15.7 Ethical Issues in Personal Selling and Sales Promotion
3 min read•june 25, 2024
Personal selling and sales promotions can be ethical minefields. From expense account misuse to , salespeople face tricky situations. Ethical issues like or creating conflicts of interest can damage trust and reputations.
Companies can promote ethical behavior through clear codes, aligned incentives, and transparent cultures. Strategies like and help navigate complex dilemmas. Ultimately, ethical sales practices build long-term success and customer loyalty.
Ethical Issues in Personal Selling
Ethical issues in personal selling
Top images from around the web for Ethical issues in personal selling
Conflict Of Interest - Free of Charge Creative Commons Legal Engraved image View original
Is this image relevant?
The Importance of Personal Selling | OpenStax Intro to Business View original
Is this image relevant?
Common Ethical Issues in Marketing | Principles of Marketing View original
Is this image relevant?
Conflict Of Interest - Free of Charge Creative Commons Legal Engraved image View original
Is this image relevant?
The Importance of Personal Selling | OpenStax Intro to Business View original
Is this image relevant?
1 of 3
Top images from around the web for Ethical issues in personal selling
Conflict Of Interest - Free of Charge Creative Commons Legal Engraved image View original
Is this image relevant?
The Importance of Personal Selling | OpenStax Intro to Business View original
Is this image relevant?
Common Ethical Issues in Marketing | Principles of Marketing View original
Is this image relevant?
Conflict Of Interest - Free of Charge Creative Commons Legal Engraved image View original
Is this image relevant?
The Importance of Personal Selling | OpenStax Intro to Business View original
Is this image relevant?
1 of 3
- Misuse of involves salespeople falsifying expense reports to claim reimbursement for personal expenses (non-business meals, entertainment, travel) which is unethical and can lead to disciplinary action or termination
- Inflating sales data occurs when salespeople exaggerate or fabricate sales figures to meet quotas or earn higher commissions by reporting sales that have not been finalized or claiming higher revenue than actually earned, misrepresenting the company's performance and misleading stakeholders
- can arise when a salesperson's personal interests interfere with their professional responsibilities, potentially compromising their judgment or loyalty to the company
Unethical practices in sales promotions
- Hidden fees involve companies advertising a low base price but adding mandatory fees that significantly increase the total cost (resort fees, processing fees, service charges) without clearly disclosing them upfront, failing to transparently communicate all fees which is unethical and can damage customer trust
- in sales promotions use vague or misleading language to make offers appear more attractive than they are by using terms like "up to" or "as low as" without clearly stating the likelihood of qualifying for the best deal, leading customers to make decisions based on incomplete or inaccurate information
- Lack of occurs when promotions fail to provide customers with all necessary information to make an educated decision about a product or service
Strategies for ethical sales behavior
- Establish a that develops clear ethical guidelines for sales and marketing personnel to follow, communicates the code through training and regular reminders, and enforces it consistently while holding violators accountable
- Align incentives with ethical behavior by structuring compensation plans to reward ethical conduct, not just short-term sales results, avoiding setting unrealistic quotas that may pressure salespeople to engage in unethical practices, and recognizing and celebrating employees who demonstrate a commitment to ethics
- Foster a culture of that encourages open communication and reporting of ethical concerns without fear of retaliation, provides channels for employees and customers to report unethical behavior (anonymous hotlines), and investigates and addresses reported issues promptly and fairly
- Lead by example with senior management and sales leaders consistently modeling ethical behavior, communicating the importance of ethics and integrity from the top down, and making ethical considerations a priority in decision-making processes
Ethical considerations in sales and promotions
- Fair competition practices ensure that businesses compete on a level playing field without resorting to deceptive or harmful tactics
- Consumer protection measures safeguard customers from unfair or deceptive sales and marketing practices, promoting trust in the marketplace
- Addressing requires salespeople to navigate complex situations where the right course of action may not be immediately clear, often balancing business objectives with moral considerations
Key Terms to Review (31)
Account Executive: An account executive is a sales professional who is responsible for managing and maintaining relationships with a company's clients or customers. They serve as the primary point of contact between the organization and its clients, ensuring their needs are met and their business objectives are achieved.
