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• Ethics is the study of how businesspeople behave when fethics describes the moral content of behavior.
• Business acing a situation with moral consequences.
• Sales management ethics is the specific component of business ethics that deals with ethically managing the sales function.
UNETHICAL SALES PRACTICES: PROHIBITED ACTIONS
• Bribes, gifts, kickbacks
• Conflicts of interest
• Illegal political payments
• Violation of laws in general
• Use of insider information
• Violations of secrecy agreements
• Falsification of sales accounts
• Moonlighting
• Violation of antitrust laws
• Fraud and deception
• Illegal payments abroad
• Justifying the means by the intended end
EMPLOYER ETHICS WITH THEIR SALESPEOPLE
• COMPENSATION: prompt, accurate payment of salary, commissions, and bonuses as well as timely reimbursement of selling expenses
• SALES TERRITORIES: fair assignment of sales territories
• SALES QUOTAS: setting realistic achievable sales quotas
• HIRING, PROMOTING, AND FIRING : sexism, racism, and ageism must not influence managerial decisions
ETHICAL VIOLATIONS
• Misusing company assets
• Expense account padding
• Unauthorized use of company funds
• Personal use of company time
• Fabrication of sales records
• Manipulation of customer orders
• Cheating in sales contests
• Circumventing company policy
ETHICAL VIOLATIONS AGAINST COWORKERS AND COMPETITORS
TREATMENT OF COWORKERS
• Sexual harassment
• Stealing customers from colleagues
• Undermining coworkers
TREATMENT OF COMPETITORS
• Disparaging competitors and their products or services
• Tampering with competitor's products
• Competitive snooping
ETHICAL ISSUES REGARDING TREATMENT OF CUSTOMERS
• special gifts
• entertainment
• over-promising
• over-selling
• misrepresenting, covering up the facts, or distorting the truth
• manipulating order forms
• disclosing confidential information
• showing favoritism
• conflicts of interest
MANAGING THE ETHICAL CLIMATE
• Sales managers should be sure of the following:
that salespersons are aware of rules and policies
that salespersons are rewarded and reprimanded with no favoritism or bias
that an ethical climate is promoted at all levels of the sales organization
STATE AND LOCAL REGULATION
• State and local laws that regulate selling activities include the following:
1. Uniform Commercial Code, which regulates the performance of goods, sellers’ warranties, and the maximum allowable rates of interest, misrepresentations, and promises not kept
2. Green River Ordinances, which requires nonresidents to obtain a license from city authorities to sell goods or services direct to consumers in that vicinity
3. Cooling-Off Rules, which requires door-to-door salespeople to give written notice to customers placing orders of $25 or more that they can cancel their purchase within three days
ETHICS AND REGULATION IN INTERNATIONAL SALES
• In international negotiations, salespeople must not confuse varying ethical standards with the U.S. and foreign laws governing their activities.
• In planning to sell products or services to a foreign country, sales representatives should contact the commercial attaché at the U.S. embassy for information on legal requirements in conducting business there.
UNETHICAL ISSUES IN ADVERTISING
ETHICS Ethics is a branch of philosophy which seeks to address questions about morality; that is, about concepts such as good and bad, right and wrong, justice, and virtue.
ADVERTISING Advertising is the promotion of a company’s products and services carried out primarily to drive sales of the products and services but also to build a brand identity and communicate changes or new product /services to the customers. Advertising has become an essential element of the corporate world and hence the companies allot a considerable amount of revenues as their advertising budget.
REASONS FOR ADVERTISING
• Increasing the sales of the product/service
• Creating and maintaining a brand identity or brand image.
• Communicating a change in the existing product line.
• Introduction of a new product or service.
• Increasing the buzz-value of the brand or the company
UNETHICAL ADVERTISING :Advertisement is considered unethical in the following situations;
• When it has degraded or underestimated the substitute or rival's product.
• When it gives false or misleading information on the value of the product.
• When it fails to give useful information on the possible reaction or side effects of the product.
• When it is immoral.
BASIC PRINCIPALS
• Decency
• Honesty
• Social Responsibility
• Truthful presentation
• Comparisons
• Imitation
• Safety and health
• Avoidance of Harm
• Environmental behaviour
WAYS OF UNETHICAL ADVERTISEMENT
1. SURROGATE ADVERTISEMENT: Surrogate advertising is prominently seen in cases where advertising a particular product is banned by law. Advertisement for products like cigarettes or alcohol which are injurious to heath are prohibited by law in several countries and hence these companies have to come up with several other products that might have the same brand name and indirectly remind people of the cigarettes or beer bottles of the same brand Common examples include Fosters and Kingfisher beer brands, which are often seen to promote their brand with the help of surrogate advertising.
2. PUFFERY: Puffery as a legal term refers to promotional statements and claims that express subjective rather than objective views, such that no reasonable person would take literally. A two-year old might believe that polar bears enjoy sipping Coca-Cola. But we know better.
