To Sell In Combo Or Not Essay

To Sell In Combo Or Not. Essay, Research Paper

To Sell in Combo or Not.

It was hot–hotter than usual for the first week in September,

and Ed Jefferson was not eager to go out in the heat and sit in his

car while the air conditioning cooled it off. He put his feet up,

stared out over the tree tops from his cool office and tried to think

of all of the alternatives he had for solving his problem.

Ed had been general sales manager of KRQZ-FM and KRQO-AM for

twelve years and he had never faced a more difficult, perplexing

decision: should he sell the two stations in combo or should he keep

the two separate sales staffs structured the way they were now. It

was budget time, and Ed had to make a decision within the next few

days so he could finalize next year’s budget. It was his budget, as

the new general manager, Tyler Saunders, had told him. Ed liked

working for Tyler, who was an ex-program director, and like the

freedom and autonomy Tyler had given him for the six months Tyler had

been general manager.

Ed Jefferson picked up the KRQZ/KRQO Weekly Sales Report,

Monthly Forecast Report and Miller-Kaplan Report (these reports

appear after page five, at the end of this case). He began examining

the reports carefully, for what seemed to him to be the thirtieth

time, trying to find the right questions to ask and some hints of

what some solutions might be.

KRQZ-FM’s revenue was running five percent ahead of last year’s

and was thirteen percent over budget, year-to-date. This situation

was quite gratifying to everyone (including corporate) because the

station had experienced some ratings declines in the past year. For

the last seven years KRQZ-FM, known by everyone as The Z, had

featured the same programming–a bright, personality-oriented Adult

Contemporary (AC) format with a highly recognizable, very funny

morning team. At one time the station had been a strong number-two

to the perennial market leader, KNNN-AM, an old-line news/talk

station with a huge but older-skewing audience. However, The Z’s

audience had fallen off in the last year as several other AC stations

began to compete for its 25-54 core audience. One station, known as

The Cloud, had virtually tied The Z in the last three books in the

all-important 25-54 demo. For the last four Arbitron rating books,

The Z had ranked fourth 25-54, and in two books it was behind The

Cloud. The Z had a 4.4 12+ share in the latest Arbitron, in contrast

to an 8.1 12+ share for KNNN-AM.

However, The Z’s sales staff had very little turnover, was the

highest paid in town and its salespeople were extremely well liked

among the agencies and clients in the top-ten market in which they

were located. So in spite of the rating declines, the salespeople

had consistently made the station the number-two biller in town,

according to the Miller-Kaplan reports. The staff reported to the

KRQZ-FM local sales manager, Olivia Mitovsky, who had been in the job

for five years and had the full support, respect and admiration of

everyone in the department. The six-person sales staff and Olivia

were considered to be miracle workers–the local staff’s share of

revenue continually outperformed the station’s 12+ rating share by

over two-to-one.

This outstanding sales performance also made Ed Jefferson, the

general sales manager, a hero, too. His boss, Tyler Saunders, and

everyone at corporate headquarters knew he and Olivia were doing an

excellent job–that’s one of the reasons everyone trusted him to come

up with a solution to the problem: KRQO-AM’s billing problem.

KRQO’s format was unique in the market–an oldies, Music-Of-

Your-Life-type format that featured Frank Sinatra, Patti Page, big

bands and songs from the late ’40s and early ’50s. KRQO’s audience

was primarily 44+ and 55+. But because it had no competition in the

format, it pulled good 12+ numbers. In the latest Arbitron it had a

5.8 12+ share, but ranked tenth 25-54.

KRQO had a six-person sales staff that reported to a local sales

manager, Oscar Smithers. As well liked and respected as Olivia

Mitovsky was by The Z’s staff, Oscar Smithers was disliked by the

KRQO staff, with one exception–a young, attractive, vivacious,

aggressive, female salesperson who was perceived by the other five to

be Oscar’s favorite. The perception of favoritism (in account

assignments and new leads) had gotten to such a point that virtually

everyone on both staffs assumed that Oscar was having an affair with

the salesperson. The other five salespeople on KRQO also complained

bitterly about the paperwork that Oscar made them do: daily call

reports, detailed weekly planners, weekly projections and complete

prospect lists updated weekly.

The Z salespeople only had to do daily call reports that merely

consisted o

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