1. 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?
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2. 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
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3. 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.
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4. Factors Affecting Ethical Behavior of Salespeople
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5. Conflicting Objectives
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6. 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?
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7. 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.
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8. Selling Ethics and Relationships
Relationships and customers
Deception
Bribes, gifts, and entertainment
Special treatment
Confidential information
Backdoor selling
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9. 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.
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10. Selling Ethics and Relationships (continued)
Relationships with the salesperson’s company
Expense accounts
Reporting work-time information and activities
Switching jobs
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11. Selling Ethics and Relationships (continued)
Relationships with colleagues
Sexual harassment
Taking advantage of other salespeople
Relationships with competitors
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12. 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.
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Common law grows out of court decisions.
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13. Legal Issues (continued)
Uniform commercial code
Agency
Sale
Title and risk of loss
Oral versus written agreements
Obligations and performance
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14. 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.
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An implied warranty is not actually stated but is still an obligation defined by law.
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15. 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
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16. Business Defamation Reciprocity Tying agreements
Conspiracy and collusion
Interference with competitors
Restrictions on resellers
Price discrimination
Privacy laws
Do-not-call law
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17. International Ethical and Legal Issues
Lubrication
Subordination
Resolving cultural differences
Legal issues
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18. 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.
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