The Valley Winery Case

Pat Waller, recently hired as sales manager of the San

Francisco region's chain division, was lamenting the

problems he inherited. Despite favorable sales results for

the San Francisco region, turnover was so severe Waller

could not understand how sales increased during the past

several years. He was surprised to learn the average sales

rep had been with the San Francisco division of Valley

Winery for only seven months and sales force turnover

neared 100 percent a year. In fact, only one sales rep had

more than two years' experience. Waller had heard that

high turnover was a problem nationwide but did not expect

such high figures for San Francisco.

Waller supervises two area managers, who in turn direct

nine district managers. District managers supervise

five to six sales reps, of which there are 50 in the San

Francisco division. Approximately 50 new sales reps are

hired each year, but the sales force size remains relatively

constant. Waller knew the increased competitiveness

in the market would make it more difficult to

continue to obtain future sales increases. The excessive

turnover problem would command immediate attention.

THE COMPANY

The Valley Winery, founded in 1933 inNapa, California,

is the largest domestic producer of wine in the United

States. Started with only a $7,500 investment at the end

of Prohibition, it has become the leading producer of

low-priced, consistent-quality wines. Favorite brands include

Santo Key and Valley premium table wines, Astral

sparkling wines, Valley brandy, and most recently the

Cool Valley line of wine coolers. As is true with most

other wineries, Valley produces a low-grade, fortified

sherry known in the streets as "Sneaky Pete." This product

appeals to a small market niche and receives virtually

no marketing support. The Valley name does not even

appear on the label, a practice followed by other wineries

as well. Brand names for this low-end product include

Snake-Eye, 20/20, and Acey-Deucy. Valley also bottles

a