1. Some questions answered in Chapter 3
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?
What guidelines should salespeople consider when confronting situations involving an ethical issue?
What laws apply to personal selling?

2. Who does a sales representative represent?

3. Is asking questions unethical?
Yes No

4. Is asking questions unethical?
What about asking questions about the buyer’s financial status and using that information to set the price of a new franchise?
Yes No

5. Deception
Without reference to the textbook, create a list of the opportunities for deception in sales.

6. Expense accounts When does use of an expense account become abuse?
Develop a set of guidelines you’d give to salespeople.

7. Factors affecting ethical behavior of salespeople
Exhibit 3.1
Social norms
Personal goals
Customer goals
Company goals
Personal code of ethics
Ethical behavior
Company policies
Laws
Values of significant others

8. Conflicts confronting salespeople
Exhibit 3.2
Company objectives
Increase profits
Increase sales
Reduce sales costs
Build long-term relationships
Salesperson objectives
Increase compensation
Receive recognition and promotion
Satisfy customers
Build long-term relationships
Maintain personal code of ethics
Customer objectives
Increase profits
Solve problems, satisfy needs
Reduce costs
Build relationships with suppliers

9. Have you ever said to yourself…
“Everyone behaves unethically in this situation.”
“No one will be hurt by this behavior.”
“This behavior is the lesser of two evils.”
“This is the price one has to pay for being in business.”

10. Has a salesperson ever acted unethically with you?
How would you describe the experience?

11. How would the salesperson have answered these questions?
Exhibit 3.5
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?

12. How would the salesperson have answered these questions?
Exhibit 3.5
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?

13. Which of these acts is most ethical?
Giving preferential treatment to some customers.
Saying negative things about a competitor’s product.
Giving expensive gifts to a buyer.
Paying off a purchasing agent if it is common practice in that country.
Using a high-pressure sales approach when you know the product is in the customer’s best interests.

14. Other unethical acts
Selling a product to a customer if you know a better product exists for that application.
Telling a customer about the poor performance features of a competitor’s product.
Padding your expense account to make extra money if your supervisor suggests you do it.

15. Buyer’s view of unethical sales behaviors
Exhibit 3.7
Exaggerates benefits of product.
Passes the blame for something s/he did to someone else.
Lies about product availability.
Misrepresents guarantee.
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 s/he does not know the correct answer.
Sells hazardous products.

16. U.C.C.: Is the salesperson an agent?
A person who acts in place of his or her company is an agent.
Authorized agents of a company have the authority to legally obligate their firm in a business transaction.
The authorization does not need to be in writing.

17. U.C.C.: When is a sale made?
A sale is defined as “the transfer of title to goods by the seller to the buyer for a consideration known as price.”
Any time a salesperson makes an offer and receives an unqualified acceptance, a contract exists.
A sale is made when the contract is completed and title passes from the seller to the buyer.

18. U.C.C.: Who has title to the merchandise?
If the terms of the contract specify free on board (FOB) destination, the seller has title until the goods are received at the destination. Any loss or damage incurred during transportation is the responsibility of the seller.

19. U.C.C.: Are oral agreements binding?
Yes No
In most cases oral agreements between a salesperson and a customer are just as binding as written agreements.
Normally, written agreements are required for sales over $500.

20. U.C.C.: What is good faith performance?
When the salesperson and the customer agree on the terms of a contract, both firms must perform according to those terms in “good faith.”

21. U.C.C.: What is the difference between an expressed and an implied warranty?
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.
An implied warranty is not actually stated but is still an obligation defined by law.

22. Is the salesperson in legal trouble?
“I’d like to help you out the way the Roseate Company did, but they broke the law when they offered you a free case of toilet paper with every 12 cases you buy.”
Yes No
If the statement is untrue, then it is business defamation and is illegal.

23. Can the buyer sue the supplier if this turns out not to be true?
“Linda, I tell you this new line of Chippewa China is the best line on the market today. Its quality can’t be beat!”
Yes No
Probably not. This most likely would be considered “puffery” since no specific statement about the inherent capabilities of the product was given.

24. Legal / Not legal?
“I think we can do business together. I’ll go ahead and buy 3000 units today, but you’ll need to agree to buy the shipping from us.”
Legal
Not legal
This is forced reciprocity. Reciprocity is only legal when both parties consent to the agreement willingly.

