CHAPTER ONE INTRODUCTION

1.1 Background Of The Study

To compete in today‟s global markets, organizations strive to deliver their products (physical) and services (intangible) in both an efficient and effective manner. In service supply chain, human labour forms a significant component of the value delivery process and physical handling of a product leads to standardized and centralized procedures and controls in manufacturing supply chains, (Sengupta et al 2008:1). The focus of efficiencies in service supply chains is on management of capacity, flexibility of resources, information flows, service performance and cash flow management. Critical factors are demand management, customer relationship management and supplier relationship management in manufacturing supply chains and service supply chains. Sales force in any company – big or small, manufacturing or service, are charged with generating product sales from assigned customer accounts in independent territories. However, the evolving selling environment today is much more complex, demanding significant changes in performance metrics, goals, control and compensation. South-East zone is an epitome of developing and concentrated businesses that engage sales force east of the Niger. The role of sales and marketing is becoming increasingly important to manufacturing and service firms (big and SMEs) in the South-East. Unfortunately, most of these companies do not apply the theories of sales management to their sales operations. They usually rely on past experience or judgment. Sales management is considered to be recognized management process activities involving the need to plan, set objectives, develop policies, procedures, strategies and tactics, to organize and co-ordinate, direct operations, motivate, communicate, develop staff, supervise and control and evaluate results, (Bolt 1987:28).

In sales management, Alexander Hamilton Institute reported in Kalu (2005:29) that motivation and supervision are two of the most important topics. Four success factors for sales success include: Product and Application, Selling Skills, Time and Territory Management, and Motivation. Among these elements, only motivation is important in all kinds of selling. Ubanagu (2006:190) stated that motivation is the effective managerial application of tangible and intangible incentives

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to improve the performance of the workforce. The obvious and distinctive feature of sales force activity is that it involves personal contact with the customers, that is, the need to persuade through personal visits, and the need to undertake other activities not directly associated with personation. Thus, all classes of sales force or salespeople, namely Route sales people, Sales clerk, Detail sales persons, Account representatives, Sales engineers and Creative sales persons require adequate and proper motivation. The three popular methods of compensating sales people identified by Ubanagu (2006:190) are straight salary, straight commission and combined plans. He further explained thus:-

1. Straight salary: This system is mostly adopted when the management wants to motivate sales people to achieve objectives other than short run volume. Straight salary method of compensation is adopted in the following situations:-

a. When the individual sales person‟s impact on sales volume is very difficult to measure in a reasonable time;

b. Where the sales people are engaged in missionary selling as in the MTN Nigeria; and

c. When the selling process is complex and involves a team or multi-level selling effort as in that of Guinness Nigeria Plc.

2. Straight commission: A commission is payment for achieving a given level of performance and are based on a certain percentage (%) of the sales essence units volume. However, MTN and Guinness companies base their commission on the profitability of sales to motivate the sales force in order to extend effort on the most profitable product or customers.

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