CHAPTER 5 Ethics: The Foundation for Relationships in Selling

BASIC ETHICAL ISSUE “Why would any company violate the moral contract it has with customers and risk the loss of goodwill built up over many years?”

Making Ethical Decisions Business ethics = Principles and standards that guide business behavior Help translate values into appropriate and effective behaviors No single uniform code of ethics for all salespeople Many businesses, professional associations, and certification agencies have established codes 5-3

Making Ethical Decisions Character and integrity strongly influence personal selling relationships. Your character is based on internal values. Character is based on internal values and resulting judgments. Ethical decisions reflect the strength of your character. 5-4

Foundation of Relationships in Selling Ethics in business reflect: Personal character and values Company policy and practices Management as role model 5-5

Code of the National Association of Sales Professionals 5-6

Character Development Colleges and universities are taking a more active role in character development. Courses that focus on ethics are becoming common. Despite a growing interest in business ethics, unethical behavior has become common. 5-7

Half-Truths Influencing Erosion of Character We are in it only for ourselves. Corporations exist to maximize shareholder value. Companies need to be lean and mean. 5-8

Factors Determining Ethical Behavior of Salespeople FIGURE 5.2 5-9

Management as Role Model Ethical standards filter down from the top. An organization’s moral tone is set by management. Moral tone is the most important determinant of employee ethics. Managers must infuse ethical values in subordinates. 5-10

Company Policies and Practices Company policies and practices have major impact on conduct Developing ethical policy statements forces company to take a stand Policies should include distributor relations, customer service, pricing, product development, etc. 5-11

Additional Policy Areas Sharing confidential information Reciprocity Bribery Gift giving Entertainment Business defamation Use of the Internet 5-12

Sales Manager as Role Model A salesperson’s actions often mirror the sales manager’s behavior. Sales managers are responsible for interpreting company policy. Values such as integrity and honesty must receive constant manager support. 5-13

Salesperson’s Personal Values Values = Ultimate reasons people act as they do Foundation for attitudes and behavior Development and refinement of values = Lifelong process Customers have negative view of salespeople who lack integrity FIGURE 5.3 5-14

Values Conflict Three basic choices: Ignore the influence of your values. Engage in the unethical behavior Voice strong opposition to the practice. Refuse to compromise your values. Be prepared to deal with the consequences. 5-15

Laws, Contracts, and Agreements Legal system plays a role in preventing unethical behavior Cooling-off laws = Reconsider a buying decision Uniform Commercial Code = Law influencing buyer-seller transactions Contract = Promise(s) enforceable in court Ethics = Beyond the letter of the law 5-16

The Uniform Commercial Code UCC = Major source of laws influencing sales and marketing Primary areas: Definition of a sale Warranties and guarantees Salesperson and reseller Financing of sales Product consignment 5-17

Personal Code of Ethics Some general guidelines include: Personal selling = An exchange of value Relationship comes first; tasks second Be honest with yourself and others 5-18

Exercising Care with CRM Data CRM software allows storage of transaction data and personal data. Record facts; not opinions or conclusions. CRM data can be “mobile.” Do not store anything you do not want the customer to see. 5-19

The Trust Factor Transactional sales = Focus is on trust in the product Consultative sales = Focus is on trust in the salesperson Strategic alliance sales = Focus is on the other company and its values 5-20

Ethical and Legal Issues: International Business Culture Issues Beliefs, values, knowledge, ethnic customs, and objects used to adapt to an environment Cultural barriers can impede acceptance in foreign countries and interpersonal relationships 5-21

Ethical and Legal Issues: International Business Doing business in global marketplaces continues to be a minefield. The Foreign Corrupt Practices Act prohibits U.S. companies from using bribes or kickbacks. High ethical standards depend on strong management leadership. 5-22