ABC’s Of Relationship Selling through Service 12th Edition by Charles Futrell – Test Bank

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ABC’s Of Relationship Selling through Service 12th Edition by Charles Futrell – Test Bank

Chapter 02 Ethics First¼Then Customer Relationships

 

True / False Questions

  1. The ethical behavior of an employee is influenced by managers, co-workers, and the organization.
    Answer: True

Learning Objective: 02-01

Topic: What Influences Ethical Behavior?

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: The ethical behavior of individual employees is influenced by the organization and by other people, such as co-workers and managers. Top management plays a significant role in the ethical decisions made by employees.

 

  1. The world views and belief systems of employees from the same country are typically identical.

Answer: False

Learning Objective: 02-01

Topic: What Influences Ethical Behavior?

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: No two people are alike because of varying personalities, religious backgrounds, and family and personal experiences. Even people from the same culture will have different ideas of right and wrong.

 

  1. An individual in the pre-conventional stage of morality asks, “What can I get away with?”
    Answer: True

Learning Objective: 02-01

Topic: What Influences Ethical Behavior?

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: At the pre-conventional moral development level, an individual acts in his or her own best interest and thus follows rules to avoid punishment or receive rewards. This individual would break moral and legal laws.

 

  1. Individuals at the principled moral level base ethical decisions on laws and consequences.

Answer: False

Learning Objective: 02-01

Topic: What Influences Ethical Behavior?

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: At the principled moral development level, an individual lives by an internal set of morals, values, and ethics and would disobey laws to follow what he or she believes is right. At the conventional moral development level, an individual conforms to the expectations of others and legal laws.

 

  1. Most sales people operate at the conventional level of moral development.
    Answer: True

Learning Objective: 02-01

Topic: What Influences Ethical Behavior?

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: The majority of sales personnel, as well as people in general, operate at the conventional level. However, a few individuals are at level 1, and it is estimated that less than 20 percent of individuals reach level 3.

 

  1. Sales representatives at the preconventional moral development level would most likely be unconcerned about lying to customers if getting caught was unlikely.

Answer: True

Learning Objective: 02-01

Topic: What Influences Ethical Behavior?

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: Individuals at the preconventional moral development stage break moral and legal laws when they can get away with it. So, they probably would feel no concern about lying to a customer.

 

  1. Morals refer to people’s adherence to right or wrong behavior and right or wrong thinking.
    Answer: True

Learning Objective: 02-01

Topic: What Influences Ethical Behavior?

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: People’s morals are their adherence to right or wrong behavior and right or wrong thinking. As one thinks, one does.

 

  1. At the preconventional moral development level, an individual conforms to the expectations of others.
    FALSE

Answer: True

Learning Objective: 02-01

Topic: What Influences Ethical Behavior?

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: Individuals at the preconventional moral development stage break moral and legal laws when they can get away with no matter what others expect. Those at the conventional level conform to expectations and maintain laws.

 

  1. Based on levels of moral development, a Golden Rule salesperson is in the minority among sales personnel.
    Answer: True

Learning Objective: 02-01

Topic: What Influences Ethical Behavior?

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: The majority of sales personnel, as well as people in general, operate at the conventional level. However, a few individuals are at level 1, and it is estimated that less

than 20 percent of individuals reach level 3. Golden Rule salespeople are in level 3, which is a minority.

 

  1. The Golden Rule of Selling requires people whose personal character is at level 2.
    Answer: False

Learning Objective: 02-01

Topic: What Influences Ethical Behavior?

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: Golden Rule salespeople are in Level 3, which involves making ethical and moral decisions as all costs. The salesperson does what is right not what is in his or her best interest.

 

  1. A fixed point of reference must be separate from you.
    Answer: True

Learning Objective: 02-01

Topic: Are There Any Ethical Guidelines?

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: A fixed point of reference refers to something that provides the correct action to take in any situation and never gets tailored to fit an occasion. This fixed point of reference must be separate from you; otherwise you will be changing the rules based upon your best interest in various situations.

 

 

  1. Multiple world religions adhere to the Golden Rule.
    Answer: True

Learning Objective: 02-01

Topic:

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: Christians, Jews, Hindus, Buddhists, and Confucius’ followers embrace the

Golden Rule, although each has its own interpretation.

 

  1. Ethical behavior refers to conducting yourself in the proper manner and treating others fairly.
    Answer: True

Learning Objective: 02-02

Topic: Management’s Ethical Responsibilities

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: Ethical behavior involves treating others with fairness, being honest, and behaving in a proper manner.

 

  1. An ethical dilemma arises in a situation when each alternative choice has some undesirable elements due to potentially negative ethical consequences.
    Answer: True

Learning Objective: 02-02

Topic: Management’s Ethical Responsibilities

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: Right and wrong are unclear in ethical dilemmas. Such situations are faced by managers regularly.

 

  1. An ethical sales manager should set realistic and obtainable goals.
    Answer: True

Learning Objective: 02-03

Topic: Ethics in Dealing with Salespeople

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: Realistic and obtainable goals eliminate excess pressure on salespeople to behave unethically. Pressure motivates salespeople, but managers must set reasonable ones to avoid unethical actions.

  1. If management decides to increase the number of territories in a state, there is a possibility the earnings of the salespeople working that state will decrease.
    Answer: True

Learning Objective: 02-02

Topic: Management’s Ethical Responsibilities

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Management makes decisions that affect sales territories and salespeople. For example, the company might increase the number of sales territories, which often necessitates

splitting a single territory, which takes customers away from a salesperson and reduces his or her earnings.

 

  1. Josh Damon sells industrial-sized heating and cooling systems. His territory includes Illinois, Iowa, and Missouri. Management at Damon’s firm has decided to increase the number of territories in each sales region. Damon will most likely be excited about the opportunity this presents for him to earn more money.
    Answer: False

Learning Objective: 02-02

Topic: Management’s Ethical Responsibilities

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: An increase in the number of sales territories usually necessitates splitting a single territory, which takes customers away from a salesperson. Josh will not be happy because his earnings will decrease.

 

  1. If a salesperson has a drug or alcohol problem, a manager has the ethical responsibility to fire the individual based on right-to-work laws.
    Answer: False

Learning Objective: 02-02

Topic: Ethics in Dealing with Salespeople

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: Right-to-work laws relate to unions and are irrelevant to a salesperson with drug and alcohol problems. An ethical manager would most likely offer support to the salesperson and require the salesperson to seek substance abuse treatment.

 

  1. Today employers have the right to terminate salespeople for poor performance, excessive absenteeism, unsafe conduct, and poor organizational citizenship.
    Answer: True

Learning Objective: 02-02

Topic: Management’s Ethical Responsibilities

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: Due to the termination-at-will rule, employers have the right to terminate sales personnel for poor performance, excessive absenteeism, unsafe conduct, and poor organizational citizenship. It is crucial, however, for employers to maintain accurate records of these events for employees and to inform employees about where they stand.

 

  1. Cooperative acceptance means that employees cannot be discriminated against in employment practices and they have the right to be free of sexual and racial harassment.
    Answer: True

Learning Objective: 02-02

Topic: Management’s Ethical Responsibilities

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: Cooperative acceptance refers to the right of employees to be treated fairly and with respect regardless of race, sex, national origin, physical disability, age, or religion while on the job. Not only does this mean that employees have the right not to be discriminated against in employment practices and decisions, but it also means that employees have the right to be free of sexual and racial harassment.

 

  1. Although several federal laws influence record keeping, they are primarily directed at private employers.
    Answer: True

Learning Objective: 02-02

Topic: Management’s Ethical Responsibilities

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: Although several federal laws influence record keeping, they are primarily directed at public employers. However, many private employers are giving employees the right to access their personnel files and to prohibit the file information from being given to others without their consent.

 

  1. Although discrimination on the basis of a person’s sex is illegal, there are no laws against sexual harassment.

Answer: False

Learning Objective: 02-02

Topic: Management’s Ethical Responsibilities

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: Though the right to be free of sexual harassment is found explicitly in fewer laws, it has been made a part of the 1980 EEOC guidelines, which state that sexual harassment is a form of sex discrimination. The designation of sexual harassment as a form of sex discrimination under Title VII also is found in numerous court decisions.

 

  1. To prevent sexual harassment, companies rely on top management support, training for all employees, and clear procedures for filing grievances.
    Answer: True

Learning Objective: 02-02

Topic: Management’s Ethical Responsibilities

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: Employers must prevent racial and sexual harassment, which they can do with top management support, grievance procedures, verification procedures, training for all employees, and performance appraisal and compensation policies that reward anti-harassment behavior and punish harassment.

 

  1. The most often misused company assets are automobiles, expense accounts, samples, and damaged-merchandise credits.
    Answer: True

Learning Objective: 02-03

Topic: Salespeople’s Ethics in Dealing with Their Employers

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: Company assets most often misused are automobiles, expense accounts, samples, and damaged-merchandise credits. All can be used for personal gain or as bribes and kickbacks to customers.

 

  1. It is easy to distinguish between a gift and a bribe.
    Answer: False

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Distinguishing between gifts and bribes is problematic, which is why many firms forbid their buyers to accept any gifts from salespeople.

 

  1. A salesperson who exaggerates about product capabilities may be guilty of misrepresentation.
    Answer: True

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: When a customer relies on a salesperson’s statements, purchases the product or service, and then finds that it fails to perform as promised, the supplier can be sued for misrepresentation and breach of warranty. A salesperson’s exaggerations may be unintentional but they can be costly.

 

  1. Generally, the more knowledgeable the customer, the greater the chances the court will interpret an incorrect statement by a salesperson as an actionable misrepresentation rather than as sales puffery.
    Answer: False

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: There is a subtle difference between sales puffery and statements of fact; they can be difficult to distinguish. In general, the courts interpret a statement as actionable when a customer lacks knowledge about a product sold by a salesperson.

 

  1. A salesperson should thoroughly educate all customers before making a sale to avoid future legal problems.
    Answer: True

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Salespeople should provide as much information as possible about a product to customers to avoid misrepresentation charges.

 

  1. Regardless of whether a buyer is knowledgeable about a product or not, he/she does not have a duty to look beyond the assertions of a salesperson and investigate the product individually.
    Answer: False

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Just as salespeople should educated buyers, buyers are responsible for investigating a salesperson’s claims about a product.

 

  1. Durham Building Supplies requires anyone who wants to use its product to purchase only from it; this contractual arrangement is called an exclusive dealership.
    Answer: True

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: When a contract requires that a wholesaler or retailer purchase products from one manufacturer, it is an exclusive dealership. If it lessens competition, it is prohibited under the Clayton Act.

 

  1. Reciprocity occurs when Mario trades a load of firewood for an oil change for his Toyota Tacoma.

Answer: False

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Reciprocity refers to buying a product from someone if the person or organization agrees to buy from you. Swapping firewood for an oil change is a bartering situation but not reciprocity because neither party is agreeing to future purchases.

 

  1. A cooling-off law gives the buyer three weeks to cancel the contract, return any merchandise, and obtain a full refund.
    Answer: False

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: Cooling-off laws provide a cooling-off period (usually three days) in which the buyer may cancel the contract, return any merchandise, and obtain a full refund. The law covers sales of $25 or more made door-to-door. It also states that the buyer must receive from the seller a written, dated contract and/or receipt of the transaction and be told there is a three-day cancellation period.

 

  1. A salesperson competing in a foreign country may end up competing with foreign companies that are allowed to do things considered unethical by U.S. standards.
    Answer: True

Learning Objective: 02-04

Topic: The International Side of Ethics

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Often guidelines for conducting international business differ from U.S. laws and may be nonexistent. Salespeople overseas often compete with foreign companies allowed to do things considered unethical by U.S. standards.

 

  1. A code of ethics formally states a company’s values regarding social and ethical issues.
    Answer: True

Learning Objective: 02-05

Topic: Managing Sales Ethics

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: A code of ethics is a formal statement of the company’s values concerning ethics

and social issues. It states those values or behaviors that are expected and those that are not tolerated.

 

  1. The single most important factor in improving the climate for ethical behavior in a sales force is the existence of a detailed code of ethics.
    Answer: False

Learning Objective: 02-05

Topic: Managing Sales Ethics

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: The single most important factor in improving the climate for ethical behavior in

a sales force is the action taken by top-level managers. Sales managers must help develop and support their codes of ethics; however, a code of ethics by itself is not very influential

 

  1. Control systems that monitor and penalize the ethical behavior of salespeople are a useful tool in creating an ethical work environment.
    Answer: True

Learning Objective: 02-05

Topic: Managing Sales Ethics

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: Control systems must be established to encourage ethical behavior. Methods should be employed to determine whether salespeople give bribes, falsify reports, or pad expenses. Dismissal, demotion, suspension, reprimand, and withholding of sales commissions would be possible penalties for unethical sales practices.

 

  1. A person with integrity is honest without compromise or corruption.
    Answer: True

Learning Objective: 02-05

Topic: Ethics in Business and Sales

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: A person with integrity is honest without compromise or corruption. People with integrity have nothing to hide and nothing to fear.

 

  1. Integrity, trust, and character are the building blocks of a Golden Rule salesperson’s values.
    Answer: True

Learning Objective: 02-06

Topic: Golden Rule of Personal Selling

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Integrity, trust, and character help form the values or moral code of conduct toward others. Respect for the dignity of the individual is at the heart of the universal moral code referred to as “the Golden Rule” by most people of the world.

 

Multiple Choice Questions

 

  1. Which term refers to the different beliefs people have about the world?
    A.  Multiculturalism
    B.  Social morals
    C.  World ethics
  2. Worldview
  3. Citizenship

Answer: d

Learning Objective: 02-01

Topic: What Influences Ethical Behavior?

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Because people have different beliefs about the world around them, referred to as a person’s worldview, they tend to have different views on ethics and morality. Morals refer to a person’s adherence to right or wrong behavior and thinking.

 

  1. Which of the following factors has the LEAST influence on an individual’s core belief system?
    A. physical appearance
    B.  religious background
    C.  family upbringing
  2. life experiences
    E. personality

Answer: a

Learning Objective: 02-01

Topic: What Influences Ethical Behavior?

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Personality, religious background, family upbringing, personal experiences, and the situation faced are examples of factors shaping our core belief system. Physical appearance is less influential than the other factors on a person’s core beliefs.

 

  1. Which of the following questions would most likely be asked by a person at the preconventional level of moral development?
    A. What can I get away with?
    B. What does my family want me to do?
    C. What am I legally required to do?
    D. What is the right thing to do?
    E. What does society expect from me?

Answer: a

Learning Objective: 02-01

Topic: What Influences Ethical Behavior?

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: A person at the preconventional level makes decisions based on what he or she can get away with. A conventional level person is concerned about laws and the expectations of family and society.

 

  1. Which of the following questions would most likely be asked by a person at the principled level of moral development?
    A. What does society expect from me?
    B. What is the right thing to do?
    C. What am I legally required to do?
    D. What does my family want me to do?
    E.  What can I get away with?

Answer: b

Learning Objective: 02-01

Topic: What Influences Ethical Behavior?

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation:  A principled person does the right thing even if it goes against the law or people’s expectations. A person at the preconventional level makes decisions based on what he or she can get away with. A conventional level person is concerned about laws and the expectations of family and society.

 

  1. According to the text, why do most employees in organizations succumb to questionable ethical standards or only follow formal policies?
    A. Most people are in the conventional and principled levels of moral development.
  2. Few organizations develop and enforce very stringent codes of ethics.
    C.Most people are in the preconventional and conventional levels of moral development.
    D. Few people in an organization are considered stakeholders or stockholders.
  3. Most people exhibit behavior that is close to the principled level of moral development.

Answer: c

Learning Objective: 02-01

Topic: What Influences Ethical Behavior?

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: The vast majority of people in our society are at the preconventional or conventional level. Therefore, most employees in an organization feel they must “go along to get along”; in other words, they acquiesce to questionable ethical standards to keep their jobs. At most, they only follow formal policies and procedures.

 

  1. According to a survey of adult Americans, people are most likely to base ethical and moral decisions on the:
    A. legal outcome.
  2. current situation.
    C. principle of justice.
    D. historical culture.
    E. religious standard.

Answer: b

Learning Objective: 02-01

Topic: Are There Any Ethical Guidelines?

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: In a February 12, 2002, national poll, American adults said by a 3-to-1 margin that truth is always relative to a person’s situation. People are most likely to make their moral and ethical decisions on the basis of whatever feels right or comfortable in a situation.

 

  1. A Barna Research study finds that all of the following are primary influences on the ethical and moral decision-making process of Americans EXCEPT:
    A.religion
  2. books
    C. the Internet
    D. television
    E. family

Answer: a

Learning Objective: 02-01

Topic: What Influences Ethical Behavior?

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: Barna Research is conducting an ongoing study of sources influencing Americans’ ethical and moral decision-making processes. In early returns, Barna found the leading influencers in American society to be movies, television, the Internet, books, music, public policy and law, and family.

 

  1. According to the text, your conscience is usually not the best guide for making moral and ethical decisions because it:
  2. is at the conventional level
    B. remains too stationary
    C.changes based on the situation
    D. is too distant from the circumstances
    E. relies on conflicting belief systems

Answer: c

Learning Objective: 02-01

Topic: Are There Any Ethical Guidelines?

