MKTG 1058:
DISTRIBUTION
  CHANNELS
Distribution Channels MKTG 1058
            LECTURE ELEVEN

           Managing People

      (Dunne Chapter Fourteen)
   ...
Learning Objectives


 Explain why intangible people resources van
 provide a more competitive advantage than
 tangible re...
Retailing Truism


 Customers don’t care who runs the company,
 they just care about how they are treated by
 the first em...
High performance retailers:


….of the future will be those that devote the maximum
  effort to hiring good employees now....
Intangible People Resources Make the Difference
                                      LO 1
  • Similarities Between Employ...
Similarities Between Employees and Customers


 Empowerment occurs when employees are given the
 power in their jobs to do...
Customers and employees both perform retail
tasks and they both service each other


 Employees must not only serve custom...
Employees and Customers are Profit Drivers


• The gross profit generated by an employee or
 customer must exceed the cost...
Profit Drivers: “How much should a retailer be
   willing to invest in recruiting an employee
   and/or customer?”

 If a ...
Factors Influencing Employees Performance



 This Retailer’s   Affects the   Which Impacts
   Program         Employees

...
Obtaining the Right People


•Customer Relationship Management
•Employee Sources
•Customer Sources
•Screening and Selectin...
Obtaining the Right People


 Customer Relationship Management
 (CRM)
 Is comprised of an integrated
 information system w...
CRM Analysis


• Analyze transactional data, find times when the most
 profitable customers shop, and schedule key
 associ...
Employee and Customer Sources
                            Exhibit 14.1




                                           11-14
Screening and Selecting Employees


 Application Form
 Personal Interview
 Testing
 References



                        ...
Screening and Selecting Customers


  Reasons for Screening and Selecting
  Customers:
  The inability to adequately servi...
Managing People


 Turnover
 Training and Developing Employees
 Training and Developing Customers
 Evaluating Employees
 E...
Types of Employee Turnover Costs
                         Exhibit 14.2




                                        11-18
Question to Ponder


• Your store is understaffed and after reviewing
 the current applications on file, you do not find
 ...
Training and Developing Employees


 Be provided for both new and existing
 employees.
 Should not be a “one-time happenin...
Evaluating Employees


  Performance Appraisal and Review is the formal,
  systematic assessment of how well employees are...
Criteria Used in the Appraisal and Review
Process
                                 Exhibit 14.3




                      ...
Criteria Used in the Appraisal and Review
Process
                                 Exhibit 14.3




                      ...
Evaluating Customers



 • It is important for employers not only to
  evaluate employees on their performance,
  but also...
Motivating Employees


Motivation is the drive that a person has to
 excel at activities, such as a job, that he or she
 u...
Content Theories


• Hierarchy of Needs Model theorizes that individuals
  have lower-level physiological, safety and secu...
How Retailers Can
Use Maslow’s Hierarchy of Needs
                              Exhibit 14.4




                         ...
Process Theories


• Expectancy Theory suggests that an employee
 will expend effort on some task because the
 employee ex...
Motivating Customers


  Retailers use a variety of demand stimulation tools
  to motivate customers to purchase or purcha...
Motivating Customers

• Merchandise: quality, style and fashion, assortment, national
 versus private labels.
• Physical C...
Compensation


• Employee Compensation
• Common Types of Compensation Program for
 Sales Force
• Supplemental Benefits
• C...
Employee Compensation


• Compensation includes direct dollar payments (wages,
  commission, and bonuses) and indirect pay...
Common Types of Compensation Programs for a
Salesforce


• Straight Salary is a fixed salary per time period
 (usually per...
Attributes of Compensation Plans
  Changing Economic Conditions                                    Exhibit 14.5
  Ability ...
Advantages and Disadvantages of
the Various Forms of Compensation

Straight Salary (Used by 11% of retailers.)
• Advantage...
Advantages and Disadvantages of
the Various Forms of Compensation

Salary plus Commission (Used by 51% of retailers.)
• Ad...
Advantages and Disadvantages of
the Various Forms of Compensation


