CHAPTER 2
ETHICS FIRST … THEN CUSTOMER RELATIONSHIPS
COMMENTS ON CHAPTER 2 SALES APPLICATION QUESTIONS
1. Your decision would probably be influenced by both standards. If a business practice is encouraged
that is ethically questionable, hopefully your moral judgment would override corporate pressure.
2. Have the students share their situations where they were in an ethical dilemma. Be sure they
understand that there are no easy solutions, but their decisions can have a wide impact not only on
themselves, but on the lives of others.
3. “Sales puffery” are the opinions of the salesperson while misrepresentation is when the customer
relies on the salesperson‘s statements of “fact” that proved to be false. Avoid this by asking for proof
that these “facts” that seem too good to be true. Also obtain a guarantee or warranty in writing for
the product by the company.
4. While all stakeholders are important, you must remember that shareholders ultimately cannot be
pleased until the customers and employees are pleased. These are the elements critical to all
5. A code of ethics brings order to the firm, but it cannot be expected to be abided by unless the
company’s leaders set the example. Ethical sales practices must be started from the top
(management); that is the most effective means of embedding an ethical culture.
COMMENTS ON CASES
Case 2-1: Perfect Solutions
Cases entitled Perfect Solutions (2-1), Sales Hype (2-2), Dumping Inventory (10-2), and Steve Santana:
Pressured to Close a Big Deal (12-4) were created from watching their videos. The write-up for each of
these cases is an overview of the video. For this overview and example multiple-choice test questions for
each case please see Part II of your IM entitled “Videos Accompanying ABC’s of Relationship
Selling.”
Taking two or three class periods (about 3 hours) to cover Chapter 2 “Ethics First…Then Customer
Relationships” and using these sales ethics cases where you feel appropriate throughout the course will
help ensure your class has a focus on business and sales ethics.
The following are possible guidelines for answering questions at the end of this case:
One of the better ways to use Perfect Solutions in both personal selling and sales management classes is
to assign someone to watch the video and talk about what is done by Scott and Larry.
1. Describe the situation faced by both Scott Patterson and Larry Ingram.
Players: Scott Patterson, salesperson of Perfect Solutions (PS) and Larry Ingram, CEO of Ingram
Distributing.
Ingram has been a distributor of PS products for 10 years and PS’s top distributor for the last two
years. Scott recently signed up Barber Distributing, a competitor of Ingram. Ingram calls Scott
into his office to discuss this and other things.
Mr. Ingram tells Scott that Barber undercut their prices by 10% to get the project. Ingram had cut
their prices to the bone. “Did PS give Barber special price deals?” asks Mr. Ingram. Scott says,
“No.” Ingram wants to know if Barber will bid for the “plant” business coming up. He wants
Scott to get him their bid price. He places pressure on Scott to get him the best price for the bid
or lose his business.
Ingram says Dymotzue is trying to get his business from PS. Dymotzue’s prices are on Ingram’s
desk, including the price for the new adhesive. Ingram asks Scott, “Where is my Bond–do–
perm?” Then he says, “If you can’t come through for me this time, I’m going to have to seriously
consider our relations.” Scott calls his office and is told the product is bad. It will be 2 months
before it is available. Scott lies to Ingram saying he might get him one truckload by the end of
the month.
Ingram says Barber Distributing was in the office of one of his customers offering a 5% lower
price than his price. Scott offers to give the product to Ingram free to reduce his price to his
customer. If Scott will do this for Ingram will he also do it for Barber? Scott thinks to himself
2. What would you do if you were Scott Patterson?
Scott is the salesperson. You might divide this question into two areas:
A. What would the lying, cheating, stealing salesperson, Scott, now do?
What might be the consequences of these actions short– and long- term?
B. What would be done by the salesperson who follows the Core Principles of
Professional Selling? See Chapter 1’s Exhibit entitled “Interest in serving the
3. What would you do if you were Larry Ingram?
Larry is Scott’s biggest distributor. You might describe to class what a distributor does—buys
from numerous manufacturers and sells in smaller quantities to resellers or organizations.
4. What are the ethical considerations, if any, in this case? Make the following overhead to show
your class and lead class discussion.
Salesperson’s Ethics in Dealing with…
A. Ethics Related to Employer
(1.) Misusing company assets—samples to reduce list price.
(2.) Cheating—getting sales unethically affects performance relative to
other salespeople. (The second ethical cases with this chapter “Sales
Hype” shows an example of this element of ethics.)
B. Ethics in Dealing with Customers
(2.) Misrepresentation—ship in month, bad product, and maybe special
price deals to Barber, Ingram’s competitor.
