Scenario 2-2
Brush Strokes is an art supply store located in a town with a population of about 100,000 people.The town is also home to a major state university.Brush Strokes gets a majority of its business from the student population.It has used the services of a local full-service advertising agency in the past.A great majority of its marketing budget has gone toward running small advertisements in the local and school newspapers at the beginning of each term.The advertising agency is now recommending that Brush Strokes devote a majority of its budget to running television spots during broadcasts of the university's football and basketball games.While the owners of Brush Strokes agree that they could be doing a better job of reaching a larger portion of the student population, they have not come to any conclusions about the best way to accomplish this.
-(Scenario 2-2) The owners of Brush Strokes are concerned that their agency may be recommending television advertising because it would be profitable for the agency.To protect against this, Brush Strokes wants to switch to an incentive-based compensation plan. To do so, Brush Strokes suggests that compensation for the agency should be

Question

Quizplus · Accepted Answer

Switching to a pay-for-results basis for compensation would ensure that the advertising agency is motivated to deliver tangible results rather than just recommend services that may not be beneficial to Brush Strokes. This also aligns the interests of the agency and the client, as the agency will only be compensated if their advertising efforts are successful in reaching a larger student population. This approach would provide the necessary incentivization for the agency to offer the best possible advertising solutions for Brush Strokes, which is the ultimate goal for the business.

Scenario 2-2 Brush Strokes Is an Art Supply Store Located in a in a Town