Blooms: Apply

AACSB: Ethics

Level of Difficulty: Hard

Explanation: A fixed point of reference refers to something that provides the correct action

to take in any situation and never gets tailored to fit an occasion. This fixed point of reference must be separate from you; otherwise you will be changing the rules based upon your best interest in various situations. This is why your conscience is usually not your best guide to making moral and ethical decisions.

  1. All of the following may eliminate the need for additional laws governing right and wrong in business settings EXCEPT:
    A. stringent codes of ethics.
    B. moral organizational cultures.
    C. ethical examples from top management.
    D.standardization of fixed points of reference.
    E. support for corporate social responsibility programs.

Answer: d

Learning Objective: 02-02

Topic: Management’s Ethical Responsibilities

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: As principles of ethics and social responsibility are more widely recognized, companies can use codes of ethics and their corporate cultures to govern behavior, thereby eliminating the need for additional laws governing right and wrong. A fixed point of reference is an individual’s tool for determining right and wrong and cannot be standardized.

 

  1. All of the following are characteristics of ethical behavior EXCEPT:
    A. being honest with customers.
  2. following company policies.
    C. showing loyalty to co-workers.
    D. treating customers and peers fairly.
    E. maintaining personal sales goals.

Answer: e

Learning Objective: 02-02

Topic: Management’s Ethical Responsibilities

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: Being honest, loyal, and fair are qualities of an ethical person as well as adhering to company policies. Maintaining sales goals is an action taken by hardworking employees, but it is not necessarily a characteristic of ethical behavior.

 

  1. All of the following are involved in the majority of sales people’s ethical issues EXCEPT:
    A. co-workers.
    B. managers.
    C. customers.
    D.friends.
    E. employers.

Answer: d

Learning Objective: 02-02

Topic: Management’s Ethical Responsibilities

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Most ethical issues that sales personnel face involve other salespeople, employers, managers, and customers.

 

  1. Which of the following is LEAST likely one of the ethical issues faced by most sales managers?
    A.Employee rights
    B. Sales territories
    C. Sales pressure
    D.  Benefits flexibility
  2. Personnel substance abuse

Answer: d

Learning Objective: 02-03

Topic: Ethics in Dealing with Salespeople

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: Five ethical considerations sales managers face are the level of sales pressure to place on a salesperson, decisions concerning a salesperson’s territory, whether to be honest with the salesperson, what to do with an ill salesperson, and employee rights. Employee benefits are unlikely to cause ethical dilemmas for sales managers.

 

  1. Which of the following terms refers to an extra-large customer that generates significantly more revenue for a salesperson than other customers?
    A. Balanced account
    B.Outsourced account
    C. Retail account
    D. House account
    E.  Key account

Answer: e

Learning Objective: 02-03

Topic: Ethics in Dealing with Salespeople

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Key accounts are those that involve extra-large customers and generate a great deal of sales. House accounts are handled by a salesperson from the home office.

 

  1. Sharon, a salesperson for a greeting card company, is responsible for sales in the northern part of California. Sharon’s manager has decided to change Sharon’s key account in the territory to a house account. Why would Sharon most likely dislike this decision?
  2. Sharon will have to monitor the key account for less pay than she usually earns.
    B. Sharon will be demoted from her position in the territory for losing the key account.
    C. Sharon will have to share commissions from the key account with the home office. D.Sharon will lose the commission for the key account.
    E. Sharon will have to work from the firm’s home office.

Answer: d

Learning Objective: 02-03

Topic: Ethics in Dealing with Salespeople

Blooms: Apply

AACSB: Ethics

Level of Difficulty: Hard

Explanation: Key accounts are extra-large customers and generate a great deal of sales commissions for salespeople. House accounts are handled by a salesperson from the home office so that the firm does not have to pay sales commissions. Sharon will be upset because she is losing commissions for a large account.

  1. Which term refers to the rights desired by employees regarding their job security and treatment by employers?
    A. Cultural acceptance
    B. Human rights
    C. Affirmative action
    D.Employee rights
    E. Workers’ compensation

Answer: d

Learning Objective: 02-03

Topic: Ethics in Dealing with Salespeople

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Employee rights are rights desired by employees regarding their job security and their treatment by employers while on the job, irrespective of whether those rights are currently protected by law or collective bargaining agreements of labor unions.

 

  1. Suzanne, a sales representative at MedEx, a pharmaceutical firm, was being sexually harassed by her manager, Phil. After Suzanne refused to submit to Phil’s advances, he threatened to fire her. Suzanne can most likely sue MedEx based on which type of sexual harassment?
    A. Hostile environment
    B. Cooperative acceptance
  2. De facto termination
    D.Quid pro quo
    E. Employment-at-will

Answer: d

Learning Objective: 02-02

Topic: Management’s Ethical Responsibilities

Blooms: Apply

AACSB:

Level of Difficulty: Hard

Explanation: Suzanne could sue based on quid pro quo, which is when an employee who refuses to submit to a superior’s sexual advances is threatened with dismissal or other sanctions. The second type of sexual harassment is hostile environment harassment; it occurs when jokes, graffiti, and other behavior are directed at persons of the opposite sex.

  1. According to the U.S. Supreme Court, sexual harassment violates ________ if it is unwelcome and “sufficiently severe” and creates an “abusive working environment.”
    A. Title VII of the 1964 Civil Rights Act
    B. Fair Labor Standards Act
    C. Employee Privacy Law
    D. Taft-Hartley Act
    E. Wagner Act

Answer: a

Learning Objective: 02-02

Topic: Management’s Ethical Responsibilities

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: In 1986, the Supreme Court held unanimously that sexual harassment violates Title VII of the 1964 Civil Rights Act if it is unwelcome and “sufficiently severe or pervasive to alter the conditions of the victim’s employment and create an abusive working environment.”

 

  1. How can an employer reduce its liability in sexual harassment complaints?
    A.  Requiring thorough background checks
    B.  Encouraging cross-cultural training exercises
    C. Implementing effective internal grievance procedures
    D. Monitoring the social environment of employees
    E. Utilizing effective recruitment and selection practices

Answer: c

Learning Objective: 02-02

Topic: Management’s Ethical Responsibilities

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Many companies are concerned about sexual harassment, and they educate employees about inappropriate behavior with brochures and training. A key factor in determining liability is whether the employer has an effective internal grievance procedure that allows employees to bypass immediate supervisors (who are often the offenders).

 

  1. Most federal laws regarding personnel files are directed at:
    A.  large corporations
    B.  private firms.
    C.government employers.
    D.  small businesses.
    E.  publicly-traded companies.

Answer: c

Learning Objective: 02-03

Topic: Ethics in Dealing with Salespeople

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Although several federal laws influence record keeping, they are primarily directed at public employers. However, many private employers are giving employees the right to access their personnel files.

 

  1. (p. 51)Two major influences on the ethical behavior of sales personnel are:
    A. the organization’s employees and the organization itself.
    B. the organization’s production and finance departments.
    C. internal and external organizational environments.
    D. national and international policies.
    E. the organization’s customers and stockholders.

Answer: a

Learning Objective: 02-01

Topic: What Influences Ethical Behavior?

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: The ethical behavior of sales personnel is influenced by co-workers and the organization. Top management at a firm has an especially strong influence on the firm and its employees.

 

  1. On the job, Gary acts purely in his own best interests. He follows the company’s rules only to avoid being fired. At what level of moral development is Gary functioning?
    A. Principled
    B. Consensual
    C. Conventional
    D. Discretionary
    E.Preconventional

Answer: e

Learning Objective: 02-01

Topic: Are There Any Ethical Guidelines?

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: A person at the preconventional level of moral development follows rules to avoid punishment. At the conventional level, a person conforms to expectations and laws.

 

  1. In Turkey, a salesperson wants to sell a block of 75 symphony tickets to an Armenian senior citizen center to hand out to its members. If he can sell these remaining tickets, he will receive a $500 bonus. When the center director asks him if there will be adequate security at the event, the Turk assures her the arena has doubled its security force for the event even though no special security arrangements have been made in spite of recent threats made against Armenians. The Turkish salesperson is most likely functioning at the _____ stage of moral development.
    A. postconventional
    B. principled
    C. conventional
    D. discretionary
    E.preconventional

Answer: e

Learning Objective: 02-01

Topic: What Influences Ethical Behavior?

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: A person at the preconventional level of moral development follows rules to receive rewards, which in this case is a $500 bonus. At the conventional level, a person conforms to expectations and laws. A principled person does the right thing no matter what.

 

  1. Tina perceives herself to be a responsible person because she does not misuse company assets, she is always truthful, and she treats others fairly. She upholds moral and legal laws and conforms to the expectations of others. At which level of moral development is Tina operating?
    A. Consensual
    B. Principled
    C.Conventional
    D. Discretionary
    E. Preconventional

Answer: c

Learning Objective: 02-01

Topic: What Influences Ethical Behavior?

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: At the conventional level, a person conforms to expectations and laws. A principled person does the right thing no matter what and is guided by internal morals and values. A person at the preconventional level of moral development follows rules to receive rewards or avoid punishment.

 

  1. A salesperson asks, “What am I legally required to do with this?” when deciding whether to return competitive intelligence that was gathered by stealing company data. At which level of moral development is this salesperson operating?
    A. Economically
    B. Principled
    C. Conventional
    D. Restricted
    E. Preconventional

Answer: c

Learning Objective: 02-01

Topic: What Influences Ethical Behavior?

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: At the conventional level, a person conforms to expectations and laws. A principled person does the right thing no matter what and is guided by internal morals and values. A person at the preconventional level of moral development follows rules to receive rewards or avoid punishment.

 

  1. Courtney Lee works for a travel agency. The company has spent several hundred dollars promoting a trip to a country that is undergoing a great deal of political unrest. Lee has been told that if she wants to keep her job, she needs to get at least three couples to sign up for this trip. Instead, Lee handed in her letter of resignation because she refused to sell a potentially dangerous trip to her customers. Lee is functioning at the _____ level of moral development.
    A. biblical
    B.principled
    C. conventional
    D. discretionary
    E. preconventional

Answer: b

Learning Objective: 02-01

Topic: What Influences Ethical Behavior?

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: A principled person, such as Lee, does the right thing no matter if it means losing her job. She is guided by internal morals and values. A person at the preconventional level of moral development follows rules to receive rewards or avoid punishment. At the conventional level, a person conforms to expectations and laws.

  1. “I don’t care what the boss said. It’s wrong and I’m not going to do it. If I get fired, then that’s just the way it’ll have to be.” The salesperson who just made this statement to a co-worker is apparently working at the _____ level of moral development.
    A. nondiscriminatory
    B.principled
    C. conventional
    D. consensual
    E. preconventional

Answer: b

Learning Objective: 02-01

Topic: What Influences Ethical Behavior?

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: A principled person does the right thing no matter what, even if it means getting fired. A person at the preconventional level of moral development follows rules to receive rewards or avoid punishment. At the conventional level, a person conforms to expectations and laws.

 

  1. Most salespeople operate at what level of moral development?
    A. Consensual
    B. Principled
    C.Conventional
    D. Discretionary
    E. Responsive

Answer: c

Learning Objective: 02-01

Topic: What Influences Ethical Behavior?

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: The majority of sales personnel, as well as people in general, operate at the conventional level. However, a few individuals are at level 1, and it is estimated that less than 20 percent of individuals reach level 3.

  1. The Golden Rule of Selling requires people whose personal character is at level:
    A. 0.
    B. 1.
    C. 2.
    D. 3.
    E. 4.

Answer: d

Learning Objective: 02-01

Topic: Are There Any Ethical Guidelines?

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: The Golden Rule of Selling requires people whose personal character is at level 3, which is the highest level of moral development. Such principled people have caring attitudes and recognize the rights of others, and they act based on personal, independently defined universal principles of justice and values.

 

  1. According to the text, a(n) _____ refers to something that provides the correct action to take in any situation and never gets tailored to fit a situation.
    A. ethical continuum
    B. situational compass
    C. ethical talisman
    D.fixed point of reference
    E. situational barometer

Answer: d

Learning Objective: 02-01

Topic: Are There Any Ethical Guidelines?

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: A fixed point of reference refers to something that provides the correct action to take in any situation and never gets tailored to fit an occasion. This fixed point of reference must be separate from you; otherwise you will be changing the rules based upon your best interest in various situations.

 

  1. According to the text, a _____ would tell Rob Loughton he should return the stolen competitive information to its owner without examining it even though the information would more than likely result in a large commission for Loughton.
    A.fixed point of reference
    B. frame of conventional reference
    C. compass point
    D. moral sextant
    E. directional code of ethics

Answer: a

Learning Objective: 02-01

Topic: Are There Any Ethical Guidelines?

Blooms: Apply

AACSB: Ethics

Level of Difficulty: Hard

Explanation:  A fixed point of reference refers to something that provides the correct action to take in any situation and never gets tailored to fit an occasion. This fixed point of reference would guide Rob to make the most ethical decision.

 

  1. According to the text, businesses use the _____ to serve as a universal, practical, and helpful standard for businesspeople.
    A. Hindu Mahabharata
    B. sayings of Confucius
    C.Golden Rule
    D. Beatitudes
    E. Torah

Answer: c

Learning Objective: 02-01

Topic: Are There Any Ethical Guidelines?

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: The Golden Rule means doing to others without expecting anything in return, and it is used by businesses as a standard for morality in the workplace. Many religions follow the Golden Rule in one form or another.

 

  1. _____ are the codes of moral principles and values that govern the behaviors of a person or a group with respect to what is wrong.
    A. Laws
    B.Ethics
    C. Principled heuristics
    D. Sociocultural norms
    E. Governing norms

Answer: b

Learning Objective: 02-02

Topic: Management’s Ethical Responsibilities

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: In a general sense, ethics are the codes of moral principles and values that govern the behaviors of a person or a group with respect to what is right or wrong. Ethics set standards for what is good or bad in conduct and decision making.

  1. Ethical behavior:
    A. assumes that an economic level of social responsibility exists in the organization.
    B. assumes that the individual is operating at an unrestricted moral level.
    C.refers to following the rules and treating others fairly.
    D. assumes that human interaction is reciprocal.
    E. refers to adhering to a generic religious principle.

Answer: c

Learning Objective: 02-02

Topic: Management’s Ethical Responsibilities

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: Ethical behavior means treating others fairly. It involves being honest, truthful, rule-abiding, and loyal.

 

  1. Which of the following statements about ethical dilemmas is true?
    A.Ethical dilemmas occur because many ethical standards are not classified.
    B. Friends and family are never the cause of an ethical dilemma.
    C. Cultural differences are never the source of ethical dilemmas.
    D. Ethical dilemmas occur when right and wrong are clearly identified.
    E. Ethical dilemmas are rare when the available choices all have unethical elements.

Answer: a

Learning Objective: 02-02

Topic: Management’s Ethical Responsibilities

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: Because ethical standards are not classified, disagreements and dilemmas about proper behavior often occur. An ethical dilemma arises in a situation when each alternative choice or behavior has some undesirable elements due to potentially negative ethical or personal consequences. Friends, family, and culture may or may not play roles in ethical dilemmas.

  1. Your brother Craig sells art collectibles. He knows that your boss collects early 20th century baseball memorabilia and he has asked that you introduce him to your boss and to endorse his background as an ethical antiques dealer. You know that in the past Craig has sold some items that were not what he claimed they were and you suspect that some of his baseball memorabilia might be forgeries. Your mother is pressuring you to help your brother make this sale. This is an example of a(n):
    A. social impasse.
    B. discretionary responsibility.
    C.ethical dilemma.
    D. policy-based moral development.
    E. sales dilemma.

Answer: c

Learning Objective: 02-02

Topic: Management’s Ethical Responsibilities

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: Because ethical standards are not classified, disagreements and dilemmas about proper behavior often occur even among family members. An ethical dilemma arises in a situation when each alternative choice or behavior has some undesirable elements due to potentially negative ethical or personal consequences.

  1. Which of the following questions is LEAST relevant to the level of pressure a manager places on a salesperson?
    A. What are the sales group goals?
    B. What motivates the salesperson?
    C. What is the industry standard?
    D. How big is the territory?
    E. What goals are realistic?

Answer: c

Learning Objective: 02-03

Topic: Ethics in Dealing with Salespeople

Blooms: Apply

AACSB:

Level of Difficulty: Hard

Explanation: Managers have to determine an appropriate level of pressure to place on salespeople. Factors to consider are the goals of the group, the personal motivation of each salesperson, the size of the territory, and the achievable nature of the goal.

 

  1. Linda Moore is a commission salesperson whose territory for the last nine years has been the entire state of Virginia. Through hard work she has greatly increased her company’s business in the region. Now her manager has decided to split the state into two territories. Moore can most likely expect to:
    A. receive additional key accounts.
    B. earn more sales revenue.
    C.earn less sales revenue.
    D. gain more customers.
    E. be fired from her job.

Answer: c

Learning Objective: 02-03

Topic: Ethics in Dealing with Salespeople

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Reducing the size of Linda’s territory will most likely cause a loss of revenue for Linda because she’ll have fewer customers and accounts. Key accounts are extra-large customers, and Linda will probably have to share some of those with another salesperson.

 

  1. All of the following statements about employee termination are true EXCEPT:
    A. many early 20th century courts strictly applied the termination-at-will rule.
    B. many 1980s courts ruled in favor of employees by limiting the termination-at-will rule.
    C. employers have the right to terminate sales personnel for poor performance.
    D. employers have the right to terminate sales personnel for excessive absenteeism.
  2. employers have the right to terminate sales personnel for union participation.

