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 http://www.youtube.com/watch?v=WcGfJMSsx20 The Definition • 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=Ttde_4Eu6gU 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. Tommy Boy : Stop at http://www.youtube.com/watch?v=mEB7WbTTlu4 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 http://www.youtube.com/watch?v=OFgSlZC4XDA of the real video.
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 Nutella http://www.youtube.com/watch?v=2IpVDkg3kL8 Commercial – which is full of palm oil!
ETHICS IN SELLING • When people sell goods and services directly to the consumer. Towers don’t http://www.youtube.com/watch?v=uTwtKRwlAzw 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 Ikea gives a warning, but the http://www.youtube.com/watch?v=ccfJei-ohXI consumer still doesn’t LISTEN!
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