Final

Question 1

Legal issues affecting pricing decisions

Answer 1

predatory pricing, horizontal price fixing, price discrimination, price deception, mark up pricing, vertical price fixing

Question 2

Two common philosophies advocated where pricing is concerned

Answer 2

proportionate reason, principle of fairness

Question 3

Other issues prevalent in pricing

Answer 3

price gouging, non price increases, price discounting, price advertising

Question 4

Common issues in industrial products

Answer 4

competitive bidding and price fixing

Question 5

common issues in consumer goods

Answer 5

consumers not as well informed as business consumers; no control or bargaining power over price

Question 6

common issues in services

Answer 6

variability in quality and consistency; lack of transparency; peak times and slow times; consumers get “dependent” on service provider

Question 7

Explain the power and complexity of advertising

Answer 7

$260 billion in US in 2004, $400 globally in 2006, tends to be biased, intrusive, irrelevant, offensive

Question 8

The role of the 3 stakeholders in advertising

Answer 8

agency, media, company

Question 9

The range of ethical concerns that pervades advertising

Answer 9

spokesperson used–>message itself–>appropriateness for intended audience

Question 10

Macro criticisms of advertising

Answer 10

negative social impact; distorts value; insatiable greed; lack of manners, language, dress and taste; ethical perspective: one sided, promotes addictions, desire for money not truth, sacrifices human dignity

Question 11

Micro criticisms of advertising

Answer 11

propriety of specific advertising practices; advertising to children

Question 12

Some of the practices in place to regulate advertising practices

Answer 12

Government and advertising industry’s own regulations; Standards of Practice Statement (by American Association of Advertising Agencies) over seen by FTC and assisted by FDA

Question 13

The range of ethical issues facing advertising

Answer 13

Factual, Persuasive, Embellished, Deceptive

Question 14

The 2 persuasive advertising techniques

Answer 14

ambush and negative

Question 15

The ethical issues facing advertising

Answer 15

a. Persuasive advertising
b. Emphasizing insignificant differences
c. Agency client relationship
d. Ethical responsibility to audiences

Question 16

The roles and ethical principles adopted by advertising agencies

Answer 16

a. Technician- gives advice only on the message content, appropriate audiences, and media; like an employee
b. Advisor- perceives duties to the client to include the obligation to act on behalf of a larger constituency, viz., the client’s customer; takes a stakeholder perspective

Question 17

The different types of advertising professionals

Answer 17

a. Moral myopia- difficulty seeing ethical issues or seeing them clearly
b. Moral muteness- know the issues but remain silent to avoid confrontation
c. Moral imagination- group that advocated morally grounded approach

Question 18

The ethical responsibilities of advertising to different audiences

Answer 18

a. Children- need to protect children, and no advertising that will harm them
b. Seniors- target for: hair care products, dentures, pharma products, anti-aging creams and medications, financial services, travel packages
c. Market illiterates- immigrants and undocumented residents; policy of “mainstreaming” or deinstitutionalizing people with mental health issues

Question 19

The role of media in advertising ethics

Answer 19

i. Newspaper- not viewed as intrusive, except for “advertorial” intentionally made to look like a news story. Might mislead seniors.
ii. Magazines- moderately intrusive; same issues with “advertorial”
iii. Broadcast- intrusive, emotional and persuasive, many ethical critics
iv. Outdoor- little information, used by tobacco and liquor companies, spoils natural beauty
v. Direct marketing- direct mail, telemarketing, etc.

Question 20

The importance of internet advertising

Answer 20

a. 2002: 619 million people involved in $6.8 billion in internet based commerce around the globe
b. Combines direct marketing and TV and magazines
c. $16 billion in 2007
d. Advantages: color and sound, interactive, reach broader audience, relatively low cost

Question 21

What are some of the common concerns in internet advertising?

Answer 21

a. Intrusiveness and deception- banners and popups, spam; violations of privacy-cookies, long privacy policies; promotion of controversial products-pornography, gambling, targeting children, use misspellings

Question 22

What are some of the positive developments in advertising?

