Incentive Mechanism Design For Sales Manager In Marketing

In marking, the entrepreneur who is the owner of the products tends to hire the sales team which is leaded by the sales manager to sell the company's products to get the sales revenue and profits. This employment relationship is a principal-agent relationship, in which the entrepreneur as the principal, the sales manager as the agent. Usually the sales will depend on some exogenous factors,such as the sales manager's personal capacity, customer demand for features,market environment,product quality and so on, while,the demand for enterprise products is significantly effected by some endogenous factors,for example:sales manager and sales team's marketing efforts, corporate advertising for sales promotion. Howener, the sales manager's sales team alwaya have the exogenous factors information which will effect corporate product sales performance, but the information is unknown to the business owner, in addition, sales manager's practical information about his marketing efforts extent can hardly be accurately observed by the business owner, all those give rise to two side information asymmetry, the former is adverse selection as the agent's information can not be observed, the latter is moral hazard as the agent's act can not be observed. Incentive mechanism design is to study how to design a principal-agent wage contract to encourage the agent honestly reports his private information to the principal or to incentive the agent work hard.In this paper, there are mainly from six parts to discuss the incentive mechanism design problem which is between the business owners and the sales manager. The first chapter is descriptions of the research backgrounds of this thesis topic, including the reasons why to select this subject; the current situations of this topic at domestic and abroad, the development trend. The second chapter is a brief comment about the knowledge of marketing, advertising and the role of advertising, and finally analysis the role of the sales manager, introducing some existing motivation theories. Chapter III is to discuss the static bilateral contracts which use a pure adverse selection and a pure moral hazard to discuss how to make the contract between the entrepreneur and the sales manager. Chapter IV are three mixed contracts: adverse selection occurs before the moral hazard, moral hazard occurs prior to adverse selection, and simultaneous moral hazard and adverse selection. The fifth chapter is to discuss the dynamics bilateral contracts, including how to make the contract in the existence of two phases between the entrepreneur and the sales manager. Chapter VI introduces the advertising to analyze the relationship between the sales manager's ability and the advertising investment, to discuss the case of how to make incentive mechanism under the bilateral moral hazard. The last part is summary and prospect.By analyzing how to make incentive mechanisms between the entrepreneur and the sales manage under different situations, each part of the discussion in this paper gets the appropriate conclusion. These conclusions should have some guiding significance between the entrepreneur and the sales manage in the Marketing.The approach of this thesis is: according different characteristics of the incentive problems under different conditions to establish the appropriate mathematical modeling, then Analysis and Solution, finally explaining the appropriate economics or management significances of the conclusions. The knowledge in the process of modeling and solution is involved: Game theory, Operations research, Economics, Mathematics and so on.