PART ONE- ETHICAL DILEMMA INTRODUCTION Marketing ethics can be described as the moral values that guide behavior
within the field of marketing and cover issues such as product safety, truthfulness in marketing communication, honesty in relationships with customers and distributors, Pricing issues and the impact of marketing decisions on the environment and society. (Jobber, 2007). ANSWER TO QUESTION ONE Ethical dilemma has increased in goods as DISTRIBUTION is now seen as a means of competitive advantage because most large retailers seek to expand its operations. Slotting allowance is the payment made by manufacturers to RETAILERS in other to secure a space on store shelves Andrews, 2000 noted that it is very observable to see some items like Kelloggs, Colgate, Doritos placed at the top eye level in a supermarket or at end of aisle. This is not by accident. Manufacturers pay big money for one of those slots. These fees can range from $5,000 to $250,000 often paid cash advance and ununiform. It is also unclear where the payments are reported. Several cases of bribery before allocation on the part of retail executives have been reported. Slotting fees can be seen as a profit by the grocery industry at their suppliers expense. (Brandon 2002). ANALYSIS OF SLOTTING FEES Slotting fees limit competition. It is often the case when a large competitor offers more than a small competitor, its products was preferred irrespective of customers demand. In such cases where only the Big manufacturers products are displayed because of the prohibitive slotting fees, the customers loses because of lack of competition in the supermarket and limited choice of products to choose from. Hence the small manufacturers are denied the opportunity to succeed. This fee turns the retailer to a REAL ESTATE dealer selling space to the highest bidder.
However most retailers have argued that slotting fees would help them to cover some cost example Stocking cost and storage cost. According to Wyatt 2001, most retailers justify slotting fees as the charge of the competitive store admission and discourage of DUMPING from most company. The retailer profits twice as a result of receiving slotting fee. Once from the fee and second from sale of the product. In addition, retailers typically require advertising promotion (often with the retailer thus shifting a great portion of their own advertising cost to the manufacturer) along with products entry and volume discounts. A FAILURE FEE is also charged once the product does not meet sales expectations. Boatrights, 2007 argued that most retailers have HIGHER POWER in deciding which products or not to display and slotting fees may suppress INNOVATION from smaller manufacturer as most of them cannot afford it. Slotting fee affect consumers as manufacturer pass on the cost by PRICE INCREASE of the product. In United Kingdom, Government is currently looking into the matter as most retail outlet are always reluctant to talk about it which makes it ETHICALLY QUESTIONABLE. Product availability is now controlled by the ability to pay Slotting fees not by consumer demand or product quality. Some critics have compared the secretiveness and nature of this fee similar to that of the drug trade atmosphere. (Robert and Mamane 2001). I think slotting fees is UNETHICAL as it creates a BARRIER TO ENTRY to manufacturers that cannot afford it. However small companies can start with few stores or niche retailers in order to reduce the cost of the slotting. Big companies can embark on extensive market research on their products and advertise to support their products in other to avoid paying slotting fee. Collaboration can also exist between the manufacturers to resist this fee by refusing to market their products with any retailer that charges this fee thus creating scarcity of
demand of shelf spaces that attract a charge. This would force the retailers to reduce or abandon this charge.
ANSWER QUESTION TWO The following are the ethical issues or dilemma that is faced by most organization: Is it ethical for sales manager to place pressure or target on its sales people? If yes, what level of sales pressure is acceptable to be place on sales people? Should unrealistic performance goals be set by managers? Should promotion of sales people be based on marginal performance? Should sales manager assign salespeople to different territories and expect the same sales result from them? The above are the question an organization needs to find solutions to in other to determine and solve the ethical issues arising with its sales people. Sales people should be carefully selected, trained, and given a proper regulation in other to demonstrate the corporate cultures and values. (Olayinka and Aminu 2006). Sales Manager treat sales people differently, some managers can achieve a high levels of sales and performance from their sales personnel without exerting pressure through motivating and proper management of their sales people while others exert great amount of pressure in other to get their sales personnel to achieve their sales quota. Sales manager must set realistic and achievable targets for their sales people so that the pressure exerted on the sales person can be reduced. ISSUES OF DECEPTION AND LYING AMONG SALES PEOPLE Sales pressure can produce unhonourable actions. Its now common for sales to be driven by commissions, sales numbers and bonuses, all short term contingencies. Regardless of the reason, failure to make sales is almost never financially rewarding. This highlights the corporate culture in which most sales personnel works. A culture of deterioration of sales ethics.
DIFFERENT STRATEGIES OF DECEPTION AMONG SALES PEOPLE Boedecker, Morgan and Slotman (1991) Identifies the different deception strategies adopted by most sales people in other to lure their customer to make purchase which may include: UNINTENDED WARRANTIES: This includes fabricating existence of a product/service warranty or overstating what is covered and the time frame COMPETITIVE OFFERRING: Include making false statement about competitors products MISREPRESENTATION OF OFFERRING: Include making claims of your product that is not valid Implication of deception of sales people to customers and companies Unethical behaviour can have a negative effect on both the consumers and the company. An unrealistic promise or lie by a salesperson to a customer in other to make purchase could lead to the customer suing the company for MISREPRESENTATION AND BREACH OF WARRANTY The IMAGE and REPUTATION of the company is at stake in situations where its sales force deceive and lie to customers when selling its products all in order to meet harsh short term performance targets. REMEDIES THAT A SALES MANAGER CAN FOLLOW IN OTHER TO REDUCE THE ISSUES OF DECEPTION AND LIEING AMONG SALES PEOPLE. Sales manager can improve its ethical climate condition of its sales people by improving its social responsiveness and by ensuring that its company stays on ethical ground Futrell, 2001 suggest that in other for managers to stay on ethical ground the following steps should be followed by the sales manager:
Management should take the lead: Management must conduct themselves ethically and mirror acceptable conduct.
