Compensation System at Collegiate Promotions In Tutorial Library

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TITLE: Compensation System at Collegiate Promotions



Strategic Human Resource Management


Case Assignment 5:


Discussion Case: Collegiate Promotions 


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 Web sites.


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.


Write a 3-4 page paper in which you:


1. Evaluate whether or not the compensation system at Collegiate Promotions is effective.

2. Discuss reasons a sales representative would try to sell at both the top and the bottom of the price range.

3. Predict whether the most sales are made at the top or bottom of the range of possible prices. Explain your prediction.

4. Discuss how the lack of geographically protected sales areas affect a salesperson‘s behavior.

5. Evaluate the commitment of the independent contractors to Collegiate Promotions.

6. Use at least three (3) quality resources in this assignment.



SOLUTION DESCRIPTION: The strategy adopted by Collegiate Promotions in order to sell the products has helped the company in achieving high......

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