• Disadvantages:
  Salespeople may not want this type ...
Advantages and Disadvantages of
the Various Forms of Compensation

Straight Commission (Used by 38% of retailers.)
• Advan...
Supplemental Benefits
                            L4

•Employee Discounts
•Insurance and Retirement Benefits
•Child Care
•...
Compensation Plan Requirements


  Fair
  Adequate
  Prompt and regular payments
  Customer interest
  Simplicity
  Balanc...
Job Enrichment


Job Enrichment is the process of enhancing the core
 job characteristics of employees to improve their
 m...
Customer Compensation


Value Proposition is the promised benefits a
 retailer offers in relation to the cost the
 custome...
Past Year Examination Questions

   Chapter Fourteen: Managing
             People



                              9-43
April 2009
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DC Lecture Eleven : Managing People

  1. 1. MKTG 1058: DISTRIBUTION CHANNELS
  2. 2. Distribution Channels MKTG 1058 LECTURE ELEVEN Managing People (Dunne Chapter Fourteen) 11-1 1
  3. 3. Learning Objectives Explain why intangible people resources van provide a more competitive advantage than tangible resources. Describe how to recruit both the right employees and the right customers to be the store’s partners. Explain how to manage employees and customers to develop long-term profitable relationships. Discuss how to compensate employees and offer customers a compelling value proposition. 11-2
  4. 4. Retailing Truism Customers don’t care who runs the company, they just care about how they are treated by the first employee they meet. Good quotation for a possible exam question!! 11-3
  5. 5. High performance retailers: ….of the future will be those that devote the maximum effort to hiring good employees now. Investments in tangible assets (land, building, technology, equipment and fixtures, and merchandise) will not produce a profitable return unless the retailer is willing to invest in recruiting, motivating, and retaining the right people. Retailers must view labor costs, as well as the costs of attracting and retaining customers, not as costs, but as investments in obtaining a sustainable competitive advantage 11-4
  6. 6. Intangible People Resources Make the Difference LO 1 • Similarities Between Employees and Customers The people factor in Services Marketing. Just like employees, customers need to be recruited, motivated, and compensated for their efforts. • Employees and Customers are Profit Drivers 11-5
  7. 7. Similarities Between Employees and Customers Empowerment occurs when employees are given the power in their jobs to do the things necessary to satisfy and make things right for customers. • Seeks to understand the customer’s problem. • Desires to develop a relationship with the customer. • Understands the value of customer loyalty. Is allowed and encouraged to solve the customer’s problem. 11-6
  8. 8. Customers and employees both perform retail tasks and they both service each other Employees must not only serve customers, but also other employees (internal customers) With servant leadership, employees recognize that their primary responsibility is to be of service to others 11-7
  9. 9. Employees and Customers are Profit Drivers • The gross profit generated by an employee or customer must exceed the cost of servicing these employees and customers. • Retailing is an exchange relationship, and in an exchange relationships people want to be “treated right.” • Honesty • Fairness • Respect 11-8
  10. 10. Profit Drivers: “How much should a retailer be willing to invest in recruiting an employee and/or customer?” If a retailer takes an investment versus an expense or cost perspective, then that retailer is addressing this issue from a long-term perspective. The gross profit generated by an employee or customer must exceed the cost of servicing these employees and customers. Customers should be thought of as employees and employees should be treated like customers. Good customer and employee relationships have a synergistic effect on a retailer’s performance. 11-9
  11. 11. Factors Influencing Employees Performance This Retailer’s Affects the Which Impacts Program Employees Training & Development Skill Performance Employee Appraisal Morale Performance Motivation Methods Effort 11-10
  12. 12. Obtaining the Right People •Customer Relationship Management •Employee Sources •Customer Sources •Screening and Selecting Employees •Screening and Selecting Customers 11-11
  13. 13. Obtaining the Right People Customer Relationship Management (CRM) Is comprised of an integrated information system where the fundamental unit of data collection is the customer, supplemented by relevant information about the customer. 11-12
