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Chapter 3
ETHICS: THE FOUNDATION FOR PARTNERING
RELATIONSHIPS THAT CREATE VALUE
Part 2, “Developing a Relationship Strategy,” includes three chapters (3, 4, and 5) that
focus on person-to-person relationship-building strategies. The influence of ethical decisions as
the very foundation for relationships in selling is discussed in Chapter 3.
EXTENDED PRESENTATION OUTLINE
Salespeople frequently provide the only link between customers and the firm. Therefore,
the ethical conduct of the salesperson must always be above reproach in order to avoid tarnishing
the image of the firm. Salespeople must operate daily by high ethical standards, without
compromise.
As part of the Reality Selling Today Video Series, this chapter features Edith Botello
from Mattress Firm, selling bedding products.
I. Developing a Relationship Strategy For Partnering Style Selling (see Figure 3.1)
A. Developing and applying the wide range of relationship skills needed in today’s complex
sales environment can be challenging.
1. Emotional intelligence refers to the capacity for monitoring our own
feelings and those of others, for motivating ourselves, and for managing emotions
well in ourselves and in our relationships.
2. In field of personal selling and most other business occupations, emotional
intelligence is a much greater predictor of success
3. Information age selling involves three major relationship challenges.
1. Building new relationships.
2. Transforming relationships from personal to business level.
3. Managing relationships.
II. Issues Challenging the Ethics of Salespeople (see Figure 3.2)
A. In the field of personal selling, the temptation to maximize short-term gains by some type
of unethical conduct is always present and occurs more often than in most other careers.
B. Salespeople are especially vulnerable to unethical decision making, because they are
subject to many temptations.
C. Large number of trusted salespersons can be counted on by the various stakeholders to a
sale to form highly ethical win-win relationships.
D. Ethical salespersons fully understand the customers buying strategies, make honest
unexaggerated claims about their product, and fully embrace a needs-based consultative
presentation strategy.
E. Partnering style seller/buyer relationship, a high level of ethical decision-making
becomes the foundation for creating value.
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III. Factors Influencing the Ethical Decision-Making of Salespeople (see Figure 3.3)
A. Influences in a global economy
1. Ethical and legal issues that are quite complex on the domestic scene become even
more complicated at the international level.
2. Cultural Issues Figure 3.3 outlines the forces that can help salespeople deal honestly
with customers. Cultural Issues:
a. Culture is the sum total of beliefs, values, knowledge, ethnic customs, and objects
that people use to adapt to their environment.
b. When the salesperson understands the cultural background of the foreign
customer, communication problems are less likely.
c. Perceptions of time differ from country to country.
3. Legal Issues:
A. Doing business in the global marketplace continues to be an ethical minefield.
B. Illegal demands for bribes, kickbacks, or special fees may stand in the way of
successful transactions.
C. American businesses acknowledge that it is difficult to compete with
organizations from other countries that are not bound by these laws.
D. The International Business Ethics Institute (www.business-ethics.org) believes
that U.S. companies have been a very positive role model for the rest of the
business world.
B. Influences of senior management.
1. Ethical standards filter down from the top of an organization.
2. The moral tone of an organization, as established by management personnel, is the
single most important determinant of employee ethics.
C. Influences of company policies and practices.
1. Many business organizations develop written policies that deal with ethical problem
areas; these give direction to all employees and offer a clear-cut philosophy of how to
conduct business transactions. This can improve financial results. (Discuss “Values
for Success” developed by Mutual of Omaha.)
2. Sharing confidential information.
a. Salespeople must preserve the confidentiality of information revealed to them by
customers.
b. Confidential information that may be helpful to a competing firm should not be
disclosed.
3. Reciprocity.
a. Reciprocity is a mutual exchange of benefits, as when a firm buys products from
its own customers.
b. Some business firms actually maintain a policy of reciprocity, although in some
cases reciprocity is not acceptable.
c. Business relationships based on reciprocity often have drawbacks.
4. Bribery.
a. In some cases, a bribe is wrong from a legal standpoint; in most cases, it is wrong
from an ethical point of view.
