CHAPTER 2
Ethics First … Then Customer Relationships
LECTURE OUTLINE
1. WHAT INFLUENCES ETHICAL BEHAVIOR?
A. The individual’s role:
1. People behave differently because of their:
a. Worldviews – people’s different beliefs about the world around them.
b. Morals – people’s adherence to right or wrong behavior and right or
wrong thinking.
2. Individuals usually can be placed into one of three levels of moral
development:
a. Pre-conventional — an individual act in one’s own best interests, and
thus follows rules to avoid punishment to receive rewards. Will break
moral and legal laws. “What can I get away with?”
b. Conventional — individual conforms to expectations of others. Upholds
moral and legal laws. “What am I legally required to do?”
c. Principled — an individual lives by an internal set of morals, values and
ethics. These are upheld regardless of punishments or majority opinion.
“What is the right thing to do?”
d. The majority of sales personnel, as well as people in general, operate at
the conventional level.
B. The organization’s role is often characterized by pre-conventional or conventional
levels of moral behavior.
II. ARE THERE ANY ETHICAL GUIDELINES?
A. What does the research say?
1. American adults said by a 3-to–1 margin that truth is always relative to a
person’s situation.
B. What does one do?
1. What would you do if you found a bank bag with $125,000? Would you return
it to the bank?
2. What would you do if you found a wallet? Why might you be more likely to
return the wallet without taking any of the money?
3. Out of class, is it alright to copy someone’s homework assignment even when
the course syllabus states that you have to do your own work? What keeps you
from copying on an exam when your professor is out of the room?
4. Is it okay to offer a customer a $10,000 trip if they place a $3 million order?
Why would you not even question paying for a $20 lunch associated with the
same purchase?
C. Is your conscience reliable?
1. We all have an internal ultimate moral standard that we use to measure good
and evil, right and wrong.
2. Most of us know not to keep the $125,000 or the wallet or copy someone else’s
work, but what would we actually do?
3. If a person’s value system is at the level 2 stage of development, this person
makes decisions based upon the “situation” and what others say and do.
a. Usually people rationalize their actions, such as, “I will only copy the
4. Many people are so accustomed to doing things unethically that they think
nothing about it.
D. Sources of significant influence.
1. Do your decision factors include your friends, family or things you see on
television or in the movies? Do their thoughts on what is ethical sometimes
change from day to day?
3. Wouldn’t it be nice to be able to base your decisions on something that never
changes?
4. The situations businesspeople face are frequently the same, yet many ethical
E. Three guidelines for making ethical decisions.
1. You need a fixed point of reference that is separate from you so that you and no
one else may influence it.
a. Fixed point of reference — refers to something that provides the correct
action to take in any situation and never gets “tailored” to fit an occasion.
b. Separate from you — refers to something outside yourself that may be
used for reference.
c. No one else may influence it — refers to something that is unchangeable
by you or anyone else. For example, navigators use stars for navigation
d. How does this relate to a person making ethical and moral decisions in
life?
F. Will the Core Principles Help?
1. One similarity in virtually all faith-based principles is the presence of a “Core
Principles of Professional Selling” concept.
2. The Core Principles of Professional Selling do not involve reciprocity—“if you
do for me, I will do for you.” It is doing for others without expecting
something in return.
3. “Could the Core Principles of Professional Selling serve as a practical, helpful
standard for the businessperson’s conduct?”
4. President Bush thinks so. He said, “A call to love your neighbor just like
5. Would you consider your faith a fixed point of reference that never changes
and is separate from you?
III. MANAGEMENT’S ETHICAL RESPONSIBILITIES
A. Ethics — Code of moral principles and values that govern the behaviors of a person
or group with respect to what is right or wrong.
B. Ethical Behavior — treating others fairly.
1. Being Honest.
2. Maintaining confidence and trust.
3. Following the rules.
5. Treating others fairly.
7. Carrying your share of work and responsibility.
C. An Ethical Dilemma is a situation when each alternative choice or behavior has some
undesirable elements due to potentially negative ethical or personal consequences.
IV. ETHICS IN DEALING WITH SALESPEOPLE
A. Sales Managers have both social and ethical responsibilities to their sales personnel.
B. Five ethical considerations by sales managers are:
1. Level of sales pressure to place on a salesperson.
2. Decisions affecting territory.
3. Whether or not to be honest with the salesperson.
5. What rights do employees have?
a. Termination-at-will — must now have accurate records which led to an
employee’s termination.
b. Privacy — non-job related information is being taken out of personal
files by employers.
c. Cooperative acceptance — employees are protected by law from acts of
discrimination and sexual harassment.
