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Principles of Marketing

15.7 Ethical Issues in Personal Selling and Sales Promotion

Principles of Marketing15.7 Ethical Issues in Personal Selling and Sales Promotion
Table of contents
  1. Preface
  2. Setting the Stage
    1. 1 Unit Introduction
    2. 1 Marketing and Customer Value
      1. In the Spotlight
      2. 1.1 Marketing and the Marketing Process
      3. 1.2 The Marketing Mix and the 4Ps of Marketing
      4. 1.3 Factors Comprising and Affecting the Marketing Environment
      5. 1.4 Evolution of the Marketing Concept
      6. 1.5 Determining Consumer Needs and Wants
      7. 1.6 Customer Relationship Management (CRM)
      8. 1.7 Ethical Marketing
      9. Chapter Summary
      10. Key Terms
      11. Applied Marketing Knowledge: Discussion Questions
      12. Critical Thinking Exercises
      13. Building Your Personal Brand
      14. What Do Marketers Do?
      15. Marketing Plan Exercise
      16. Closing Company Case
      17. References
    3. 2 Strategic Planning in Marketing
      1. In the Spotlight
      2. 2.1 Developing a Strategic Plan
      3. 2.2 The Role of Marketing in the Strategic Planning Process
      4. 2.3 Purpose and Structure of the Marketing Plan
      5. 2.4 Marketing Plan Progress Using Metrics
      6. 2.5 Ethical Issues in Developing a Marketing Strategy
      7. Chapter Summary
      8. Key Terms
      9. Applied Marketing Knowledge: Discussion Questions
      10. Critical Thinking Exercises
      11. Building Your Personal Brand
      12. What Do Marketers Do?
      13. Marketing Plan Exercise
      14. Closing Company Case
      15. References
  3. Understanding the Marketplace
    1. 2 Unit Introduction
    2. 3 Consumer Markets and Purchasing Behavior
      1. In the Spotlight
      2. 3.1 Understanding Consumer Markets and Buying Behavior
      3. 3.2 Factors That Influence Consumer Buying Behavior
      4. 3.3 The Consumer Purchasing Decision Process
      5. 3.4 Ethical Issues in Consumer Buying Behavior
      6. Chapter Summary
      7. Key Terms
      8. Applied Marketing Knowledge: Discussion Questions
      9. Critical Thinking Exercises
      10. Building Your Personal Brand
      11. What Do Marketers Do?
      12. Closing Company Case
      13. References
    3. 4 Business Markets and Purchasing Behavior
      1. In the Spotlight
      2. 4.1 The Business-to-Business (B2B) Market
      3. 4.2 Buyers and Buying Situations in a B2B Market
      4. 4.3 Major Influences on B2B Buyer Behavior
      5. 4.4 Stages in the B2B Buying Process
      6. 4.5 Ethical Issues in B2B Marketing
      7. Chapter Summary
      8. Key Terms
      9. Applied Marketing Knowledge: Discussion Questions
      10. Critical Thinking Exercises
      11. Building Your Personal Brand
      12. What Do Marketers Do?
      13. Closing Company Case
      14. References
    4. 5 Market Segmentation, Targeting, and Positioning
      1. In the Spotlight
      2. 5.1 Market Segmentation and Consumer Markets
      3. 5.2 Segmentation of B2B Markets
      4. 5.3 Segmentation of International Markets
      5. 5.4 Essential Factors in Effective Market Segmentation
      6. 5.5 Selecting Target Markets
      7. 5.6 Product Positioning
      8. 5.7 Ethical Concerns and Target Marketing
      9. Chapter Summary
      10. Key Terms
      11. Applied Marketing Knowledge: Discussion Questions
      12. Critical Thinking Exercises
      13. Building Your Personal Brand
      14. What Do Marketers Do?
      15. Marketing Plan Exercise
      16. Closing Company Case
      17. References
    5. 6 Marketing Research and Market Intelligence
      1. In the Spotlight
      2. 6.1 Marketing Research and Big Data
      3. 6.2 Sources of Marketing Information
      4. 6.3 Steps in a Successful Marketing Research Plan
      5. 6.4 Ethical Issues in Marketing Research
      6. Chapter Summary
      7. Key Terms
      8. Applied Marketing Knowledge: Discussion Questions
      9. Critical Thinking Exercises
      10. Building Your Personal Brand
      11. What Do Marketers Do?
      12. Marketing Plan Exercise
      13. Closing Company Case
      14. References
    6. 7 Marketing in a Global Environment
      1. In the Spotlight
      2. 7.1 The Global Market and Advantages of International Trade
      3. 7.2 Assessment of Global Markets for Opportunities
      4. 7.3 Entering the Global Arena
      5. 7.4 Marketing in a Global Environment
