Quota

The term quota generally means a prescribed number for or of something. That prescribed number can either be a minimum or a maximum amount, depending on the reason for imposing a quota. The whole point of a quota is to set a required number so that the goal of an individual, group of people, business, or government will be achieved.

For business and in marketing the term quota usually refers to three kinds of quotas: sales quota, production quota, and poundage or marketing quota.

A sales quota is the minimum volume of sales that has to be met by a sales agent or the entire business. Sales quotas are determined or established by the seller/company. Sales quotas are usually expressed in number of units/items sold, dollars, or even number of sales calls made. Salespeople who achieve or surpass their quotas usually get bonuses as an incentive.

Production quotas can be a minimum or maximum amount depending on the demand for the product. For high-demand products, production quotas are usually set high in order to meet the needed supply. If demand is low, production quotas go down as well to avoid surplus and waste.

Poundage or marketing quotas are limits set by permanent government and international laws. These quotas are set in place to ensure that production and supply are not excessive to drive the market down.

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