Chapter 17

1. Chapter 17 Ethical and Legal Responsibilities of Sales Managers

2. Learning Objectives • Business Ethics • Ethical situations in selling

3. Ethics “the science of moral duty” Sales managers have important ethical responsibilities with regard to their own actions and the actions of their salespeople.

4. Fig. 17-1 Evaluating the EthicalStatus of a Business Decision • Questions to help a sales executive evaluate the ethical status of proposed actions: • Is this sound from a long-run point of view? • Would I do this to a friend? • Would I be willing to have this done to me? (The Golden Rule) • Would I want this action publicized in national media? • Would I tell others about it? • Who is damaged by the action?

5. Ethical situation We always use a manufacturer’s rep to open up a new territory; but once that territory is generating enough revenue to support a company rep, we take it away from the rep and put one of our own salespeople in the territory.” Is this an ethical policy?

6. Fig. 17-2 The American Marketing Association’s Code of Ethics • Professional Conduct Marketers’ professional conduct must be guided by: • The basic rule of professional ethics: not knowing to do harm; • The adherence to all applicable laws and regulations; • The accurate representation of their education, training and experience; and • The active support, practice and promotion of this Code of Ethics. • Honesty and Fairness Marketers should uphold and advance the integrity, honor and dignity of the profession by: • Being honest in serving consumers, clients, employees, suppliers, distributors and the public. • Not knowingly participating in conflict of interest without prior notice to all parties involved; and • Establishing equitable fee schedules including the payment or receipt of usual, customary and/or legal compensation for marketing exchanges. • Rights and Duties of Parties in the Marketing Exchange Process Participants in the marketing exchange process should be able to expect that: • Products and services offered are safe and fit for their intended uses; Communications about offered products and services are not deceptive; • All parties intend to discharge their obligations, financial and otherwise, in good faith; and • Appropriate internal methods exist for equitable adjustment and/or redress of grievances concerning purchases.

7. Laws and RegulationsAffecting Sales Executives • Price discrimination • Clayton Antitrust Act (1914) and Robinson-Patman (1936) • Unfair competition • Bribes • Misleading information (about products, competitors) • Green River Ordinances • Enacted by many cities to regulate door-to-door salespeople from firms located outside the city • Cooling-Off Laws • Protects consumers requiring a time period (usually 3 days) to cancel contract, return merchandise for refund.

8. Illegal Sales Practices • Granting price concessions that are not justified or that are not necessary to meet competition • Making false claims about your product and the services that accompany your product • Representing a product to be new when it is rebuilt or second-hand • Misleading customers into thinking they are getting a bargain when this is not the case • Bribing customers’ employees in order to acquire or hold an account • Using bribery or espionage to learn a competitor’s trade secrets