Relationship
Selling
Mark W. Johnston
Greg W. Marshall
McGraw-Hill/Irwin
Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
Ethical and Legal Issues
in Relationship Selling
Chapter 4
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Learning Objectives
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Understand importance of ethical behavior in
relationship selling and sales management
Identify ethical concerns facing salespeople
Identify ethical concerns facing sales managers
Discuss legal issues in relationship selling
Create a personal code of sales ethics
4-4
Renewed Emphasis on Ethical
Practices
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Business ethics - moral principles and standards that:
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define right and wrong
guide behavior in the world of business
Enron and WorldCom engaged in unethical, and in some
cases, illegal activities
Sales managers report 70% of clients consider a company’s
ethical reputation when making purchase decisions
4-5
Leadership 4.1
Code of Conduct at Dell Computer
• Dell’s success is built on personal and
professional integrity
• The “Soul of Dell” - statement of values
and beliefs which define company’s
shared global culture
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Leadership 4.1
Key Characteristics
Trust
Responsib
ility
Integrity
Dell’s
Code
Judgment
Honesty
Courage
Respect
4-7
Companies Have Social
Responsibility to:
• Customers
• Employees
• Shareholders
• Suppliers
• Government
• Creditors
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Exhibit 4.1
The Best Corporate Citizens
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Business Ethics magazine’s 100 best corporate balance
social responsibility with traditional financial returns
Analysis based on:
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•
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Environment
Community relations
Employee relations
Diversity
Customer relations
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Exhibit 4.1
Top Five Corporate Citizens of 2007
1.
Green Mountain Coffee Roasters, Inc.
2. Advanced Micro Devices, Inc.
3. Nike, Inc.
4. Motorola, Inc.
5. Intel Corporation
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Exhibit 4.2
Ethical Concerns for Salespeople
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Issues with Customers
• Dishonesty
• Gifts, entertainment, bribes
• Gifts - non financial presents
• Bribes - financial presents given to
manipulate purchase decisions
(it often works)
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Issues with Customers
• Unfair treatment
• Special treatment can be costly
• Other customers may feel they are not
as important
• Confidentiality leaks
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Issues with Employers
• Cheating – misrepresenting information
to management
• Misuse of company resources – rule of
thumb: adopt your own standard of living
when traveling
• Inappropriate relationships with other
employees and customers – potential
negative implications
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Exhibit 4.3
Ethical Concerns for Management
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Issues with Salespeople
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Sales Pressure – applied too forcefully, may constitute
unethical behavior
Deception – misleading or misrepresenting something
Abuse of Salesperson’s Rights
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Not following policies related to termination
Not maintaining confidentiality
Not creating a work environment free of discrimination
Not following policies regarding performance
appraisals and compensation
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Issues with Company Policies
• Unethical Corporate Culture – unethical or
illegal behavior is tolerated or encouraged
• Unfair Corporate Policies – managers
must consider unique situation of
salespeople when enforcing company
policies
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Global Perspective
4.2
Business Culture
4-18
Global Perspective
4.2
Negotiations
4-19
Global Perspective
4.2
Negotiations
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International Ethical Issues
• Cultural Differences – norms, accepted
behaviors, beliefs
• Differences in Corporate Selling Policies –
adjust selling policies to different
countries
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Legal Issues in Relationship Selling
• Uniform Commercial Code
• Laws affecting selling
• Consists of nine articles, modified by
each state
• www.law.cornell.edu/ucc
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Exhibit 4.4
UCC Definitions Relevant to Selling
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Salesperson – a person who sells or contracts to sell goods
(Section 2-103)
Buyer – a person who buys or contracts to buy goods
(Section 2-103)
Sale – consists in the passing of title from the seller to the
buyer for a price (Section 2-401)
Contract for sale – includes both a present sale of goods
and a contract to sell goods at a future time (Section 2-107)
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Legal Issues in Relationship
Selling
• Representing the company
• Oral vs. written commitments
• Implies and express warranties
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Unlawful Business Practices
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Collusion – competing companies fixing prices,
dividing up customers or territories
Restraint of Trade – forcing a channel member to
stop carrying a competitor’s products
Reciprocity – suppliers buying from one another
(illegal if it shuts out competitors)
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Unlawful Business Practices
• Competitor Obstruction – impeding
competitor access to a customer
• Competitor Defamation – making unfair or
untrue statements about a competitor
• Slander - oral
• Libel - written
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Unlawful Business Practices
• Price discrimination – giving different
prices or discounts to different customers
who purchase the same quality and
quantity of products and services
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Exhibit 4.5
Sales Management Policies to Encourage
Legal Behavior
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Provide instruction on relevant laws and legal
guidelines
Update salespeople on new judicial and statutory
developments
Reward salespeople for effectively managing
potentially illegal situations
Identify quickly salespeople who engage in illegal
activities
Manage by example
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A Code of Sales Ethics
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Corporate Code of Ethics
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Framework for a company’s approach to
doing business
Point of reference for individual employee
behavior
Can have a positive effect on customers
Individual Code of Ethics – influences how a
person makes decisions in certain situations
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Innovation 4.3
Ethical Checklist
1= not at all; 5=totally yes
1
Relevant Information Test
1
2
3
4
5
2
Involvement Test
1
2
3
4
5
3
Consequential Test
1
2
3
4
5
4
Fairness Test
1
2
3
4
5
5
Enduring Values Test
1
2
3
4
5
6
Universality Test
1
2
3
4
5
7
Light-of-Day Test
1
2
3
4
5
Total Ethical Analysis Confidence Score
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Role Play
http://www.mhhe.com/business/marketing/videos/RS/04_RP_ethical_legal_issues.mp4
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