Theresa Campana owns The Olentangy Group (named after a localriver)—a manufacturer’s rep agency. The Olentangy Group sellssimilar products for noncompeting producers in the technologyindustry. She is deciding whether to add a new product line—servinganother producer. She is very concerned because, although she wantsmore lines, she feels that something is wrong with her latestcandidate.
Theresa graduated from a large Midwestern university in 2006with a B.S. in business. She worked selling cell phones for a year.Then Theresa decided to go into business for herself and formed TheOlentangy Group. Looking for opportunities, Theresa placed severalads in her local newspaper in Columbus, Ohio, announcing that shewas interested in becoming a sales representative in the area. Shewas quite pleased to receive a number of responses. Eventually, shebecame the sales representative in the Columbus area for threelocal computer software producers: Accto Company, which producesaccounting-related software; Saleco, Inc., a producer of salesmanagement software; and Invo, Inc., a producer of inventorycontrol software. All of these companies were relatively small andwere represented in other areas by other sales representatives likeTheresa. The companies often sent her leads when customers from herarea expressed interest at a trade show or through the company’swebsite.
Theresa’s main job was to call on possible customers. Once shemade a sale, she would fax the signed license agreement to therespective producer, who would then UPS the programs directly tothe customer or, more often, provide a key code for a websitedownload. The producer would bill the customer, and Theresa wouldreceive a commission varying from 5 to 10 percent of the dollarvalue of the sale. Theresa was expected to pay her own expenses.And the producers would handle any user questions, either by using800 numbers for out-of-town calls or by e-mail queries to atechnical support group.
Theresa called on anyone in the Columbus area who might use theproducts she sold. At first, her job was relatively easy, and salescame quickly because she had little competition. Many nationalcompanies offer similar products, but at that time they were notwell represented in the Columbus area. Most small businesses neededsomeone to demonstrate what the software could do.
In 2008, Theresa sold $250,000 worth of Accto software, earninga 10 percent commission; $100,000 worth of Saleco software, alsoearning a 10 percent commission; and $200,000 worth of Invosoftware, earning a 7 percent commission. She was encouraged withher progress and looked forward to expanding sales in the future.She was especially optimistic because she had achieved these salesvolumes without overtaxing herself. In fact, she felt she wasoperating at about 60 percent of her capacity and could easily takeon new lines. So she began looking for other products she couldsell in the Columbus area.
A local software company has recently approached Theresa aboutselling its newly developed software, which is basically a networksecurity product. It is designed to secretly track all of thekeystrokes and mouse clicks of each employee as he or she uses thecomputer—so that an employer can identify inappropriate uses of itscomputers or confidential data. Theresa isn’t too enthusiasticabout this offer because the commission is only 2 percent onpotential annual sales of about $150,000—and she also doesn’t likethe idea of selling a product that might undermine the privacy ofemployees who are not doing anything wrong.
Now Theresa is faced with another decision. The owner of theMetalCoat Company, also in Columbus, has made what looks like anattractive offer. She called on MetalCoat to see if the firm mightbe interested in buying her accounting software. The owner didn’twant the software, but he was very impressed with Theresa. Aftertwo long discussions, he asked if she would like to help MetalCoatsolve its current problem. MetalCoat is having trouble withmarketing, and the owner would like Theresa to take over the wholemarketing effort.
MetalCoat produces solvents used to make coatings for metalproducts. It sells mainly to industrial customers in the Page637mid-Ohio area and faces many competitors selling essentially thesame products and charging the same low prices.
MetalCoat is a small manufacturer. Last year’s sales were$500,000. It could handle at least four times this sales volumewith ease and is willing to expand to increase sales—its mainobjective in the short run. MetalCoat’s owner is offering Theresa a12 percent commission on all sales if she will take charge of itspricing, advertising, and sales efforts. Theresa is flattered bythe offer, but she is a little worried because it is a differenttype of product and she would have to learn a lot about it. The jobalso might require a great deal more traveling than she is doingnow. For one thing, she would have to call on new potentialcustomers in mid-Ohio, and she might have to travel up to 200 milesaround Columbus to expand the solvent business. Further, sherealizes that she is being asked to do more than just sell. But shedid have marketing courses in college and thinks the newopportunity might be challenging.
Evaluate Theresa Campana’s current strategy and how the proposedsolvent line fits in with what she is doing now. What should shedo? Why?