5. Gift giving.
a. The giving of gifts is sometimes closely related to offering bribes, although it is a
more widespread practice.
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b. Gifts can be inexpensive tokens of appreciation for business, or expensive items.
c. Guidelines for the giving of gifts:
1) Do not give gifts before doing business with a customer.
2) Never give the impression you are “buying” the customer’s business with
gifts.
3) Customers should have a clear understanding that gifts are given as tokens of
appreciation.
4) Be sure the gift does not violate the policies of your firm or the customer’s
firm.
6. Entertainment.
a. The dividing line between gifts, bribes, and entertainment is often arbitrary.
b. In a few industries, entertainment is seen as the key to obtaining new accounts.
c. Entertainment is a highly individualized process and should be planned with the
personal preferences of the prospect in mind.
7. Business defamation.
a. Business slander arises when unfair and untrue oral statements about a competitor
are communicated to a third party, thus damaging the competitor’s business
reputation or the personal reputation of an individual in that business.
b. Business libel may be incurred when an unfair and untrue statement is written
about a competitor and communicated to a third party, thus damaging the
competitor’s business and reputation.
c. Product disparagement occurs when false or deceptive comparisons or distorted
claims are made concerning a competitor’s product, services, or property.
8. Use of the Internet.
a. The Internet can create a number of ethical dilemmas.
b. Many companies have developed policies that define permissible uses of their e–
mail system.
9. Effectiveness of company policies as a deterrent to unethical behavior depends on
two factors:
a. The firm’s attitude toward employees who violate these policies.
b. The participation and support of the entire sales staff when developing policies.
D. Influence of the sales manager.
1. The actions of a salesperson often mirror the behavior and expectations of the sales
manager.
a. Sales managers provide new salespeople with their first orientation to company
operations.
b. They interpret company policy and provide feedback regarding the salesperson’s
work and conduct.
2. If the moral fiber of a sales force begins to deteriorate, the sales manager must
shoulder a great deal of responsibility.
3. Sales managers influence ethical behavior of salespeople by virtue of what they say
and what they do.
E. Influence of salesperson’s personal values (see Figure 3.4.).
1. Values represent the ultimate reasons people have for acting as they do.
2. Values serve as a foundation for our attitudes, and our attitudes serve as a foundation
for our behavior.
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3. Education and life experiences help people clarify their values.
4. Values can serve as a deterrent to unethical behavior in a selling situation.
5. When salespeople discover a conflict between their value system and that of their
employer, they have three choices:
a. Ignore the influence of their values and engage in unethical behavior.
b. Voice strong opposition to the practice that is in conflict with their value system.
c. Refuse to compromise their values and be prepared to deal with the consequences.
d. Ethical salespersons make decisions on the basis of the values they hold
F. Influence of laws, contracts, and agreements.
1. Legal standard is enforced by statute.
2. Ethical standard is an outgrowth of the customs and attitudes of the society.
3. Nearly all sales activities are subject to regulation.
4. Defending ethics claims can be costly to a company.
5. The Uniform Commercial Code.
a. A legal guide to a wide range of transactions between the seller and the buyer,
dealing with:
1) Definition of a sale.
2) Warranties and guarantees.
3) Salesperson and the reseller.
4) Financing of sales.
5) Product consignment.
b. Has been adopted throughout the United States.
6. Cooling-off laws.
a. Legislation that establishes a cooling-off period, during which the consumer may
void a contract to purchase goods or services.
b. Provisions of the laws vary from state to state.
c. Primary purpose is to provide consumers with an opportunity to reconsider their
buying decision made under the persuasive influence of a salesperson.
7. Contracts and agreements.
a. A contract is simply a promise or promises (oral or written) that the courts will
enforce.
b. Salespeople are sometimes the legal representatives of their company and
therefore must be careful when they sign contracts or agreements.
