Chapter 2: MRKT

Assuming company policies do not prohibit gift giving, which of the following gifts would be most appropriate for a salesperson selling earthmoving equipment to give to a potential customer?

A coffee mug with the company name, logo, and telephone number imprinted on it

How does a sale differ from a contract to sell?

A contract to sell exists anytime a salesperson makes an offer and receives unqualified acceptance from the customer, while a sale is made only when the title passes from the seller to the buyer.

Which of the following is true of an agent?

A person who acts in place of his or her company is an agent.

What impact does a salesperson's statement have when he or she acts as an agent?

A salesperson's statements and actions can legally bind his or her company and have significant financial impact.

___ laws are established by local, state, or federal regulatory agencies.

Administrative

Which of the following could be a problem area in the salesperson-company relationship?

All of the above

Which of the following questions should one ask oneself to determine whether a sales behavior or activity is unethical?

All of the above

Which of the following acts may be considered sexual harassment?

All of the above.

__ occurs when salespeople make unfair or untrue statements to customers about a competitor, its products or its salespeople.

Business defamation

What is business defamation?

Business defamation occurs when a salesperson makes unfair or untrue statements to customers about a competitor, its products, or its salespeople. These statements are illegal when they damage the competitor's reputation or the reputation of its salespeople.

Which of the following is an example of a kickback?

Chantal pays a department store buyer five percent of all the orders placed by the store.

reters to competitors working together while the customer is making a purchase decision.

Collusion

___ is the view that no culture's ethics are superior to any other culture's ethics.

Cultural relativism

What is cultural relativism?

Cultural relativism is the view that no culture's ethics are superior.

Larry, an inexperienced sales rep, has asked you to suggest ways to deal with potential ethical problems. What should you suggest?

Develop and maintain a personal code of ethics.

Robin is selling a Local Area Network (LAN) system to a company that oversees the renovation of dingy, old downtown districts into attractive, shopping areas. Which of the following statements by the seller might be construed as an expressed warranty?

Don't worry if it breaks down; our service people will be able to get it running again quickly.

is the view that ethical standards in one's home country should be applied to one's behavior across the world.

Ethical imperialism

Which of the following statements about ethics is true?

Ethical principles establish appropriate behavior.

A noncompete clause prevents employees from leaving the company until a specified amount of time has passed.

FALSE

If a salesperson does not know the answer to a customer's question concerning the product, then the best option is to quess.

FALSE

It is easy to develop a reimbursement policy that prevents salespeople from cheating and yet allows them the flexibility to cover their territory and entertain customers.

FALSE

It is unethical for salespeople to employ persuasion because it reduces or eliminates a buyer's choice.

FALSE

Spreading rumors about a colleague's sexual conduct cannot be considered as sexual harassment.

FALSE

Statements such as, "The performance of this product is top-notch," can be classified as expressed warranties.

FALSE

The Foreign Corrupt Practices Act (FCPA) made it legal for U.S. companies to engage in conspiracy.

FALSE

The Robinson-Patman Act forbids product differentiation.

FALSE

The Uniform Commercial Code (UCC) is the only legal quide to commercial practice in the United Nations.

FALSE

Tying agreements stipulate that a seller is only allowed to sell products to a single buyer.

FALSE

The __ is the most active regulatory agency in developing administrative laws affecting salespeople.

Federal Trade Commission

The ___ Act requires written notification to customers regarding privacy policies.

Gramm-Leach-Bliley

What is the difference between free on board (FOB) destination and free on board factory?

If the contract terms specify free on board (FOB) destination, the seller has title until the goods are received at the destination. In this case any loss or damage incurred during transportation is the responsibility of the seller. The buyer assumes this responsibility and risk if contract terms call for FOB factory.

What is a tying agreement?

In a tying agreement, a buyer is required to purchase one product in order to get another product.

Which of the following is an example of a tying agreement?

In order to carry a highly successtul organic cleaning compound, Nature's Survival Store has to carry a much less successful line of laundry detergent made by the same company.

