86 terms

Personal selling chapter 2

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ethics
the principles governing the 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
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.
basic principle of ethical selling
that the customer remains free to make a choice
Manipulation
eliminates or reduces the buyer's choice unfairly.
Persuasion
trying to influence the buyer's decision, not force it.
- Social norms
- Personal goals
- Customer goals
- Company goals
- Company policies
- Laws
- Values of significant others
- Personal code of ethics (all above affect this)
8 Factors Affecting Ethical Behavior of Salespeople
1. increase profits
2. increase sales
3. reduce sales costs
4. build long-term customer relationships
5. avoid legal trouble
conflicting company objectives (5)
1. increase compensation
2. receive recognition
3. satisfy customers
4. build long-term customer relationships
5. maintain personal code of ethics
conflicting salespersons objectives (5)
1. increase profits
2. solve problems, satisfy needs
3. reduce costs
4. build relationships with suppliers
5. avoid legal trouble
conflicting customer objectives (5)
company policies
establish a code of ethics for their salespeople to provide guidelines in making ethical decisions
values of significant others
influencing the ethical behavior of salespeople are their relatives and friends, other salespeople, and their sales managers
sales managers
are particularly important because they establish the ethical climate in their organization through the salespeople they hire, the ethical training they provide for their salespeople, and the degree to which they enforce ethical standards
laws
dictate which activities society has deemed to be clearly wrong-- the activities for which salespeople and their companies will be punished
1. All salespeople behave "this way"
2. No one will be hurt by this behavior
3. This behavior is the lesser of two evils
4. This conduct is the price one has to pay for being in business
salespeople may be tempted to avoid difficult ethical choices by making rationalizations (4)
1. Would I be embarrassed if a customer found out about this behavior?
2. Would my supervisor disapprove of this behavior?
3. Would most salespeople find this behavior unusual?
4. Am I about to do this because I think I can get away with it?
5. Would I be upset if a salesperson did this to me?
6. Would my family or friends think less of me if I told them about engaging in this sales activity?
7. Am I concerned about the possible consequences of this behavior?
8. Would I be upset if this behavior or activity were publicized in a newspaper article?
9. Would society be worse off if everyone engaged in this behavior or activity?
Checklist for Ethical Decisions, if the answer is yes to any of these you should not do it (9)
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 Choices You Can Make if Your Manager Asks You to Act Unethically
Selling ethics
The buyer has the right to make the purchase decision with equal and fair access to the information needed to make the decision; further, all competitors should have fair access to the sales opportunity
Deception
Deliberately presenting inaccurate information, or lying, to a customer is illegal (ex. telling half-truths, withholding important information)
Bribes
Voluntary offered payment by someone seeking unlawful advantage
kickbacks
payments made to buyers based on the amount of orders placed
1. Check your motives for gift giving
2. Make sure the customer understands no strings attached
3. Make sure the gift does not violate either companies' policies
4. Safest gifts are inexpensive business items imprinted with the salesperson's company logo
4 guidelines for gift giving
extortion
If payments are extracted under duress by someone in authority from a person seeking only what he / she is lawfully entitled to
special treatment
some customers try to take advantage of their status to get special treatment from salespeople
confidential information
During sales calls salespeople often encounter this, such as new products underdevelopment, costs, and production schedules. Offering information about a customer's competitor in exchange for an order is unethical.
nondisclosure agreement (NDA)
Sometimes, salespeople have to sign this contract that specifies what information is owned by the customer and how or if that information can be shared with anyone
Backdoor selling
when salespeople ignore the purchasing agent's policy, go around his or her back, and contact other people directly involved in the purchasing decision
1. Exaggerates benefits of the product
2. Passes the blame for something he or she did to someone else
3. Lies about product availability
4. Misrepresents guarantees
5. Lies about competition
6. Sells products that people do not need
7. Makes oral promises that are not legally binding
8. Is not interested in customer needs
9. Answers questions even when he or she does not know the correct answer
10. Sells hazardous products
Buyers' View of Unethical Sales Behaviors (10)
1. expense accounts
2. reporting work time information and activities
3. switching jobs
Relationships with the Salesperson's Company (3 problems)
expense accounts problems
Act as though you are spending your own money, when they are using companies money
reporting work time information and activities
salespeople are not working full time but claiming they are. (coffee breaks, long lunches, or unauthorized days off. Or they lie and give inaccurate information about them working)
switching job problems
if a salesperson goes to work for a competitor, they should not say negative things about the past employer. Also, disclosing confidential information about the former employer's business is improper
1. Give ample notice
2. Offer assistance during the transition phase
3. Don't burn your bridges
4. Don't take anything with you that belongs to the company
ethical approach to switching jobs (4)
trade secrets
information owned by the company by which the company gains a competitive advantage
1. Don't make false claims
2. Don't criticize
Relationships with competitors (2)
1. Sexual Harassment
2. Poaching
Relationships with colleagues (2)
sexual harassment
unwelcome sexual advances, requests for sexual favors, jokes or graffiti, posting sexual explicit material on bulletin boards or cubicle walls, and physical conduct. Harassment is not confined to requests for sexual favors in exchange for job considerations such as a raise or promotion, creating a hostile work environment can be considered sexual harassment
poaching
it is unethical to steal potential customers from other salespeople
1. Statutory law
2. Administrative law
3. Common law
activities of salespeople are affected by three forms of law
Statutory law
based on legislation passed by either state legislatures or Congress (Uniform Commercial Code and antitrust laws
Administrative law
established by local, state, or federal regulatory agencies. (The Federal Trade Commission)
Common law
Grows out of court decisions; Precedents set by these decisions fill in the gaps where no law exist
Uniform Commercial Code (UCC)
is the legal guide to commercial practice in the United states
1. Agency
2. Sale
3. Title and risk of loss
4. Oral versus written agreements
5. Obligations and performance
6. Warranties
6 parts of the Uniform Commercial Code (UCC)
agent
A person who acts in place of his or her company
Agency
Authorized agents of a company have the authority to legally obligate their firm in a business transaction. This authorization to represent the company does not have to be written. Thus, as a salesperson, your statements and actions can legally bind your company and have significant financial impact
sale
the transfer of title to goods by the seller to the buyer for a consideration known as price. This is made when the contract is completed
contract to sell
Any time a salesperson makes an offer and receives an unqualified acceptance
invitation to negotiate
The initiation of an interaction, usually a sales presentation, that results in an offer
offer
Specific statement by a seller outlining what the seller will provide and what is expected from the buyer
Free on board (FOB)
the seller has title until the goods are received at the destination
FOB factory
any loss or damage incurred during transportation is the responsibility of the seller. The buyer assumes this responsibility and risk if contract terms call for ____.