8. Ethics beyond the letter of the law.
a. Ethics are not a matter of law alone.
b. A salesperson’s ethical sense must extend beyond the legal definition of what is
right and wrong.
c. Salespeople must develop their own personal codes of ethics
9. Although trust is an essential element of every sale, the meaning of trust changes with
the type of sale:
a. Trust in transactional sales
b. Trust in consultative sales
c. Trust in strategic alliance sales.
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IV. Making Ethical Decisions That Build Selling Relationships (see Figure 3.4)
A. Every day salespeople must judge the rightness or wrongness of their actions.
1. Business ethics comprise principles and standards that guide behavior in the world of
business. Ethics help translate values into behavior.
2. There is no uniform code of ethics for all people.
3. Many organizations establish a written code of conduct for their salespeople or
members.
B. Influence of character in ethical decision-making
1. Despite growing interest in business ethics, unethical behavior has become all too
common.
2. The current generation of workers may be more tolerant of unethical behavior.
C. The erosion of character on ethical decision-making
1. Several “half–truths” have influenced the erosion of character in the business
community.
a. We are only in it for ourselves.
b. Corporations exist to maximize shareholder value.
c. Companies need to be lean and mean.
d. Many business firms are struggling to align their values, ethics, and principle with
the expectations of their salespeople and their customers.
V. Developing a Personal Code of Ethics That Adds Value (see Figure 3.5)
A. The apparent decline in moral integrity throughout various segments of our society has
precipitated a concern toward firming up our ethical standards.
B. If the business community cannot police itself, people will look to government for
solutions to the problem.
C. General guidelines can be used as a foundation for a personal code of ethics.
1. Relationship comes first, task second.
2. Be honest with yourself and others.
3. Personal selling must be viewed as an exchange of value.
D. Although trust is an essential element of every sale, the meaning of trust changes with the
type of sale:
1. Trust in transactional sales
2. Trust in consultative sales
3. Trust in strategic alliance sales
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END-OF–CHAPTER ACTIVITES
Included in this section are answers to selected end-of-chapter exercises. Answers are
provided for all review questions, application exercises, and case problems. In addition, a brief
description of each role-play is provided.
Not included in this section are answers to the Regional Accounts Management Case
Study. The answers are found in the Instructor’s Manual for Appendix 2: Answers to the
Regional Accounts Management Case Study.
Also not included in this section are answers to exercises related to Appendix 3:
“Partnership Selling: A Role–Play/Simulation.” Answers, forms, and instructions related to
Appendix 3 will be found in Instructor’s Manual for Appendix 3 and the Instructor’s Manual
titled Traditional Role Play Exercises and Forms.
Key Terms
Emotional intelligence, p. 51: Emotional intelligence refers to the capacity for monitoring our
own feelings and those of others, for motivating ourselves, and for managing emotions well in
ourselves and in our relationships.
Culture, p. 53: Culture is the sum total of beliefs, values, knowledge, ethnic customs, and
objects that people use to adapt to their environment.
Reciprocity, p. 56: Reciprocity is a mutual exchange of benefits, as when a firm buys products
from its own customers.
Values, p. 57: Values represent the ultimate reasons people have for acting as they do.
Cooling-off laws, p. 60: Cooling-off laws vary from state to state, with the primary purpose is to
give customers an opportunity to reconsider a buying decision made under a salesperson’s
persuasive influence. A cooling-off period is a time during which the consumer may void a
contract to purchase goods or services.
Contract, p. 60: A contract is simply a promise or promises that the courts will enforce.
Business ethics, p. 62: Business ethics comprise principles and standards that guide behavior in
the world of business.
Character, p. 62: Character is composed of personal standards, including honesty, integrity, and
moral strength.
Integrity, p. 62: Integrity is the basic ingredient of character that is exhibited when you achieve
congruence between what you know, what you say, and what you do
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MyMarketingLab
To complete the problems with the * in your MyLab, go to the EOC Discussion Questions.
ANSWERS TO REVIEW QUESTIONS
3-1 List the three prescriptions that serve as the foundation for development of a relationship
3-3 What major factors help influence salespeople’s ethical conduct?
