MAJESTIC PLASTICS COMPANY

Reps Selling Too Many Low-Profit Products

Over the past several days the top executives in the Majestic Plastic Company had been conducting their annual performance review of the companys operations. The company president, Boyd Russell, sat in on most of these sessions and periodically became quite involved in some of the departmental reviews.

Thesales department was the one currently under discussion, and Clyde Brion, the general sales manager, was the focus of attention. Overall, the sales and profit results were satisfactory, but the executives noted what they thought was a problem in two Louise Shannon was the rep, and the other was in Chicago, which was Henry Sadowskis territory.

In each of these territories, the sales reps total sales volume was satisfactory. The problem was that thebulk of their sales volume was in low profit products- that is, products whose gross margin was well below the companys desired average. Then the chief financial officer, Oliver Twombly, recalled that this same situation had been brought up at last years performance review. Clyde Brion realized he was on the spot with his fellow executives, including the president.

Top management really did not want to change the basic compensation plan because, oer the company asa whole, it apparently had been working okay. And Brion concurred in this decision. He pointed out that Shannon ad Sadowski consistently met their total sales quotas and that each had won a sales contest designed to stimulate total sales. But their performance was not balanced. They went way over quota on low-margin goods. They were not selling a desirable mix of products, nor were they generating their share of new accounts. Basically they were getting large repeat orders from a few established accounts. And Shannon and Sadowski generally were neglecting the newer products that were the foundation of the

companys future growth.

Brion had been aware of this situation for some time, but he had never given it the attention it deserved, partly because the two reps total sales volume was satisfactory and partly because he had other brushfires to put out. Now he was convinced that he had better do something-and do it quickly.

Question:

1. What should Clyde Brion do to remedy the imbalanced sales performance of Louise Shannon and Henry Sadowski?
2. How can Clyde Brion ensure that in long term the similar problems do not occur?
3. What tools can be used by Clyde Brion to immediately arrest the issue?