C. Company benefits of respecting employee rights:
1. Employees are more productive.
3. It reduces legal costs.
4. It reduces wage-increase demands.
V. SALESPEOPLE’S ETHICS IN DEALING WITH THEIR EMPLOYERS – salespeople, as well
as managers, may occasionally:
A. Misuse company assets – for personal gain or as bribes to customers.
B. Moonlight – take a second job or college course on company time.
C. Cheat – not play fair in contests.
D. Affect other salespeople – the unethical practices of one salesperson can affect other
salespeople within the company.
E. Attempt technology theft – take customer records, after quitting or being fired for his
or her or a future employer’s benefit.
VI. ETHICS IN DEALING WITH OTHER CUSTOMERS
A. Common problems faced in dealing with customers:
1. Bribes – There is a thin line between good business and the misuse of a bribe or
gift.
2. Misrepresentation — of the product, company, company policies, prices, or
delivery time in attempt to make a sale.
a. Salespeople must understand the difference between opinions and
statements of fact.
(1) Opinions do not have legal consequences.
(2) A company may be sued if its salesperson uses erroneous statements
of “fact.”
b. Suggestions for staying legal:
(1) Understand the difference between statements of praise and
statements of fact.
(2) Educate customers.
(3) Be accurate.
(4) Know the product’s technical specifications.
(5) Avoid exaggerations about product safety.
(6) Be familiar with laws regarding warranties.
(7) Understand your product’s capabilities.
(8) Keep current with design changes.
(10) Never overstep authority.
3. Price discrimination – Some customers may be given price reductions,
4. Tie–in-sales – When the buyer is required to buy other products that are not
wanted. Prohibited under the Clayton Act.
5. Exclusive Dealership – also prohibited under the Clayton Act.
6. Reciprocity – buying a product from someone if the person or organization
agrees to buy from you.
7. Sales restrictions.
a. FTC “cooling off” laws.
(1) Within three days, buyer can:
(a) Cancel contract.
(b) Return merchandise.
(2) Law covers sales of $25 or over made door-to–door.
(3) Buyer must have written, dated contract and be told of the three-day
period.
b. Green River Ordinance — required a license for selling direct to
consumers.
VII. THE INTERNATIONAL SIDE OF ETHICS – Despite different laws in other countries, U.S.
firms are subject to U.S. laws internationally.
VIII. MANAGING SALES ETHICS
A. Follow the leader – chief executives may set the example.
B. Leader selection – carefully choose managers with high levels of moral development.
C. Establish a Code of Ethics – a formal statement of the company’s views concerning
ethics and social values which includes:
1. Principle-based statements.
D. Create Ethical Structures such as an:
1. Ethical Committee – group of executives appointed to oversee company ethics.
2. Ethical ombudsman – official given the responsibility of corporate conscience
that hears and investigates ethical complaints and informs top management of
potential ethical issues.
E. Encourage whistle-blowing.
F. Create an ethical sales climate.
G. Establish control systems.
IX. HELPFUL HINTS TO MAKING CAREER DECISIONS
A. Be involved in businesses/organizations that make worthwhile products.
B. Do what is right according to your beliefs no matter what the costs.
C. Do not compromise your beliefs.
X. DO YOUR RESEARCH – In a potential employer look for:
A. Integrity – The business should be honest without compromise or corruption.
B. Trust – You have to know you can trust your employer.
C. Character – What is the company like when no one is looking, and what do they stand
for?
D. Values – The company should follow a moral code of conduct toward others.
E. Truth – The company should be true to their word and reflect the best of mankind.
XI. CORE PRINCIPLES OF PROFESSIONAL SELLILNG
A. What is truth?
2. But what are true facts? (What a discussion you can have here!)
XII. SUMMARY OF MAJOR ISSUES
A. Ethical behavior pertains to values of right and wrong.
B. Values depend on individual and organizational characteristics.
1. An important individual characteristic is one’s moral development.
2. Corporate culture is an organizational characteristic.
C. Corporate social responsibility is based on four criteria:
1. Economic responsibility.
3. Discretionary responsibility
D. Social responsibility in business means profitably serving employees and customers
in an ethical and lawful manner regardless of cost.
E. Could the Golden Rule serve as a universal, practical, helpful standard for people’s
conduct?
F. In the future, ethical standards for salespeople must be developed, supported, and
policed. Current techniques include:
1. Leadership
3. Ethical Structures
5. Establishing Control Systems
D. Socially responsible organizations perform as well as – and often better than –
organizations that are not socially responsible.