Chapter
3
Some questions answered in
Chapter 3
Questions
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Terminology
3-1
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?
Chapter
3
Representative?
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3-2
Who does a sales
representative represent?
Chapter
3
Asking questions
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Is asking
questions
unethical?
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Ethics in
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Terminology
3-3
1. Yes
2. No
Chapter
3
Is asking questions unethical?
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What about asking questions about the
buyer’s financial status and using that
information to set the price of a new
franchise?
1. Yes
2. No
3-4
Chapter
3
Deception
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3-5
Without reference to
the textbook, create a
list of the opportunities
for deception in sales.
Chapter
3
Expense accounts
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3-6
When does use of an expense account become abuse?
Develop a set of guidelines you’d give to salespeople.
Chapter
3
Questions
answered
Factors affecting
ethical behavior of salespeople
Exhibit 3.1
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Personal
goals
Social
norms
Customer
goals
Company
goals
Personal
code of ethics
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Ethics in
relationships
Terminology
3-7
Company
policies
Laws
Values of
significant others
Ethical
behavior
Chapter
3
Conflicts confronting salespeople
Questions
answered
Representation
Exhibit 3.2
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3-8
Company
objectives
Increase
profits
Increase sales
Reduce sales
costs
Build longterm
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
Chapter
3
Have you ever said to yourself…
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3-9
“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.”
Chapter
3
Has a salesperson ever
acted unethically with you?
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3 - 10
How would you
describe the
experience?
Chapter
3
Questions
answered
How would the salesperson
have answered these questions?
Exhibit 3.5
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3 - 11
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?
Chapter
3
How would the salesperson
have answered these questions?
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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?
Which of these acts is most ethical?
Chapter
3
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1. Giving preferential treatment to some
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4.
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3 - 13
5.
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.
Chapter
3
Other unethical acts
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3 - 14
1. Selling a product to a customer if you
know a better product exists for that
application.
2. Telling a customer about the poor
performance features of a competitor’s
product.
3. Padding your expense account to make
extra money if your supervisor suggests
you do it.
Buyer’s view of
unethical sales behaviors
Chapter
3
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3 - 15
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.
Chapter
3
U.C.C.: Is the salesperson an agent?
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3 - 16
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.
Chapter
3
U.C.C.: When is a sale made?
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3 - 17
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.
Chapter
3
U.C.C.: Who has title to the merchandise?
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3 - 18
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.
Chapter
3
U.C.C.: Are oral agreements binding?
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1. Yes
2. No
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3 - 19
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.
Chapter
3
U.C.C.: What is good faith performance?
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When the salesperson and the customer
agree on the terms of a contract, both
firms must perform according to those
terms in “good faith.”
Chapter
3
U.C.C.: What is the difference between an
expressed and an implied warranty?
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3 - 21
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.
Chapter
3
Is the salesperson in legal trouble?
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“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.”
1. Yes
2. No
International
selling
Ethics in
relationships
Terminology
3 - 22
If the statement is untrue, then it is business
defamation and is illegal.
Chapter
3
Can the buyer sue the supplier if this
turns out not to be true?
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“Linda, I tell you this new
line of Chippewa China is
the best line on the market
today. Its quality can’t be
beat!”
1. Yes
2. No
Harassment
International
selling
Ethics in
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Terminology
3 - 23
Probably not. This most likely would be considered
“puffery” since no specific statement about the
inherent capabilities of the product was given.
Chapter
3
Legal / Not legal?
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“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.”
1.Legal
2.Not legal
Harassment
International
selling
Ethics in
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Terminology
3 - 24
This is forced reciprocity.
Reciprocity is only legal
when both parties consent
to the agreement willingly.
Chapter
3
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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.”
1.Legal
2.Not legal
This is a tying agreement. A
buyer cannot be required to
purchase one product in
order to get another.
Chapter
3
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3 - 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.”
1.Illegal
2.Legal but unethical
3.Legal and ethical
Taking another salesperson’s customer is
unethical, but it is not illegal.
Chapter
3
Are the salespeople in legal trouble?
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“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.”
1.Illegal
2.Legal but unethical
3.Legal and ethical
This is a conspiracy, and is illegal.
3 - 27
Chapter
3
Legal?
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3 - 28
“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.”
1. Competitors
Legal
Illegal: this is collusion.
cannot agree
to charge the same price
for equipment a buyer is
2. Illegal
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
they’re doing some market
research right now, and I want
to make them think their new
unit really is a hit.” 1.Illegal
2.Legal but unethical
3.Legal and ethical
This is an illegal interference with competitors.
Chapter
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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.”
1.Legal
2.Illegal
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Ethics in
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Terminology
3 - 30
Push money (“spiffs”) is legal as long
as the store owners agree to it and it is
offered to every salesperson.
Chapter
3
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3 - 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.”
1.Legal
2.Illegal
Maybe. This is price discrimination, and will be
illegal if the same offer is not made to the other
stores carrying your line.
Chapter
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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!”
1.Legal
2.Illegal
Ethics in
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Terminology
3 - 32
Illegal! This is price fixing. Competitors cannot
agree to set prices.
Chapter
3
Guidelines to avoid violating laws
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3 - 33
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.
Chapter
3
How do you deal with
sexual harassment by customers?
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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.
Chapter
3
What do you do when the ethical standards in a country
differ from the standards in your country?
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Cultural relativism
The view that no culture’s
ethics are superior.
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Ethical imperialism
The view that ethical standards in
one’s home country should be applied
to one’s behavior across the world.
Ethical and legal issues
in relationships
Chapter
3
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Laws
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Ethics
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Solo
Exchange
3 - 36
Functional
Relationship
Relational
Partnership
Strategic
Partnership
Chapter
3
Any questions about the terminology?
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3 - 37
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
Chapter
3
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3 - 38