Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic

Marketing: A

Global−Managerial

Approach, 14/e

19. Implementing and
    Controlling Marketing
    Plans: Evolution and
    Revolution

Text © The McGraw−Hill

Companies, 2002

562 Chapter 19

A performance analysis can be quite revealing, as shown in the following

example.

A manufacturer of business products sells to wholesalers through five sales reps,

each serving a separate territory. Total net sales for the year amount to $2,386,000.

Sales force compensation and expenses come to $198,000, yielding a direct-selling

expense ratio of 8.3 percent—that is, $198,000 $2,386,000 100.

This information—taken from a profit and loss statement—is interesting, but it

doesn’t explain what’s happening from one territory to another. To get a clearer pic-

ture, the manager compares the sales results with other data from each territory.See

Exhibits 19-4 and 19-5. Keep in mind that exhibits like these and others that fol-

low in this chapter are now very easy to generate. Common computer programs like

Microsoft Office make it easy to apply the ideas discussed here. Larger companies

make such analysis available at a website so the manager can sort out whatever is

needed.

The reps in sales areas D and E aren’t doing well. Sales are low and marketing

costs are high. Perhaps more aggressive sales reps could do a better job, but the num-

ber of customers suggests that sales potential might be low. Perhaps the whole plan

needs revision.

The figures themselves, of course, don’t provide the answers. But they do reveal

the areas that need improvement. This is the main value of performance analysis.

It’s up to management to find the remedy, either by revising or changing the mar-

keting plan.

Exhibit 19-4 Comparative Performance of Sales Reps

Order- Sales Average

Sales Total Total Call by Sales Rep Total

Area Calls Orders Ratio Sales Rep Order Customers

Exhibit 19-5 Comparative Cost of Sales Reps

Total Cost-

Sales Annual Expense Sales Rep Sales Sales

Area Compensation Payments Cost Produced Ratio

Straight performance
analysis—an illustration

A 1,900 1,140 60.0% $ 912,000 $800 195

B 1,500 1,000 66.7 720,000 720 160

C 1,400 700 50.0 560,000 800 140

D 1,030 279 27.1 132,000 478 60

E 820 165 20.1 62,000 374 50

Total 6,650 3,284 49.3% $2,386,000 $634 605

A $ 22,800 $11,200 $ 34,000 $ 912,000 3.7%

B 21,600 14,400 36,000 720,000 5.0

C 20,400 11,600 32,000 560,000 5.7

D 19,200 24,800 44,000 132,000 33.3

E 20,000 32,000 52,000 62,000 83.8

Total $104,000 $94,000 $198,000 $2,386,000 8.3%