Final answer:
An oil company can increase sales margins by providing performance-based incentives to employees and tiered rewards to customers that incentivize larger or more frequent orders. Reducing operational costs and leveraging these savings in strategic ways can also improve margins. Sales volume may also increase by incentivizing loyal and repeat business.
Step-by-step explanation:
An oil company looking to increase sales margin while offering various discounts can consider several strategies to achieve this goal. Rewards to employees might include performance-based incentives, which encourage more efficient work practices that could reduce costs and improve service delivery. Similarly, offering rewards to customers that incentivize larger or more frequent orders can increase sales volume and potentially offset the discounts given. To generate such an increase in margins through rewards, the company needs to ensure that the cost of these rewards is less than the additional profit generated from the induced sales.
For example, similar to a messenger company whose costs decrease as gasoline prices fall, an oil company could leverage reductions in operational costs to either increase its coverage area or to offer more competitive pricing, increasing its market share. Rewards or incentives for employees could be tied to finding cost-saving measures or meeting specific performance targets that contribute directly to reduced operational costs. On the customer side, tiered rewards programs could be introduced that provide increasing benefits for loyalty and repeat business, encouraging customers to consolidate their purchases with the oil company. Such strategic use of rewards and incentives could help in improving sales margins without compromising on the competitiveness of the discounts offered.