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 58 3-1 McGraw-Hill/Irwin

Ethics and Personal Selling Ethics are the principles governing behavior of an individual or a group. These principles establish appropriate behavior, indicating what is right and wrong. What is ethical can vary from: Country to country Industry to industry Page 60 3-2 McGraw-Hill/Irwin

Ethics and Personal Selling (continued) vs. Ethics and partnering relationships Persuasion is trying to influence the buyer’s decision, not force it. Manipulation eliminates or reduces the buyer’s choice unfairly. Page 60 3-3 McGraw-Hill/Irwin

Factors Affecting Ethical Behavior of Salespeople Page 61 3-4 McGraw-Hill/Irwin

Conflicting Objectives Page 62 3-5 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? 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 consequences of this behavior? Would I be upset if this behavior or activity were publicized in a newspaper article? Would society be worse off if everyone engaged in this behavior or activity? Page 64 3-6 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 compromise your principles. Page 65 3-7 McGraw-Hill/Irwin

Selling Ethics and Relationships Relationships and customers Deception Bribes, gifts, and entertainment Special treatment Confidential information Backdoor selling Pages 65-68 3-8 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 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 69 3-9 McGraw-Hill/Irwin

Selling Ethics and Relationships (continued) Relationships with the salesperson’s company Expense accounts Reporting work-time information and activities Switching jobs Pages 69, 70 3-10 McGraw-Hill/Irwin

Selling Ethics and Relationships (continued) Relationships with colleagues Sexual harassment Taking advantage of other salespeople Relationships with competitors Pages 71, 72 3-11 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 72 Common law grows out of court decisions. 3-12 McGraw-Hill/Irwin

Legal Issues (continued) Uniform commercial code Agency Sale Title and risk of loss Oral versus written agreements Obligations and performance Page 72-74 3-13 McGraw-Hill/Irwin

Legal Issues - Warranties A warranty is an assurance by the seller that the products will perform as represented. An expressed warranty is an oral or written statement by the seller. Page 74 An implied warranty is not actually stated but is still an obligation defined by law. 3-14 McGraw-Hill/Irwin

Legal Issues (continued) 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.” Illegal business practices Page 74-76 3-15 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 Page 76-78 3-16 McGraw-Hill/Irwin

International Ethical and Legal Issues Lubrication Subordination Resolving cultural differences Legal issues Page 78-80 3-17 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. Page 80 3-18 McGraw-Hill/Irwin