One of the First Sales Management Decisions a Firm Must

question 144

Essay

One of the first sales management decisions a firm must make is whether the company should build its own salesforce or hire independent agents such as manufacturers' representatives. Abacus Designs sells high-end furniture to retailers and needs to make this decision. Independent agents would receive a 5 percent commission on sales while a company salesforce would receive a 3 percent commission, salaries, and benefits. In addition, with company salespeople, sales administration costs would be incurred for a total fixed cost of $500,000 per year. At what sales level would independent salespeople be less costly?

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Definitions:

Text Messages

Short electronic messages sent over a phone network, commonly used for personal communication and increasingly for marketing purposes.

Direct Marketing

A type of advertising strategy that seeks to deliver a message directly to consumers, through methods such as mail, email, or phone calls, without intermediaries.

Customer Databases

Collections of information about customers, including their contact details, buying habits, and preferences, which companies use to manage customer relationships effectively.

Marginal Costs

The extra expense associated with the production of an additional unit of a product or service.