ETHICAL SELLING, MARKETING,

AND ADVERTISING

http://www.youtube.com/watch?v=vstg5c3c3g8

ETHICS IN ADVERTISING

• Advertising is the practice of attracting

public attention to a product or business

for the purpose of increasing sales.

– Fine line between:

• Encouraging people to buy a car AND

• Manipulating people to buy a car

ETHICAL PROBLEMS IN

ADVERTISING

• The First Amendment to the Constitution

guarantees the right to free speech.

– Applies to individuals and organizations

• Ads that are manipulative are legal but deceptive

– False Advertising

– Puffery

– Bait and Switch

– Advertising to children

– Telemarketing and Spam

FALSE ADVERTISING

• Is the practice of making statements about products that the advertiser knows are not true.

– The claims can be about how a product:

• Works

• How it is made

• How it will affect people– Who buy it

– Or use it

http://www.youtube.com/watch?v=PRNv

hGND7Kc

PUFFERY

• Is the term used to describe statements

that are not outright lies, but merely

exaggeration.

– The FTC allow puffery.

• Their definition says the exaggeration can not be

determined.

http://www.youtube.com/watch?v=WcGfJMSsx20

http://www.youtube.com/watch?v=Ttde_4Eu6gU

The Definition

The Commercial

BAIT AND SWITCH

• The practice of advertising a product at a

low price while intentionally stocking

only a limited number in hopes of luring

shoppers to buy more expensive items.

– Illegal but hard to prove

• Raincheck – written guarantee that when the

product is back in stock, the consumer will get

the discounted price.

http://www.youtube.com/watch?v=ZdbjJ85iv5E

ADVERTISING TO CHILDREN

• Children are specially vulnerable to

deceptive advertising.

– Generally trusting

– Believe what adults tell them

– Difficulty between fantasy vs. reality

(Sponge Bob)

http://www.youtube.com/watch?v=WMDPql6rweo&list

=PLC8470BC499E2CB2B

TELEMARKETING AND SPAM

• The practice of selling directly to

individuals through unsolicited phone

calls, e-mails, or faxes.

– Can waste consumers $$$

• Toner, paper and minutes on the phone

• Laws have been passed

– “do not call” lists

• Spam – option to open

ETHICAL STANDARDS IN

ADVERTISING

• Code of Ethics –

– A written set of principles and rules

intended to serve as a guideline for ethical

behavior for individuals under the

organization’s authority.

• AAF ( The American Advertising Federation)

– 1984 – Code of Ethics and Principles

TRUTH

• Advertising shall tell the truth, and shall

reveal significant facts, the omission of

which would mislead the public.

– Truth and Fairness go hand in hand in

advertising.

SUBSTANTIATION

• Advertising claims shall be substantiated

by evidence in possession of the

advertiser and advertising agency, prior to

making such claims.

– Substantiation is the validation of advertising

claims with objective data from independent

research.

COMPARISONS

• To make false claims and comparisons

about competitors is unethical, and it is

also illegal.

– Could be sued for libel.

GUARANTEES AND WARRANTIES

• “The big print giveth and the small print taketh away” - Tom Waits

• A guarantee is an assurance attesting to the durability or quality of a service or product.

• A warranty is a written promise to repair or replace a product if it breaks or become defective within a specific period of time.

http://www.youtube.com/watch?v=mEB7WbTTlu4

Tommy Boy

: Stop at

1:30 sharp

PRICE CLAIMS

• Advertising shall avoid price claims

which are false or misleading, or saving

claims which do not offer provable

savings.

TESTIMONIALS

• An endorsement of a product by

someone claiming to have benefited

from its use

– Often feature Celebrities and “experts”.

• Paid for their endorsement

http://www.youtube.com/watch?v=5RuUZrJvLXs

TASTE AND DECENCY

• Advertising shall be free of statements,

illustrations or implications which are

offensive to good taste or public decency.

– Edgy ads

• Monitored closely by special interest groups.

– Boycott

Madonna’s Pepsi

commercial that

got cut because

of the real video.http://www.youtube.com/watch?v=OFgSlZC4XDA

LIMITATIONS OF THE

ADVERTISING CODE OF ETHICS

• “Vague rules are easier to bend, if one is

so inclined”

– What some people think about the AFF

Code of Ethics

http://www.youtube.com/watch?v=2IpVDkg3kL8Nutella

Commercial –

which is full of

palm oil!

ETHICS IN SELLING

• When people sell goods and services

directly to the consumer.

http://www.youtube.com/watch?v=uTwtKRwlAzwTowers don’t

all exist !

ETHICAL PROBLEMS IN

SELLING

• Price Gouging

• False Prizes

• Commissions vs. “Straight” Commissions

PRICE GOUGING

• The practice of pricing a product far above the normal market value on the assumption that consumers have no other way to buy the product.– Ex. Bags of ice during

Hurricane Ike. $10 http://www.youtube.c

om/watch?v=R6ojYtKa

zgQ

FALSE PRIZES

• Common sales technique

– Seeks to trick potential customers into

thinking they have won valuable prizes such

as cash, cars, and cruises.

• Ex. “free piano” – turns out to be a toy piano

COMMISIONS VS. “STRAIGHT”

COMMISSIONS

• Commission – in addition to paying a salary

or hourly wage, the company rewards

salespeople with a percentage of the

money from the sales they make

– The more they sell, the more they make

• Straight Commission – salesperson’s

income is based entirely on what they sell

– Encourages deceptive and dishonest sales

techniques

PRINCIPLES OF ETHICAL

SELLING

• The Good News

– Most people in most professions are honest

and honorable.

– Most salespeople treat their customers with

integrity and fairness

http://www.youtube.com/watch?v=ijGLyGa2Uhg

THINK LONG-TERM

• The majority of unethical business

actions and decisions are based on

short-term thinking.

– Its all about the MONEY

ELEVATE THE GOAL

• People should

not be viewed as

wallets to be

exploited, but

relationships to

be built and

nurtured.

LEARN TO LISTEN

• The traditional model of selling involves:

– Memorizing the key points of a sales talk

– Presenting information to the customer

– Hoping to convince the customer to listen

and buy!

THE END

http://www.youtube.com/watch?v=ccfJei-ohXI

Ikea gives a

warning, but the

consumer still

doesn’t LISTEN!