1. Is it reasonable to charge CVP'S salesforce with simultaneously building and holding market share?
2. What are the pros and cons of Sophia Rone's five-point plan?
3. Since the meeting with the regional managers ended on a sour note, what should Gaines do now? What should the regional managers do?
CASE 3.1: COUSINS VIDEO AND PARTY STORES Background Cousins Video and Party Scores (CVPS) is a well- cstablished company with over 150 outlets scat- tered along the West Coast. A little ewer 100 of their outlets are in California. Each outlet is a cim. bination video score with a larger than usual party store. The party store side of the business has expanded over the past 10 years to carry almost anything a Celebration store might carry. The party store items can be anything from baloons and streamers for a birthday to scasonal holiday items This combination has worked quite well for CVPS Of the 150 stores, 47 are company owned stores with the remaining stores leased to independent owners in a quasi-franchising agreement. The independent owners agree to buy their DVDs and party supplies from Cousins Video's parent company, Entertainment Inc. through thar designated distributors. They also agree to uphold uniformity and facilitatc appearance standards as set by Cousins Videos Every store layout is exactly the same throughout the entire West Coast The independent crners are encouraged to buy their convenience store merchandise tive Cousins Video's designated distributor, but they are not required to do so Lease payments are collected from independent owners when DVD deliveries are made cach month when new releases come out dealers has become more commonplace. It was taking CVPS an average of 60 days to find new dealers when existing dealers decided to leave the business. When a dealer operation closed, CVPS rarely converted it to a company-owned store, as their aggressive growth strategy at the corporate level left little capital for acquisition of existing outlets. Sophia Roncs called her five reg konal managers into her California headquarters office to discuss the problem with dedining sales volume and possi ble remedies to the problem. Given that the corpo rate strategy would continue to be to build market share and sales volume, Runes outlined the follow. ing five-point plan: 1. Each salesperson would continue to supervise company-owned stores and independent dealers 2. Salespeople would be given specific objectives for facilities appearance and a percentage of sales of convenience store merchandise purchases from CVPSY designated distributors. 3. Salespeople would be given mandates that no retail outlet would remain closed for more than 30 days 4. Sales wolume objectives for salespeople would remain in place. Current year wolume objectives would not change 5. Regional sales managers annual objectives would he revised to be consistent with salespeople's new cibjectives The regional managers saw the need for the revised strategy but raised several concerns. They felt that the corporate strategy focused on build ing market share, but that the sales organization was expected to oth build and hold market share They complained that the new-dealer team, a cor porate should be adding new dealers at a faster rate, and that part if the volume Shortfall was due to po performance of the new dealer team, not the salesforce. They also predst that CVPS salespole were on a straight salary hass.ph marily because they had previously functioned me as manas dolge retail outlets that a pure alespeople. The discussion becaune hcare, and finally Lyle Holter spoke for the regana manag elok, Sophis we know that corporate stra egy call Shilla we knew he capt when tipos hideg les indist ile de corporate new cakram Wed sed licin ihange ther. And we are Tell us that withome noentie pay, it will be hard redirect our salespel Riones Current Situation In the past 12 months, Cousins Video and Party Store growth rate has slowed considerably. This has been a major concern to CVPSS upper manage ment, including Sophia Rones, vice president for sales, Roncs has analyzed the declining growth rate and found that sales volume at company owned stores is growing at a very acceptable 12 percent on an annualized basis. In contrast, cores run by inde pendent dealers are lagging Ichind with an annual growth rate of and 2 percent. Roncs leheves the independent category is underperforming for three basic reasons. First, the independent stores and scher ally not kept as clean and procesa na kuking as the company and stores, Second, many of the larger independent operators have been buying a large share of their party store merchandise from lowon distributors thar than CVPS dented in bu bors. This hurus sales volume resuhsance (MPS retail operation per rebates from their deagnated distributor which counts as sales volume in the Fanily Villancial Chan, CPS sul to wieks Eron closets Competition is intclic and furniwer and CASE 3.1: COUSINS VIDEO AND PARTY STORES Background Cousins Video and Party Scores (CVPS) is a well- cstablished company with over 150 outlets scat- tered along the West Coast. A little ewer 100 of their outlets are in California. Each outlet is a cim. bination video score with a larger than usual party store. The party store side of the business has expanded over the past 10 years to carry almost anything a Celebration store might carry. The party store items can be anything from baloons and streamers for a birthday to scasonal holiday items This combination has worked quite well for CVPS Of the 150 stores, 47 are company owned stores with the remaining stores leased to independent owners in a quasi-franchising agreement. The independent owners agree to buy their DVDs and party supplies from Cousins Video's parent company, Entertainment Inc. through thar designated distributors. They also agree to uphold uniformity and facilitatc appearance standards as set by Cousins Videos Every store layout is exactly the same throughout the entire West Coast The independent crners are encouraged to buy their convenience store merchandise tive Cousins Video's designated distributor, but they are not required to do so Lease payments are collected from independent owners when DVD deliveries are made cach month when new releases come out dealers has become more commonplace. It was taking CVPS an average of 60 days to find new dealers when existing dealers decided to leave the business. When a dealer operation closed, CVPS rarely converted it to a company-owned store, as their aggressive growth strategy at the corporate level left little capital for acquisition of existing outlets. Sophia Roncs called her five reg konal managers into her California headquarters office to discuss the problem with dedining sales volume and possi ble remedies to the problem. Given that the corpo rate strategy would continue to be to build market share and sales volume, Runes outlined the follow. ing five-point plan: 1. Each salesperson would continue to supervise company-owned stores and independent dealers 2. Salespeople would be given specific objectives for facilities appearance and a percentage of sales of convenience store merchandise purchases from CVPSY designated distributors. 3. Salespeople would be given mandates that no retail outlet would remain closed for more than 30 days 4. Sales wolume objectives for salespeople would remain in place. Current year wolume objectives would not change 5. Regional sales managers annual objectives would he revised to be consistent with salespeople's new cibjectives The regional managers saw the need for the revised strategy but raised several concerns. They felt that the corporate strategy focused on build ing market share, but that the sales organization was expected to oth build and hold market share They complained that the new-dealer team, a cor porate should be adding new dealers at a faster rate, and that part if the volume Shortfall was due to po performance of the new dealer team, not the salesforce. They also predst that CVPS salespole were on a straight salary hass.ph marily because they had previously functioned me as manas dolge retail outlets that a pure alespeople. The discussion becaune hcare, and finally Lyle Holter spoke for the regana manag elok, Sophis we know that corporate stra egy call Shilla we knew he capt when tipos hideg les indist ile de corporate new cakram Wed sed licin ihange ther. And we are Tell us that withome noentie pay, it will be hard redirect our salespel Riones Current Situation In the past 12 months, Cousins Video and Party Store growth rate has slowed considerably. This has been a major concern to CVPSS upper manage ment, including Sophia Rones, vice president for sales, Roncs has analyzed the declining growth rate and found that sales volume at company owned stores is growing at a very acceptable 12 percent on an annualized basis. In contrast, cores run by inde pendent dealers are lagging Ichind with an annual growth rate of and 2 percent. Roncs leheves the independent category is underperforming for three basic reasons. First, the independent stores and scher ally not kept as clean and procesa na kuking as the company and stores, Second, many of the larger independent operators have been buying a large share of their party store merchandise from lowon distributors thar than CVPS dented in bu bors. This hurus sales volume resuhsance (MPS retail operation per rebates from their deagnated distributor which counts as sales volume in the Fanily Villancial Chan, CPS sul to wieks Eron closets Competition is intclic and furniwer and
