ETHICAL AND LEGAL ISSUES IN SELLING chapter 3 ETHICAL AND LEGAL ISSUES IN SELLING SOME QUESTIONS ANSWERED IN THIS CHAPTER ARE: Why do salespeople need to develop their own codes of ethics? What ethical responsibilities do salespeople have toward themselves, their firms, and their customers? Do ethics get in the way of being a successful salesperson? Which guidelines should salespeople consider when confronting situations involving an ethical issue? Which laws apply to personal selling? Page 56 3-2 McGraw-Hill/Irwin

~Georgia Taylor Moore myCRMcareer “You must practice business with the same integrity and ethics I learned as a child from my grandmother.” ~Georgia Taylor Moore myCRMcareer Page 57 3-3 McGraw-Hill/Irwin

Ethics and Personal Selling Ethics are the ________ governing behavior of an individual or a group. These ________ establish appropriate behavior, indicating what is right and wrong. What is ethical can vary from: Country to country Industry to industry Page 58 3-4 McGraw-Hill/Irwin

Ethics and Partnering Relationships Partnerships between buyers and sellers cannot develop when salespeople behave unethically or illegally. Trust deteriorates if ________ becomes questionable. Legal principles guide market exchange relationships. Ethical principles become increasingly important as firms move to partnerships, particularly strategic partnerships. Basic principle: Customer remains free to make a choice. Pages 58-59 3-5 McGraw-Hill/Irwin

Ethics and Partnering Relationships (continued) vs. Which is unethical? Persuasion is trying to ________ the buyer’s decision, not force it. Manipulation eliminates or reduces the buyer’s choice unfairly. Page 59 3-6 McGraw-Hill/Irwin

Factors Affecting Ethical Behavior of Salespeople Page 60 3-7 McGraw-Hill/Irwin

Personal, Company, and Customer Needs Conflicting Objectives Page 60 3-8 McGraw-Hill/Irwin

Factors Influencing the Ethical Behavior of Salespeople (continued) Company policies Codes of ethics Values of significant others Relatives and friends Other salespeople Sales managers Laws Page 60-62 3-9 McGraw-Hill/Irwin

A Personal Code of Ethics Rationalizations: All salespeople behave “this way” No one will be hurt by this behavior This behavior is the lesser of two evils This conduct is the price one has to pay for being in business Page 62 3-10 McGraw-Hill/Irwin

Checklist for Making Ethical Decisions Would I be embarrassed if a customer found out about this behavior? Would my supervisor disapprove of this behavior? Would most salespeople feel that this behavior is unusual? Am I about to do this because I think I can get away with it? Would I be upset if a salesperson did this to me? Page 63 3-11 McGraw-Hill/Irwin

Checklist for Making Ethical Decisions (continued) Would my family or friends think less of me if I told them about engaging in this sales activity? Am I concerned about the possible ________ of this behavior? Would I be upset if this behavior or activity were publicized in a newspaper article? Would ________ be worse off if everyone engaged in this behavior or activity? Page 63 3-12 McGraw-Hill/Irwin

Choices You Can Make if Your Manager Asks You to Act Unethically Ignore your personal values and do what your company asks you to do. Take a stand and tell your employer what you think. Refuse to ________ your principles. Page 3-13 McGraw-Hill/Irwin

Selling Ethics and Relationships Principle of fairness Equal and fair access to information Withheld information or misrepresented information is unfair Kickbacks, bribes, and other unethical activities are unfair Page 63 3-14 McGraw-Hill/Irwin

Relationships with Customers Deception Telling ________-truths Withholding important information Bribes, gifts, and entertainment Check your motives for gift giving Make sure the customer understands no strings attached Make sure the gift does not violate either companies’ policies Safest gifts are inexpensive business items imprinted with the salesperson’s company logo Pages 64-66 3-15 McGraw-Hill/Irwin

Relationships with Customers (continued) Special treatment Confidential information Backdoor selling Pages 66-67 3-16 McGraw-Hill/Irwin

Buyers’ View of Unethical Sales Behaviors Exaggerates benefits of product. Passes the blame for something he or she did to someone else. Lies about product availability. Misrepresents guarantees. Lies about competition. Sells products that people do not need. Makes oral promises that are not legally binding. Is not interested in customer needs. Answers questions even when he or she does not know the correct answer. Sells hazardous products. Page 68 3-17 McGraw-Hill/Irwin

Relationships with the Salesperson’s Company Expense accounts Act as though you are spending ________ ________ money Reporting work-time information and activities Switching jobs Give ample notice Offer assistance during the transition Don’t burn your bridges Don’t take anything with you that belongs to the company Pages 68-70 3-18 McGraw-Hill/Irwin

Relationships with Colleagues and Competitors Sexual harassment Taking advantage of other salespeople Relationships with competitors Don’t make false claims Don’t criticize Pages 70-71 3-19 McGraw-Hill/Irwin

Legal Issues Statutory law is based on legislation passed by either state legislatures or Congress. Administrative laws are established by local, state, or federal regulatory agencies. Page 71 Common law grows out of court decisions. 3-20 McGraw-Hill/Irwin

Legal Issues (continued) Uniform commercial code Agency Sale Title and risk of loss Oral versus written agreements Obligations and performance Pages 71-72 3-21 McGraw-Hill/Irwin

Legal Issues - Warranties A warranty is an ________ by the seller that the products will perform as represented. An expressed warranty is an oral or written statement by the seller. Page 72 An implied warranty is not actually stated but is still an obligation defined by law. 3-22 McGraw-Hill/Irwin

Misrepresentation or Sales Puffery “This is a top-notch product.” “This product will last a lifetime.” Misrepresentation “Mechanically, this oil rig is a 9 on a scale of 10.” “Feel free to prescribe this drug to your patients, doctor. It’s nonaddicting.” Pages 73-74 3-23 McGraw-Hill/Irwin

Illegal Business Practices Sherman Antitrust Act of 1890 Clayton Act of 1914 Federal Trade Commission Act of 1914 Robinson-Patman Act of 1934 Page 74 3-24 McGraw-Hill/Irwin

Business Defamation Reciprocity Tying agreements Conspiracy and collusion Interference with competitors Restrictions on resellers Price discrimination Privacy laws Do-not-call law Pages 74-77 3-25 McGraw-Hill/Irwin

International Ethical and Legal Issues Subordination Resolving cultural differences Salespeople need corporate support and guidance Legal issues U.S. salespeople are subject to U.S. laws Pages 77-78 3-26 McGraw-Hill/Irwin

Summary Legal and ethical responsibilities of salespeople are important because salespeople may face conflicts between their personal standards and the standards of their firms and customers. Salespeople’s ethical standards determine how they will conduct relationships with their customers, employers, and competitors. Many companies have ethical standards that describe the behavior expected of their salespeople. Good ethics are good business. Statutory laws guide the activities of salespeople in the United States. Pages 78-79 3-27 McGraw-Hill/Irwin