      6. 7.5 Ethical Issues in the Global Marketplace
      7. Chapter Summary
      8. Key Terms
      9. Applied Marketing Knowledge: Discussion Questions
      10. Critical Thinking Exercises
      11. Building Your Personal Brand
      12. What Do Marketers Do?
      13. Closing Company Case
      14. References
    7. 8 Marketing in a Diverse Marketplace
      1. In the Spotlight
      2. 8.1 Strategic Marketing: Standardization versus Adaptation
      3. 8.2 Diversity and Inclusion Marketing
      4. 8.3 Multicultural Marketing
      5. 8.4 Marketing to Hispanic, Black, and Asian Consumers
      6. 8.5 Marketing to Sociodemographic Groups
      7. 8.6 Ethical Issues in Diversity Marketing
      8. Chapter Summary
      9. Key Terms
      10. Applied Marketing Knowledge: Discussion Questions
      11. Critical Thinking Exercises
      12. Building Your Personal Brand
      13. What Do Marketers Do?
      14. Closing Company Case
      15. References
  4. Product, Promotion, Price, and Place
    1. 3 Unit Introduction
    2. 9 Products: Consumer Offerings
      1. In the Spotlight
      2. 9.1 Products, Services, and Experiences
      3. 9.2 Product Items, Product Lines, and Product Mixes
      4. 9.3 The Product Life Cycle
      5. 9.4 Marketing Strategies at Each Stage of the Product Life Cycle
      6. 9.5 Branding and Brand Development
      7. 9.6 Forms of Brand Development, Brand Loyalty, and Brand Metrics
      8. 9.7 Creating Value through Packaging and Labeling
      9. 9.8 Environmental Concerns Regarding Packaging
      10. 9.9 Ethical Issues in Packaging
      11. Chapter Summary
      12. Key Terms
      13. Applied Marketing Knowledge: Discussion Questions
      14. Critical Thinking Exercises
      15. Building Your Personal Brand
      16. What Do Marketers Do?
      17. Marketing Plan Exercise
      18. Closing Company Case
      19. References
    3. 10 Maintaining a Competitive Edge with New Offerings
      1. In the Spotlight
      2. 10.1 New Products from a Customer’s Perspective
      3. 10.2 Stages of the New Product Development Process
      4. 10.3 The Use of Metrics in Evaluating New Products
      5. 10.4 Factors Contributing to the Success or Failure of New Products
      6. 10.5 Stages in the Consumer Adoption Process for New Products
      7. 10.6 Ethical Considerations in New Product Development
      8. Chapter Summary
      9. Key Terms
      10. Applied Marketing Knowledge: Discussion Questions
      11. Critical Thinking Exercises
      12. Building Your Personal Brand
      13. What Do Marketers Do?
      14. Closing Company Case
      15. References
    4. 11 Services: The Intangible Product
      1. In the Spotlight
      2. 11.1 Classification of Services
      3. 11.2 The Service-Profit Chain Model and the Service Marketing Triangle
      4. 11.3 The Gap Model of Service Quality
      5. 11.4 Ethical Considerations in Providing Services
      6. Chapter Summary
      7. Key Terms
      8. Applied Marketing Knowledge: Discussion Questions
      9. Critical Thinking Exercises
      10. Building Your Personal Brand
      11. What Do Marketers Do?
      12. Closing Company Case
      13. References
    5. 12 Pricing Products and Services
      1. In the Spotlight
      2. 12.1 Pricing and Its Role in the Marketing Mix
      3. 12.2 The Five Critical Cs of Pricing
      4. 12.3 The Five-Step Procedure for Establishing Pricing Policy
      5. 12.4 Pricing Strategies for New Products
      6. 12.5 Pricing Strategies and Tactics for Existing Products
      7. 12.6 Ethical Considerations in Pricing
      8. Chapter Summary
      9. Key Terms
      10. Applied Marketing Knowledge: Discussion Questions
      11. Critical Thinking Exercises
      12. Building Your Personal Brand
      13. What Do Marketers Do?
      14. Marketing Plan Exercise
      15. Closing Company Case
      16. References
    6. 13 Integrated Marketing Communications
      1. In the Spotlight
      2. 13.1 The Promotion Mix and Its Elements
      3. 13.2 The Communication Process
      4. 13.3 Integrated Marketing Communications
      5. 13.4 Steps in the IMC Planning Process
      6. 13.5 Ethical Issues in Marketing Communication
      7. Chapter Summary
      8. Key Terms
      9. Applied Marketing Knowledge: Discussion Questions
      10. Critical Thinking Exercises
      11. Building Your Personal Brand
      12. What Do Marketers Do?
