Discussion Questions on TAM
Instructions: Read and study the case and complete the questions at the end of the study.
Solution.
Discussion Questions on TAM
1. Sales by the outside sale staff account for 15 percent of the business. Management at TAM suspects that with proper sales, this can go even higher. However, the outside sales staff feel they are not adequately equipped or compensated to handle the kind of work expected of them. First, they believe that with the rise in the cost of gas, they cannot make calls even to smaller, remote clients. Further, they want a commission on sales made through online applications from their regions. Loss of sales from such poor customer service is unacceptable as it gives competitors an advantage to come in and replace the company permanently. Therefore, since the chief complaint is on the commission the company provides, I propose raising the commissions to 15 percent. This may be a bit high for the enterprise but the loss in revenue due to reduced sales and loss of customers may prove worse. Further, threatening the workers with the sack cannot work since they will be simply re-enlisted by competitors. Hence, incentives such as bonuses on certain sales targets and public recognition of the best sales agents may go a long way to boost the morale of the sales staff (Hohenberg & Homburg, 2016).
2. In the early years, TAM customers did not seem to mind the price of its tea. Due to their loyalty, customers simply wanted the company’s tea due to its quality. However, the past months has left seen prices go up considerably due to the increased costs of operations of the company. Such has seen competitors swoop in and take advantage by offering prices as low as half of the price charged by TAM. Because of this, the company has lost part of its market share. However, restoring the company’s attractiveness first and foremost involves targeted advertising towards its loyal customers. Instead of incurring high costs in unnecessary advertisements, the company can instead target loyal customers first and secure their market (Chung, n.d.). Then, they can plan to progressively lower their prices while exploring cheaper methods of production.
3. Orders placed to the company for tea varies with the season. More orders come in during cold season due to the demand for tea. However, most of the time, retail owners under-order their purchases, therefore, leading to shortages to consumers. The consumers start making frantic calls to the Cleveland offices complaining of empty shelves. This is easily corrected by training retailers to make their orders early enough twice or three times in a year. They should do this while keeping in mind the trend of sales at different points of the year, therefore, preventing them from underquoting the required stock and therefore avoiding the need for emergency shipping (Damron, Rupp, & Smith, 2016).
4. TAM requires its customers to pay their dues within 30 days of making their order. However, the average period of payment for most customers is usually 54 days. The company should use its sales agents to collect the arrears due while clearly stating the commissions payable to the agents. Also, after sending invoices by mail or through fax, the company can also do a follow-up mail or fax reminding the customer to make their payments within the next 30 days. By explaining to the customers that delayed payments also delays the shipment of new products, TAM can therefore gently assert that any payments after 40 days may face a slight fine. The company may also put only its most trusted sales people on the duty of collecting such revenue and not just any other outside sales person (Hohenberg & Homburg, 2016).
5. For TAM, experimenting with new products has proved unsuccessful hence only turning out to be an expensive venture. Although the company has doubled the type of tea it produces in the past two years, consumers only tend to stick to the traditional varieties produced by the company. However, the leaders admit that the company has a superior product to that of their competitors. Therefore, the firm can afford to stop experimenting with multiple new products and instead focus on improving what they have in the market through repackaging and fancy displays during festive seasons (Soviar & Závodská, 2011). The best way for the company to present a new product to the market is through gradual introduction which means bringing in the new product and marketing it along the existing ones for a significant period to allow consumers to identify with it.
6. The company should
re-evaluate its supply chain which is too complicated. The founders focused
more on selling to their retail markets than on scale, efficiency, or
reliability of their supply chain. Since tea has a long shelf life, then its
shipment can be done twice a year after
obtaining reports from consumption trends on the quantity demanded (Esper &
Russell Crook, 2014). The company should also consider
hiring permanent salespeople on a regular
monthly salary. The move will guarantee ready, loyal, and motivated employees
who have a target to meet and a sense of loyalty to the organization. A
permanently employed sales agent will not want to take out a commission on
payments received while in the field. Further, they understand the goals of the
organization and will, therefore, strive
to help the company meet its targets.
References
Chung, H. Marketing Control and Marketing Standardisation Strategies: An Integrated Typology. SSRN Electronic Journal. http://dx.doi.org/10.2139/ssrn.1071192
Damron, T., Rupp, W., & Smith, A. (2016). Inventory control in the retail sector: case studies of best business practices. IJPM, 9(3), 354. http://dx.doi.org/10.1504/ijpm.2016.076309
Esper, T. & Russell Crook, T. (2014). Supply Chain Resources: Advancing Theoretical Foundations and Constructs. J Supply Chain Manag, n/a-n/a. http://dx.doi.org/10.1111/jscm.12054
Hohenberg, S. & Homburg, C. (2016). Motivating Sales Reps for Innovation Selling in Different Cultures. Journal Of Marketing, 80(2), 101-120. http://dx.doi.org/10.1509/jm.14.0398
Soviar, J. & Závodská, A. (2011). Knowledge and Its Creation – the Case of Introducing Product to the Market. Business: Theory And Practice, 12(4), 362-368. http://dx.doi.org/10.3846/btp.2011.37