Deck 2: Ethical and Legal Issues in Selling

Question 1

For each of the following situations, evaluate the salesperson's action and indicate what you think the appropriate action would be.
a. In an electronics store, salespeople are offered an extra $50 for each sale of HDTV models that are being closed out. The manufacturer is offering the spiff, and management is fully aware of it. Salespeople are encouraged to not mention either the spiff or that these are close-out models.

Answer 1

Sales people have to work under several legal and ethical obligations and this affects their profession to a large scale. If the sales people will not work with high personal and ethical standards, then this will affect their credibility alongwith the goodwill of the firm.
The following are the reactions and actions that salespeople should undertake in the following situations -
a. In this situation, the salespeople should not try to attempt selling the closed-out models to the customers and should not mention these products to them. If any of the customers seems to be interested in any of the closed-out models, then the salespeople should secretly let them go for other product that is not closed-out and do not let the sale of closed out product take place.
b. In this situation, the salesperson should politely refuse to remove the safety feature and deny this request of the customer. The salesperson should properly explain the use and benefit of this safety feature and make the customer understand the importance of it and make him understand that even though the speed of the equipment gets affected with the safety feature to a bit, but still it will keep the equipment and its user safe and prevent any accident that might take place in the absence of the safety equipment.
c. In this situation, the salesperson should simply ignore the phone call from the purchasing agent and should not submit another bid to win the tender. This is because submitting of another tender which is 10 percent less the initial bid just on the request of the purchasing agent will make the salesperson to undertake fraud with other low bidders.
d. In this situation, Mr. Y should not take clients to that restaurant because the benefit that is going to be received by dining at that place is not going to be given to the client but it will directly go to Mr. Y's pocket. Thus, in this case, Mr. Y should go to that restaurant to avail that benefit only when he is not accompanied with anyone from his professional arena so that the benefit received by him relates clearly on his expenses.
e. In this situation, the salesperson should have definitely submitted the customer suggestion to the company instead of starting her own business using that idea from the customer. This kind of behavior from the salesperson's side by not submitting the idea to the firm shows fraud and unethical conduct.

Question 2

Jesse Fernandes joined Plaxico, a major provider of engineering services in the plastics industry, straight out of college in sales support. After a couple of years of working on proposals and bids, she moved into the field, calling directly on manufacturers who could use Plaxico's services. Things went well-the territory she took over had not been worked very hard, so she was able to show some significant increases in the first year.
But shortly after the first of the year, she began to get the same e-mail from client after client. "Jesse, please explain your firm's pricing to us, line item by line item." After the fifth such e-mail, she forwarded it to her manager, Marty.
As soon as he saw the e-mail, Marty picked up the phone and called Jesse. "Looks like you've got Notelli Associates moving in," he told her. "Their strategy is to tell customers our prices are higher and prove it by showing a line-item comparison. But actually, it's how they define each line that differs, and when you add it up, we're less expensive by some 15 to 20 percent."
"How do I prove that we're not more expensive?" asked Jesse.
"It's hard because they won't show the client a full price list. To make matters worse, we also have filed a lawsuit against them because they keep telling clients we're going out of the environmental engineering business."
"Oh, that explains why I've gotten that question a few times recently."
How do you respond to the pricing issue if you can't actually prove Notelli is lying until a customer tries them and then realizes it is more?

Answer 2

The competitors in the industry can adopt various strategies to achieve the competitive advantage. As per the stated case, the strategy adopted by the competitors was to achieve the competitive advantage, compare their product's prices with others and to prove that they are the lowest.
It is always the responsibility of the sales person to resolve the issues of the customers and to respond to them properly. In the stated case too, Mrs. JF had to respond to the customer regarding the pricing issue whether she could prove it or not.
She can make the customer realize that the amount paid by the customer for the product is worth. She can convince the consumer by stating the benefits of the product and can prove that their product is more competitive than others.