25. Legal / Not legal?
“Yes, I can ship you three units of the new BriteSpa® line. However, we still need to get rid of our remaining SassySpa® units, so I’ll have to ship you two of those at the same time.”
Legal
Not legal
This is a tying agreement. A buyer cannot be required to purchase one product in order to get another.

26. Is Catrice in legal trouble?
“Catrice, I just found out that Don called me back last week about our new shipment of afghans, but you took the sale instead of giving me the message.”
Illegal
Legal but unethical
Legal and ethical
Taking another salesperson’s customer is unethical, but it is not illegal.

27. Are the salespeople in legal trouble?
“Look, neither of us is making any money this way. Let’s do this: you take everything west of Linden Avenue and I’ll only sell east of there. As long as we each stay in our territory, we’ll both do a lot better.”
Illegal
Legal but unethical
Legal and ethical
This is a conspiracy, and is illegal.

28. Legal?
“You’re right, Tom. Ben really is a pain to deal with. He’s always trying to find some new way to get the siding for houses he’s building at a reduced rate. Tell you what: from now on, whichever one of us he calls first sets the price, and the other one agrees to match it exactly. That way we’ll both be able to survive, but we won’t be guilty of fixing prices.”
Illegal: this is collusion. Competitors cannot agree to charge the same price for equipment a buyer is considering.
Legal
Illegal

29. Is the sales manager in legal trouble?
“Sandy, I need you to go out to each of the hardware stores in town and buy one Amax generator this week. Then next week, go to each store and buy two more. I know they’re doing some market research right now, and I want to make them think their new unit really is a hit.”
Illegal
Legal but unethical
Legal and ethical
This is an illegal interference with competitors.

30. Is the sales manager in legal trouble?
“JoeBob, we’ve authorized you to give the salespeople in each retailer’s store $100 for each unit they sell in the next two weeks. Here’s a letter you can give to each clerk – they’ll love the chance to pocket some extra cash. Just keep it hush-hush – we don’t want our competitors to find out about it.”
Legal
Illegal
Push money (“spiffs”) is legal as long as the store owners agree to it and it is offered to every salesperson.

31. Is the salesperson in legal trouble?
“Bill, Yolanda tells me that Trax is offering to take $50 per unit off their price. We want to do keep doing business with you – in fact, we really need to have you continue to sell our line rather than theirs. So here’s what I’ll do: to show you how much we value your business, we’ll take $60 per unit off our price.”
Legal
Illegal
Maybe. This is price discrimination, and will be illegal if the same offer is not made to the other stores carrying your line.

32. Legal?
“Abe, these new environmental regulations in the town of Yardley are really eating into our profits. I know you can’t be doing any better than we are. Let’s agree that for the next four months, we will both bid $16.75 per cubic foot for any jobs in Yardley. That way, we can keep from losing our shirts!”
Legal
Illegal
Illegal! This is price fixing. Competitors cannot agree to set prices.

33. Guidelines to avoid violating laws
Be sure all statements about your product are accurate.
Be sure all positive statements about performance can be supported by evidence.
Remind customers to pay attention to warnings and operating instructions.
If customers contemplate using your product incorrectly, caution them.
Assess your customer’s experience – your legal obligations are greater with unsophisticated customers.
Don’t make negative statements about a competitor’s product, financial condition, or business practices.

34. How do you deal with sexual harassment by customers?
Don’t become too dependent on one customer.
Clearly indicate that you are in control and will not be passive.
Utilize the sexual harassment policies of your firm and your customer’s firm.

35. Cultural relativism Ethical imperialism
What do you do when the ethical standards in a country differ from the standards in your country?
Cultural relativism
The view that no culture’s ethics are superior.
Ethical imperialism
The view that ethical standards in one’s home country should be applied to one’s behavior across the world.

36. Ethical and legal issues in relationships
Importance
High
Laws
Ethics
Low
Solo
Exchange
Functional Relationship
Relational
Partnership
Strategic
Partnership

37. Any questions about the terminology?
Administrative law
Agent
Backdoor selling
Bribes
Business defamation
Collusion
Common law
Conspiracy
Contract to sell
Credulous person standard
Cultural relativism
Deception
Ethical imperialism
Ethics
Expressed warranty
Free on board (FOB) destination
FOB factory
Foreign Corrupt Practices Act
Implied warranty
Invitation to negotiate
Kickbacks
Lubrication
Offer
Order
Price discrimination
Reciprocity
Resale price maintenance
Sale
Sales puffery
Sexual harassment
Spiffs (push money)
Statutory law
Subordination
Tying agreement
Uniform Commercial Code (UCC)
Warranty