Answer: e

Learning Objective: 02-03

Topic: Ethics in Dealing with Salespeople

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Early termination-at-will cases favored employers and allowed them to terminate employees for any reason, even union membership. Current courts have favored employees, but terminations can still occur for poor performance and absenteeism but not union participation.

  1. Under current U.S. laws regarding termination-at-will, it is illegal to terminate an employee for:
    A. excessive absenteeism.
    B. poor organizational citizenship.
    C. unsatisfactory performance.
    D. unsafe conduct.
    E. union activities.

Answer: e

Learning Objective: 02-03

Topic: Ethics in Dealing with Salespeople

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Early termination-at-will cases favored employers and allowed them to terminate employees for any reason, even union membership. Current courts have favored employees, but terminations can still occur for poor performance and absenteeism but not union participation.

 

  1. Termination-at-will:
    A. is a modern judicial term that came from court decisions in the 1980s.
    B. refers to a firm’s inability to terminate an employee without just cause.
    C. was designed to protect the rights of the employees.
    D.was designed to protect the rights of the employers.
    E. supports the strategy of downsizing.

Answer: d

Learning Objective: 02-03

Topic: Ethics in Dealing with Salespeople

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: The termination-at-will rule stemmed from a 1903 case that protected employer’s rights to fire workers for union activities. Courts in the 1980s favored employees in such cases.

 

  1. Which of the following statements about employee rights is true?
    A. Employee rights are based on what the employer deems is fair and equitable
    B. The terminate-at-will rule first came about during a 1940 court case
    C.Cooperative acceptance is an employee right referring to fair treatment
    D. Privacy is only an employee right with private firms not public entities
    E. Reciprocity is an employee right guaranteed by federal laws

Answer: c

Learning Objective: 02-03

Topic: Ethics in Dealing with Salespeople

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation:  Cooperative acceptance is the employee right to be treated fairly and without sexual or racial harassment. Termination-at-will was established by the courts in 1903. Employee rights apply to private and public employees.

  1. _____ refers to the right of employees to be treated fairly and with respect regardless of race, sex, national origin, physical disability, age, or religion while on the job.
    A. Discretionary approval
    B. Hire-at-will
    C. Discrimination
    D.Cooperative acceptance
    E. Terminate-at-will

Answer: d

Learning Objective: 02-03

Topic: Ethics in Dealing with Salespeople

Blooms: Understand  Remember

AACSB:

Level of Difficulty: Medium  Easy

Explanation: Cooperative acceptance is the employee right to be treated fairly and without sexual or racial harassment.

 

  1. Which of the following corporate actions would LEAST likely prevent racial and sexual harassment?
    A. Getting the active support of top management in preventing workplace harassment
    B. Establishing compensation policies that reward anti-harassment behavior
    C. Establishing harassment grievance procedures
    D. Providing anti-harassment training to employees
    E.Eliminating cooperative acceptance

Answer: e

Learning Objective: 02-03

Topic: Ethics in Dealing with Salespeople

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Cooperative acceptance is the employee right to be treated fairly and without sexual or racial harassment. Top management support, policies, procedures, and training are methods for eliminating harassment in the workplace.

 

  1. All of the following are employer benefits of respecting employee rights EXCEPT:
    A. creating a positive work environment.
    B. reducing employee turnover.
    C. attracting good employees.
    D. reducing legal fees and fines.
    E. minimizing union control.

Answer: e

Learning Objective: 02-03

Topic: Ethics in Dealing with Salespeople

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Employers benefit from respecting employee rights by creating a high quality work life, attracting and retaining good personnel, and reducing legal fines. Union influence is less likely to be affected.

 

  1. Which of the following would be an example of a salesperson who is moonlighting unethically?
    A. A retail sales clerk who works Monday through Friday and is taking a weekend MBA program.
    B.A building supply salesperson who sells vacation real estate on company time.
    C. A travel agent who sells antiques on the Internet during the weekends.
    D. A fire equipment salesperson who demonstrates her equipment to prospects by setting real fires.
    E. A retail ad salesperson who tells his wife when store sales are scheduled before they are announced to the public.

Answer: b

Learning Objective: 02-03

Topic: Salespeople’s Ethics in Dealing with Their Employers

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: Moonlighting occurs when an employee takes a second job or attends classes on company time. Employees who work second jobs or take classes during their off hours are not moonlighting.

 

  1. Clark is a soft drink salesperson who is enrolled in a vocational technology program that meets at night. From time to time, he takes off most of the day before his night class meets in order to prepare assignments that are due that evening. From an ethical standpoint, it is correct to say that Clark is:
    A. guilty of misrepresentation.
    B. misusing company assets.
    C. cheating.
    D.moonlighting.
    E. acting quite ethically.

Answer: d

Learning Objective: 02-03

Topic: Salespeople’s Ethics in Dealing with Their Employers

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: Moonlighting occurs when an employee takes a second job or attends classes on company time. Employees who work second jobs or take classes during their off hours are not moonlighting.

 

  1. Which of the following sales personnel activities is considered ethically acceptable behavior?
    A. Splitting commissions with fellow employees to win a sales contest
    B. Taking the family to Disneyworld and writing it off on the expense account
    C. Attending a college course on company time
    D. Attending college in the evening but taking an afternoon off to prepare for class
    E. Giving a $10 dollar gift to a $10,000 customer

Answer: e

Learning Objective: 02-03

Topic: Salespeople’s Ethics in Dealing with Their Employers

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: Cheating to win a sales contest, misusing company assets, and moonlighting are unethical actions. Giving a small gift to a big customer is most likely not a bribe.

  1. Which of the following statements about bribery is most likely true?
    A. Bribes always involve money.
    B.Bribery accounts for more than half of all white-collar crimes in the U.S.
    C. Commissioned salespeople cannot be bribed because of the commission system.
    D. The difference between a business gift and a bribe is quite clear.
    E. Bar bills, meals, and entertainment are always considered bribes.

Answer: b

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: The U.S. Chamber of Commerce estimates that bribes and kickbacks account for $27 billion of the annual $50 billion in white collar crime. Bribes, which can involve gifts and travel, are often hard to detect because in some cases they may be legitimate gifts.

 

  1. While buying some land, Mike asked the seller’s solicitor if there were any restrictive covenants on the land; the solicitor said he did not know of any. What the solicitor failed to mention was that he had not bothered to read the documents. This failure on the part of the solicitor to disclose the state of affairs to Mike amounts to:
    A. misuse of relationship marketing.
    B. sales puffery.
    C.misrepresentation.
    D. a warranty of fact.
    E. a statement of fact.

Answer: c

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: The solicitor is guilty of misrepresentation because he lied about reading the documents about the land. Mike relied on the solicitor to provide both knowledge and honesty.

 

  1. A computer dealer induced a finance company to enter into a hire-purchase agreement by contributing false information about the amount of deposit paid by the customer unknowingly, who later defaulted and sold the computer to a third party. This is an example of:
    A. misuse of relationship marketing.
    B. sales puffery.
    C. a warranty of fact.
    D.misrepresentation.
    E. a statement of fact.

Answer: d

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: Misrepresentation occurs when a salesperson provides false information to a customer. Such statements can lead to lawsuits even if they are unintentional.

 

  1. The salesperson promised the radio station manager that the new $30,000 computer system would be compatible with the equipment already used by the station. When the new computer system proved not to be compatible even after an additional $10,000 worth of new software, the station manager sued the salesperson and his company for:
    A.misrepresentation and breach of warranty.
    B. misuse of relationship marketing.
    C. violation of Title VII.
    D. violation of the Robinson-Patman Act.
    E. failure to adhere to the rules of full disclosure.

Answer: a

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: Misrepresentation occurs when a salesperson provides false information to a customer. Companies around the United States have been liable for million-dollar judgments for making such mistakes, particularly when their salespeople sold high-ticket, high-tech products or services.

 

  1. Which of the following pricing tactics is LEAST likely to be a source of an ethical dilemma?
    A. Tie-in sales
    B. Reciprocity
    C. Price discrimination
    D.Seasonal discounts
    E. Exclusive dealership

Answer: d

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: Salespeople use many tactics to encourage purchases, and some methods are unethical and perhaps illegal including tie-in sales, reciprocity, price discrimination, and exclusive dealerships. Reducing the prices of seasonal items to make room for new merchandise is a normal business practice.

 

  1. When the salesperson says to the new prospective customer, “I believe my company sells the best mattresses and that you can’t find any better,” it is an example of:
    A.sales puffery.
    B. an illegal act.
    C. a statement of fact.
    D. price discrimination.
    E. a breach of warranty.

Answer: a

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: Sales puffery refers to statements made by salespeople that describe a product in glowing terms. Such statements are viewed as opinions and are generally not considered unethical.

  1. Which of the following statements about misrepresentation is most likely true?
    A. When salespeople loosely describe their product or service in glowing terms, those statements can be relied upon by the potential buyer.
    B. Generally, the more knowledgeable the customer, the greater the chances the court will interpret an incorrect statement by a salesperson as an actionable misrepresentation.
    C. When a salesperson makes claims of a “factual nature” regarding a service’s inherent capabilities, the law does not treat these comments as statements of fact and warranties.
    D. A salesperson’s opinion about the quality of the product being sold is known as sales puffery and is legally actionable.
    E.Even if the salesperson misrepresentation statement is made innocently, many courts will award damages to the customer.

Answer: e

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Analyze

AACSB:

Level of Difficulty: Hard

Explanation: It’s generally easy for customers to recover damages on the grounds of misrepresentation and breach of warranty. In many states, this holds even when a salesperson’s statement is made innocently. Sales puffery typically does not lead to legal actions.

 

  1. Which of the following statements about sales puffery is true?
    A. The difference between sales puffery and statements of fact is easy to distinguish.
    B. Misrepresentation cases are judged on the use of standardized words and phrases.
    C.Generally, the less knowledgeable the customer, the greater the chances the court will interpret a statement as actionable.
    D. A salesperson’s statements of puffery should be taken at face value and considered factual.
    E. Puffery typically occurs when a salesperson deliberately makes erroneous statements.

Answer: c

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Courts tend to rule in favor of customers who lack knowledge about a product. In contrast, when a knowledgeable person makes a poor purchase the courts tend to favor the salesperson assuming that the buyer should have been more wary of the product and the salesperson’s inaccurate claims.

  1. Which of the following statements about misrepresentation is false?
    A. When salespeople loosely describe their goods or services in glowing terms, those statements cannot be relied upon by the potential buyer.
    B.Courts tend to favor salespersons in misrepresentation cases when the customer lacks product knowledge.
    C. When a salesperson makes claims of a “factual nature” regarding a service’s inherent capabilities, the law treats these comments as statements of fact and warranties.
    D. A salesperson’s opinion of the quality of the product being sold is known as sales puffery and is not legally actionable.
    E. To “stay legal” a salesperson needs to understand the difference between general statements of praise and statements of fact.

Answer: b

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Courts tend to rule in favor of customers who lack knowledge about a product. In contrast, when a knowledgeable person makes a poor purchase the courts tend to favor the salesperson assuming that the buyer should have been more wary of the product and the salesperson’s inaccurate claims.

 

  1. All of the following statements, if made by a salesperson, could have legally actionable consequences if the statement were incorrect EXCEPT:
    A. “this refrigerator will preserve foods in the warmest weather.”
    B. “this is a safe, dependable helicopter.”
    C. “feel free to prescribe this drug to your patients, doctor. It’s not addictive.”
    D. “this mace pen is capable of instantaneous incapacitation for a period of 15 to 20 minutes.”
    E.”this offer is valid only until the end of this month.”

Answer: e

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Apply

AACSB:

Level of Difficulty: Hard

Explanation: A salesperson’s claims that are factual in nature, such as a product’s safety or capabilities, are treated by the law as statements of fact. However, indicating that an offer is only good for a certain time and a customer should act quickly would probably be considered puffery.

 

  1. A salesperson can minimize exposure to costly misrepresentation and breach of warranty lawsuits if he/she:
    A. never negotiates.
    B. avoids win-win sales situations.
    C. never sells the customer more than he/she wants.
    D.thoroughly educates customers before making a sale.
    E. offers opinions when the customer asks what result a product will accomplish.

Answer: d

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: A salesperson can minimize legal problems by educating customers about a product and its capabilities. Negotiating and offering opinions is not problematic for salespeople when done ethically and without exaggeration.

 

  1. Which of the following statements, if false, would most likely have legal consequences?
    A. “You’re going to love this new mattress!”
    B. “We are the metropolitan area’s low price leader.”
    C.”We offer a 100 percent order-fill rate; you’ll never experience a back-order.”
    D. “Our employees have extensive training in how to pamper our customers.”
    E. “Your own mother can’t care for you as well as our staff!”

Answer: c

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Apply

AACSB:

Level of Difficulty: Hard

Explanation: Making claims or predictions about specific results can lead to misrepresentation lawsuits if failure to uphold the claim occurs. Exaggerations are considered sales puffery and are typically not upheld by the law as statements of fact.

 

  1. Edna Wallace is a little worried concerning all the talk she has heard recently about lawsuits due to misrepresentation and breach of warranty. To help her “stay legal,” her sales manager should advise her to do all of the following EXCEPT:
    A. be accurate when describing her product’s capabilities.
    B. thoroughly educate all customers before making a sale.
    C. avoid making exaggerated claims about product safety.
    D. know the technical specifications of the products she sells.
    E.make claims or promises of a factual nature.

Answer: e

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: Providing accurate information, educating customers, and avoiding exaggeration are tactics for avoiding legal problems after the sale. Making statements that appear to be factual are often determined legally actionable.

 

  1. Which term refers to giving some customers promotional allowances and support while not making other customers aware of such opportunities?
    A. customer discrimination
    B. selective discounting
    C.price discrimination
    D. exclusive dealing
    E. functional discounting

Answer: c

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Price discrimination refers to selling the same quantity of the same product to different buyers at different prices. This can be illegal if it injures or reduces competition and is considered unethical.

 

  1. Sheridan decides to buy his first car. The car salesperson promises to arrange a car loan for him if he also purchases the auto insurance. This is a classic example of:
    A. misrepresentation.
    B. reciprocal selling.
    C. a Green River dealership.
    D. discriminatory selling.
    E.a tie-in sale.

Answer: 3

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Requiring a customer to buy one product when buying another product is known as a tie-in sale. Such actions are prohibited under the Clayton Act because they lessen competition.

 

 

  1. Which of the following marketing tactics would most likely trigger an ethical dilemma?
    A. Prospecting
    B.Reciprocity
    C. Cooperative acceptance
    D. Seasonal discounts
    E. Loyalty programs

Answer: b

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: Reciprocity involves agreeing to buy a product from once source if they agree to reciprocate and buy a product from you.  Reciprocity can lead to ethical dilemmas unlike prospecting, discounts, and loyalty programs, which are ethical components of marketing.

 

  1. If a video game manufacturer required its resellers to stock a line of games based on the financially-disappointing movie War of the Worlds in order to carry games based on the very popular TV show Survivor, it would be an example of:
    A. misrepresentation.
    B.a tie-in sale.
    C. reciprocal selling.
    D. a Green River dealership.
    E. discriminatory selling.

Answer: b

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Requiring a customer to buy one product when buying another product is known as a tie-in sale. Such actions are prohibited under the Clayton Act because they lessen competition.

 

  1. “I’ll let you sell the Harley-Davidson designer clothes only if you’ll also sell a new line of clothes designed by Paula Abdul, too.” This statement made by a salesperson to a specialty retailer is potentially an example of _____ and may be in violation of the Clayton Act prohibition if the action substantially lessens competition.
    A. misrepresentation
    B.tie-in sales
    C. reciprocity
    D. price discrimination
    E. kickbacks

Answer: b

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: Requiring a customer to buy one product when buying another product is known as a tie-in sale and is prohibited under the Clayton Act. Reciprocity involves agreeing to buy a product from one person if they agree to buy a product from you.

 

  1. The Clayton Act:
    A. prohibits sexual harassment.
    B. allows some customers to receive price reductions while others do not.
    C. defines sales puffery.
    D.prohibits tie-in sales and exclusive agreements if they substantially lessen competition.
    E. removes the employer’s ability to terminate-at-will without justification.

Answer: d

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: The Clayton Act serves to prohibit sales tactics such as tie-ins and exclusive dealerships when such actions lessen market competition.

 

  1. If a manufacturer requires that its wholesalers and retailers buy merchandise only from it, the contract is a(n) _____ contract.
  2. exclusive dealership
    B. reciprocity
    C. product discrimination
    D. deceptive slotting
    E. price discrimination

Answer: a

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation:

 

  1. “I’ll tell you what,” said Tim. “I’ll buy all my building supplies from your company if you’ll make sure your people rent generators from my firm.” Tim is proposing:
    A. receivership.
    B.reciprocity.
    C. a tie-in sale.
    D. price bartering.
    E. discriminatory selling.

Answer: b

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Reciprocity involves agreeing to buy a product from one person if they return the favor. A tie-in sale occurs when a buyer is required to buy unwanted products in order to purchase another product.

 

  1. NewShine Floor Co. manufactures floor mats. It has agreed to buy all of its light bulbs and fixtures from Luminous Lighting if Luminous will agree to buy and use NewShine safety mats in its factory. This is an example of:
    A.reciprocity.
    B. tie-in sales.
    C. price discrimination
    D. a Green River dealership.
    E. an exclusive kickback.

