Case # 5.2 . Heirloom photo plan. PLEASE ANSWER FOUR QUESTIONS AT THE END OF THE CASE, in two or three
Case # 5.2 . Heirloom photo plan. PLEASE ANSWER FOUR QUESTIONS AT THE END OF THE CASE, in two or three
pages.
Please see the attach file. thanks.
CASE 5-2 Heirloom Photo PlansHeirloom Photos sells a $900 photography plan to rural customers using a commissioned sales force. Rather than pay the price up front, most customers pay $250 down and make 36 monthly payments of $25 each. The$900 plan includes the following:1.A coupon book good for one free sitting every six months for thenext Fve years (10 sittings) at any Heirloom-approved photo studio. Thecustomer receives one free 11-by-14-inch black-and-white print. Additionalphotos or color upgrades can be purchased at the photographer’s retailprices.2.To preserve the 11-by-14-inch photos, the family name is embossedin 24-carat gold on a leather-bound photo album.The embossed leather album, with a retail value of $300, costs Heirloom$75. Each sitting and free 11-by-14-inch print, with a retail value of $150,costs Heirloom only $50 because photographers are given exclusive rights toall Heirloom customers in a geographic region and have the opportunity too±er customers upgrades to color and/or more pictures.The commissioned sales sta± is paid on the 10th of each month, based uponthe prior month’s sales. The commission rates are as follows:NUMBER OF PLANSSOLDCOMMISSIONQUANTITY BONUSFewer than 100$100 per plan101 to 200$125 per planOn sale of plan #101, $2,500 is paid to cover the extra$25 on the first 100 salesMore than 200$150 per planOn sale of plan #201, $5,000 is paid to cover the extra$25 on the first 200 salesOver 70% of all agents sell at least 101 plans per year; 40% sell over 200.There is a strong sales surge before year-end as customers purchase plans togive as holiday gifts. About 67% of all agents reach their highest incentivelevel in late November or December. Heirloom treats the sales sta± and the
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