(3.) Price discrimination—sell cheaper to Barber? We do not know this
buy given Scott’s other sales practices this is a possibility.
C. Customer Ethics to Salesperson (Not discussed in textbook)
(2.) Put pressure on Scott to get best price—does that mean more free
samples or lower price than list price and price to competitors?
1. What level of moral development are Patterson and Ingram operating at in this business
relationship?
A. Scott Patterson — the salesperson — Level 1.
Case 2-2: Sales Hype: To Tell the Truth or Stretch It, That is the Question
Taking two or three class periods (about 3 hours) to cover Chapter 2 “Ethics First…Then Customer
Relationships” and using these sales ethics cases where you feel appropriate throughout the course will
help ensure your class has a focus on business and sales ethics.
The following are possible guidelines for answering questions at the end of this case:
1. Describe the situation faced by Kara.
This video is about two retail furniture salespeople, Sally and Kara, who are about to have
2. What would you do if you were Kara?
A. Kara needs to see what happens when she goes into management for her
performance review. Two of her options are:
(1.) If management is happy with Sally’s unethical sales practices, Kara
(2.) If management is in agreement with Kara, then Sally can change her
sales practices. Maybe Kara will act as a mirror, reflecting her caring
for others. Kara can relax and let management work with Sally and
others who might sell, as does the Traditional Salesperson described
in Chapter 1.
B. Make an overhead of Exhibit 1 in this case answer, and give it to your class
before showing the video. Give them 3 minutes to read. Ask them to see how
Kara could apply Exhibit 1 to the injustice Kara is experiencing with Sally and
maybe her boss.
3. What are the ethical considerations, if any, in this case?
A. Ethics With Employer Dealing with Employees
(1.) The textbooks clearly discuss that it is the ‘leader(s)’ responsibly to
act at the Level 3 of moral development. Kara will soon know what
management expects of salespeople.
B. Ethics Related to Employer
(1.) Sally is lying to customers. Let’s you and I tell our students the truth.
Sales hype is sales lying. Sally seems to be willing to do anything to
(2.) The unnamed man in the video seems to view selling the same as
Sally.
(3.) However Kara can not go by what Sally does and the man says. She
must determine for herself at what moral level management is
operating. Then Kara can make her decision.
C. Ethics Related to Customers
(2.) Kara is treating customers how I would want to be treated.
(3.) Ask students to vote on which salesperson—Sally or Kara—they
would like to deal with.
D. Salespeople’s Ethics Related to Other Salespeople (not in textbook)
(2.) By lying to customers and stealing other salespeople’s customers,
(3.) Kara might be the better salesperson, but Sally’s unearned sales can
cause management to view Sally as the better of the two.
4. What level of moral development are Sally and Kara operating at in this business situation?
A. Sally — Level 1.
B. Kara — Level 3.
Case 2-3: Personal Decision Making: Do Ethical Considerations Matter?
1. Let the students speak their mind. It would be interesting to compare and contrast their views on this
situation.
2. What are the ethical considerations, if any, in this case?
John is acting in his own best interest. He fails to see any wrong in his unprofessional approach where he has
already signed an employment contract.
3. As an employee, this individual would break moral and legal laws. In making an ethical or moral
decision, John at this level might ask, “What can I get away with?” He may not see wrong in unethical
4. John is operating at level 1 of moral development, as he is only concerned about himself.
Insert 1
Clayton Antitrust Act – Section 2C
“...It shall be unlawful for any person engaged in commerce, in the course of such commerce, to pay or grant,
or to receive or accept, anything of value as a commission, brokerage, or through compensation, ...except for
services rendered in connection with the sale or purchase of goods...”
Lack of knowledge, intent of illegal payment, and/or proof of actual competitive injury cannot be raised as a
defense under this section.
Insert 2
Clayton Antitrust Act – Section 3
That it shall be unlawful for any person engaged in commerce, in the course of such commerce, to lease or
make a sale or contract for sale of goods, wares, merchandise, machinery, supplies or other commodities,
whether patented or unpatented, for use, consumption or resale within or any insular possession or other place
under the jurisdiction of the United States, or fix a price charged therefore, or discount from, or rebate upon,
such price, on the condition, agreement or understanding that the lessee or purchaser thereof shall not use or
deal in the goods, wares, merchandise, machinery, supplies or other commodities of a competitor or
competitors of the lessor or seller where the effect of such lease, sale, or contract for sale of such condition,
agreement or understanding may be to substantially lessen competition or tend to create a monopoly in any
line of commerce.
representative was not adhering to company policy and thus was released. This will, hopefully, restore the
buyer’s faith in SS.