3. EXAGGERATION: Using false claims in the advertisements about the product.
For example:-Ghari detergent - “Pehle Istemaal kare phir vishvaas kare.”, Tide detergent – “White ho to Tide ho.”, Vodafone Essar – “Wherever you go our network follows.”
4. UNVERIFIED CLAIMS: It includes advertisements of “energy drinks” which tells us about the number of vitamins and how they help children to grow strong and tall. There is no way of verifying these false claims.
For example:-Horlicks, Maltova, Tiger biscuits.
5. WOMEN STEREOTYPING Women are generally associated with household works and is not supposed to be a good decision maker which contributes to women stereotyping .
6. WOMEN USED AS SEX SYMBOLS FOR PROMOTING PRODUCTS
7. COMPARATIVE ADVERTISEMENTS: Nowadays advertisers are engaged in unhealthy brand comparison with the help of advertising. Such comparisons create problems and confusions for the right choice of the product as far as audience are concerned. Example can be cited of colgate and pepsodent toothpaste.
8. USE OF CHILDREN IN ADVERTISING: Children are easily persuaded and have a large pull on today's markets, as is known by all advertisers, even ones who do not intend for their products to be consumed by children
7 ETHICAL CHALLENGES FOR ADVERTISING PRACTITIONERS
• Treating clients fairly
• Treating advertising audiences fairly
• Creating honest, nonmisleading, socially desirable ads
• Representing healthy, useful, and ethical products, services, and/or ideas
• Treating supplier, vendors, and media fairly
• Treating employees and management of agency fairly
• Treating other agencies fairly
SOME OF THE IMPORTANT FEATURES OF VARIOUS LAWS CONCERNING ADVERTISING ARE:
1. The Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954 prohibits advertisements for products and services claiming to cure certain medical conditions. As per the law, no advertisement should promise magical cure for any ailments or disease and the rules specify the diseases and ailments that cannot be advertised promising cure or remedies.
2. The Monopolies and Restrictive Trade Practice act, 1969: It had been the most effective Act in the eighties and nineties to regulate undesirable advertising. In the year 1984, the government brought, through an amendment, "unfair trade practices" under the purview of the MRTP Commission and the Office of the Director General (Investigation and Registration). However, this Act is being replaced by the Competition Act, 2002 but the cases pending under the MRTP Commission are still being heard.
3. The Consumer Protection Act, 1986: The Consumer Protection Act, 1986, applies to advertisements for all products in the market place. A consumer may file a complaint related to false and misleading advertisements, which are included under the definition of unfair trade practice (Section 2 ® The law mentions seven classes of unfair trade practices in six subsections of this section of the law. The consumer courts can however, take the following actions under section 14 of the Consumer Protection Act, 1986:
4. Cable Television Networks (Regulation) Act, 1995: This law lays down the procedure for registration of a cable television network and also regulates the programmes and advertisements transmitted on cable network in India. The registering authority is the Head Post Master of a Head Post Office of the area within whose territorial jurisdiction the office of the cable operator is situated.
5. Drugs and Cosmetics Act, 1940 This law regulates the production, manufacture and sale of all drugs and cosmetics in the country. The Act prescribes a fine of up to Rs. 500 for any person using any report or extract of report of a test or analysis made by the Central Drugs Laboratory or a government analyst for advertising of a drug or cosmetic.
6. Section 292 and Section 293 of the Indian Penal Code, 1860, prohibits the dissemination of any obscene matter. The Indian Post Office Act, 1898, imposes a similar prohibition on the transmission of obscene matter through the post..
7. The Children's Act, 1960, prohibits the disclosure of names and address and other particulars of any child involved in any proceedings.
8. The Indecent Representation of Women (Prohibition) Act, 1986 forbids the depiction of women in an indecent or derogatory manner in the mass media. No person shall publish, or cause to be published, or arrange or take part in the publication or exhibition of, any advertisement which contains indecent representation of women in any form.
9. The Emblems and Names (Prevention of Improper Use) Act, 1950, prohibits the use by any private party of certain names, emblems, etc.
UNETHICAL ISSUES IN MARKETING
WHAT IS ETHICAL MARKETING?
• Ethical marketing refers to the application of marketing ethics into the marketing process
• Marketing ethics has the potential to benefit society as a whole, both in the short- and long-term
• Study of Ethical marketing should be included in applied ethics and involves examination of whether or not an honest and factual representation
• Marketing ethics has influenced companies and their response is to market their products in a more socially responsible way
• The increasing trend of fair trade is an example of the impact of ethical marketing
• The philosophy of marketing is not lost with this newfound ethical slant, but rather hopes to win customer loyalty
• Ethical marketing should not be confused with government regulations brought into force to improve consumer welfare
• Marketing ethics is the area of applied ethics which deals with the moral principles behind the operation and regulation of marketing. Some areas of marketing ethics overlap with media ethics