Chapter 3 Topics

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Chapter 3 Topics

• 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?

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Thinking it Through
Who does a sales representative represent?
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Thinking it Through
Is asking questions unethical?
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Is asking questions unethical?

• What about asking questions about the buyers
  financial status and using that information to
  set the price?

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Thinking it Through
What opportunities are there in sales for
deception?
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Thinking it Through
What opportunities are there in sales for bribes
and gifts?
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Thinking it Through
What opportunities are there in sales for misuse
of confidential information?
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Thinking it Through
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Thinking it Through
What opportunities are there in sales for abuse
of expense accounts?
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Thinking it Through
What opportunities are there in sales for
switching jobs?
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Factors Affecting Ethical Behavior of Salespeople
Exhibit 3.1
Social Norms
Personal Goals
Customer Goals
Company Goals
Ethical Behavior
Personal Code of Ethics
Company Policies
Laws
Values of Significant Others
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Conflicts Confronting Salespeople
Exhibit 3.2
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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.
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Has a salesperson ever acted unethically with you?

• Write down a description of the experience.

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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?

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

• 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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Would YOU

• Give preferential treatment to some customers?
• Say negative things about a competitors product?
• Give expensive gifts to a buyer?
• Pay off a purchasing agent if it is common
  practice in that country?
• Use a high-pressure sales approach when you know
  the product is in the customers best interests?

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Would YOU

• Sell a product to a customer if you know a better
  product exists for that application?

• Tell a customer about the poor performance
  features of a competitors product?
• Pad your expense account to make extra money if
  your supervisor suggests you do it?

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Buyers View of Unethical Sales Behaviors
Exhibit 3.7

• Exaggerates benefits of product.
• Passes the blame for something he or she 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 he or she does not
  know the correct answer.
• Sells hazardous products.

Source Adapted from William Bearden, Thomas
Ingram, and Raymond LaForge, Marketing
Principles and Perspectives (New York)
Irwin/McGraw-Hill, 1998), p. 512.
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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.

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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.

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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.
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U.C.C. Are oral agreements binding?

• 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.

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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.
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U.C.C. What is 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.

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Is the salesperson in legal trouble?
Id 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.

• If the statement is untrue, then it is business
  defamation and is illegal.

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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 cant be beat!

• Probably not. This most likely would be
  considered puffery since no specific statement
  about the inherent capabilities of the product
  was given.

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Is the buyer in legal trouble?
I think we can do business together. Ill go
ahead and buy 3000 units today, but youll need
to agree to buy the shipping from us.

• Yes, this is forced reciprocity. Reciprocity is
  only legal when both parties consent to the
  agreement willingly.

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Is this reciprocity?
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Is the salesperson in legal trouble?
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 Ill have to
ship you two of those at the same time.

• Yes, this is a tying agreement. A buyer cannot be
  required to purchase one product in order to get
  another.

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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.

• No, taking another salespersons customer is
  unethical, but it is not illegal.

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Are the salespeople in legal trouble?
Look, neither of us is making any money this
way. Lets do this you take everything west of
Linden Avenue and Ill only sell east of there.
As long as we each stay in our territory, well
both do a lot better.

• Yes, this is a conspiracy, and is illegal.

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Are the salespeople in legal trouble?
Youre right, Tom. Ben really is a pain to deal
with. Hes always trying to find some new way to
get the siding for houses hes 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 well both be able to survive,
but we wont be guilty of fixing prices.

• Yes, this is collusion. Competitors cannot agree
  to charge the same price for equipment a buyer is
  considering.

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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 theyre doing some
market research right now, and I want to make
them think their new unit really is a hit.

• Yes, this is an illegal interference with
  competitors.

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Is the sales manager in legal trouble?
JoeBob, weve authorized you to give the
salespeople in each retailers store 100 for
each unit they sell in the next two weeks. Heres
a letter you can give to each clerk theyll
love the chance to pocket some extra cash. Just
keep it hush-hush we dont want our competitors
to find out about it.

• Push money (spiffs) is legal as long as the
  store owners agree to it and it is offered to
  every salesperson.

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Is the salesperson in legal trouble?
Yolanda, Jasper tells me that BonnieBee 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 heres what Ill
do to show you how much we value your business,
well take 60 per unit off our price.

• Maybe. This is price discrimination, and will be
  illegal if the same offer is not made to the
  other stores carrying your line.

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Is the salesperson in legal trouble?
Abe, these new environmental regulations in the
town of Yardley are really eating into our
profits. I know you cant be doing any better
than we are. Lets 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!

• Yes, this is price fixing. Competitors cannot
  agree to set prices.

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Sexual Harassment
What is sexual harassment?

• Dealing with harassment from customers
• Dont 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 customers firm.

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What do you do when the ethical standards in a
country differ from the standards in your country?

• Cultural relativism
• The view that no cultures ethics are superior.

• Ethical imperialism
• The view that ethical standards in ones home
  country should be applied to ones behavior
  across the world.

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Ethical and Legal Issues in Relationships
Importance
High
Laws
Ethics
Low
Solo Exchange
Functional Relationship
Relational Partnership
Strategic Partnership
Source Adapted from Gregory Gundlach and Patrick
Murphy, Ethical and Legal Foundations of
Relational Exchanges, Journal of Marketing,
October 1993, p. 40. Reprinted with permission
from the American Marketing Association.
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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
• Resale price maintenance
• Reciprocity
• Sale
• Sales puffery
• Sexual harassment
• Spiffs (push money)
• Statutory law
• Subordination
• Tying agreement
• Uniform Commercial Code
• Warranty

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