Organizations must review and update sales management practices and their compensation strategies according to the different stages of product life cycle (PLC). The PLC can be a valid framework for assessing organizational response in terms of marketing mix variables and sales force compensation strategy based on sales efforts. Fluctuations in sales growth, profit margins, asset turnover, and return on net assets are normal outcomes of the PLC and strongly influence compensation strategy. Restructuring fixed and variable pay in compensation plans according to the PLC will help organizations design an optimal compensation strategy. The primary objective of this article is to propose a framework for selecting an appropriate sales force compensation plan according to the various stages of the PLC.
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