4-1 Ethical and Legal Issues in Relationship Selling 4

ETHICAL AND LEGAL ISSUES IN RELATIONSHIP SELLING 4-2 Learning Objectives Understand the 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

ETHICAL AND LEGAL ISSUES IN RELATIONSHIP SELLING 4-3 Ethics Begins at the Top Source: “A Matter of Trust,” Sales and Marketing Management, March 2003, pp ; Companies place a high value on the ethical behavior of salespeople with whom they do business As the point of contact, salespeople play a critical role in the overall ethical relationship between company and customer

ETHICAL AND LEGAL ISSUES IN RELATIONSHIP SELLING 4-4 Renewed Emphasis on Ethical Practices Business ethics comprises moral principles and standards that define right and wrong and guide behavior in the world of business Business ethics has become front-page news as companies like Enron and WorldCom have engaged in unethical, and in some cases, illegal activities Sales managers report 70% of their clients consider a company’s ethical reputation when making purchase decisions

ETHICAL AND LEGAL ISSUES IN RELATIONSHIP SELLING leadership Dell’s success is built on a foundation of personal and professional integrity The “Soul of Dell” is the statement of the values and beliefs which define the company’s shared global culture Source: Dell corporate website, “Code of Conduct” Code of Conduct at Dell Computer

ETHICAL AND LEGAL ISSUES IN RELATIONSHIP SELLING leadership Source: Dell corporate website, “Code of Conduct” TrustRespect IntegrityCourage HonestyResponsibility Judgment Key characteristics of Dell’s Code

ETHICAL AND LEGAL ISSUES IN RELATIONSHIP SELLING EXHIBIT 4-7 The 100 Best Corporate Citizens 4.1 Source: “Top 100 Corporate Citizens,” Business Ethics magazine’s 100 best corporate citizens highlights companies that balance social responsibility with traditional financial returns Analysis is based on each company’s: –Environment –Community relations –Employee relations –Diversity –Customer relations

ETHICAL AND LEGAL ISSUES IN RELATIONSHIP SELLING EXHIBIT 4-8 The 100 Best Corporate Citizens 4.1 Source: “Top 100 Corporate Citizens,” 1.General Mills, Inc. 2.Cummins, Inc. 3.Intel 4.Procter & Gamble 5.IBM Top Five Corporate Citizens of 2003

ETHICAL AND LEGAL ISSUES IN RELATIONSHIP SELLING EXHIBIT 4-9 Ethical Concerns for Salespeople 4.2 CustomersEmployers DishonestyCheating Gifts, entertainment, bribes Misuse of company resources Unfair treatmentInappropriate relationships with employees and customers Breaking confidentiality

ETHICAL AND LEGAL ISSUES IN RELATIONSHIP SELLING 4-10 Issues with Customers Dishonesty – there is a line between enthusiasm for a product and providing false or deliberately inaccurate information to customers Gifts, entertainment, bribes Gifts are nonfinancial presents Bribes are financial presents given to buyers to manipulate purchase decisions Why do some salespeople offer bribes? Unfortunately, it often works.

ETHICAL AND LEGAL ISSUES IN RELATIONSHIP SELLING 4-11 Issues with Customers Unfair treatment Special treatment of customers can be costly Other customers will feel as though they are not as important Confidentiality leaks – any information shared by the customer must be held in the strictest confidence

ETHICAL AND LEGAL ISSUES IN RELATIONSHIP SELLING 4-12 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

ETHICAL AND LEGAL ISSUES IN RELATIONSHIP SELLING 4-13 Issues with Salespeople Sales Pressure – when applied too forcefully, may constitute unethical behavior Deception – practice of misleading or misrepresenting something Abuse of Salespeople’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

ETHICAL AND LEGAL ISSUES IN RELATIONSHIP SELLING Global Perspective Differences in Negotiating between the Japanese and American Cultures Source: Johny K. Johansson, Global Marketing, 2 nd ed., 2000, Irwin/McGraw-Hill, p Stage of ProcessJapaneseAmerican Nontask soundingConsiderable time and expense Shorter period of time Task-related exchange of information THE MOST IMPORTANT STEP; High first offers Brief and direct; Fair first offers PersuasionBehind the scenes.THE MOST IMPORTANT STEP; aggressive tactics Concessions and agreement Holistic approach to decision making Sequential approach to decision making

ETHICAL AND LEGAL ISSUES IN RELATIONSHIP SELLING 4-15 International Ethical Issues Cultural Differences – every culture has its own set of norms, accepted behaviors, and beliefs Differences in Corporate Selling Policies – companies must adjust their selling policies to different countries

ETHICAL AND LEGAL ISSUES IN RELATIONSHIP SELLING 4-16 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)

ETHICAL AND LEGAL ISSUES IN RELATIONSHIP SELLING 4-17 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

ETHICAL AND LEGAL ISSUES IN RELATIONSHIP SELLING EXHIBIT 4-18 Sales Mgt Policies to Encourage Legal Behavior 4.5 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

ETHICAL AND LEGAL ISSUES IN RELATIONSHIP SELLING 4-19 A Code of Sales Ethics Corporate Code of Ethics Framework for a company’s approach to doing business Serves as a 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

ETHICAL AND LEGAL ISSUES IN RELATIONSHIP SELLING EXHIBIT 4-20 SMEI Sales and Marketing Creed (excerpts) I shall personally maintain the highest standards of ethical and professional conduct in all my business relationships with customers, suppliers, colleagues, competitors, governmental agencies, and the public 4.6

ETHICAL AND LEGAL ISSUES IN RELATIONSHIP SELLING EXHIBIT 4-21 SMEI Sales and Marketing Creed (excerpts) I pledge to protect, support, and promote the principles of consumer choice, competition, and innovation enterprise, consistent with relevant legislative public policy standards I shall not knowingly participate in actions, agreements, or marketing policies or practices which may be detrimental to customers, competitors, or established community or social or economic policies or standards. 4.6