Answer: a

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Reciprocity involves agreeing to buy a product from one person if they return the favor. A tie-in sale occurs when a buyer is required to buy unwanted products in order to purchase another product.

 

  1. What is reciprocity?
    A. Obeying the Golden Rule of Sales
    B.Buying a product from someone if that person agrees to buy from you
    C. Sharing competitive intelligence
    D. Creating win-win buying situations
    E. A mutually-beneficial buying situation that does not lessen competition

Answer: b

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Reciprocity involves agreeing to buy a product from one person if they return the favor. Reciprocity is considered illegal if it hurts competition.

 

  1. Cooling-off laws apply only to:
    A. sales made in out-of-town offices, regardless of value.
    B. sales for which verbal guarantees are given.
    C.sales over $25, made door-to-door.
    D. sales over $50, made in hometown offices.
    E. sales made in hometown offices over the value of $100.

Answer: c

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Cooling-off laws provide a cooling-off period (usually three days) in which the buyer may cancel the contract, return any merchandise, and obtain a full refund. The law covers sales of $25 or more made door-to-door.

 

  1. A cooling-off law:
    A. gives the buyer three weeks to return merchandise.
    B. covers items sold through wholesale outlets.
    C. deals with purchases between $25.00 and $50.00.
    D. is in effect in all states.
    E.covers some door-to-door transactions.

Answer: e

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Cooling-off claws provide a cooling-off period (usually three days) in which the buyer may cancel the contract, return any merchandise, and obtain a full refund. The law covers door-to-door sales of $25 or more.

 

  1. A Green River ordinance states that:
    A. door-to-door sales are illegal unless being made for nonprofit organizations like schools and Girl Scouts.
    B.door-to-door salespersons who are not residents of the city in which they do business must purchase sales licenses.
    C. all persons selling directly to consumers must pay a bond.
    D. door-to-door sales are not allowed within city limits.
    E. all salespeople in a city must obtain a sales license.

Answer: b

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Under Green River ordinances, cities require persons selling directly to consumers to be licensed by the city in which they do business if they are not residents and to pay a license fee. A bond also may be required in some places.

 

  1. What is the primary purpose of Green River ordinances and cooling-off laws?
    A. Hold salespeople legally responsible for damaged products
  2. Allow small businesses to compete fairly against large firms
    C.Require persons selling directly to consumers to pay a license fee
    D. Enforce federal laws regarding competition and monopolies
    E. Protect consumers from high-pressure, unethical sales tactics

Answer: e

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: Both the cooling-off laws and the Green River ordinances were passed to protect consumers from salespeople using unethical, high-pressure sales tactics. These statutes and others were necessary because some salespeople used unethical practices in sales transactions.

  1. Which of the following statements about the international side of ethics is true?
    A. Agents but not distributors for U.S. firms operating in foreign countries are required to comply with U.S. ethical standards.
    B. Those parts of the world that do not conform to U.S. ethical standards are limited to just three geographic areas.
    C. The vast majority of international companies have low ethical standards.
    D. Ethics related to employees and communities are never difficult to understand when doing business in another country.
    E. Every employee of a U.S. company is subject to U.S. law regardless of the country in which business is conducted.

Answer: e

Learning Objective: 02-04

Topic: The International Side of Ethics

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: Each and every employee of a U.S. company is subject to U.S. law regardless of the country in which the business takes place. Even the agents or the distributors are subject to U.S. law.

 

  1. Which of the following statements about the international side of ethics is false?
    A. A salesperson competing in a foreign country may find himself/herself competing with foreign companies who are allowed to do things considered unethical by U.S. standards.
    B.Those parts of the world that do not conform to U.S. ethical standards are limited to just three geographic areas.
    C. Ethics related to employees and community are often more difficult to understand when doing business in another country.
    D. Every employee of a U.S. company is subject to U.S. law regardless of the country in which business is conducted.
    E. The vast majority of international companies have high ethical standards.

Answer: b

Learning Objective: 02-04

Topic: The International Side of Ethics

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: Most international firms have high ethical standards, and the ones that do not cannot be defined to a specific region or culture. U.S. firms operating overseas must comply with U.S. ethical laws.

 

  1. According to surveys, which of the following statements about how managers view sales ethics is true?
    A. Sales goals force managers to act even more ethically than they ordinarily would
    B.Some sales managers lower their ethical standards to meet job goals
    C. Few managers feel that they face ethical problems in the workplace
    D. Most managers are unaware of any unethical behavior in their industry
    E. Most managers feel that they and their employees are operating as ethically as possible

Answer: b

Learning Objective: 02-05

Topic: Managing Sales Ethics

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: Surveys show that most managers want to be more ethical but they sometimes lower their ethical standards to meet sales goals. All managers feel they face ethical problems, and most are aware of industry and company ethical issues.

 

  1. A(n) _____ is a formal statement of a company’s values concerning ethics and social issues.
    A. social covenant
    B. tying agreement
    C. law of fairness
    D.code of ethics
    E. ethics ombudsperson

Answer: d

Learning Objective: 02-05

Topic: Managing Sales Ethics

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: A code of ethics is a formal statement of the company’s values concerning ethics and social issues. It states those values or behaviors that are expected and those that are not tolerated.

 

  1. A code of ethics that _____ is classified as a principle-based statement.
    A. communicates selection methods
    B. affirms equal opportunities
    C. defines conflicts of interest
    D. outlines ethical tolerances
  2. defines fundamental values

Answer: e

Learning Objective: 02-05

Topic: Managing Sales Ethics

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: Principle-based statements are designed to affect corporate culture, define fundamental values, and contain general language about company responsibilities, quality of products, and treatment of employees. Policy-based statements generally outline the  procedures to be used in specific ethical situations.

 

  1. A(n) _____ code of ethics generally outlines the procedures to be used in specific ethical situations.
    A. operational
    B. tactical
    C.policy-based
    D. credo-based
    E. principle-based

Answer: c

Learning Objective: 02-05

Topic: Managing Sales Ethics

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: Policy-based statements generally outline the procedures to be used in specific ethical situations. Principle-based statements are designed to affect corporate culture, define fundamental values, and contain general language about company responsibilities, quality of products, and treatment of employees.

 

  1. Fostering a climate that encourages ethical behavior by the sales force requires management to do all of the following EXCEPT:
    A. establish an ethics committee.
    B. ensure that top management behaves ethically.
    C. discipline wrongdoers.
    D.formally discourage “whistle-blowing.”
    E. establish control systems.

Answer: d

Learning Objective: 02-05

Topic: Managing Sales Ethics

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: Encouraging an ethical climate requires managers to form ethics committees, discipline wrongdoing, establish control systems and encourage whistle-blowing. For such methods to have an impact, top management must exhibit support for high ethics.

  1. According to the text, what is the single most important factor in improving the climate for ethical behavior in a sales force?
    A.The actions taken by top management
    B. The establishment of whistle-blowing procedures
    C. Effective goal-setting programs
    D. Quick disciplinary action against offenders
    E. The development of ethics training seminars

Answer: a

Learning Objective: 02-05

Topic: Ethics in Business and Sales

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: Studies show that it is critical for top management to guide the ethical character of an organization. Ethics training and committees are irrelevant if top managers do not exhibit and support ethical behavior from employees.

  1. An ethics committee is typically:
    A. composed of employees from all functional areas and managerial levels.
    B. a nonessential organization in multinational corporations.
    C. assigned the task of writing employee handbooks.
    D.responsible for disciplining wrongdoers.
    E. charged with eliminating ethical dilemmas.

Answer: d

Learning Objective: 02-05

Topic: Managing Sales Ethics

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation:  An ethics committee is a group of executives appointed to oversee company ethics. The committee provides rulings on questionable ethical issues. The ethics committee assumes responsibility for disciplining wrongdoers. This responsibility is essential if the organization is to directly influence employee behavior.

 

  1. An ethics ombudsperson:
    A. interacts with the organizational stakeholders on a daily basis.
    B. writes the company’s code of ethics.
    C. is also called a whistle-blower.
    D. handles all negative publicity for an organization.
    E.is an official who assumes the role of corporate conscience.

Answer: e

Learning Objective: 02-05

Topic: Managing Sales Ethics

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: An ethics ombudsperson is an official given the responsibility of corporate conscience that hears and investigates ethics complaints and informs top management of potential ethics issues.

 

  1. All employees who observe or become aware of criminal practices or unethical behavior should be encouraged to report the incident to their superiors, to a higher level of management, or to an appropriate unit of the organization. This reporting process is called:
    A. reciprocating.
    B. tattling.
    C. intelligence gathering.
    D.whistle-blowing.
    E. fact-finding.

Answer: d

Learning Objective: 02-05

Topic: Managing Sales Ethics

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation:  Employee disclosure of illegal, immoral, or illegitimate practices on the employer’s part is called whistle-blowing. Companies can provide a mechanism for whistleblowing as a matter of policy.

 

  1. Jason Montgomery, a hospital administrator in Montana, lodged a complaint against the hospital owners when he was asked to keep two sets of accounting records so that the hospital could reduce its tax liability. Montgomery was engaged in:
    A. reciprocity.
    B. preconventional moral development.
    C.whistle-blowing.
    D. consensual reporting.
    E. ethical declarations of wrongdoing.

Answer: c

Learning Objective: 02-05

Topic: Managing Sales Ethics

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: Employee disclosure of illegal, immoral, or illegitimate practices on the employer’s part is called whistle-blowing. Montgomery was asked to participate in a potentially unethical accounting practice, so he reported the practice to authorities, which made him a whistle-blower.

 

  1. Harold Williams was the Managing Director of Web Power, which was being merged with another company. He raised concerns that false invoices were being used to support the merger proposal. He was dismissed from the company unfairly for indulging in:
    A. breach of trust.
    B. intelligence gathering.
    C. tattling.
    D.whistle-blowing.
    E. fact-finding.

Answer: d

Learning Objective: 02-05

Topic: Managing Sales Ethics

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: Employee disclosure of illegal, immoral, or illegitimate practices on the employer’s part is called whistle-blowing. Employees who observe or become aware of criminal practices or unethical behavior should be encouraged to report the incident to their superiors, but in this case, Harold was unfairly dismissed.

  1. Which term refers to the adherence to a strict ethical and moral code?
    A. humility
    B. courage
    C. sincerity
    D. honesty
    E.integrity

Answer:

Learning Objective: 02-05

Topic: Ethics in Business and Sales

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: Integrity means to be stand by a strict moral and ethical code of conduct at all times. People with integrity may also be humble, courageous, sincere, and honest, but none of these adjectives are directly linked to strong moral values.

 

  1. According to the text, modern corporations seek salespeople with all of the following characteristics EXCEPT:
    A. character
    B.integrity
    C. synergy
    D. values
    E. trust

Answer: c

Learning Objective: 02-05

Topic: Ethics in Business and Sales

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: Salespeople with integrity, trustworthiness, character, and values are sought after and needed in today’s business world. Being able to work well with others is important in sales but less desirable than the other four components.

 

  1. Which of the following is the underlying focus of the Golden Rule?
    A.Respecting the dignity of individuals
    B. Showing fairness with competitors
    C. Being conscientious at all times
    D. Showing trustworthiness
    E. Recognizing good deeds

Answer: a

Learning Objective: 02-06

Topic: Golden Rule of Personal Selling

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Respect for the dignity of the individual is at the heart of the universal moral code referred to as “the Golden Rule” by most people of the world. Salespeople with integrity, trustworthiness, character, and values are considered Golden Rule Salespeople and are sought after and needed in today’s business world.

 

  1. Which of the following is legal according to the Robinson-Patman Act of 1936?
    A. Whistle-blowing
    B. Exclusive dealerships
    C. Reciprocity
    D.Quantity discounts
    E. Tie-in sales

Answer: d

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: Some customers may receive price reductions, promotional allowances, and support while others do not, even though, under certain circumstances, this violates the

Robinson-Patman Act of 1936. The act allows sellers to grant what are called quantity

discounts to larger buyers based on savings in manufacturing costs.

Essay Questions 

  1. What factors shape a person’s belief system?

Answer: Personality, religious background, family upbringing, personal experiences, and the

situation faced are examples of factors shaping our core belief system.

Learning Objective: 02-1

Topic: What Influences Ethical Behavior?

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

 

  1. What are some common ethical situations that occur between salespeople and customers? What control systems can an employer implement to create an ethical sales climate?

Answer: Some common problems sales personnel face include bribes, misrepresentation, price discrimination, tie-in sales, exclusive dealership, reciprocity, and sales restrictions. Control systems must be established to determine whether salespeople give bribes, falsify reports, or pad expenses. Dismissal, demotion, suspension, reprimand, and withholding of sales commissions would be possible penalties for unethical sales practices.

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Analyze

AACSB: Ethics

Level of Difficulty: Hard

  1. What steps can a company take to ensure that it maintains an ethical environment?

Answer: Managers must take active steps to ensure that the company stays on ethical ground. Management methods for helping organizations be more responsive include (1) top  management taking the lead, (2) carefully selecting leaders, (3) establishing and following a code of ethics, (4) creating ethical structures, (5) formally encouraging whistle-blowing, (6) creating an ethical sales climate, and (7) establishing control systems.

Learning Objective: 02-05

Topic: Managing Sales Ethics

Blooms: Apply

AACSB: Ethics

Level of Difficulty: Hard

 

  1. List the three levels of moral development. At what level do most salespeople operate?

Answer: The three levels of moral development are (1) preconventional, (2) conventional, and (3) principled. The majority of sales personnel operate at the conventional level.

Learning Objective: 02-01

Topic: What Influences Ethical Behavior?

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

 

  1. From the perspective of the world’s religions, define the Golden Rule. What is the Golden Rule of Personal Selling?

Answer: From a religions perspective, it is important to understand the Golden Rule does not involve reciprocity. The Golden Rule of Personal Selling requires people who are at the principled moral development level to have caring attitudes and recognize the rights of others and to act based on personal, independently defined principles of justice and values and not to act on the basis of how others treat them.

Learning Objective: 02-01

Topic: Are There Any Ethical Guidelines?

Blooms: Apply

AACSB: Ethics

Level of Difficulty: Hard

 

  1. If the concept of ethics is so easy to understand, why do ethical dilemmas occur so frequently?

Answer: Ethics set standards as to what is good or bad in conduct and decision making. Because these ethical standards are not classified, disagreements about proper behavior often occur. An ethical dilemma arises in a situation when each alternative choice or behavior has some undesirable elements due to potentially negative ethical or personal consequences. Right or wrong cannot be clearly identified.

Learning Objective: 02-02

Topic: Management’s Ethical Responsibilities

Blooms: Apply

AACSB: Ethics

Level of Difficulty: Hard

 

  1. Imagine you sell automobiles. Develop a statement that is clearly an example of puffery. Develop a statement that could be interpreted as misrepresentation. What conditions would make this assignment easier?

Answer: Puffery is probably most easily defined as an opinion. Students should provide something similar to the following for their examples of puffery: “I think you look great sitting in the driver’s seat.” “I wish I could buy this car.” “I think this car looks hot.” A misrepresentation occurs when a salesperson makes claims or promises of a factual nature regarding a product’s inherent capabilities. Examples should be similar to the following: “You can depend on this car for the next 20 years.” “You don’t have to worry about maintenance with a well-made car like this one.” “Don’t worry about that oil on the pavement. All cars leak some.” This assignment would be easier if the student knew how knowledgeable the customer was.

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Create

AACSB: Ethics

Level of Difficulty: Hard

 

  1. What is price discrimination? What law protects customers from price discrimination?

Answer: Price discrimination refers to selling the same quantity of the same product to different buyers at different prices. The Robinson-Patman Act protects customers from price discrimination.

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Apply

AACSB: Ethics

Level of Difficulty: Hard

 

  1. (p. 71)What is an ethics ombudsperson?

Answer: An ethics ombudsperson is an official given the responsibility of corporate conscience who hears and investigates ethical complaints and informs top managers of potential ethical issues.

Learning Objective: 02-05

Topic: Managing Sales Ethics

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Short Answer Questions

  1. What are the two major influences on the ethical behavior of sales personnel?

Answer: Employees and the organization itself

Learning Objective: 02-01

Topic: What Influences Ethical Behavior?

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

 

  1. At what level of moral development do most people operate?

Answer: The conventional level

Learning Objective: 02-01

Topic: What Influences Ethical Behavior?

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

 

  1. What complaint could be lodged against a salesperson who claimed that if you bought the mattress she was selling, you would never have any more backaches?

Answer: Misrepresentation and breach of warranty

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB:

Level of Difficulty: Medium

 

  1. What law protects customers from price discrimination?

Answer: The Robinson-Patman Act

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB:

Level of Difficulty: Medium

 

  1. Under what condition(s) is it illegal for a manufacturer to offer a reseller an exclusive dealership?

Answer: When the exclusive dealership lessens competition

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB:

Level of Difficulty: Medium

 

  1. What are the two types of codes of ethics?

Answer: Principle-based statements and policy-based statements

Learning Objective: 02-05

Topic: Managing Sales Ethics

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

 

  1. What is the single most important factor in improving the climate for ethical behavior in a sales force?

Answer: The action taken by top-level managers

Learning Objective: 02-05

Topic: Managing Sales Ethics

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

 

Multiple Choice Questions
California-based Innovative Installers, Inc. provides a variety of corporate services related to office space. The firm sells modular office furniture, offers space planning consultations, and provides office relocation services. The company was founded in 1992 and depended on the growth of dot.com companies for its early success. Innovative Installers has experienced cash flow problems during the recent economic recession, and top managers are eager for salespeople to obtain new accounts. Mierzett Evans and Glenda Heldris are two of Innovative Installers’ salespeople.