AMA Code of Ethics: The AMA (American Marketing Association) Code of Ethics is a set of professional standards and guidelines that marketing practitioners are expected to follow in order to maintain ethical conduct and responsible practices in their work.
Ambiguous Terms: Ambiguous terms are words or phrases that can have multiple, potentially contradictory meanings, leading to uncertainty or confusion. In the context of personal selling and sales promotion, ambiguous terms can create ethical issues by obscuring the true nature of a product or service being offered.
Bait-and-Switch: Bait-and-switch is a deceptive sales tactic where a marketer advertises a product or service at an attractive price to lure in potential customers, but then persuades them to purchase a different, typically more expensive, item instead. This practice is considered unethical and is often prohibited by consumer protection laws.
CAN-SPAM Act: The CAN-SPAM Act is a law that establishes requirements for commercial email, gives recipients the right to have businesses stop emailing them, and spells out tough penalties for violations.
Code of Ethics: A code of ethics is a set of principles and guidelines that outline the ethical standards and responsibilities for individuals or organizations within a particular profession or industry. It serves as a framework to guide decision-making and ensure ethical conduct.
Conflict of Interest: A conflict of interest occurs when an individual or organization has competing interests or loyalties that could improperly influence their judgment, decisions, or actions. This term is particularly relevant in the context of providing professional services, advertising and public relations, and personal selling and sales promotion.
Consumer Protection: Consumer protection refers to the laws, regulations, and initiatives aimed at safeguarding the rights and interests of individuals who purchase goods or services. It ensures that consumers are treated fairly, have access to accurate information, and are protected from deceptive or unfair practices by businesses and marketers.
Conversion Rate: Conversion rate refers to the percentage of visitors or potential customers who take a desired action on a website or in a marketing campaign, such as making a purchase, filling out a form, or clicking on a link. It is a key metric used to measure the effectiveness of various marketing and advertising efforts.
Cross-Selling: Cross-selling is the practice of offering customers additional products or services related to their initial purchase, with the goal of increasing sales and customer value. It involves identifying complementary offerings that can enhance the customer's experience or address their needs more comprehensively.
Customer Lifetime Value: Customer lifetime value (CLV) is a metric that measures the total worth of a customer to a business over the entire duration of their relationship. It represents the net present value of the future cash flows expected from a customer, taking into account factors such as customer acquisition costs, revenue generated, and the likelihood of retention. CLV is a crucial concept in marketing, as it helps businesses understand the long-term value of their customers and make informed decisions about customer acquisition, retention, and resource allocation.
Deontology: Deontology is an ethical theory that judges the morality of an action based on the action's adherence to a rule or rules, rather than the consequences of the action. It is a duty-based approach to ethics that emphasizes the inherent rightness or wrongness of an action, regardless of its outcomes.
Ethical Dilemmas: Ethical dilemmas are situations where there is no clear right or wrong answer, and an individual must make a difficult choice between two or more morally acceptable or unacceptable actions. These dilemmas often arise in the context of personal selling and sales promotion, where salespeople must navigate complex ethical considerations.
Expense Accounts: Expense accounts refer to the funds provided by an organization to its employees to cover work-related expenses, such as travel, meals, and other business-related costs. These accounts allow employees to be reimbursed for expenses incurred while performing their job duties, ensuring they are not out-of-pocket for necessary expenditures.
Fair Competition: Fair competition refers to the ethical and legal practice of competing in a market or industry without engaging in unfair, deceptive, or anticompetitive tactics. It ensures a level playing field where businesses can compete on the merits of their products, services, and strategies rather than through underhanded means.
