Question 1

The _____ method for compensating the sales force maximizes security and stability of earnings to a sales person.

Accepted Answer

The salary-only method provides the most security and stability of earnings to a salesperson because it guarantees a fixed amount of money regardless of sales performance.

Question 2

Which of the following statements describes a significant drawback associated with the use of a salary-only plan?

Accepted Answer

A salary-only plan does not provide a direct financial incentive for salespeople to increase their sales volume, which can lead to a lack of motivation to exceed sales targets.

Question 3

Kitchengear of Maine wants to use a salary-only plan for compensating its sales people. This plan may not be such a good idea because the salary-only plan:

Accepted Answer

Salary-only compensation plans are less effective at motivating salespeople to maximize sales because they provide a fixed income regardless of sales performance. This can lead to a focus on activities that don't directly contribute to sales, as there's no financial incentive to prioritize selling over other tasks.

Question 4

With the salary-only plan of compensating the sales force, pay becomes a _____ cost.

Accepted Answer

With a salary-only plan, pay is a fixed cost because it does not vary with the level of sales or production; it remains constant regardless of the company's level of activity.

Question 5

Sales personnel for Romertopf, a manufacturer of clay cookware, have been compensated in a variety of ways. In which of the following situations, if any, would a salary-only plan be most advisable?

Accepted Answer

The answer of Sales personnel for Romertopf, a manufacturer of...

Question 6

Karel is a missionary sales person for a company that manufactures the cameras that took photographs of the sunken remains of the Titanic. As a missionary sales person, Karel is most likely to receive what form of compensation?

Accepted Answer

Missionary salespeople typically receive a salary-only compensation because their role focuses on promoting the product and building relationships rather than directly closing sales.

Question 7

The straight-commission plan for compensating sales representatives is used because this plan:

Accepted Answer

The straight-commission plan directly ties a sales representative's earnings to their sales performance, providing a strong incentive to sell more. This is because their income depends entirely on the commissions they earn from the sales they make.

Question 8

Which of the following statements describes a significant drawback associated with the use of a straight commission compensation plan?

Accepted Answer

Straight commission plans can lead to less control over salespeople by management, as salespeople may prioritize sales in a way that maximizes their commissions rather than aligning with company goals or strategies.

Question 9

In the early 1990s, when Sears introduced a _____ compensation plan, it was discovered that employees in the Sears Auto Centers were recommending unnecessary work on customers' cars to raise their take-home pay.

Accepted Answer

The correct answer is C) straight commission. This type of compensation plan directly ties employees' earnings to the amount of sales or services they provide, incentivizing them to sell more, which in the case of Sears Auto Centers, led to employees recommending unnecessary work to increase their earnings.

Question 10

Hamilton Industries makes reproductions of architectural features for the renovation of 19th century buildings. It is considering abandoning the straight-commission plan for compensating sales people because that plan:

Accepted Answer

Straight-commission plans can lead to salespeople focusing primarily on making sales to earn commissions, often at the expense of providing ongoing customer service and support, which do not directly contribute to immediate sales and commissions.

Question 11

The management of Floral Treats Cosmetics wants its sales people to sell aggressively and engage in virtually no missionary activities. The cosmetics firm is not financially strong, and so its management wants to relate the compensation plan directly to gross margins. Floral Treats should use a _____ plan for paying its sales force.

Accepted Answer

A straight-commission plan directly ties a salesperson's earnings to sales performance, which encourages aggressive selling and is suitable for a company like Floral Treats Cosmetics that wants to closely link compensation to gross margins without incurring fixed salary costs.

Question 12

In which of the following situations would a straight-commission plan be the appropriate compensation plan?

Accepted Answer

A straight-commission plan is appropriate in all the listed situations because it provides strong incentives for salespeople to close sales, is suitable when little nonselling work is required, can be beneficial for financially weak companies by tying compensation directly to sales performance, and is useful when direct supervision of the sales force is challenging.

Question 13

According to the text, the ideal method for compensating a sales force is:

Accepted Answer

The combination compensation plan is often considered ideal because it balances a base salary with performance-based incentives, motivating salespeople while providing financial stability.

Question 14

About twice a year, Charles's sales manager goes with him to visit clients. What is the most likely reason for the sales manager's actions?

Accepted Answer

Visiting clients with sales representatives is a common supervisory method that allows managers to observe and support their team's performance directly, ensuring that sales strategies are effectively implemented and client relationships are well managed.

Question 15

The most effective supervisory method for a sales manager to use is:

Accepted Answer

Personal observation in the field allows the sales manager to directly assess and guide the sales process, providing immediate feedback and coaching to improve performance.

Question 16

Sales performance should be evaluated on the basis of both input and output. A person's selling effectiveness is a combination of the two. Which of the following factors is a quantitative output measure?

Accepted Answer

Gross margin by product line is a quantitative output measure because it directly reflects the financial results of sales activities, indicating the profitability of different products.

Question 17

Which of the following is an example of a quantitative input measure useful in evaluating the sales job done by a person who sells industrial washers?

Accepted Answer

The answer of Which of the following is an example...

Question 18

Which of the following is an example of a quantitative input base for evaluating sales performance?

Accepted Answer

Quantitative input bases for evaluating sales performance focus on measurable activities that lead to sales, such as the number of sales calls made. Barbara's average of four sales calls per day is a quantifiable measure of her sales activity, making it a quantitative input base.

Question 19

Which of the following is an example of a quantitative output base for a person that sells musical and comedic talent for appearance at state fairs?

Accepted Answer

The number of bookings per year is a quantitative measure of successful sales or engagements, reflecting actual output.

Question 20

Which of the following is an example of a qualitative factor for evaluating sales performance?

Accepted Answer

Chase's knowledge of the company's products, policies, and competitors is a qualitative factor because it describes qualities or characteristics that cannot be directly measured with numbers, unlike the other options which are quantitative and can be measured or expressed numerically.

Quiz 18: Personal Selling and Sales Management