      13. Marketing Plan Exercise
      14. Closing Company Case
      15. References
    7. 14 The Promotion Mix: Advertising and Public Relations
      1. In the Spotlight
      2. 14.1 Advertising in the Promotion Mix
      3. 14.2 Major Decisions in Developing an Advertising Plan
      4. 14.3 The Use of Metrics to Measure Advertising Campaign Effectiveness
      5. 14.4 Public Relations and Its Role in the Promotion Mix
      6. 14.5 The Advantages and Disadvantages of Public Relations
      7. 14.6 Ethical Concerns in Advertising and Public Relations
      8. Chapter Summary
      9. Key Terms
      10. Applied Marketing Knowledge: Discussion Questions
      11. Critical Thinking Exercises
      12. Building Your Personal Brand
      13. What Do Marketers Do?
      14. Closing Company Case
      15. References
    8. 15 The Promotion Mix: Personal Selling and Sales Promotion
      1. In the Spotlight
      2. 15.1 Personal Selling and Its Role in the Promotion Mix
      3. 15.2 Classifications of Salespeople Involved in Personal Selling
      4. 15.3 Steps in the Personal Selling Process
      5. 15.4 Management of the Sales Force
      6. 15.5 Sales Promotion and Its Role in the Promotion Mix
      7. 15.6 Main Types of Sales Promotion
      8. 15.7 Ethical Issues in Personal Selling and Sales Promotion
      9. Chapter Summary
      10. Key Terms
      11. Applied Marketing Knowledge: Discussion Questions
      12. Critical Thinking Exercises
      13. Building Your Personal Brand
      14. What Do Marketers Do?
      15. Closing Company Case
      16. References
    9. 16 Direct, Online, Social Media, and Mobile Marketing
      1. In the Spotlight
      2. 16.1 Traditional Direct Marketing
      3. 16.2 Social Media and Mobile Marketing
      4. 16.3 Metrics Used to Evaluate the Success of Online Marketing
      5. 16.4 Ethical Issues in Digital Marketing and Social Media
      6. Chapter Summary
      7. Key Terms
      8. Applied Marketing Knowledge: Discussion Questions
      9. Critical Thinking Exercises
      10. Building Your Personal Brand
      11. What Do Marketers Do?
      12. Closing Company Case
      13. References
    10. 17 Distribution: Delivering Customer Value
      1. In the Spotlight
      2. 17.1 The Use and Value of Marketing Channels
      3. 17.2 Types of Marketing Channels
      4. 17.3 Factors Influencing Channel Choice
      5. 17.4 Managing the Distribution Channel
      6. 17.5 The Supply Chain and Its Functions
      7. 17.6 Logistics and Its Functions
      8. 17.7 Ethical Issues in Supply Chain Management
      9. Chapter Summary
      10. Key Terms
      11. Applied Marketing Knowledge: Discussion Questions
      12. Critical Thinking Exercises
      13. Building Your Personal Brand
      14. What Do Marketers Do?
      15. Marketing Plan Exercise
      16. Closing Company Case
      17. References
    11. 18 Retailing and Wholesaling
      1. In the Spotlight
      2. 18.1 Retailing and the Role of Retailers in the Distribution Channel
      3. 18.2 Major Types of Retailers
      4. 18.3 Retailing Strategy Decisions
      5. 18.4 Recent Trends in Retailing
      6. 18.5 Wholesaling
      7. 18.6 Recent Trends in Wholesaling
      8. 18.7 Ethical Issues in Retailing and Wholesaling
      9. Chapter Summary
      10. Key Terms
      11. Applied Marketing Knowledge: Discussion Questions
      12. Critical Thinking Exercises
      13. Building Your Personal Brand
      14. What Do Marketers Do?
      15. Marketing Plan Exercise
      16. Closing Company Case
      17. References
    12. 19 Sustainable Marketing: The New Paradigm
      1. In the Spotlight
      2. 19.1 Sustainable Marketing
      3. 19.2 Traditional Marketing versus Sustainable Marketing
      4. 19.3 The Benefits of Sustainable Marketing
      5. 19.4 Sustainable Marketing Principles
      6. 19.5 Purpose-Driven Marketing
      7. Chapter Summary
      8. Key Terms
      9. Applied Marketing Knowledge: Discussion Questions
      10. Critical Thinking Exercises
      11. Building Your Personal Brand
      12. References
  5. Answer Key
    1. Chapter 1
    2. Chapter 2
    3. Chapter 3
    4. Chapter 4
    5. Chapter 5
    6. Chapter 6
    7. Chapter 7
    8. Chapter 8
    9. Chapter 9
    10. Chapter 10
    11. Chapter 11
    12. Chapter 12
    13. Chapter 13
    14. Chapter 14
    15. Chapter 15
    16. Chapter 16
    17. Chapter 17
    18. Chapter 18
    19. Chapter 19
  6. Index