 

  1. Evan’s income is based on commissions at Innovative Installers, and his income has declined in recent months. As a result, Evans has taken an additional job renting apartments. Although Evans mostly works on weekends, he sometimes shows apartments to clients during the week when he works for Innovative Installers. Which of the following best describes Evans’s actions?
  2. Misusing company assets
    B. Accepting bribes
    C. Misrepresentation
    D. Sales puffery
    E.Moonlighting

Answer: e

Learning Objective: 02-03

Topic: Salespeople’s Ethics in Dealing with

Their Employers

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: Moonlighting occurs when a salesperson takes a second job or attends college classes during company time. It is often easy for salespeople to moonlight because they are not closely supervised; however, moonlighting is unethical.

 

  1. Evans tells a potential client that Innovative Installers offers the most modern and stylish office furniture available on the market. Evans is most likely guilty of:
    A. reciprocity.
    B. profiteering.
    C.sales puffery.
    D. breach of warranty.
    E. misrepresentation.

Answer: c

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: When a salesperson describes a product in glowing terms, it is viewed by the courts as sales puffery and opinion, which should not be taken at face value. If Evans had made a claim or promise of a factual nature, then misrepresentation could be proved.

 

  1. Glenda is meeting with an Office Pro store manager. Office Pro is interested in purchasing a line of Innovative Installers’ desks to sell in the Office Pro retail stores. Glenda tells the Office Pro manager that she has a limited supply of the desks; however, she can obtain more desks if Office Pro also purchases desk chairs. Glenda is most likely guilty of:
    A. establishing unfair sales restrictions.
    B. practicing price discrimination.
    C. setting an exclusive dealership.
    D. encouraging a tie-in sale.
    E. requiring reciprocity.

Answer: d

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: A tie-in sale requires a buyer to purchase unwanted products, such as chairs, in order to purchase desired products, such as desks. Tie-in sales are prohibited under the Clayton Act.

 

  1. Managerial concern about the solvency of Innovative Installers has led to excessive pressure on salespeople to sell unneeded services to customers. The issue of whether the company should be more concerned about maintaining its existence or providing the best possible service to its customers produces a(n):
    A. social impasse.
    B. discretionary responsibility.
    C.ethical dilemma.
    D. policy-based moral development.
    E. sales dilemma.

Answer: c

Learning Objective: 02-02

Topic: Management’s Ethical Responsibilities

Blooms: Remember

AACSB: Ethics

Level of Difficulty: Easy

Explanation: An ethical dilemma arises in a situation when each alternative choice or behavior has some undesirable elements due to potentially negative ethical or personal consequences. Salespeople want to boost sales for the firm but also need to be ethical with their customers.

  1. After Glenda promises a potential customer that a new office arrangement will increase productivity by 50%, the customer signs a contract with Innovative Installers for the furniture and service. However, Glenda made this assertion without any valid data as support. Glenda could possibly be guilty of:
    A.misrepresentation.
    B. bribery.
    C. reciprocity
    D. exclusive dealership.
    E. sales restrictions.

Answer: a

Learning Objective: 02-03

Topic: Ethics in Dealing with Customers

Blooms: Understand

AACSB: Ethics

Level of Difficulty: Medium

Explanation: When a customer relies on a salesperson’s statements, purchases the product or service, and then finds that it fails to perform as promised, the supplier can be sued for misrepresentation. Glenda could be guilty of misrepresentation for her assertions.

Chapter 14 Time, Territory, and Self-Management: Keys to Success

True / False Questions

  1. According to the Golden Rule, how you spend your time greatly influences your level of sales success.
    Answer: True

Learning Objective: 14-01

Topic: The Golden Rule: Time

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: How you spend your time determines your life. It greatly influences the level of your success in sales—and school. Time encompasses the time spent with customers and your life activities.

 

  1. A sales quota comprises a group of customers or a geographical area assigned to a salesperson.
    Answer: False

Learning Objective: 14-01

Topic: Customers Form Sales Territories

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: A sales territory comprises a group of customers or a geographic area assigned to a salesperson. Firms use sales territories to establish each salesperson’s responsibilities and to improve customer relations.

 

  1. Sales territories can be used to obtain thorough coverage of the market.
    Answer: True

Learning Objective: 14-01

Topic: Customers Form Sales Territories

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Firms use sales territories to obtain a thorough coverage of a market. With proper coverage of territories, a company will reach the sales potential of its markets.

 

  1. Fewer overnight trips and more regular contact with productive customers can reduce sales expenses as well as improve a firm’s sales-cost ratio.
    Answer: True

Learning Objective: 14-01

Topic: Customers Form Sales Territories

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Sales territories are designed to avoid duplicating efforts so that two salespeople do not travel in the same area. Such benefits as fewer travel miles and fewer overnight trips, plus regular contact with productive customers by the same salesperson, can improve the firm’s sales-to-cost ratio.

 

  1. Generally, it is a good idea to maximize the difference between the salesperson and the customer being served to keep sales presentations fresh and interesting.
    Answer: False

Learning Objective: 14-01

Topic: Customers Form Sales Territories

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Salespeople are hired and trained to meet the requirements of the customers in a territory. Often, the more similar the customer and the salesperson, the more likely the sales effort will succeed.

 

  1. All companies segment their markets into sales territories.
    Answer: False

Learning Objective: 14-01

Topic: Customers Form Sales Territories

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Not all firms divide markets into sales territories. In spite of many advantages to sales territories, there are disadvantages to developing sales territories for some companies, such as in the real estate and insurance industries.

 

  1. Segmenting the market into territories can be very effective in industries like insurance and retail.
    Answer: False

Learning Objective: 14-01

Topic: Customers Form Sales Territories

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: In spite of advantages, there are disadvantages to developing sales territories for some companies, such as in the real estate and insurance industries.

 

  1. A market with homogeneous needs and characteristics would best be suited for an undifferentiated market approach.
    Answer: True

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Salespeople whose accounts have homogeneous needs and characteristics may find the undifferentiated selling approach useful. The basic assumption underlying this approach is that the account needs for a specific product or group of products are similar.

 

  1. In an undifferentiated selling approach, the salesperson uses multiple selling strategies in the same market.
    Answer: False

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: With the undifferentiated selling approach, salespeople use a single selling approach for all accounts.

 

  1. The 80/20 principle is a time management concept that favors a salesperson putting 80 percent of his time on planning and 20 percent on selling.
    Answer: False

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: There are few extra-large or large accounts, but they often account for 80 percent of a company’s profitable sales even though they represent only 20 percent of total accounts. This is known as the eighty/twenty principle.

 

  1. It is wise to use the account segmentation approach in a market with heterogeneous needs.
    Answer: True

Learning Objective: 14-03

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Salespeople using the account segmentation approach recognize that their territories contain accounts with heterogeneous needs and differing characteristics that require different selling strategies.

 

  1. Multivariable account segmentation involves the use of one or more criterion to characterize the organization’s account.
    Answer: True

Learning Objective: 14-03

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Multivariable account segmentation means using more than one criterion to characterize the organization’s accounts. Sales organizations use segmentation because they sell to several markets and use many channel members in these markets.

 

  1. The majority of sales force resources should be invested in key accounts.
    Answer: True

Learning Objective: 14-03

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: The bulk of sales force resources (such as personnel, time, samples, and entertainment expenses) should be invested in the key accounts, and the needs of these large accounts should receive top priority.

 

  1. Territory time allocation is the time spent by the salesperson calling on accounts excluding the traveling time.
    Answer: False

Learning Objective: 14-03

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Time allocation is the time spent by the salesperson traveling around the territory and calling on accounts. The allocation includes the time it takes to travel between customers.

 

  1. Nonselling time is a factor to be considered in territory time allocation.
    Answer: True

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Time allocation is the time spent by the salesperson traveling around the territory and calling on accounts. Factors to consider in time allocation include the number of accounts in the territory, travel time around the territory, and nonselling time.

 

  1. A salesperson has reached the most productive number of calls to make on an account when further increases in calls increase sales expenses.
    Answer: False

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: The most productive number of calls is reached at the point at which additional calls do not increase sales. This relationship of sales volume to sales calls is the sales response function of the customer to the salesperson’s calls.

 

  1. The term sales response function of a customer refers to the relationship between sales volume and number of prospects in a territory.
    Answer: False

Learning Objective: 14-02

Topic:

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: The most productive number of calls is reached at the point at which additional calls do not increase sales. This relationship of sales volume to sales calls is the sales response function of the customer to the salesperson’s calls.

 

  1. The difference between cost of goods sold and sales is the net profit on sales revenue.
    Answer: False

Learning Objective: 14-04

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: The difference between cost of goods sold and sales is the gross profit on sales revenue. Gross profit should be large enough to cover selling expenses.

 

  1. Break-even volume per hour = Cost per hour/Gross profit percentage
    Answer: True

Learning Objective: 14-04

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Break-even analysis is a quantitative technique for determining the level of sales at which total revenues equal total costs. Break-even volume per hour is calculated by dividing cost per hour by gross profit percentage.

 

 

  1. The break-even point for a territory for a month is $1,000. If the salesperson generates $1,000 of profit the territory’s direct costs are covered.
    Answer: False

Learning Objective: 14-04

Topic: Elements of Time and Territory Management

Blooms: Apply

AACSB: Analytic

Level of Difficulty: Hard

Explanation: Break-even point is calculated by dividing a salesperson’s fixed costs by gross profit percentage. Break-even analysis determines how much sales volume a salesperson must generate to meet costs in a territory. The difference between cost of goods sold and sales is the gross profit on sales revenue. If profit equals $1,000 then the direct costs are met.

 

  1. Before making a sales call, the salesperson should first qualify an account, which means the account should meet the firm’s credit standards.
    Answer: False

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Salespeople must be sure that their prospects are qualified to make the purchase decision, and they must determine whether sales to these accounts are large enough to allow for an adequate return on time invested. Qualified does not relate to credit standards.

 

  1. A professional salesperson should not study product materials during the waiting time at the customer’s office.
    Answer: False

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Top salespeople work while waiting: studying material about their products, completing call reports, or organizing material for the sales presentation.

 

  1. Research has shown that a business lunch rarely leads to a sale.
    Answer: True

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Results of one study show that the business lunch does not lead directly to a sale, but to the buyer and seller knowing each other better, which builds confidence and trust. In turn, this may lead to sales in the long run.

 

  1. Although it is useful to have lunch with a prospect or a client, dining alone can be very productive for a professional salesperson.
    Answer: True

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: A salesperson’s lunch is time to review activities and further plan the afternoon. It is a time to relax and start psyching up for a productive selling afternoon.

 

  1. Scheduling refers to the travel pattern the salesperson uses in working his or her territory.
    Answer: False

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Scheduling refers to establishing a fixed time (day and hour) for visiting a customer’s business. Routing is the travel pattern used in working a territory.

 

  1. Routing refers to the travel pattern the salesperson uses in working his territory.
    Answer: True

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Scheduling refers to establishing a fixed time (day and hour) for visiting a customer’s business. Routing is the travel pattern used in working a territory.

 

  1. Strict formal routing procedures are designed by firms that want to improve territory coverage and minimize wasted time.
    Answer: True

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: In theory, strict formal route designs enable the company to (1) improve territory coverage; (2) minimize wasted time; and (3) establish communication between management and the sales force in terms of the location and activities of individual salespeople.

 

  1. Salespeople usually file routing reports weekly.
    Answer: True

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Typically, after finishing a workweek, the salesperson fills out a routing report and sends it to the manager. The report states where the salesperson will work.

 

  1. For a salesperson, the critical factor in route planning is to minimize the number of miles traveled.
    Answer: False

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: The critical factor in route planning is travel time—not miles. In some cases, by using major nonstop highways, your miles may increase but your total travel time may decrease.

 

  1. If most accounts are in a straight line from your home, it is advisable to visit the closest one first and then move to the distant accounts.
    Answer: False

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: If most accounts are in a straight line from your home, leave early and drive to the far end of your territory before making your first call, then work your way back so that you end up near home at the end of the day, which is called the straight-line method.

 

  1. Experts recommend that salespeople limit themselves to no more than two routes per day to make sure enough time is spent with each customer.
    Answer: False

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: There is no right number of sections or routes for all salespersons. It depends on the size of your territory, the geographic layout of your area, and the call frequencies you want to establish.

 

  1. Salespeople should not rely on telephones for any of the sales activities.
    Answer: False

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: The increasing cost of a personal sales call and the increasing amount of time spent traveling to make personal calls are reasons for the efficient territory manager to look to the telephone as a territory coverage tool. With field sales costs still rising and no end in sight, more companies are developing telephone sales and marketing campaigns to supplement personal selling efforts.

 

  1. The three basic routing patterns are straight-line, cloverleaf, and major-city.
    Answer: True

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: The straight-line, cloverleaf, and major-city are the three basic routing patterns used by salespeople.

 

  1. Territorial evaluation is the comparison of performance standards for the individual territory with the salesperson’s actual performance.
    Answer: True

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Territorial evaluation is the establishment of performance standards for the individual territory in the form of qualitative and quantitative quotas or goals. Actual performance is compared to these goals for evaluation purposes.

 

  1. Sales managers monitor the frequency and time intervals between sales calls for each salesperson.
    Answer: True

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Many companies routinely furnish managers and individual salespeople with reports on how many times during the year salespeople have called on each account and the date of the last sales call. Management can monitor the frequency and time intervals between calls for each salesperson.

 

Multiple Choice Questions

  1. Many companies concentrate on improving the way their salespeople manage their time and territories because:
    A. the cost of direct selling is rapidly decreasing.
    B. the time available for face-to-face customer contact is increasing.
    C. there is reduced emphasis on profitability.
    D.time is always limited.
    E. they want to increase the salesperson’s responsibilities.

Answer: d

Learning Objective: 14-01

Topic: The Golden Rule: Time

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Since time is limited, firms focus on maximizing their salespeople’s time. Time and territory management enables firms to cover the market effectively and efficiently.

 

  1. A(n) _____ comprises a group of customers or a geographical area assigned to a salesperson.
    A. market development area
    B. MSA
    C.sales territory
    D. market potential
    E. sales quota

Answer: c

Learning Objective: 14-02

Topic: Customers Form Sales Territories

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: A sales territory comprises a group of customers or a geographic area assigned to a salesperson. The territory may or may not have geographic boundaries.

 

  1. Which of the following statements about sales territories is true?
    A. A sales territory contains only one key account.
  2. Sales territories always have geographic boundaries.
    C.Sales territories are used to maximize the sales potential of a market.
    D. A sales territory guarantees that a company reaches the breakeven point.
    E. Sales territories are used to evaluate the effectiveness of the marketing mix.

Answer: c

Learning Objective: 14-01

Topic: Customers Form Sales Territories

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Sales territories enable firms to cover the market and maximize sales potential. A sales territory may or may not have geographic boundaries and may or may not contain key accounts.

 

  1. Which of the following statements about sales territories is INCORRECT?
    A. A sales territory contains present customers.
    B.Geographic boundaries define a sales territory.
    C. Firms use sales territories to evaluate performance.
    D. A sales territory typically contains potential customers.
    E. A sales territory comprises a geographic area assigned to a salesperson.

Answer: b

Learning Objective: 14-01

Topic: Customers Form Sales Territories

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: A sales territory comprises a group of current and potential customers or a geographic area assigned to a salesperson. The territory may or may not have geographic boundaries. Territories help firms evaluate sales performance.

 

  1. Companies establish sales territories to accomplish all of the following objectives EXCEPT to:
    A. set responsibilities for salespeople.
    B. avoid duplicating sales efforts.
    C.control corporate credit ratings.
    D. create goodwill with customers.
    E. meet sales goals.

Answer: c

Learning Objective: 14-01

Topic: Customers Form Sales Territories

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Companies establish sales territories to establish responsibilities, avoid duplicating work, create good relationships with customers, and meet sales goals. Territories are irrelevant to credit ratings.

 

  1. How do sales territories benefit a company’s customers?
    A. Monitors sales team salaries and expenses
    B. Links organizational vision with buyer’s needs
    C.Establishes relationships between buyers and sellers
  2. Ensures sales presentation structure and organization
  3. Matches long-term strategic goals with seller’s personality

Answer: c

Learning Objective: 14-01

Topic: Customers Form Sales Territories

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Sales territories help salespeople develop relationships with their assigned customers. Customer goodwill and increased sales are expected when customers receive regular calls.

 

  1. According to the text, which of the following is one of the objectives given for establishing sales territories?
    A. To lower long-term company profits.
    B.To improve customer relations and satisfaction.
    C. To match the wants of the salesperson with the needs of the customers served.
    D. To facilitate utilization of the undifferentiated selling approach.
    E. To attain more efficiency in businesses based on personal friendships.

Answer: b

Learning Objective: 14-01

Topic: Customers Form Sales Territories

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Customer relations and goodwill are enhanced by having one salesperson assigned to an account. The buyer and seller form a relationship over time which improves customer service and satisfaction.

