For this exercise, which is based on a recent media release, you will review Sports Direct (a major UK sports retailer) and the impact of its attractive staff bonus on sales and profitability. But while profits are up, your task is to identify any concerns that they need to manage?
SportsDirect.com is a large sporting goods retailer based in the UK. Founded in the late 1970’s, it is now the UK’s largest retailer of sports clothing and accessories. The centerpiece of their marketing strategy is based around aggressive sales promotion tactics, using significant discounting on well-known brands such as Adidas, Nike and Reebok.
In July 2012, Sports Direct released details of a highly effective staff bonus scheme, which was helped the firm generate record profits. The very attractive bonus scheme introduced by Sports Direct is predicted (by the firm) to enable 2,000 of its 18,000 employees to each earn about £15,000 next month and a likely £36,000 next summer. According to Sports Direct chief executive Dave Forsey had been a “game-changer” and motivated staff to work harder.
In addition, its online sales had increased dramatically (by 82%), which prompted them to announce that their physical future would be “bigger but fewer” Sports Direct stores in the UK.
- Explain why a staff bonus scheme is related to marketing.
- Do you think that it is a good idea to publicly announce the money value of this scheme to the public? Do you think that some customers would prefer lower prices or perhaps start questioning the motivation of Sports Direct staff when they recommend products to them?
- What is the likely impact of 16,000 out of 18,000 employees NOT participating in the bonus? Will these employees become more or less motivated?
- Other than the bonus scheme, what other factors need to be present to help motivate staff?