Reference no: EM132208708

Martin’s Electronics: A Short Case

Martin’s Electronics is a very popular chain of appliance and consumer electronics stores located throughout the South (USA). Robert Martin, 50 years old, opened his first store in Tallahassee, Florida in 1986. He wanted to create a store where the salespeople are highly knowledgeable about all the products, and who do not push products the customer doesn’t need. He did not want to sink to the level of “bait and switch” tactics just to make a sale. Over the years the chain developed a reputation of being a great place to shop because the salespeople are so friendly, helpful, and knowledgeable about the products.

There are now 20 stores located in Alabama, Tennessee, Virginia, Georgia, and Florida. All the stores are profitable, although this varies from store to store. The average store employs 30 people, most of whom are sales personnel. In the late 1990’s, sales began to level off, and in 2003, started declining. To figure out what was going on with sales and profitability, Martin hired a well-known consulting firm based in Atlanta to do a thorough analysis of the situation. The consultants examined financial data, visited several of the stores, interviewed managers and salespeople, and visited competing electronics stores. Maya Smith, lead consultant on the project, summarized their analysis of the situation as follows:

“Mr. Martin, you have prime store locations, an excellent selection of merchandise, a good pricing policy, and an efficient distribution system. What we think you need to do is pursue a more aggressive sales policy in the stores. Competition has increased tremendously in your market sector, and clinching sales on the premises is the key to continued success. We recommend a two-part strategy. First, we think you need to institute a formal sales training program for your salespeople. This should cover some product knowledge, but should focus mainly on advanced sales techniques. To reinforce your concern about sales, we also recommend that you replace your current hourly pay plan for salespeople with a system based partly on hourly pay and partly on commission.”

Martin pondered the consultant’s recommendations. It was true that Martin Electronics had never used formal sales training. Salespeople had been viewed as friendly, knowledgeable order takers. Sales training was expensive. Would it be effective? And what about commissions? How would the sales staff  react? How would the non-sales staff react? How would the customers react? Would the sales staff become overly aggressive? Could training be used without the commission plan, or vice versa?

You and your team of consultants want to get the contract ($$) to help Martin determine whether the recommendations should be implemented company-wide.

1) What research design would you use to answer his questions?

2) Discuss the issue of measurement in your research design. What should be measured, how should it be measured, and when should it be measured?

3) Discuss any threats to the validity of your design.

4) Could the Hawthorne Effect come into play?