The manager of the linen section of a department store purchases towels only from a salesperson from the Bona Fide Textile Company. The salesperson pays him five percent of the total sale once the order is placed. This is an example of a:

Kickback

Which of the following is an example of reciprocity?

Larry's Uniform Company agrees to buy Harry's landscaping services if Harry will rent its uniforms from Larry.

To speed up the opening of a new factory in a Middle Eastern country, Micah gifted a pen and pencil set that he had purchased for $10 to an assistant of a local government. Micah hoped this gift would remove some of the red tape that was slowing down the building process. This type of gift is referred to as:

Lubrication

What are spiffs?

Spiff stands for "special promotion incentive fund." Spiffs (or push money), are special incentives to get a reseller's salespeople to push products. They are legal only if the reseller knows and approves of the incentive and it is offered to all the reseller's salespeople.

A small appliance manufacturer, trying to build a factory in one Mexican state, offered the governor a bribe of $12,000 to waive off certain environmental regulations for the manufacturing concern. This is an example of:

Subordination

___ involves paying large sums of money to higher-ranking officials to get them to do something illegal or to ignore an illegal act.

Subordination

What is subordination?

Subordination involves paying larger sums of money to higher-ranking officials to get them to do something that is illegal or to ignore an illegal act. Even in countries where bribery is common, subordination is considered unethical.

A salesperson should only give a gift to a purchasing agent if that gift will foster a mutually beneficial, long-term relationship.

TRUE

Because salespeople's activities in the field cannot be closely monitored, their employers trust them to act in the company's best interests.

TRUE

Bribes typically have no negative consequences for the purchasing agent's firm-only for the purchasing agent as an individual.

TRUE

Common law grows out of court decisions, and precedents set by these decisions fill in the gaps where no laws exist.

TRUE

For salespeople who have switched jobs, disclosinq confidential information about the former employer's business is improper.

TRUE

Harassment is not confined to requests for sexual favors in exchange for job considerations such as a raise or promotion.

TRUE

If the company takes specific steps, such as mentioning the law in company policy, the government's assumption is that the employee acted on his or her own and is individually responsible.

TRUE

In the early days of selling, companies studied and wrote down the sales pitches of their most successful people, and created canned sales pitches.

TRUE

Most sales situations are not covered by laws.

TRUE

Over time, common and administrative laws have defined the difference between misrepresentation and puffery.

TRUE

Salespeople engage in backdoor selling only when they are about to get an order.

TRUE

Society has determined that some activities are clearly unethical and has created a legal system to prevent people from engaging in these activities.

TRUE

The U.S. laws concerning bribery are much more restrictive than laws in Italy and Germany.

TRUE

The federal Do-Not-Call Registry limits the conditions under which anyone on the registry may be telephoned at home or on a cell phone.

TRUE

U.S. salespeople are subject to U.S. laws, regardless of the country they are selling in.

TRUE

What is ethical can vary from country to country and from industry to industry.

TRUE

When an item is shipped under contract terms that call for FOB (free on board) factory, the buyer assumes responsibility for any loss or damage incurred during transportation.

TRUE

When spending from their company's expense accounts, salespeople should act as though they are spending their own money.

TRUE

Why did the Robinson-Patman Act become law?

The Robinson-Patman Act became law because independent wholesalers and retailers wanted additional protection from the aggressive marketing tactics of large chain stores. Principally, the act forbids price discrimination in interstate commerce.

A group of uniform rental companies agreed that neither would charge less than $5 per week per uniform even before the newly opened chicken plant contacted them for bids. This is an example of:

a conspiracy.

The manufacturer of Kingston freestanding greenhouses gives $100 as an incentive to a reseller's salespeople for each greenhouse they sell. This special incentive is known as:

a spiff

If the terms of the contract specify FOB (free on board) destination, then:

any loss or damage incurred during transportation is the responsibility of the seller.

Statutory laws:

are based on legislation passed either by state legislatures or by Congress.