3-5 Why must a salesperson’s ethical sense extend beyond the legal definition of what is
3-6 Explain why the sales manager plays such an important role in influencing the ethical
3-7 A company policy on ethics should cover several major areas. What are they?
3-8 List and describe three guidelines used as a foundation of a self-imposed code of
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SUGGESTED ANSWERS FOR ETHICS APPLICATION EXERCISE
Gray Issues – Ethical Decision Making in Personal Selling is an instructional assessment
designed to help students make more informed ethical decisions. Students who apply for and
obtain a personal selling position will face many of the ethical issues included in this
assessment. Participation in the assessment will provide students with an introduction to a
wide range of real-life ethical dilemmas. It will stimulate in-depth thinking about the ethical
consequences of their decisions and actions.
Gray Issues – Ethical Decision Making in Personal Selling is a two-part assessment. Part I
includes five mini-cases that introduce ethical dilemmas that a student is likely to face when
applying for a sales position. Part II includes seven ethical dilemmas that a salesperson is
likely to encounter in a typical sales position. Each mini-case poses four solutions. In some
cases, only one solution is the correct choice; in others, more than one choice has merit. Keep
in mind, however, that one solution will be the best selection from the options listed. The
answer key provides a point total for each solution and a solution rationale.
To maximize interest and involvement, schedule the assessment after students have read
Chapter 1, Relationship Selling Opportunities in Selling Today, and Chapter 3, Ethics – The
Foundation for Relationships in Selling. During Part I, each student will assume the role of
candidate for the position of account executive at the Park Shores Convention Center.
Students should read the position description on page 425 of Appendix 3 prior to class time.
Suggested Answers to the Ethics Application Assessment are provided in the text on page
483, at the end of Appendix 3.
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TEAM DISCUSSION ALTERNATIVE
Team competition adds an extra dimension of excitement to the assessment. Organize the
class into teams of three to four students, and appoint a group spokesperson. Working alone,
class members should select the best solution for each case prior to meeting with members of
their group. The selection of solutions will require about five to seven minutes. Once the students
have selected a solution for each case, they should join their team for a discussion of their
choices. Instruct teams to reach a consensus, if possible, regarding the best solution. Teams
should be given 12–15 minutes to discuss the solution options for each mini-case. After each
team has completed its deliberations, begin posting the solution choices on the board or flip
chart. Post all of the team choices for the first mini-case and then encourage team members to
discuss the rationale for their choice. After each team has presented support for its choice, post
the points earned for the mini-case. For example:
Case #1 Team #1 Team #2 Team #3 Team #4
A (5 points) B (10 points) B (10 points) C (0 points)
After all mini-cases have been discussed and the points have been posted, total the points
and announce the winning team. Keep in mind that the most essential ingredient to successful
administration of the assessment is complete discussion of each ethical dilemma. Margaret
Gredler, Professor of Educational Psychology at the University of South Carolina, says after you
complete an assessment, talk about it. “This is where the real learning should take place.”
ROLE-PLAY EXERCISE
This is a very challenging role-play exercise. Encourage students to prepare a written outline of
their responses prior to the role-play.
SOLUTION FOR THE CASE PROBLEM
3-9. The situations that might challenge the ethical conduct:
3-10. The major areas that should be covered in a company policy on ethics should include the
following:
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Copyright © 2018 Pearson Education, Inc.
a. Competition and Fair Dealing – This deals with the ethical way the company wants to
advertise its products and features to its customers and avoid misleading them. Moreover, it
should also set guidelines on business slandering, business libel and product disparagement.
b. Corporate Opportunities – This aspect of the policy deals with deterring the employees from
using company assets for improper personal gains.
c. Maintaining Confidentiality – This ensures that the information with which the employees are
entrusted should not be disclosed for personal gains. Divulging confidential statements to
competitors and customers could be harmful to the company.
d. Improper Gifts and Payments – This area should deal with employees neither offering,
promising or giving any undue advantages to obtain or retain business or any improper dealings
in the conduct of business.
3-11. If the incentives that are in place are very strong financial incentives, employees will be