and have the freedom to sell the items at the price they favor. The more they charge the more commission they make. These sales representatives are not employees of the company therefore they can have another job and this can be their side hustle.

2. Why would a sales representative try to sell at the top of the price range? Why at the bottom of the price range? Do you predict that most sales are made at the top or bottom of the range of possible prices? A sales rep would want to sell at the top price range where there is less competition and to volume of items needed are low. A sales rep would want to sell at the bottom of the price range where there is more competition to out beat their competitors and where the volume is high. Larger volumes would offset the lower price and the sales rep would get his profit off the commission. The reading mentioned most of the sales rep work in the same geographic location which to me means more competition so I believe if the sales rep prices their product at a competitive lower price then their competitors.

3. How does the lack of geographically protected sales areas affect salespersons’ behavior? As mentioned above a sales rep would want to price their product at a lower sales price because their competition is also selling these same products in the same geographic location. They may also want to do more concentration on internet sales.

4. How committed do you think the independent contractors are to Collegiate Promotions? What are some positive features of the independent contractor status for the organization? What might be some positive features for the independent representatives? Would you expect sales representatives to have long-term associations with the company? Since there is no base pay for these independent contractors they would have to be highly committed to accept this type of job. I can also see this as perhaps a second income. Some positive features of being an independent contract may include you decide to work when you want to, you can make a lot of money depending on how aggressive you are. There are no limitations. Positive features of an independent contractor would be highly qualified, demanding, dedicated and independent. I do not see this as a long term association with the company since you would have to always be hustling to gain your commission and you would get burnt out. 

First peer below

Hello everyone,

Do you think the compensation system at Collegiate Promotions is effective?

I do believe this is an effective compensation system because depending on how hard you work and how well you do your job will decide how much you earn. The people the will become sale representative will be driven and competitive with the other representatives.

Why would a sales representative try to sell at the top of the price range? Why at the bottom of the price range? Do you predict that most sales are made at the top or bottom of the range of possible prices?

The sales representative will try to sell that the top price range because they will earn more. They get half of whatever the whole sale is so by them selling the products at top price then they will earn more commission. Some of the representative may want to sell the products are the bottom price range because it may give them an advantage over the other representatives. They may also sale at the bottom because it may prompt the clients to purchase more. I think that most sales will be based on the sales representative and not the price they set.

How does the lack of geographically protected sales areas affect salespersons’ behavior?

By not having geographic areas set I think that it makes the salespersons’ very competitive and sometimes territorial of the clients they have. I can not image that system being pretty.

How committed do you think the independent contractors are to Collegiate Promotions? What are some positive features of the independent contractor status for the organization? What might be some positive features for the independent representatives? Would you expect sales representatives to have long-term associations with the company?

I would say that the independent contractors are relatively committed. They have to pay $300 in order to get information they need to be able to sale. If I have to pay for something as opposed to getting something for free I will be more committed. Nobody wants to waste money. Some of the positives is that how much you earn is based off of your own work. If you are not out actively communicating with clients or looking for new clients then you will not be earning a lot. Another positive is the Collegiate Promotions gives the sales representatives a lot of liberty. They have the liberty to set their price as well as the liberty to choose where to sell. I would expect the sales representatives that are successful lasting long-term with the family. If they are good at it and are making a good profit then they will be there for a long time.