  14. 14. CRM Analysis • Analyze transactional data, find times when the most profitable customers shop, and schedule key associates for those hours. • Sales or visits have been declining: special marketing programs such as direct mail, coupons, or a special call from a sales associate. • Identify the type of merchandise to stock during certain seasons. • A complete record of purchase history to prioritize the special treatment of customers. 11-13
  15. 15. Employee and Customer Sources Exhibit 14.1 11-14
  16. 16. Screening and Selecting Employees Application Form Personal Interview Testing References 11-15
  17. 17. Screening and Selecting Customers Reasons for Screening and Selecting Customers: The inability to adequately service certain customers. The deterioration of a retailer’s atmosphere if customers of a certain type are admitted. The inability to profitably service customers. 11-16
  18. 18. Managing People Turnover Training and Developing Employees Training and Developing Customers Evaluating Employees Evaluating Customers Motivating Employees Motivating Customers 11-17
  19. 19. Types of Employee Turnover Costs Exhibit 14.2 11-18
  20. 20. Question to Ponder • Your store is understaffed and after reviewing the current applications on file, you do not find any good applicants available. Should you hire someone who does not meet your standards and risk having to replace him or here within a couple of months or should you have your present staff continue to work overtime? 11-19
  21. 21. Training and Developing Employees Be provided for both new and existing employees. Should not be a “one-time happening.” Content should mirror employee development. New training and development programs should build on the content provided in previous programs. Online training for retailers who cannot afford to have a complete training staff. 11-20
  22. 22. Evaluating Employees Performance Appraisal and Review is the formal, systematic assessment of how well employees are performing their jobs in relation to established standards and the communication of that assessment to employees. • Ongoing process. • Feedback provided to employees. • Reviewer knows the what the job tasks and performance standards. • Two people contribute to the review. • Various types of measures to be used. 11-21
  23. 23. Criteria Used in the Appraisal and Review Process Exhibit 14.3 11-22
  24. 24. Criteria Used in the Appraisal and Review Process Exhibit 14.3 11-23
  25. 25. Evaluating Customers • It is important for employers not only to evaluate employees on their performance, but also to evaluate customers for their contributions to the retailer’s financial objectives. • A variety of retailers have detailed profiles on their most profitable customers. Increasingly CRM is allowing the retailer to evaluate the profitability of each of its customers 11-24
  26. 26. Motivating Employees Motivation is the drive that a person has to excel at activities, such as a job, that he or she undertakes. • Content Theories refer to theories on motivation that ask, “What motivates and individual to behave?” • Process Theories refer to theories on motivation that ask, “How can I motivate an individual?” 11-25
  27. 27. Content Theories • Hierarchy of Needs Model theorizes that individuals have lower-level physiological, safety and security needs, which are first satisfied before higher level needs of belongingness or social esteem or self- actualization are pursued. • Theory X is a theory of management that views employees as unreliable and thus must be closely supervised and controlled and given economic inducements to perform properly. • Theory Y is a theory of management that views employees as self-reliant and enjoying work and thus can be empowered and delegated authority and responsibility. 11-26
  28. 28. How Retailers Can Use Maslow’s Hierarchy of Needs Exhibit 14.4 11-27
  29. 29. Process Theories • Expectancy Theory suggests that an employee will expend effort on some task because the employee expects that the effort will lead to a performance outcome that will lead in turn to a reward or bonus that the employee finds desirable or valued. • Goal Setting is the process in which management and employees establish goals that become the basis for performance appraisal and review. 11-28
  30. 30. Motivating Customers Retailers use a variety of demand stimulation tools to motivate customers to purchase or purchase in higher volumes. Most of these programs are based on the assumption that customers are motivated primarily by financial incentives. However, innovative retailers are recognizing that other factors can motivate success. Some non-price elements that can motivate customers include: 11-29
  31. 31. Motivating Customers • Merchandise: quality, style and fashion, assortment, national versus private labels. • Physical Characteristics: décor, layout, and floor space. • Sales Promotion • Advertising • Convenience: hours, location, ease of entrance and parking, ease of finding items. • Services: credit, delivery, return policy, and guarantees. • Store Personal: helpfulness, friendliness, and courtesy. 11-30
