ETHICAL AND LEGAL ISSUES IN SELLING

2. ETHICAL AND LEGAL ISSUES IN SELLING 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? • Which guidelines should salespeople consider when confronting situations involving an ethical issue? • Which laws apply to personal selling? SOME QUESTIONS ANSWERED IN THIS CHAPTER ARE: 3-2 McGraw-Hill/Irwin

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

4. 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 3-4 McGraw-Hill/Irwin

5. Ethics and Partnering Relationships • Partnerships between buyers and sellers cannot develop when salespeople behave unethically or illegally. • Trust deteriorates if integrity 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. 3-5 McGraw-Hill/Irwin

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

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

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

9. 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 3-9 McGraw-Hill/Irwin

10. 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 3-10 McGraw-Hill/Irwin

11. 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? 3-11 McGraw-Hill/Irwin

12. 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 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? 3-12 McGraw-Hill/Irwin

13. 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. 3-13 McGraw-Hill/Irwin

14. 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 3-14 McGraw-Hill/Irwin

15. Relationships with Customers • Deception • Telling half-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 3-15 McGraw-Hill/Irwin

16. Relationships with Customers (continued) • Special treatment • Confidential information • Backdoor selling 3-16 McGraw-Hill/Irwin

17. 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. 3-17 McGraw-Hill/Irwin

18. Relationships with the Salesperson’s Company • Expense accounts • Act as though you are spending your own 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 3-18 McGraw-Hill/Irwin

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

20. 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. Common law grows out of court decisions. 3-20 McGraw-Hill/Irwin

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

22. 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. An implied warranty is not actually stated but is still an obligation defined by law. 3-22 McGraw-Hill/Irwin

23. Misrepresentation or Sales Puffery • 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.” 3-23 McGraw-Hill/Irwin

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

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

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

27. 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. 3-27 McGraw-Hill/Irwin