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Launch a policy based code of conduct: Management must communicate this to all staff and monitor implementation. Establish an ethical structure and ethical sales climate: Must look at marketing and sales campaigns from an ethical viewpoint Appropriate selection and Recruitment of Staff: Using ethically based questions during interview process Encourage whistle-blowing among staffs by rewarding any staffs that report unethical behaviors. Develop a control system: Establish a due process for dealing with violators. Reward and Recognition of staff with desired ethically behaviour.
Appendix 1 explains how the above strategy in full and how it can be implemented. Conclusion Salespeople have a duty to abstain from deception and lying, warn customers of possible danger, not lead customer to purchases that will harm them and answer honestly and in full questions regarding their product/services. From the above implication of lying it is Unethical for sales people to lie or deceive in order to generate sales. This is a short term strategy that will backfire in the long run. Adequate disclosure of correct information of product/service is required.
PART TWO ANALYSIS OF AVON CASE STUDY ANSWER TO QUESTION ONE. Today, manufacturers use a number of channels to sell their products, from retail stores to the internet and everywhere in between. As a result of selling through many channels at the same time, often channels compete for the same set of customers resulting in channel conflict. This always makes its way back to the manufacturer. (Ingram et al 2007). Serious conflict happens when a channel targets other channels customers. This can lead to the threatened channel retaliating against the manufacturer by withdrawing its products from its stores. Avon adopted direct selling method by employing over 750,000 sales representatives in other to sell its cosmetic product to its target audience (WOMEN) but now it has employed different various channels in other to expand its operations (Laura,2005). Avon starts selling directly online due to online competition by Estee launder Inc. However this new channel represented a threat to the Avon Sales Reps. Avon decided to incorporate the reps to the website and give them commission from their sales online. The website allows for both direct sales and referrals to the sales reps. A customer can buy directly from avon.com without commission going to the sales reps, or enter a code that will identify the sales rep who directed them or order from the eRepresentative personalized online store integrated within Avons site. Avon tries to manage the conflict by focusing on driving customers to shop with an ERepresentative rather than directly with avon.com by offering cheap/free delivery for orders via the eRepresentative. Avon has also been able to draw attention away from its channel conflict with the introduction of its Sales Leadership program; a multilevel marketing plan which has
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helped kept Avon competitive in the direct selling industry. Under the Sales Leadership program, sales reps will continue selling Avon products but would be financially rewarded for recruiting and training others. The Sales Leadership Representative would earn bonuses based on the sale of her recruits and the recruits of the recruits. Avon can avoid serious conflicts with its sales representatives after adding Channel Expanding Sales: Avon can avoid conflict with its sales representatives by giving them priority and power to sell their Fast moving product. This will enable the sales representative increase their sales volume through higher value products and help increase higher margin and also protect their profitability. Dual Compensation and differerentiate Role: Avon has also tried to avoid the conflicts between its sales representatives by agreeing to compensate them with 20% to 25% commission. This strategy will enable the existing channel to perform some roles in supporting the new channel. For example Avon has introduced e-representative on their website in other to make special promotion and new product and offer Avon full product line where their target market (women) can also get their different ranges of products Dedicated Products In order to manage the conflict of the retail store, Avon might decide to develop and dedicate some brand and products to be sold at these outlets. They can also market current products which their sales reps are usually not willing to sell. However with the introduction of new channels Avon cannot totally eradicate conflict but however Avon can manage this conflict with the above recommendations. Conclusion With Avons new channels, channel conflict is inevitable. Avon was able to recognize its previous direct selling strategy on its website was destructive and rethink their strategies.
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ANSWER TO QUESTION TWO In todays global economy any company that wants to survive in terms of profit and market share must employ different strategies in other to get its good/services to to its targets audience (Coughlan 2006). Avon is known as the worlds largest door to door cosmetic seller selling mainly Cosmetics, Fragrances and Toiletries. The introduction of the online sales, has kept the Avons direct sales model relevant and viable for its type of products. Avon has moved from an era of door-to-door to an era where most women buy their makeup at superstores or buy online which makes their product accessible to different ages. The introduction of the e-representative, customers can still view the products and make order with their local representative with free delivery from the representative thus retaining the personal relationship the traditional Avon lady had. The ability of young sales people enable them to sell within social networking sites such as Facebook represents a way of expanding the business online. New Customers can also be generated through referrals, meetings, gatherings, parties and the internet which can help Avon to increase its sales and also expand its publicity. Avon direct sales model is still much a viable channel for its products. This is evident in the increasing product range the company produces, increasing market share and presence, brand popularity and increased consumer usage. The new generation of Avon sales reps now incorporates a lot of IT with the use of personalized website, Facebook, blogs, online ad messaging, chats and online makeover tools.