When a purchasing agent bought an order of sheet aluminum (used to make cans) from a new supplier, the salesperson specified the details of the product's quality. However, when the purchasing agent received the order, he noticed that the aluminum sheets were of inferior quality. The salesperson had violated the _ that the salesperson had made.

expressed warranty

If the salesperson for a paint manufacturer promised a purchasing agent that a certain brand of paint was mildew-resistant (when it was not), the salesperson:

gave an expressed warranty.

Kevin purchased a lawn mower. The blades were so dull that the mower could not cut the grass in his backyard. Due to the existence of warranties, Kevin can return the mower and expect to receive a replacement that will cut grass.

implied

A(n) __ is not actually stated but is still an obligation defined by law.

implied warranty

When a department store clerk tells Hilda that the coffee brewed by one particular coffee maker will make her think she has died and has gone to Starbucks heaven, the clerk is using:

puffery.

When a perfume manufacturer establishes a minimum price below which a retailer may not sell its perfume, the manufacturer is engaged in:

resale price maintenance

Claiborne used to work for a law office. He was forced to quit because one of the partners kept rubbing against him, telling him dirty jokes, and making it an environment in which he could not work. This is an example of

sexual harassment.

When James sold the protective window bars for the nursing home complex, he specified in the contract that the bars would be shipped FOB factory. According to the UCC, this means that

the buyer assumes responsibility, cost, and risk for shipping of the bars.

If the terms of the contract specify FOB (free on board) factory, then:

the buyer assumes the responsibility and risk for any loss during transportation.

According to UCC, orders become contracts to sell when:

they are signed by an authorized representative of the salesperson's company.

Ivan sells customized computer software and hardware to small businesses. To make a sale to Anastasia, he has offered to discount $100 if she buys the product immediately. He initially quotes $100 more than his company's list price; his bargain price is the list price. Ivan has:

used deception in trying to make a sale.

In a successful partnering relationship, a purchasing agent:

can ethically accept a free lunch from a salesperson.

Three companies were selected as potential suppliers of computer equipment for an organization's headquarters. After the negotiations began, representatives of two of the firms met and developed a scheme to eliminate the third company from the competition. This is an example of:

collusion.

The accounting of sales and costs of many new technology products has resulted in many ethical and legal controversies. Often, the shelf life of a new product is difficult to assess and therefore how to allocate sales and costs is debatable. A court decision provides guidelines to address these issues. The court decision is an example of:

common law.

In Canada, where puffery is more closely monitored than in the United States, a salesperson told a customer a particular oven would cook meat better than any other oven in the market. The salesperson might be guilty of violating the:

credulous person standard.

Court decisions related to the Robinson-Patman Act define ___ as a seller giving unjustified special prices, discounts, or services to some customers and not to others.

Price discrimination

What is reciprocity?

Reciprocity is a special relationship in which two companies agree to buy products from each other.

How do salespeople engage in backdoor selling?

Salespeople engage in backdoor selling when they ignore the purchasing agent's policy, go around his or her back, and contact other people directly involved in the purchasing decision.

Which of the following statements about U.S. salespeople who sell to international customers is true?

U.S. salespeople are prohibited from engaging in activities that would adversely affect the U.S. economy.

Marvin is an inexperienced sales rep for a manufacturer of kitchen appliances. He requests you (p. 42) to advise him on handling an expense account ethically. What should you tell him?

Use your expense account as if you were spending your own money.

Salespeople engage in when they ignore a purchasing agent's (PA) policy against contacting other employees without the PA's permission, and directly contact other people involved in the purchasing decision.

backdoor selling

Calvin sells hospital supplies. When his company did not make it to the approved list of suppliers (p. 40) developed during a vendor analysis by a chain of nursing homes, he went against the purchasing department's policy and contacted nurses and other staff directly to persuade them to get the purchasing department to place his company on its approved list of suppliers. Calvin engaged in:

backdoor selling.

The Uniform Commercial Code (UCC):

defines a number of terms related to salespeople.

A(n) __ is an oral or written statement by the seller about how a product will perform.

expressed warranty

According to UCC, a sale is made:

when the contract is completed and the title exchanges hands.