Federal Trade Commission: The Federal Trade Commission (FTC) is an independent agency of the United States government that is responsible for promoting consumer protection and preventing anticompetitive business practices. It plays a crucial role in ensuring ethical considerations and addressing various ethical issues across different areas of marketing and business operations.
Greenwashing: Greenwashing is the practice of making misleading or deceptive claims about the environmental benefits or sustainability of a product, service, or company in order to appear more eco-friendly than they actually are. It involves the use of marketing and advertising tactics to create a false impression of environmental responsibility, often with the goal of increasing sales or improving a company's public image.
Hidden Fees: Hidden fees refer to charges or costs that are not clearly disclosed or made apparent to consumers when making a purchase or engaging in a transaction. These fees are often buried in the fine print or obscured from the main pricing information, leading to unexpected or unpleasant surprises for the consumer.
Inflating Sales Data: Inflating sales data refers to the unethical practice of artificially increasing or misrepresenting sales figures, revenue, or other financial metrics related to a company's performance. This is often done to create a false impression of success and growth, misleading investors, customers, and other stakeholders.
Informed Consent: Informed consent is the ethical and legal requirement that a person must be fully informed about and agree to a medical, research, or marketing procedure before it is undertaken. It ensures that individuals understand the potential risks, benefits, and alternatives, and voluntarily choose to participate.
Loyalty Programs: Loyalty programs are structured marketing strategies designed to encourage customers to continue doing business with a particular brand, company, or group of affiliated brands and companies by providing rewards or incentives for repeat business. These programs aim to foster customer loyalty, increase customer retention, and drive repeat purchases.
Push Strategy: A push strategy is a type of marketing approach where a company focuses on pushing its products or services through the distribution channel to the end consumer, rather than directly promoting to the consumer. The goal is to incentivize and motivate the intermediaries, such as wholesalers and retailers, to actively promote and sell the company's offerings.
Rebates: Rebates are a form of sales promotion where a consumer receives a partial refund of the purchase price after providing proof of purchase. Rebates are commonly used to incentivize consumers to make a purchase, often for higher-priced items, and can be an effective tool in the promotion mix.
Relationship Selling: Relationship selling is a sales approach that focuses on building long-term, mutually beneficial connections with customers, rather than simply making one-time transactions. It emphasizes understanding the customer's needs, providing value, and fostering trust and loyalty over the course of an ongoing relationship.
Sales Quota: A sales quota is a numerical target or goal set for a salesperson or sales team to achieve within a specific time period, typically a month, quarter, or year. It is a fundamental tool used in personal selling and sales promotion to measure and motivate sales performance.
Sales Representative: A sales representative is a professional who is responsible for promoting and selling a company's products or services to potential customers. They serve as the primary point of contact between the company and its clients, working to build relationships, understand customer needs, and secure sales.
TARES Test: The TARES test is a framework used to evaluate the ethical standards of personal selling and sales promotion tactics. It provides a set of criteria to assess whether these marketing practices adhere to ethical principles.
Territory Management: Territory management is the strategic approach used by sales organizations to divide their market or customer base into distinct geographical areas or territories, with the goal of optimizing sales performance and customer relationships. It involves the effective allocation and management of sales resources, including personnel, time, and activities, within designated territories to maximize revenue, market share, and customer satisfaction.
Transparency: Transparency refers to the openness, communication, and accountability demonstrated by organizations or individuals in their actions and decision-making processes. It involves providing clear, accurate, and timely information to stakeholders, fostering trust and credibility.
Upselling: Upselling is a sales technique where a seller encourages a customer to purchase a more expensive or higher-end product, service, or add-on in order to make a more profitable sale. The goal is to increase the total value of a transaction by persuading customers to spend more money.
Utilitarianism: Utilitarianism is an ethical theory that holds that the most ethical choice is the one that maximizes overall happiness or well-being for the greatest number of people. It focuses on the consequences of actions rather than the intentions behind them, aiming to produce the greatest good for the greatest number.