 

  1. Robert is the CEO of a small firm which manufactures inverters. Company sales have been increasing, and Robert finds it increasingly difficult to manage the salespeople. The company has a sufficient number of salespeople, but they are not able to reach all current and potential customers. Robert also has difficulties in evaluating the performance of salespeople. What advice can you give Robert?
    A. Robert can hire more salespeople to have better sales coverage.
    B. Robert can appoint more supervisors for managing and evaluating the sales force.
    C. Robert can ask the salespeople to work overtime to obtain better coverage.
    D.Robert can manage the salespeople by assigning each of them to different groups of customers.
    E. Robert can ask salespeople to report directly to him, and he can use the authoritative management style.

Answer: d

Learning Objective: 14-01

Topic: Customers Form Sales Territories

Blooms: Apply

AACSB:

Level of Difficulty: Hard

Explanation: Robert should establish sales territories to ensure that all customers and prospects in a market are reached and to enable him to evaluate the sales team.

 

  1. A sales territory:
    A. is essential for all kind of industries for managing the sales force.
    B. makes the evaluation of performance more difficult.
    C. does not aid in improving customer relations.
    D. always contains group of customers residing in different geographic areas.
    E.contains present and potential customers.

Answer: e

Learning Objective: 14-01

Topic: Customers Form Sales Territories

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: A sales territory comprises a group of present and potential customers or a geographic area assigned to a salesperson. Not all industries and firms require sales territories.

 

  1. Sales territories are a disadvantage for some firms in all of the following cases EXCEPT when:
    A.sales performance is difficult to monitor and evaluate.
  2. personal friendships are the basis for attracting customers.
    C. salespeople are more motivated if they are not restricted by territorial boundaries.
    D. the company is too small to be concerned about segmenting the market into sales areas.
    E. management lacks the knowledge, time, and interest to develop and establish sales territories.

Answer: a

Learning Objective: 14-01

Topic: Customers Form Sales Territories

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: A firm would be more likely to assign territories when sales performance is difficult to monitor because territories facilitate evaluations. Firms often do not form territories if friendships lead to customers, salespeople are motivated without boundaries, or the firm is too small. Creating territories takes time, which management may lack.

 

  1. A company may avoid establishing sales territories if:
    A. it uses a matrix organizational structure.
    B.personal friendships attract customers.
    C. the company uses qualitative evaluations.
    D. the company has no key accounts.
    E. sales expenses are rising.

Answer: b

Learning Objective: 14-01

Topic: Customers Form Sales Territories

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: If personal friendships are the basis for attracting customers, then territories may not be advantageous. For example, life insurance salespeople often sell policies to their families and friends, which would be problematic with a territory.

 

  1. Which of the following companies would LEAST likely form sales territories?
    A. McGraw-Hill Publishing
    B. Century-21 Real Estate
    C.Anheuser Busch
    D. Hewlett Packard
    E. Proctor & Gamble

Answer: b

Learning Objective: 14-01

Topic: Customers Form Sales Territories

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: There are disadvantages to developing sales territories for some companies, such as in the real estate and insurance industries. A realtor may be more motivated if not restricted by a particular territory and having the ability to develop customers anywhere.

 

  1. Which of the following companies is most likely to avoid the formation of sales territories?
    A.A large distributor of books
  2. A global consumer products manufacturer
    C. A leading manufacturer of small engines
    D. A small company that makes custom architectural pieces
    E. A company that supplies the inventory for convenience stores in 35 states

Answer: d

Learning Objective: 14-01

Topic: Customers Form Sales Territories

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Small firms with small markets do not benefit from forming sales territories. However, large firms are able to cover the market better by creating sales territories.

 

  1. For the salesperson, time and territory management (TTM):
    A. is only useful during busy seasons.
    B. is most relevant during periods of economic recession.
    C. is only useful when the salesperson is selling homogeneous products.
    D.is a continuous process of planning, executing, and evaluating.
    E. requires an efficient and effective sales manager.

Answer: d

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: For the salesperson, time and territory management is a continuous process of planning, executing, and evaluating the sales and service provided to customers. By completing each of the seven key elements involved in time and territory management the salesperson ensures customers will be provided excellent service

 

  1. An insurance company should most likely:
    A. form territories based on income distribution.
    B. make geographical sales territories.
    C.avoid making distinct sales territories.
    D. make small, local sales territories.
    E. have territories with only prospects.

Answer: c

Learning Objective: 14-01

Topic: Customers Form Sales Territories

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: With insurance sales, policies are often sold to family and friends. A sales territory would disrupt this method of attracting customers.

 

  1. The first step of time and territory management is:
  2. setting quotas.
    B. seeking referrals.
    C. scheduling calls.
    D. planning travel routes.
    E. engaging in prospecting.

Answer: a

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Setting sales goals or quotas is the first step of time and territory management. Scheduling and routing occur later in the process.

 

  1. After conducting an account analysis in the time and territory management process, salespeople should:
    A. set account objectives and sales quotas.
    B. manage scheduling and routing.
    C. conduct customer sales planning.
    D. evaluate customers and accounts.
    E. conduct territory evaluations.

Answer: a

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: After an account analysis has been completed, the salesperson should set account objectives and sales quotas. Customer sales planning, scheduling, routing, and territory and customer evaluations are conducted later in the process.

 

  1. Rick Preston, a pharmaceutical sales representative, has a new kidney medication available. He is in the process of identifying physicians in his territory that might be interested in the new drug and estimating the sales potential of each. Rick is in the process of:
  2. customer sales planning.
    B. route reporting.
    C. territory-time allocation.
    D.account analysis.
    E. quota scheduling.

Answer: d

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Rick is conducting an account analysis of current customers. Account analysis involves identifying accounts and their varying levels of sales potential.

 

  1. The two general approaches to _____ are the undifferentiated selling approach and the account segmentation approach.
    A. customer sales planning.
    B. route reporting.
    C. territory-time allocation.
    D.account analysis.
    E. quota scheduling.

Answer: d

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Two general approaches to account analysis —identifying accounts and their varying levels of sales potential—are the undifferentiated selling approach and the account segmentation approach.

 

  1. Account analysis:
    A.identifies accounts and their varying levels of sales potential.
    B. begins with an estimate of a prospect’s past sales.
    C. involves four general approaches.
    D. requires management oversight.
    E. is another form of value analysis.

Answer: a

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Two general approaches to account analysis —identifying accounts and their varying levels of sales potential—are the undifferentiated selling approach and the account segmentation approach.

 

  1. The two general approaches to account analysis for salespeople are:
    A. time and territory management.
    B.undifferentiated selling and account segmentation.
    C. mass marketing and target marketing.
    D. personal selling and mass selling.
    E. homogeneous selling and heterogeneous selling.

Answer: b

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Two general approaches to account analysis —identifying accounts and their varying levels of sales potential—are the undifferentiated selling approach and the account segmentation approach. Account analysis is an aspect of time and territory management.

  1. The undifferentiated selling approach is used by the salesperson when:
    A.accounts in a market are similar.
    B. customers are primarily heterogeneous.
    C. the product line is varied with unique uses.
    D. major distinctions exist in a geographic region.
    E. accounts have different needs and characteristics.

Answer: a

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: An organization may see the accounts in its market as similar. When this happens and selling strategies are designed and applied equally to all accounts, the salesperson uses an undifferentiated selling approach.

 

  1. Which selling approach would most likely involve a salesperson using the same selling strategy for all customers?
    A. Homogeneous selling
    B. Heterogeneous selling
    C. Account segmentation
    D. TTM segmentation
    E.Undifferentiated selling

Answer: e

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: With the undifferentiated selling approach, a salesperson may use the same sales presentation in selling an entire product line. The salesperson feels he or she can satisfy most customers with a single selling strategy because the accounts in the market are similar.

 

 

  1. Which of the following statements about undifferentiated selling is true?
    A. The undifferentiated selling approach is only useful if customers are heterogeneous.
    B.Many door-to-door salespeople use the undifferentiated approach.
    C. The undifferentiated selling approach allows salespeople to devote time to customers in proportion to the customer’s potential value.
    D. The undifferentiated selling approach allows salespeople to streamline their pre-call preparation and thus is growing in popularity.
    E. Undifferentiated selling cannot be used in conjunction with a stimulus-response presentation.

Answer: b

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: With the undifferentiated selling approach the salesperson feels he or she can satisfy most customers with a single selling strategy. Many door-to-door salespeople use the same selling strategies with each person they contact (a stimulus–response sales presentation).

 

  1. Stephen started a new company which manufactures vacuum cleaners. He hired four salespeople and decided to use the door-to-door selling technique to sell his products. Which selling approach will most likely be used by the salespeople?
    A. Account segmentation
    B.Undifferentiated
    C. Customized
    D. Specific
    E. Unstructured

Answer: b

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Most door-to-door salespeople use the same selling strategies with each person they contact, which means they use the undifferentiated selling approach. Stephen must feel that he can satisfy most customers with a single selling strategy.

 

  1. In most cases, the total sales quota for a salesperson is:
    A. the same for all salespeople in the company.
    B. set by the individual salesperson.
    C.set by the sales manager.
    D. fluctuating and flexible.
    E. based on new accounts.

Answer: c

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: A salesperson is responsible for generating sales in a territory based on its sales potential. The salesperson’s manager typically establishes the total sales quota that each salesperson is expected to reach.

 

  1. The account segmentation approach to territory management is used to:
    A. insure equal treatment of the firm’s prospects.
    B. prevent dependence on the 80/20 principle.
    C. insure equal treatment of the firm’s customers.
    D.increase the profitability of the territory.
    E. insure equal treatment of the firm’s salespeople.

Answer: d

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Analyze

AACSB:

Level of Difficulty: Hard

Explanation: With the account segmentation approach, salespeople classify customers to identify profitable ones. This classification determines where the salesperson’s time is invested. The method typically involves using the 80/20 principle.

 

  1. Salespeople using the _____ approach recognize their territories contain accounts with heterogeneous needs and differing characteristics that require different selling strategies.
    A.account segmentation
    B. market diversification
    C. undifferentiated selling approach
    D. territorial development
    E. market penetration

Answer: a

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Salespeople using the account segmentation approach recognize that their territories contain accounts with heterogeneous needs and differing characteristics that require different selling strategies. Consequently, they develop sales objectives based on overall sales and sales of each product for each customer and prospect.

 

  1. When a salesperson refers to her key accounts, she is talking about her _____ accounts.
    A. newest
    B. homogeneous
    C.extra-large
    D. undifferentiated
    E. break-even

Answer: c

Learning Objective: 14-03

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Key accounts are the extra-large accounts in a sales territory. These accounts are target customers because they are highly profitable.

 

  1. Sales managers use the ELMS system to:
    A. identify demographic characteristics so that customer needs match sales goals.
  2. evaluate salespeople during annual performance appraisals.
    C. match the personalities of salespeople and customers.
    D. create the most efficient travel routes for salespeople.
    E.categorize accounts in terms of profitability.

Answer: e

Learning Objective: 14-03

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Accounts are classified broadly by salespeople in the account segmentation approach. Categories or types of accounts are defined in terms such as extra-large (key), large, medium, and small, which we refer to as the ELMS system.

 

  1. The ELMS system:
    A. is used by the home office not by the individual salesperson.
    B. classifies prospects according to how and when they were qualified.
    C.classifies accounts to extra-large, large, medium, and small accounts.
    D. categorizes according to geographic location relative to the home office.
    E. classifies according to time spent on average with each buyer.

Answer: c

Learning Objective: 14-03

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Categories or types of accounts are defined in terms such as extra-large (key), large, medium, and small, which we refer to as the ELMS system.

 

  1. Which of the following is a method used to define accounts in terms of their size?
    A. OAKS
    B. KISS
    C.  FAB
    D.ELMS
    E. SELL

Answer: d

Learning Objective: 14-03

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Categories or types of accounts are defined by size in terms such as extra-large (key), large, medium, and small, which we refer to as the ELMS system.

 

  1. The use of the ELMS system is most closely related to the:
    A. FAB closing.
    B.80/20 principle.
    C. 50-50 method.
    D. SELL sequence.
    E. KISS selling process.

Answer: b

Learning Objective: 14-03

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: The 80/20 principle is most relevant to the ELMS system of designating accounts by size. The 80/20 principle asserts that large accounts are the reason for 80 percent of a company’s profitable sales even though they represent only 20 percent of total accounts.

 

  1. The 80/20 principle can be used to explain why salespeople use:
    A.the ELMS system to segment accounts in their sales territories.
    B. trial closes a minimum of three times per sales call.
    C. three different types of routing patterns.
    D. waiting time for non-selling activities.
    E. mobile offices and technology.

Answer: a

Learning Objective: 14-03

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: The 80/20 principle is most relevant to the ELMS system of designating accounts by size. The 80/20 principle asserts that large accounts are the reason for 80 percent of a company’s profitable sales even though they represent only 20 percent of total accounts.

 

  1. The 80/20 principle:
    A. is a territorial management concept that favors a salesperson putting 80 percent of his time on planning and 20 percent on action.
    B. refers to the fact that eighty salespeople require twenty sales managers to keep the appropriate 1-to-4 ratio of supervisors to employees.
    C. indicates that no matter how hard a salesperson tries, 80 percent of the customer’s potential business ends up going to competitors.
    D. is a territorial management concept that favors a salesperson putting 80 percent of her time on action and 20 percent on planning.
    E.refers to the idea that 20 percent of a firm’s customers account for 80 percent of a firm’s profitability.

Answer: e

Learning Objective: 14-03

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: The 80/20 principle is most relevant to the ELMS system of designating accounts by size. The 80/20 principle asserts that large accounts are the reason for 80 percent of a company’s profitable sales even though they represent only 20 percent of total accounts.

 

  1. Salespeople need to segment their accounts by the amount of revenue generated to:
    A. reduce the amount of time they spend with large accounts.
    B. improve the quality of their firm’s advertising campaigns.
    C. perform an OAKS analysis before a value analysis.
    D.ensure they use their time appropriately.
    E. accomplish all their personal goals.

Answer: d

Learning Objective: 14-03

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Salespeople classify customers to identify profitable ones and to make sure their time is used wisely and sales goals are met.

 

  1. Sheryl Ford, a senior salesperson at a large firm, was asked by her sales manager to handle a key customer at a distant place from her home. Sheryl was surprised because that area belonged to another salesperson. According to the text, what is the most likely reason for Sheryl’s assignment?
    A. Sheryl’s area lacks key accounts, and the manager wants to distribute the accounts equally among the salespeople.
    B.The salesperson in the customer’s area is inexperienced.
    C. The sales manager wants Sheryl to utilize her time better.
    D. The sales manager is punishing Sheryl for breaking a sales policy.
  2. The sales manager is trying to lower sales and travel expenses.

Answer: b

Learning Objective: 14-03

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: The territory where the key account is located is probably handled by an inexperienced local salesperson. Even though the key account is in another salesperson’s territory, a key account salesperson like Sheryl is necessary to call on an extra-large customer.

 

  1. According to the text, when a company directs its sales force members to use multiple selling strategies, this means salespeople are expected to:
    A. split commissions if a buyer’s purchasing office is in one salesperson’s territory and the retail outlet is the territory of another salesperson.
    B. have several sales approaches planned so that if their first sales attempt is unsuccessful, they can shift to an alternate approach without delay.
    C. develop different sales approaches for the different products in the company’s product line.
    D.invest the bulk of their time and resources in the large, important accounts in their territories.
    E. develop one form of presentation for existing accounts and another for prospects.

Answer: d

Learning Objective: 14-03

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: The bulk of sales force resources (such as personnel, time, samples, and entertainment expenses) should be invested in the key accounts, and the needs of these large

accounts should receive top priority. Therefore, salespeople use multiple selling strategies.

 

  1. _____ means using more than one criterion to characterize an organization’s accounts.
    A. Multivariable account segmentation
    B. Key stoning
    C. Parallel account integration
    D. Territory-aggregate management
    E. Double positioning

Answer: a

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Multivariable account segmentation means using more than one criterion to characterize the organization’s accounts. Sales organizations use segmentation because they sell to several markets and use many channel members in these markets.

 

  1. All of the following holds true for multivariable account segmentation EXCEPT that it:
    A. characterizes the organization’s account using more than one criterion.
    B. is used by sales organizations who sell to several markets.
    C.emphasizes the supply of similar products to channel members.
    D. is used because organizations use many channel members.
    E. allows sales personnel to develop plans for selling various products to specific segments of their accounts.

Answer: c

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Multivariable account segmentation means using more than one criterion to characterize the organization’s accounts. Sales organizations use segmentation because they sell to several markets and use many channel members in these markets. Furthermore, they may emphasize different products, product sizes, or product lines to different channel members in various markets.

 

  1. James Lambert is an assistant territory sales manager at Cellcom, a leading wireless service provider in Europe. James manages the salespeople in a small city in France. There are many players in the wireless service provider market, and it is becoming increasingly difficult to position the company as unique. What can James do to position Cellcom as a unique company, when compared to its competitors?
    A. Reduce the call rates by half.
    B. Increase the mass media advertising of Cellcom.
    C.Instruct salespeople to spend more time on each sales call.
    D. Ask salespeople to discuss the weakness of competition in every sales call.
    E. Substantially reduce the salespeople’s visits to the small accounts and increase the visits to key accounts.