Learning Outcomes

By the end of this section, you will be able to:

  • 1 Discuss the ethical issues that may arise in personal selling. 
  • 2 Discuss the ethical issues that may arise in sales promotion.

Ethical Issues in Personal Selling

The goal of sales is to create customer loyalty and repeat purchases. Developing the relationship with the customer is best done through honesty and integrity. Sales should always be conducted with a long-term goal of developing a lifetime customer and not just one sale.

However, with sales goals as the driving force behind the sales activities, the sales force can be pressured into practices that might be counter to building customer loyalty. Without proper regulation and a code of ethics, sales efforts can run afoul of ethical rules. Good sales managers seek to have control features built in to prevent the temptation to have a climate of dishonesty.

Ethical issues that can arise within the sales function of a company include dishonest claims about a product, slanderous comments about the competition, padding of company expense accounts and/or misuse of the expense account, artificially inflating sales data to meet goals and bonuses, and bribes and kickbacks.

Sales professionals are typically self-starters who are out in the field working with their customers. In a sales role, companies provide the sales professionals expense accounts and credit cards as a way to work with and build relationships with clients. Without close supervision and company policies and guidelines, the sales professional can be tempted to participate in unethical practices. If a code of conduct is not present, it is often hard to resist the temptations. Some of the most common practices and temptations include misuse of the company credit card, inflating sales to reach goals, and receiving kickbacks.

Misuse of Company Credit Cards or Expense Accounts

Misuse of company credit cards and expense accounts can happen with any employee, but given the solitary nature of the sales professional, it is typically prone to happen more often with them. Because the work of the sales professional is fairly independent from the rest of the organization, it can create situations where there isn’t enough accountability. Misuse can happen through double billing, padding the expense account, or overcharging for expensed items.

To handle issues of expense misuse, it is best to have policies and procedures in place along with a record of accounting for expenses and providing receipts for all expensed items.

Inflating Sales Data

Because sales professionals are often given sales targets and expectations to meet the targets, they are at risk for finding methods of inflating their sales numbers to meet the targets. If the sales professional gets behind or feels pressure to meet goals, it can be appealing to find methods of showing goal achievement. The method of inflating sales can also be termed channel stuffing. This practice happens when a company forces more products through the distribution channel than the channel is actually capable of selling.

When the sales organization calculates the sales targets based on shipments of products, the method of channel stuffing helps to meet the targets in the short term. However, long-term sales targets are adversely affected, especially if the channel partners return the products.

An example of how this might happen can be explained through a company that sells over-the-counter medicines. If it has products with an expiration date in a few months, it may ship all of the products with the near-term expiration date. When the products don’t sell within the expiration time frame, the products are shipped back for a return. The sales in the short term where high, and the targets were met. However, in the long-term, the company is faced with a large shipment of returned product.

