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 4-3 Learning Objectives • • • • • 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 • Business ethics - moral principles and standards that: • • • • 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 4-6 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 4-8 Exhibit 4.1 The Best Corporate Citizens • • Business Ethics magazine’s 100 best corporate balance social responsibility with traditional financial returns Analysis based on: • • • • • Environment Community relations Employee relations Diversity Customer relations 4-9 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 4-10 Exhibit 4.2 Ethical Concerns for Salespeople 4-11 Issues with Customers • Dishonesty • Gifts, entertainment, bribes • Gifts - non financial presents • Bribes - financial presents given to manipulate purchase decisions (it often works) 4-12 Issues with Customers • Unfair treatment • Special treatment can be costly • Other customers may feel they are not as important • Confidentiality leaks 4-13 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 4-14 Exhibit 4.3 Ethical Concerns for Management 4-15 Issues with Salespeople • • • Sales Pressure – applied too forcefully, may constitute unethical behavior Deception – misleading or misrepresenting something Abuse of Salesperson’s Rights • • • • 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 4-16 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 4-17 Global Perspective 4.2 Business Culture 4-18 Global Perspective 4.2 Negotiations 4-19 Global Perspective 4.2 Negotiations 4-20 International Ethical Issues • Cultural Differences – norms, accepted behaviors, beliefs • Differences in Corporate Selling Policies – adjust selling policies to different countries 4-21 Legal Issues in Relationship Selling • Uniform Commercial Code • Laws affecting selling • Consists of nine articles, modified by each state • www.law.cornell.edu/ucc 4-22 Exhibit 4.4 UCC Definitions Relevant to Selling • • • • 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) 4-23 Legal Issues in Relationship Selling • Representing the company • Oral vs. written commitments • Implies and express warranties 4-24 Unlawful Business Practices • • • 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) 4-25 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 4-26 Unlawful Business Practices • Price discrimination – giving different prices or discounts to different customers who purchase the same quality and quantity of products and services 4-27 Exhibit 4.5 Sales Management Policies to Encourage Legal Behavior • • • • • 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 4-28 A Code of Sales Ethics • Corporate Code of Ethics • • • • 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 4-29 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 4-30 Role Play http://www.mhhe.com/business/marketing/videos/RS/04_RP_ethical_legal_issues.mp4 4-31 4-32