The optimal pricing and compensation strategies for heterogeneous salesforce

[[abstract]]Corporations, salespeople and consumers constitute a marketing system. For a corporation emphasizes on the effect of marketing, deciding price and compensation is an important task, because such a decision involves the profits of all members in the whole marketing system, and it also influences the operation of a firm, directly or indirectly. This paper tries to challenge the following tasks: to motivate salesman’s performance and maximizes the profit of a firm on condition that a firm pays the reward to salespeople by the pieces when it faces heterogeneous salesforce. First, we let the price and the compensation rate be decision variables, and establish a mathematical model to find an optimal solution. Then, we find many interesting properties from the features of the optimal solution and make sensitivity analysis of parameters to the optimal solution.