Answer: c

Learning Objective: 14-03

Topic: Elements of Time and Territory Management

Blooms: Apply

AACSB: Analytic

Level of Difficulty: Hard

Explanation: James should strive to create the image that Cellcom is uniquely better than the competition. One way to accomplish this is to spend more time on each sales call and to make more total sales calls during the year, thus providing a problem-solving approach to servicing accounts.

 

  1. Dividing accounts on the basis of market type and sales volume would be an example of:
    A.multivariable account segmentation.
    B. dual segmentation marketing.
    C. reciprocal sales differentiation.
    D. total territory management.
    E. dual positioning.

Answer: a

Learning Objective: 14-03

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Multivariable account segmentation means using more than one criterion to characterize the organization’s accounts. The type of market, environment, account sales potential, and sales volume are major variables for segmenting accounts.

 

  1. Jayson Jaworski is a manufacturer’s salesperson. He finds it useful to divide the accounts in his territory on the basis of whether the buyer sells at the wholesale or retail level as well as according to the account’s potential sales volume. Jaworski is using:
    A.multivariable account segmentation.
    B. dual segmentation marketing.
    C. differentiated segmentation.
    D. total territory management.
    E. dual positioning.

Answer: a

Learning Objective: 14-03

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Jayson is using multivariable account segmentation, which involves using more than one criterion to characterize the organization’s accounts. The type of market, environment, account sales potential, and sales volume are major variables for segmenting accounts.

 

  1. Hancock Distribution Company characterizes its customers according to their yearly sales potential and whether the account is a builder, a homeowner, or a government facility. This approach to segmentation is called:
    A. OAKS selling.
    B.multivariable account segmentation
    C. dual differentiation.
    D. dual segmentation marketing.
    E. total territory management.

Answer: b

Learning Objective: 14-03

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Hancock is using multivariable account segmentation, which uses more than one criterion to characterize the organization’s accounts. The type of market, environment, account sales potential, and sales volume are major variables for segmenting accounts.

 

  1. “To increase the total number of sales calls every month by 10,” is an example of a(n):
    A. territory allocation.
    B. account analysis.
    C.account objective.
    D. sales quota.
    E. sales positioning.

Answer: c

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Increasing the total number of monthly sales calls is an account objective. Other objectives might be increasing product distribution to prospects in the territory or increasing the product assortment that current customers purchase.

 

  1. “To increase the product assortment purchased by current customers by two percent during the next three months,” is an example of a(n):
    A. market quota.
    B. derived demand.
    C.account objective.
    D. future product quotient.
    E. net product forecast.

Answer: c

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Increasing the product assortment purchased by customers is an account objective. Other objectives might be increasing product distribution to prospects in the territory or increasing the number of sales calls made in a month.

 

  1. Which of the following is a basic factor to consider in time allocation?
  2. Nonselling time
    B. Cost of goods sold
    C. Personality style of customers
    D. Structure of sales presentation
    E. Revenue projections for the year

Answer: a

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Time allocation is the time spent by the salesperson traveling around the territory and calling on accounts. There are seven basic factors to consider in time allocation including nonselling time, the number of accounts in the territory, and the number of sales calls made on customers.

 

  1. Which of the following is one of the seven basic factors the text indicates must be considered in the allocation of a salesperson’s time?
    A. Types of products being sold
    B. Cost of goods sold
    C. Personality of the salesperson
    D. Number of visual aids used in sales presentation
    E.Number of accounts in the territory

Answer: e

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Time allocation is the time spent by the salesperson traveling around the territory and calling on accounts. There are seven basic factors to consider in time allocation including nonselling time, the number of accounts in the territory, and the number of sales calls made on customers.

 

  1. Which of the following is NOT one of the seven basic factors to consider in the allocation of a salesperson’s time?
    A. Frequency of customer sales calls
    B. Return on time invested
    C. Nonselling time
    D.Compensation
    E. Travel time

Answer: d

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: There are seven basic factors to consider in time allocation including frequency of calls, return on time invested, nonselling time, and travel time around the territory. Compensation is not a factor to consider.

 

  1. If a territorial evaluation indicates that a salesperson’s quotas are not met, then it is most likely that:
    A. territories will be expanded.
  2. sales methods will be changed.
    C. routing will be re-measured.
    D. key accounts will be dropped.
    E. new territory plans will be developed.

Answer: e

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Territorial evaluation is the establishment of performance standards for the individual territory in the form of qualitative and quantitative quotas or goals. Actual performance is compared to these goals for evaluation purposes. This allows the salesperson to see how well territory plans were executed in meeting performance quotas. If quotas are not met, new plans must be developed.

 

  1. Madison works for a weed killer manufacturing company. The products have only been available in a concentrated liquid form, but now the firm is introducing a pre-mixed version that should be easier for consumers to use. Madison will most likely increase the frequency of sales calls because:
    A. the available supply is limited and costly.
    B. there is no competition within the sales territory.
    C. demand is low for his company’s older products.
    D. customers are less likely to buy products from the competition.
    E.his company has increased the number of product lines available.

Answer: e

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Analyze

AACSB: Analytic

Level of Difficulty: Hard

Explanation: Madison will increase the frequency of calls because there has been an increase in the number of product lines sold. Madison needs to make customers aware of the new product.

 

  1. Which among the following is NOT a reason for increasing the number of sales calls?
    A. Increase of potential future sales
    B. Increase of orders placed
  2. Increase of product lines sold
    D.Increase of cost of goods sold
    E. Increase in servicing requirements

Answer: d

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Cost increases would not justify more sales calls. Usually, the frequency of calls increases as there are increases in (1) sales and/or potential future sales, (2) number of orders placed in a year, (3) number of product lines sold, and (4) complexity, servicing, and redesign requirements of products.

 

  1. You are the salesperson for a manufacturing business that makes various scents used in soap and candle making. Your sales manager expects your frequency of sales calls on a particular customer will increase when the:
    A. complexity of the scent mixtures sold decreases.
    B. number of orders placed for different scents diminishes.
    C. future sales potential for your company’s products decreases.
    D. number of product lines sold carried by the wholesaler increases.
    E. total number of managerial levels increases at the end of the year.

Answer: d

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Usually, the frequency of calls increases as there are increases in (1) sales and/or potential future sales, (2) number of orders placed in a year, (3) number of product lines sold, and (4) complexity, servicing, and redesign requirements of products.

 

  1. A salesperson invests time in direct proportion to the actual or potential sales that the account represents. This relationship of sales volume to sales calls is the:
    A.break-even point.
    B. sales response function.
    C. basis for time allocation.
    D. basis for territory formation.
    E. correlation of effort and skill.

Answer: b

Learning Objective: 14-04

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Typically, the salesperson invests sales time in direct proportion to the actual or

potential sales that the account represents. The most productive number of calls is reached at the point at which additional calls do not increase sales. This relationship of sales volume to sales calls is the sales response function of the customer to the salesperson’s calls.

 

  1. _____ is a quantitative technique for determining the level of sales at which total revenues equal total costs.
    A. The sales response function
    B. Equilibrium analysis
    C. Profit allocation
    D. Break-even analysis
    E. The ELMS approach

Answer: d

Learning Objective: 14-04

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Break-even analysis is a quantitative technique for determining the level of sales at which total revenues equal total costs. Break-even analysis determines how much sales volume a salesperson must generate to meet costs in a territory.

 

  1. The total fixed cost for Harold, a salesperson, is $20,000 per month. Harold generates 25% gross profit on the products he sells. If Harold sells $200,000 worth of merchandise in six months, which of the following statements is true?
    A.By having Harold, the company incurred a direct loss of $70,000.
    B. Harold generated $120,000 in gross profit for the company.
    C. Harold sold $120,000 worth of goods, which equals the BEP.
    D. By having Harold, the company incurred a direct loss of $280,000.
    E. Harold generated $30,000 gross profit for the company.

Answer: d

Learning Objective: 14-04

Topic: Elements of Time and Territory Management

Blooms: Apply

AACSB: Analytic

Level of Difficulty: Hard

Explanation: BEP = $20,000/.25 = $80,000 x 6 = $480,000

$480,000 – $200,000 = $280,000 loss

  1. Gross profit is the difference between:
    A. sales revenue and costs of goods sold.
    B.  sales revenue and fixed costs of the salesperson.
    C.  sales revenue and costs of goods sold including taxes.
    D.  net profit and transportation cost.
    E.  total sales and manufacturing cost.

Answer: a

Learning Objective: 14-04

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: The difference between cost of goods sold and sales is the gross profit on sales revenue. Gross profit should be large enough to cover selling expenses.

 

  1. Based on the following data, calculate the breakeven point in dollars:

Sales = $400,000

Gross Profit = $100,000
Transportation = $8,000
Cost of Goods Sold = $280,000
Expenses = $10,000
Salary = $40,000

  1. $96,667
    B. $133,333
    C. $166,000
    D.$232,000
    E. Cannot be calculated with the information provided

Answer: d

Learning Objective: 14-04

Topic: Elements of Time and Territory Management

Blooms: Apply

AACSB: Analytic

Level of Difficulty: Hard

Explanation: Gross profit percentage = Gross profit/sales = $100,000/$400,000 = 25%

BEP = Fixed costs/gross profit % = $58,000/25% = $232,000

 

  1. Based on the following data, calculate the breakeven point.

    Sales = $500,000
    Transportation = $10,000
    Gross Profit = $200,000
    Lodging and Meals = $8,000
    Salary = $37,000
    Other expenses = $5,000

  2. $150,000
    B. $130,000
    C. $100,0003
    D. $86,667
    E. Cannot be calculated with the information given

Answer: a

Learning Objective: 14-04

Topic: Elements of Time and Territory Management

Blooms: Apply

AACSB: Analytic

Level of Difficulty: Hard

Explanation: Gross profit percentage = Gross profit/sales = $200,000/$500,000 = 40%

BEP = Fixed costs/gross profit % = $60,000/40% = $150,000

 

  1. Mack Jacoby sells building supplies. His annual sales equal $450,000. His total fixed costs annually equal $75,000. The cost of goods sold annually is $335,000. Calculate his gross profit percentage.
    A. 11.9%
    B. 20.3%
    C.25.6%
    D. 34.3%
    E. Cannot be determined from information given

Answer: c

Learning Objective: 14-04

Topic: Elements of Time and Territory Management

Blooms: Apply

AACSB: Analytic

Level of Difficulty: Hard

Explanation:

Gross profit = annual sales – cost of goods sold = $450,000 – $335,000 = $115,000

Gross profit percentage = Gross profit/sales = $115,000/$450,000 = 25.6%

  1. Mack Jacoby sells building supplies. His annual sales equal $450,000. His total fixed costs annually equal $75,000. The cost of goods sold annually is $335,000. Mark’s break-even point in terms of total sales is approximately:
    A. $198,000
    B. $218,600
    C.$224,000
    D. $293.000
    E. $315,200

Answer: d

Learning Objective: 14-04

Topic: Elements of Time and Territory Management

Blooms: Apply

AACSB: Analytic

Level of Difficulty: Hard

Explanation:

Gross profit = annual sales – cost of goods sold = $450,000 – $335,000 = $115,000

Gross profit percentage = Gross profit/sales = $115,000/$450,000 = 25.6%
BEP = Fixed costs/gross profit % = $75,000/25.6% = $292,968.75

 

 

  1. Mack Jacoby sells building supplies. His annual sales equal $450,000. His total fixed costs annually equal $75,000. The cost of goods sold annually is $335,000. Mack works an average of 240 days a year and 8 hours each day. Mack makes an average of five sales calls per day. Mack’s break-even volume per hour is approximately:

 

  1. $119.00
    B. $153.00
    C.$171.00
    D. $256.00
    E. $392.00

Answer: b

Learning Objective: 14-04

Topic: Elements of Time and Territory Management

Blooms: Apply

AACSB: Analytic

Level of Difficulty: Hard

Explanation:

Gross profit = annual sales – cost of goods sold = $450,000 – $335,000 = $115,000

Gross profit percentage = Gross profit/sales = $115,000/$450,000 = 25.6%
BEP = Fixed costs/gross profit % = $75,000/25.6% = $292,968.75

Hours worked per year = 240 x 8 = 1,920 hours

Mack’s cost per hour = $75,000/1,920 = $39.06

Break-even volume per hour = cost per hour/gross profit % = $39.06/25.6% = $152.58

 

  1. Which of the following is used to calculate the costs and revenues of sales territories? A. ELMS system
    B.Break-even analysis
    C. Multivariate territorial analysis
    D. Key stoning
    E. SWOT analysis

Answer: b

Learning Objective: 14-04

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: The break-even analysis shows that a sales territory is a cost- and revenue-generating profit center. Therefore, priorities must be established on account calls to maximize territory profits.

 

  1. According to the suggestions in the text, daily planning by the salesperson would be LEAST likely to include:
    A. determination of the time to contact the customer.
    B.analysis of territorial gains and losses.
    C. selection of the next day’s prospects.
    D. organization of facts and figures.
    E. preparation of sales presentation materials.

Answer: b

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Daily planning starts the night before, as the salesperson selects the next day’s prospects, determines the time to contact the customer, organizes facts and data, and prepares sales presentation materials. Monthly rather than daily planning might include an analysis of territory profits and losses.

 

  1. The annual break-even point of a salesperson is $2,000,000 and his per month salary is $10,000. This means that:
    A. the salesperson should generate $2,000,000 gross profit every year to cover the costs.
    B.the salesperson should generate sales worth $2,000,000 every year to cover the costs.
    C. the salesperson should generate $2,000,000 net profit every year to cover the costs.
    D. the salesperson should generate gross profit worth $80,000 to cover the costs.
    E. the salesperson is generating $80,000 profit compared to his fixed cost.

Answer: b

Learning Objective: 14-04

Topic: Elements of Time and Territory Management

Blooms: Analyze

AACSB: Analytic

Level of Difficulty: Hard

Explanation: If the salesperson sells $2,000,000 worth of merchandise, it exactly covers the territory’s direct costs. Sales over $2,000,000 contribute to profit.

 

  1. Which of the following activities is NOT an appropriate thing to do while you, the salesperson, are waiting to see a buyer?
    A. Asking the secretary how soon the buyer will be available.
    B.Reading a magazine to clear your head and relax.
    C. Organizing materials for the sales presentation.
    D. Completing call reports that you will send to your boss.
    E. Studying promotional material prepared by your marketing department.

Answer: b

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Top salespeople do not read magazines. They work while waiting: studying material about their products, completing call reports, or organizing material for the sales presentation. Also, they quickly determine whether buyers they wait for will be free within a reasonable time.

 

  1. Which of the following rules should a salesperson adopt in order to have more productive lunch periods?
    A.Monitor the time to avoid monopolizing too much of the buyer’s day.
    B. Have an alcoholic drink only if the client makes the suggestion.
  2. Conduct part of the sales presentation during lunch using a laptop.
    D. When lunching alone, use the time to read something relaxing.
  3. Offer to purchase the customer a lunchtime cocktail or dessert.

Answer: a

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: During a business lunch, salespeople must keep an eye on the clock and not monopolize too much of the buyer’s time. They should not have a lunchtime cocktail, which may make the salesperson less alert and may be against company policy. A salesperson’s lunch is time to review activities and further plan the afternoon.

 

  1. Which of the following would be a good rule for salespeople to follow in handling their paperwork?
    A. Avoid paperwork so that more time is available for sales presentations.
    B. Politely interrupt a sales interview to get paperwork finished.
  2. Finish paperwork during non-selling times and evenings.
    D. Manage paperwork on a once-a-month basis.
    E. Handle paperwork throughout the day.

Answer: c

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Effective salespeople do paperwork during nonselling times; evenings are best. Many companies note these records and reports in performance evaluations of salespeople, and the salesperson should keep them current rather than once a month.

 

  1. As the sales rep for Electrolux appliances plans her activities for the next week, she is establishing a certain day and time to visit each customer’s place of business. She is engaged in the process of:
    A. networking.
    B.scheduling.
    C. customer time allocation.
    D. customer sales planning.
    E. routing.

Answer: b

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Scheduling refers to establishing a fixed time (day and hour) for visiting a customer’s business. Routing is the travel pattern used in working a territory.

 

  1. Establishing a travel pattern to be used for working your territory is called:
    A. Account grouping.
    B. Account time allocation.
    C. Customer sales planning.
    D.Routing.
    E. Scheduling.

Answer: d

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Routing is the travel pattern used in working a territory. Scheduling refers to establishing a fixed time (day and hour) for visiting a customer’s business.

 

  1. Some companies give their salespeople strict formal route plans in order to:
    A. improve collection of overdue accounts.
    B.improve territory coverage.
    C. promote the individual’s planning experience.
    D. minimize territory size.
    E. maximize the utility of the salesperson’s weekly report.

Answer: b

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Strict formal route designs enable the company to improve territory coverage; minimize wasted time; and establish communication between management and the sales force in terms of the location and activities of individual salespeople.

 

  1. Which of the following statements about routing reports is true?
    A. A routing report is usually filed monthly and submitted to the manager.
    B. Companies usually require route reports even if no overnight travel is involved. C. Salespeople are seldom asked to specify times and accounts on routing reports.
    D.Routing reports allow sales managers to know where salespeople are located.
  2. Most companies allow very little latitude for salespeople in routing.

Answer: d

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Routing reports, which are filed weekly, help a manager keep track of a salesperson. If no overnight travel is necessary to cover a territory, the company may not require any route reports because the salesperson can be contacted at home in the evening.