In 2016, in an effort to meet sales goals and targets, Wells Fargo employees created millions of fraudulent savings and checking accounts for clients without their consent. Regulatory agencies such as the Consumer Financial Protection Bureau (CFPB) penalized the company and fined it $185 million for the illegal activity.11

Accepting Kickbacks

Another unethical practice is when sales professionals accept kickbacks. There are many forms of kickbacks. Companies that deal internationally are often at the biggest risk for kickbacks, as it is common practice in some countries. Sales professionals that have long-term relationships can be tempted to take advantage of the situation, particularly if both sides profit from the scheme. There are many types of kickback schemes. Primarily a kickback scheme involves two people who work together to change the pricing structure, and in turn they both generally pocket some profit from the sale. Under the 1977 Foreign Corrupt Practices Act (FCPA), it is unlawful to pay or promise to pay another person for the purpose of retaining their business.

Companies with a Conscience

Tentree

A tree stands in a filed of grass. More trees are visible in the background.
Figure 15.5 Tentree runs consumer-oriented promotions in which it plants 10 trees for every purchase made. (credit: “Tree Near Barkisland” by Tim Green/flickr, CC BY 2.0)

Tentree is a sustainable clothing brand. Like many online stores and clothing brands, it regularly runs promotions, including a percent off of the purchase price when you sign up for their newsletter. But along with the typical consumer-oriented promotions, Tentree also plants 10 trees for every purchase (see Figure 15.5).

According to Tentree’s Facebook page, “We believe that big change starts small. Small as in bringing your reusable tote to the grocery store, getting your coffee refilled in a thermos, and choosing to wear sustainably made T-shirts. These small choices add up (trust us, we’ve done the math), and we’re here to celebrate each and every one of them. By planting 10 trees for every purchase, we hope to make big change accessible to everybody and show the lasting impact that one small choice can have.”12

So far, the company has planted over 81 million trees. The clothing it manufactures and sells is designed to have a very small environmental impact. And consumers are incentivized to purchase from Tentree because for every item purchased, the company plants 10 trees. Tentree has a goal that customers are pushing to reach—1 billion trees planted by 2030.13 Its earth-first philosophy is at the heart of every garment it sells.

Ethical Issues in Sales Promotions

When it comes to sales promotions, many ethical issues can arise. One of the most well-known issues with sales promotion happened with a popular McDonald’s game (see Figure 15.6). For years, McDonald’s ran its Monopoly game as a method to increase the consumer purchase of meals along with Monopoly game pieces that could net customers winnings from the fast-food giant. Not only was the game popular with customers, but it did exactly what the sales promotion was supposed to do: it increased sales. Unfortunately, the head of security for the company that ran the promotion and printed the game pieces took out all the winning game pieces in a scam worth $24 million.14

A small cardboard display box contains McDonalds Monopoly gameboards. The box says “Take one! Game Board Monopoly. September 30 through October 27”. An arrow points to the gameboards. Similar copy is written on the folded up gameboard, along with a picture of the Monopoly Man in his top hat and suit.
Figure 15.6 McDonald’s Monopoly game was an effective consumer-oriented promotion that resulted in a $24 million scam. (credit: “McDonald’s Monopoly 2014” by Mike Mozart, JeepersMedia/flickr, CC BY 2.0)

Hidden Fees

One of the most common issues with ethics in sales promotion is in hidden fees that might be tacked on to the promotion. The travel and hospitality industry can be an example of the hidden fees often found in the fine print for the unwary customer looking for a “deal.” An airline might have advertised prices, but upon booking, the traveler may realize the baggage and airport fees make the price higher than other advertised rates. This can also be a common practice with hotels and resorts. The advertised price may look appealing, and the sales promotion may seem like a good deal, but by the time resort fees are tacked on to the price, the promotional discount isn’t as attractive.

Ambiguous Terms and Conditions

Legal documents have long been considered tricky to maneuver. A company may provide the terms and conditions and a link to click or simply acknowledge that you have read through the 15,000-word document for understanding. But does anybody really read the documents? Do consumers really understand what they are reading and agreeing to? Most likely, the legal jargon has gone unread, and the customer is typically unaware of what they have agreed to. However, it is in the best interest of the company to look out for the best interests of their customers. If the end goal is long-term customer satisfaction, all of the work of the company should be around making sure the customer is satisfied. Providing ambiguous terms and conditions does nothing to really protect the customer relationship.

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