  32. 32. Compensation • Employee Compensation • Common Types of Compensation Program for Sales Force • Supplemental Benefits • Compensation Plan Requirements • Job Enrichment • Customer Compensation 11-31
  33. 33. Employee Compensation • Compensation includes direct dollar payments (wages, commission, and bonuses) and indirect payments (insurance, vacation time, retirement plans). • Fixed Component typically is composed of some base wage per hour, week, month, or year. • Variable Component is often compose of some bonus that is received if performance warrants. • Fringe Benefits is a part of the total compensation package offered to many retail employees and may include health insurance, disability benefits, life insurance, retirement plans, child care, use of auto, and financial counseling. 11-32
  34. 34. Common Types of Compensation Programs for a Salesforce • Straight Salary is a fixed salary per time period (usually per week) regardless of the level of sales generated or orders taken. • Salary Plus Commission is a fixed salary plus a percentage commission on all sales or sales over an established quota. • Straight Commission is limited to a percentage commission on each sale they generate. 11-33
  35. 35. Attributes of Compensation Plans Changing Economic Conditions Exhibit 14.5 Ability for Employee to Weather Straight Salary Salary plus Commission Straight Commission Incentive to Perform 11-34
  36. 36. Advantages and Disadvantages of the Various Forms of Compensation Straight Salary (Used by 11% of retailers.) • Advantages: • Straight salary provides for a regular income. • It gives management a more direct control. • It provides relatively fixed sales cost. • It ensures that nonselling activities will be completed. • It helps develop a high degree of salesperson loyalty. • Disadvantages: • It favors salespeople who are least productive. • It provides minimum, if any, reasons to give customers extra effort. • It offers little, if any, financial incentive. • It does not provide for a balanced sales mix. 11-35
  37. 37. Advantages and Disadvantages of the Various Forms of Compensation Salary plus Commission (Used by 51% of retailers.) • Advantages: • It provides security because there is stable income. • Since there is commission, it provides encouragement for salespeople to sell. • Since there is salary, it provides salespeople with the incentive to perform nonselling tasks. • It would be beneficial for the department store chain because there is a good chance we are going to be in a recession, so employee costs would be partly proportional to sales. • It would boost morale and provide security at the same time. • It favors salespeople that are motivated and productive. • It should give a balanced sales mix because salespeople will push merchandise with consumer appeal and high volume. 11-36
  38. 38. Advantages and Disadvantages of the Various Forms of Compensation • Disadvantages: Salespeople may not want this type of compensation if we do go into a recession because a decrease in sales volume will effect their wages. • It may lead to high pressure selling. 11-37
  39. 39. Advantages and Disadvantages of the Various Forms of Compensation Straight Commission (Used by 38% of retailers.) • Advantages: • Salespeople have great incentive to perform well. • Compensation relates directly to performance. • Sales costs are directly related to net sales. In times of a recession, employees’ incomes, that are expenses to the chain, are directly proportional to sales volume. • Disadvantages: • It encourages high-pressure selling. • The emphasis would be on volume not what the customer needs. • Salespeople will neglect nonselling activities. • The service aspect of selling tends to be neglected. 11-38
  40. 40. Supplemental Benefits L4 •Employee Discounts •Insurance and Retirement Benefits •Child Care •Push Money 11-39
  41. 41. Compensation Plan Requirements Fair Adequate Prompt and regular payments Customer interest Simplicity Balance Security Cost effective 11-40
  42. 42. Job Enrichment Job Enrichment is the process of enhancing the core job characteristics of employees to improve their motivation, productivity, and job satisfaction. Skill variety Task identity Task significance Autonomy Job feedback 11-41
  43. 43. Customer Compensation Value Proposition is the promised benefits a retailer offers in relation to the cost the customer incurs. The eight attributes for motivating customers represent benefits and costs; the better the value equation (benefits versus costs), the more compelling the retailer’s value proposition. 11-42
  44. 44. Past Year Examination Questions Chapter Fourteen: Managing People 9-43
  45. 45. April 2009

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