oral agreements between a salesperson and customer
are just as binding as written agreements
written agreements
are required for sales over $500
good faith
the salesperson and the customer agree on the terms of the contract. This means they have to try and fulfill the contract. In addition, both parties must perform according to commonly accepted industry practices. Even if the salesperson overstate the performance of the product, they have to provide the stated performance
Warranty
an assurance by the seller that the products will perform as represented
Expressed warranty
an oral or written statement by the seller
Implied warranty
not actually stated but is still an obligation defined by law.
Sales puffery
"This is a top-notch product."
"This product will last a lifetime."
Customers cannot reasonably rely on these statements
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."
These statements are considered legally binding
False Claims Act (Lincoln Law)
was passed in 1863 during the civil war to encourage citizens to press claims against vendors that fraudulently sold to the U.S. government
Credulous person standard
the company and the salesperson have to pay damages if a reasonable person could misunderstand a statement (Canada)
Business defamation
Occurs when a salesperson makes unfair or untrue statements to customers about a competitor, its products, or its salespeople.
Statements are illegal when they damage the competitor's reputation or the reputation of its salespeople.
1. Reciprocity
2. Tying agreement
3. Conspiracy and collusion
4. Interference with competitors
5. Restrictions on resellers
6. Price discrimination
7. Privacy laws
8. Do-Not-Call Law
8 types of Business Defamation
Reciprocity
a special relationship in which two companies agree to buy from each other. This is illegal WHEN one company forces another company to join in the agreement
Tying agreements
a buyer is required to purchase one product in order to get another product. A firm CAN be required to purchase a service contract, but the customer does NOT have to buy the contract from the manufacturer
Conspiracy
an agreement between competitors before customers are contacted
Collusion
competitors working together while the customer is making a purchase decision
Restrictions on resellers
Restrictions regarding what the purchaser can or must do in order to secure the sale.
1. Retail (resale) price maintenance
2. SPIFFS (Push Money)
2 types of Restrictions on Resellers
Retail (resale) price maintenance
company establishes a minimum price their product below which their distributors or retailers could not resell their products....this IS legal in some situations
SPIFFS
special promotion incentive funs (or push money) providing special incentives to resellers salespeople to push products. IS LEGAL IF the reseller knows and approves of the incentive and it is offered to all of the reseller's salespeople
Price Discrimination
giving a seller unjustified special prices, discounts, or services to some customers and not to others. To justify a special price or discount, the seller must prove that the special price results from:
a. differences in the cost of manufacture, sale or delivery
b. differences in the quality or nature of the product delivered
c. an attempt to meet prices offered by competitors in a market.
Robinson-Patman Act
illegal to discriminate on price. Only applies to interstate commerce
Privacy laws
limit the amount of information a firm can obtain about a consumer and specifies how that information can be used
Do-Not-Call Law
makes phone solicitation illegal unless a previous customer (Does not apply to business phones)
1. Lubrication
2. Subordination
International Legal Issues (2)
Lubrication or Facilitating payments
small sums of money or gifts typically made to low-ranking managers or government officials, in countries where these payments are not illegal. Made to get the official to do the job rapidly or process an order more quickly or to provide a copy of a request for a proposal.
subordination
involves paying larger sums of money to higher ranking officials to get them to do something that is illegal or to ignore an illegal act. Even where bribery is common, this is considered unethical
culture relativism
is the view that no culture's ethics are superior
ethical imperialism
is the view that ethical standards in one's home country should be applied to one's behavior across the world
Foreign Corrupt Practices Act (1977)
Makes it a crime for a U.S. corporation to bribe an official of a foreign government or political party to obtain or retain business. Prohibits payments to third parties when there is reason to believe it may be channeled to foreign officials
Omnibus Trade and Competitiveness Act
Allows for "grease" payments to cut red tape, such as getting shipments trough customs, getting permits
National Do Not Call Registry
- List of phone numbers from consumers indicating preference to limit the telemarketing calls they receive.
- Registry managed by the Federal Trade Commission (FTC), the nation's consumer protection agency.
- Enforced by the FTC, the Federal Communications Commission (FCC), and state officials.