Question 3

Jesse Fernandes joined Plaxico, a major provider of engineering services in the plastics industry, straight out of college in sales support. After a couple of years of working on proposals and bids, she moved into the field, calling directly on manufacturers who could use Plaxico's services. Things went well-the territory she took over had not been worked very hard, so she was able to show some significant increases in the first year.
But shortly after the first of the year, she began to get the same e-mail from client after client. "Jesse, please explain your firm's pricing to us, line item by line item." After the fifth such e-mail, she forwarded it to her manager, Marty.
As soon as he saw the e-mail, Marty picked up the phone and called Jesse. "Looks like you've got Notelli Associates moving in," he told her. "Their strategy is to tell customers our prices are higher and prove it by showing a line-item comparison. But actually, it's how they define each line that differs, and when you add it up, we're less expensive by some 15 to 20 percent."
"How do I prove that we're not more expensive?" asked Jesse.
"It's hard because they won't show the client a full price list. To make matters worse, we also have filed a lawsuit against them because they keep telling clients we're going out of the environmental engineering business."
"Oh, that explains why I've gotten that question a few times recently."
How do you respond to the question about leaving the business? What if a client asked about the lawsuit directly, saying, "I hear your company filed suit against Notelli. Wasn't that a cheap shot at a competitor?"

Answer 3

Leaving the business when a crisis situation comes cannot be considered as a competitive operation. It is evident from the case that Mrs. JF has performed well in her territory by increasing sales under normal condition. If she could manage the crisis situation, then she can prove her efficiency.
If an organization arise a law suit against any organization then certainly the clients and other members in its business environment would too raise a law suit. It was after that the organization P filed the law suit after its competitor initiated a wrong publicity.
Hence, the sales persons should be equipped to answer to the questions raised by clients, against such instances.

Question 4

What should she do about the Farley situation? Should she try to find out if Canuck plans to bid on the Farley contract and, if so, what its strategy is?

Question 5

What should she do about the Hudson account?

Question 6

Describe her relationship with Mitch. Where should she go with this account in the future?

Question 7

There are certainly many ethical and legal issues in selling, as this chapter demonstrates. Do you think there are more ethical and legal issues in selling than other jobs, such as accounting, finance, retail store management, or the like? Which issues raised in the chapter likely to be present, no matter the job, and which are likely to be specific to sales jobs?

Question 8

Do you think that the Internet has made companies more or less ethical? Why or why not?

Question 9

For centuries the guideline for business transactions was the Latin term caveat emptor (let the buyer beware). This principle suggests that the seller is not responsible for the buyer?s welfare. Is this principle still appropriate in modern business transactions? Why or why not? How has the evolution of selling influenced ethics in professional selling?

Question 10

What's the difference between manipulation and persuasion? Give two examples of what would be considered manipulation and alternatives of acceptable persuasion. Then describe how your examples of manipulation might fall into the realm of illegal activity and under which law or laws.

Question 11

Some professors believe that ethics cannot be taught; only laws need to be taught. Do you agree? Why or why not? What do you think Jim Keller's (in the opening profile) answer would be to this question? Why? Would his answer differ from that of someone who sells to consumers?

Question 12

Your customer asks you what you think of a competitor's product. You know from experience with other customers that it is very unreliable and breaks down frequently. Further, given this particular customer's needs, you expect that it would be an even bigger problem if the customer chose this product. How do you respond? Be specific as to what you would say.

Question 13

Your company has a contact management software system where you enter in all of the information you can about your customers. The company wants to partner with another firm to comarket products. They want to give your database to the other firm so the other firm can create marketing pieces and e-mail them to your clients. Is this legal? Is it ethical? Why or why not?

Question 14

One of our students shared the story of how is family was able to spend their vacation on a private Caribbean island-no exaggeration-as a guest of one of his father's clients. While that may be extreme, what might the ethical issues be with accepting a gift from a customer? How should you respond if offered a gift?