Answer 22

a. More positive images of women, minorities, seniors, other groups
b. More responsive to consumer complaints about content in which they advertise
c. Shift to other promotional techniques like coupons
d. Self-regulation and government regulation applies throughout the world

Question 23

What are some of the future challenges in terms of advertising?

Answer 23

a. Increase in infomercials
b. Dubious claims about “green marketing”
c. Absence of global regulation

Question 24

What are the ethical principles in action?

Answer 24

a. False and misleading statements are prohibited
b. Testimonials that do not reflect real opinion of individuals are forbidden
c. No misleading price claims
d. No statements or pictures offensive to public decency
e. No unsubstantiated performance claims

Question 25

The importance of personal selling

Answer 25

a. Accounts for over 16 million jobs in US

b. For every position in advertising, there are 30 jobs in personal selling

Question 26

Why does personal selling represent particularly difficult questions?

Answer 26

a. Constant change, time pressure, relative isolation
b. Results evaluated by manager by reports from the field
c. Need to make instantaneous choices
d. Heavy travel schedule
e. Rewards only for superior performance

Question 27

The various laws and legislation associated with personal selling

Answer 27

a. Clayton Act- prohibits tie in sales
b. Robinson Patman Act- must grant equivalent discounts to all buyers
c. FTC Act and Wheeler Lea Amendment- making false, deceptive, disparaging claims about competitors or their products

Question 28

The various state and local regulations

Answer 28

a. Uniform Commercial Code- provisions for implied warranty, maximum interest when sale is financed, salesperson should know difference between puffery and fact
b. Cooling off Laws- When purchase is greater than $25, customers can change their mind and return a product in 3 days for a full refund
c. Green River Ordinances- nonresident sellers need to register with local authorities

Question 29

What are some of the gray areas of selling?

Answer 29

a. Company assets- use of automobiles, fax machines, cell phones and supplies; inflating expense reports
b. Relationship with customers- overstocking, overselling, overpromising, over telling, under informing
c. Relationship with competitors- spying, product tampering, disparaging statements about competitors
d. Others- relationships with fellow workers and supervisors, conflict of interest, bribes, gifts and entertainment (should not exceed $25)

Question 30

What are the different sales management ethics?

Answer 30

a. Managing sales territories- house or national accounts, no encroachment
b. Setting sales quotas
c. Controlling sales messages
d. Sexual harassment

Question 31

The 2 types of sexual harrassment

Answer 31

a. Quid pro quo- sexual favors appear to be a requirement for advancement in workplace
b. Hostile work environment- worker made uncomfortable because of unwanted actions or comments relating to sexuality

Question 32

Explain why sexual harassment is a concern in selling.

Answer 32

a. Often isolated in field
b. Dependent on only sales manager
c. Expected to entertain clients outside the office, attend conventions, and social events
d. Over 60% of women and 10% of men indicate that they have been sexually harassed in the work place

Question 33

What are some of the issues with direct marketing and selling?

Answer 33

a. Irritation, unfairness, and deception
b. Invasion of privacy
c. Perceived pressure

Question 34

What are some ideas for ethical marketing?

Answer 34

a. Sales ethics policy statement
b. Set realistic sales quotas
c. Encourage sales reps to seek assistance when facing ethical troubles
d. Take proactive measure, even if it means working with your competitors

Question 35

Explain the financial value of social responsibility.

Answer 35

a. Improved financial performance
b. Investors see increase in returns
c. Competitiveness of a company and the health of communities are it are mutually dependent

Question 36

What are the types of social responsibility?

Answer 36

a. Sustainability- a company’s capacity to endure over the long term through renewal, maintenance, and sustenance
b. Eco centric management- protect and improve natural environment, regardless of economic benefits to an organization; reflects commitment to environment

Question 37

Explain CSR.

Answer 37

a. Embracing responsibility and encouraging a positive impact through the company’s activities related to the environment, consumers, employees, communities, and stakeholders
b. Includes philanthropic efforts, employee volunteering, and core strategies
c. Philanthropy- donating funds, good, or services to another organization or cause

Question 38

What are social audits?

Answer 38

a. Social responsibility audits- voluntarily produced by corporations themselves and are not held to same standards as financial reporting; lack of consensus about definition and metrics for social audits