Transcript Chapter_02
© 2007 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin CHAPTER 2 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? 3-2 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin “Without my clients having the confidence and knowledge of my moral and ethical standards, I doubt that I would have been able to create a solid client base.” ~Eric Pollack Global Crown Capital 3-3 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Prudential Insurance In 1996, 3,800 Prudential agents destroyed or discarded client documents There was also a warehouse fire Result: • $35 million fine for unethical activities • $400 million in restitution to policyholders • Total including Lawyers, etc = $2 billion © 2007 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 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 3-5 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. S-1 of 1 The most important credential we have -- outweighing competence, product knowledge and the lot -- is our reputation for integrity, honesty and client service. Larry Wilson, Author Changing the Game: The New Way to Sell © 2007 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Ethics and Personal Selling (continued) • Ethics and partnering relationships Manipulation eliminates or reduces the buyer’s choice unfairly. vs. 3-7 Persuasion is trying to influence the buyer’s decision, not force it. © 2007 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Factors Affecting Ethical Behavior of Salespeople 3-8 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Ethics and Personal Selling (continued) • Factors influencing the ethical behavior of salespeople – Personal, company, and customer needs – Company policies – Values of significant others – Laws – A personal code of ethics 3-9 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 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? 3-10 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Choices You Can Make if Your Manager Asks You to Act Unethically 1. Ignore your personal values and do what your company asks you to do. 2. Take a stand and tell your employer what you think. 3. Refuse to compromise your principles. 3-11 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Selling Ethics and Relationships • Relationships and customers – – – – – Deception Bribes, gifts, and entertainment Special treatment Confidential information Backdoor selling 3-12 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 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. 3-13 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Selling Ethics and Relationships (continued) • Relationships with the salesperson’s company – Expense accounts – Reporting work-time information and activities – Switching jobs 3-14 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Selling Ethics and Relationships (continued) • Relationships with colleagues – Sexual harassment – Taking advantage of other salespeople – Fighting over accounts • Relationships with competitors 3-15 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Chapter 3: Ethics and Social Responsibility Prepared by Amit Shah, Frostburg State University Designed by Eric Brengle, B-books, Ltd. Copyright 2010 by Cengage Learning Inc. All Rights Reserved 16 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Ethical Behavior LO2 Explain the concept of ethical behavior. Copyright 2010 by Cengage Learning Inc. All Rights Reserved17 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. LO1 Review Learning Outcome Explain the Determinants of a Civil Society Copyright 2010 by Cengage Learning Inc. All Rights Reserved18 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Ethical Behavior Ethics The moral principles or values that generally govern the conduct of an individual. Copyright 2010 by Cengage Learning Inc. All Rights Reserved19 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. LO2 Explain the Concept of Ethical Behavior Copyright 2010 by Cengage Learning Inc. All Rights Reserved20 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Ethical Theories People usually base their individual choice of ethical theory on their life experiences •Deontology •Utilitarianism •Casuist •Moral Relativists •Virtue Ethics Copyright 2010 by Cengage Learning Inc. All Rights Reserved21 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Exercise • See Case 3-2 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Legal Issues • Uniform commercial code – – – – Agency Sale Title and risk of loss Oral versus written agreements – Obligations and performance 3-23 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 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. 3-24 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 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 3-25 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin • Business Defamation – slander, libel, product disparagement • Reciprocity – must consent willingly • Tying agreements – will only sell A if B is purchased • Conspiracy and collusion – agreements by competitors • Interference with competitors – tampering with products, market research, etc. • Restrictions on resellers – resale price maintenance (sometimes legal), SPIFFs (legal if reseller approved) • Price discrimination – unjustified differences in prices are illegal • Privacy laws – regulate info obtained about consumers • Do-not-call law 3-26 © 2007 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 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 © 2007 The McGraw-Hill Companies, Inc. All rights reserved.