 

  1. Which of the following statements about routing is true?
    A. Global positioning systems have eliminated the need for routing reports.
    B. The best routing pattern to use is the cloverleaf pattern.
    C. The critical factor in sales routing is to minimize the number of miles you drive.
    D. Under the ELMS classification system, the S (super-size) accounts should be called on with greatest frequency.
    E.Most companies allow considerable flexibility in routing.

Answer: e

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Most firms allow flexibility with routing reports, which are still required despite GPS. The best pattern depends on the sales territory, and time is more important than miles.

 

  1. M & N Enterprises uses strict route designs for its large sales team. M & B most likely wants to:
    A.reduce vacation time.
    B. eliminate overnight travel.
    C. establish performance goals.
    D. improve territory coverage.
    E. ensure the safety of salespeople.

Answer: d

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: In theory, strict formal route designs enable the company to improve territory coverage; minimize wasted time; and establish communication between management and the sales force in terms of the location and activities of individual salespeople.

 

  1. A company uses formal route designs to:
    A. overcome territory disagreements.
    B. reach small to medium size territories.
    C. provide greater latitude to salespeople.
    D. establish communication between management and the sales force.
    E. reduce the promotional and distribution costs of new products.

Answer: d

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Strict formal route designs enable the company to improve territory coverage; minimize wasted time; and establish communication between management and the sales force in terms of the location and activities of individual salespeople.

 

  1. The most critical factor to be considered when setting up a sales route is:
    A. number of miles traveled.
    B. traffic signals in the route.
    C. fuel consumption.
    D. sales experience.
    E.travel time.

Answer: e

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: The critical factor is travel time—not miles. In some cases, by using major nonstop highways, your miles may increase but your total travel time may decrease.

 

  1. Mark Adams is a salesperson with a pharmaceutical company. Mark divided his territory into four sections as shown below. What is the major flaw in arranging the accounts in this fashion?

    A. The number of sections formed by Mark allows little flexibility.
    B. The small accounts are unequally distributed.
    C. The extra-large accounts are unequally distributed.
    D. The number of sections should be an odd number.
    E. Daily mileage is greatest in section 3.

Answer: c

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Analyze

AACSB: Analytic

Level of Difficulty: Hard

Explanation: Mark should distribute the EL accounts equally to ensure that each receives enough time. These are the biggest and most profitable accounts, so it is important that they receive enough of Mark’s time. Mileage is unknown from the chart, but mileage is less relevant than time anyway.

 

  1. Which of the following statements about using the telephone for territory coverage is INCORRECT?
    A. The telephone can be useful for handling complaints.
    B. It is appropriate to use the telephone to develop leads and qualify prospects.
    C. Computers facilitate the use of the telephone in selling.
    D. If possible, the telephone should be used to replace some personal visits to geographically distant accounts.
    E.Telephone sales are developed to replace personal selling.

Answer: e

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: More companies are developing telephone sales and marketing campaigns to supplement personal selling efforts but not replace personal selling. Telephone calls are useful for addressing complaints, developing leads, and handling distant customers.

 

  1. Which of the following statements about using the telephone for territory coverage is most likely TRUE?
    A. The telephone is inappropriate for handling complaints.
    B. Prospecting over the telephone is ineffective and time consuming.
  2. Large accounts should primarily be handled and serviced by telephone.
  3. Phone calls can replace some personal visits to geographically distant accounts.
    E. Telephone sales are replacing personal selling efforts because of time and cost savings.

Answer: d

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Telephone calls are useful for addressing complaints, prospecting, and handling distant customers. More companies are developing telephone sales and marketing campaigns to supplement personal selling efforts but not replace personal selling.

 

  1. Which of the following activities would be LEAST appropriate to conduct over the telephone?
    A. Closing sales
    B. Developing leads
    C.Handling complaints
    D. Scheduling sales calls
    E. Gathering market data

Answer: a

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Closing a sale is best handled in person rather than by phone. However, telephone calls are useful for developing leads, addressing complaints, scheduling, prospecting, and collecting data.

  1. The three basic routing patterns are:
    A. morning, afternoon, and midday.
    B.straight-line, cloverleaf, and major-city.
    C. longitudinal, diagonal, and latitudinal.
    D. leapfrog, intersecting, and straight-line.
    E. short-distance, medium-distance, and long-distance.

Answer: b

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: There are three basic routing patterns for planning sales calls: straight-line, cloverleaf, and major-city.

 

  1. Ezekiel delivers pesticides to farmers’ cooperatives. When planning his daily routing pattern, Ezekiel prefers to start with the customers furthest away and work his way back to his company’s office. Which routing pattern is followed by Ezekiel?
    A.Straight-line
    B. Parallel
    C. Perpendicular
    D. Horizontal and vertical
    E. Cloverleaf

Answer: a

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: The straight-line method involves starting with the customer at the greatest distance from the office or home and working backwards so that the finishing point is the office or home.

 

  1. The cloverleaf pattern:
    A. arranges accounts as a group of leaves with no center base.
    B.  has a salesperson drive around the perimeter of major cities.
    C. is a pattern used for supporting the visuals in a sales presentation.
    D. is a call procedure used for telephone and door-to-door sales.
    E.has a salesperson drive out and back on one leaf in the same day.

Answer: e

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: When using the cloverleaf pattern, a salesperson makes sales calls located on the same leaf each day. The salesperson starts and ends at a central location.

 

  1. Donovan’s sales territory encompasses the entire metropolitan area of Seattle. Which of the following routing patterns is Donovan likely to use when selling to customers in Seattle?
    A. Quadrant pattern
    B. Straight-line pattern
    C. Leapfrog pattern
    D.Major-city pattern
    E. Rush-hour pattern

Answer: d

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: The major-city pattern divides a city into sections. Donovan would focus on customers in each quadrant of Seattle to minimize driving time.

 

  1. During a salesperson’s _____, her actual performance is compared with the performance standards set for her sales territory.
    A.Territorial evaluation
    B. MBO review
    C. Break-even analysis
    D. ELMS review
    E. Market audit

Answer: a

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Territorial evaluation is the establishment of performance standards for the individual territory in the form of qualitative and quantitative quotas or goals. Actual performance is compared to these goals for evaluation purposes.

 

  1. Which of the following statements is most likely true about territorial evaluation?
    A. In territorial evaluation, actual performance is evaluated separately from goals.
    B. Territorial evaluation monitors the time interval between multiple sales calls.
    C. Qualitative quotas and performance are not considered in territorial evaluation.
    D.Territorial evaluation establishes performance standards in the form of quotas or goals.
    E. During the evaluation, managers reports are considered instead of individual salespeople’s reports.

Answer: d

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Territorial evaluation is the establishment of performance standards for the individual territory in the form of qualitative and quantitative quotas or goals. Actual performance is compared to these goals for evaluation purposes.

 

Essay Questions

  1. What is a sales territory? What are the major reasons for forming sales territories?

Answer: A sales territory comprises a group of customers or a geographic area assigned to a salesperson. The territory may or may not have geographic boundaries. Typically, however, a salesperson is assigned to a geographic area containing present and potential customers.
Companies develop sales territories for the following reasons. (1) For obtaining thorough coverage of the market. (2) For establishing each salesperson’s responsibilities. (3) For evaluating the performance of salespeople. (4) For improving customer relations. (5) For reducing sales expense. (6) For allowing better matching of salesperson to customer’s needs.

Learning Objective: 14-01

Topic: Customers Form Sales Territories

Blooms: Analyze

AACSB: Analytic

Level of Difficulty: Hard

  1. Why is the development of sales territories inefficient for some companies?

Answer: Their salespeople may be more motivated if not restricted by a particular territory; they can develop customers anywhere. In some cases, the company may be too small to be concerned with segmenting the market into sales areas. Some companies may not divide markets into territories because, the company’s management may not want to take the time or may not have the know-how for territorial development. Personal friendships may be the basis for attracting customers in some companies. These companies also may not divide their market into territories.

Learning Objective: 14-01

Topic: Customers Form Sales Territories

Blooms: Analyze

AACSB: Analytic

Level of Difficulty: Hard

  1. What are the two general approaches used for account analysis?

Answer: The two general approaches are the undifferentiated selling approach and the account segmentation approach.

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

 

  1. Explain the undifferentiated selling approach.

Answer: If the selling strategies are designed and applied equally to all accounts, it is called undifferentiated selling approach. The basic assumption underlying this approach is that the account needs for a specific product or group of products are similar. Salespeople call on all potential accounts, devoting equal selling time to each of them. The same sales presentation may be used in selling an entire product line.

Learning Objective: 14-03

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

 

  1. What is the relationship between the ELMS system and the 80/20 principle?

Answer: The ELMS system defines accounts in terms of extra-large, large, medium and small. The 80/20 principle explains that these extra-large accounts typically represent 80 percent of a company’s profitable sales and only 20 percent of its total accounts. Both emphasize that some accounts are large and need more attention.

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Apply

AACSB:

Level of Difficulty: Hard

  1. Explain multivariable account segmentation.

Answer: Multivariable account segmentation means using more than one criterion to characterize the organization’s accounts. Sales organizations use segmentation because they sell to several markets and use many channel members in these markets. The emphasis can be given to different products, product sizes, or product lines to different channel members in various markets.

Learning Objective: 14-03

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

 

  1. What commonly causes the frequency of sales calls made by a salesperson to increase?

Answer: The following things generally cause an increase in the frequency of calls made by the salesperson. (1) An increase in sales and/or potential sales, (2) an increase in number of orders placed in a year, (3) an increase in number of product lines sold, and (4) an increase in complexity, servicing, and redesigning requirements of product.

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

 

  1. How is the sales response function used by salespeople in time management?

Answer: The sales response function is the relationship of sales volume to sales calls. It is used to determine when the salesperson has reached his or her most productive level of sales calls on individual customers.

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

 

  1. How can a salesperson use break-even analysis as a time management tool?

Answer: Break-even analysis is a quantitative technique for determining the level of sales at which total revenues equal total costs. Salespeople can use break-even analysis to calculate how much sales they need to make to break-even in terms of territory and in terms of hours.

Learning Objective: 14-04

Topic: Elements of Time and Territory Management

Blooms: Apply

AACSB:

Level of Difficulty: Hard

 

  1. Lawrence sells lockers like those found in airports, bus stations, exercise centers, and schools. His fixed selling costs are $25,000 annually. His annual sales are $350,000 and the annual cost of the lockers he sells equals $215,000. Calculate his gross profit in percentage and his break-even point.

Answer: His gross profit in percentage is ($350,000 – $215,000)/$350,000 = 38.57 percent.
His break-even equals $25,000/0.3857 = $64817.21

Learning Objective: 14-04

Topic: Elements of Time and Territory Management

Blooms: Apply

AACSB:

Level of Difficulty: Hard

  1. Greg sells athletic equipment to retailers. He spends $12,500 annually on transportation. His annual salary is $19,000. His other annual expenses total $4,000. His annual sales are $130,000 and the cost of the goods he sells is $65,000. Calculate Greg’s direct costs and his break-point point.

Answer: His direct costs equals $12,500 + $19,000 + $4,000 = $35,500
Break-even = $35,500/[($130,000 – $65,000)/$130,000] = $71,000

Learning Objective: 14-04

Topic: Elements of Time and Territory Management

Blooms: Apply

AACSB:

Level of Difficulty: Hard

  1. Karolyn sells bathroom fixtures. She believes that if she can get a customer she is calling on to go out to lunch with her, she will close the sale. What do you think about Karolyn’s assumption?

Answer: Salespeople often take people to lunch. However, study results show that the business lunch does not lead directly to a sale, but to the buyer and seller can know each other better, which builds confidence and trust. This may lead to sales in the long run.

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

 

  1. Differentiate between routing and scheduling.

Answer: Routing is the travel pattern used in working a territory. Scheduling refers to the establishment of a fixed time for visiting a customer’s business.

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

 

  1. Why would a company insist that its salespeople stick to strict route designs?

Answer: Strict route designs enable the company to improve territory coverage, minimize wasted time, and establish communication between management and the sales force in terms of the location and activities of individual salespeople.

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

 

  1. What is territorial evaluation? What is the purpose and benefit of territorial evaluation?

Answer: Territorial evaluation is the establishment of performance standards for the individual territory in the form of qualitative and quantitative quotas or goals. Actual performance is compared to these goals for evaluation purposes. This allows the salesperson to see how well territory plans were executed in meeting performance quotas. If quotas were not met, new plans must be developed.

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Analyze

AACSB:

Level of Difficulty: Hard

Short Answer Questions

  1. What is a sales territory?

Answer: Sales territory refers to a group of customers or a geographical area assigned to a salesperson.

Learning Objective: 14-01

Topic: Customers Form Sales Territories

Blooms: Remember

AACSB:

Level of Difficulty: Easy

  1. A sales territory is not advisable in the life insurance industry. Why?

Answer: In industries like life insurance, personal friendship becomes the basis for attracting sales. Salespeople may first sell policies to their families and friends. So territory formation is not recommended.

Learning Objective: 14-01

Topic: Customers Form Sales Territories

Blooms: Understand

AACSB:

Level of Difficulty: Medium

 

  1. What is the first step in account analysis?

Answer: The first step in account analysis is to identify all prospects and present customers.

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

  1. What are the two general approaches to account analysis?

Answer: The two general approaches are the undifferentiated selling approach and the account segmentation approach.

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

  1. Account analysis classifies accounts according to the ELMS system. Briefly describe this system.

Answer: With this system, accounts are classified as extra-large, large, medium, and small based on present and potential sales.

Learning Objective: 14-03

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

  1. Briefly explain territory time allocation step in territory management.

Answer: It is the allocation of time spent by salespeople traveling around the territory and calling on accounts. It is based on factors such as number of accounts in the territory, traveling time, time required for calls, and return on time invested.

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

 

  1. At what point does the salesperson reach the most productive number of sales calls?

Answer: When additional calls do not increase sales, the salesperson has reached the most productive number of sales calls.

Learning Objective: 14-04

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

  1. Lin Zander sells health and beauty aids to retailers. If she sells $74,130, she exactly covers all of her territory’s direct costs. Based on an 8-hour workday, a five-day week, and a 48-week year, how much does Zander need to sell hourly to reach her break-even point?

Answer: Working hours per week = 5*8*48 = 1920
Hourly break-even point = $74,130/1920 = $38.61.

Learning Objective: 14-04

Topic: Elements of Time and Territory Management

Blooms: Apply

AACSB:

Level of Difficulty: Hard

  1. List the three basic routing patterns used by salespeople.

Answer: The three routing patterns used by salespeople are the straight-line pattern, the cloverleaf pattern, and the major-city pattern.

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy
Multiple Choice Questions
Clearwater Hampers is a small British company that sells luxury food and drinks in various combinations in picnic hampers. Food and wine are seen as classic, fail-safe gifts in a market where present-buying is increasingly tricky. Corporate customers, both in the United Kingdom and abroad, are important to the business as well as are a number of department stores. Clearwater has had several orders for more than a quarter of a million dollars and prides itself on how much repeat business it does. The company’s leading salesperson, Peter Austin, is placed in charge of an important territory divided on the basis of geography and sales potential. He classifies his customers according to the size of their average orders.

 

  1. Which method is used by Austin to segment his market?
    A. TTM
    B.ELMS
    C. FAB
    D. SELL
    E. L-O-C-A-T-E

Answer: b

Learning Objective: 14-03

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Austin uses the ELMS system. Once accounts are classified broadly, categories or types of accounts are defined in terms such as extra-large (key), large, medium, and small, which we refer to as the ELMS system.

 

  1. Austin is a firm believer in the 80/20 principle. This means he believes:
    A. 80 percent of his effort will not result in sales.
    B. 20 percent of his time should be spent on prospecting and qualifying.
    C. 80 percent of his time should be spent in follow-up service.
    D.20 percent of his customers will provide 80 percent of the sales.
    E. 20 percent of his time should be spent on paperwork.

Answer: d

Learning Objective: 14-03

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: There are few extra-large or large accounts, but they often account for 80 percent of a company’s profitable sales even though they represent only 20 percent of total accounts. This is known as the eighty/twenty principle.

 

  1. In deciding how to allocate his sales time, Austin should consider all of the following EXCEPT:
    A. non-selling time.
    B.cost of goods sold.
    C. time required for each sales call.
    D. frequency of sales calls.
    E. return on time invested.

Answer: b

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Understand

AACSB:

Level of Difficulty: Medium

Explanation: Time allocation is the time spent by the salesperson traveling around the territory and calling on accounts. Factors to consider in time allocation include non-selling time, time required for each sales call, frequency of sales calls, and return on time invested. The cost of the goods sold is less relevant.

 

  1. The product handled by Austin has an average gross profit percentage of 25%. Austin’s annual salary and expenses total $200,000. Austin works 8 hours a day, 5 days a week, and 40 weeks in a year. What is Austin’s break-even volume per hour?
  2. $500.00
    B. $390.00
    C. $265.00
    D. $150.00
    E. $100.00

Answer: a

Learning Objective: 14-04

Topic: Elements of Time and Territory Management

Blooms: Apply

AACSB: Analytic

Level of Difficulty: Hard

Explanation: Explanation: BEP = Salesperson’s fixed costs/gross profit percentage.

BEP = $200,000/.25 = $800,000/1600 hours = $500.00

 

  1. Austin has arrived at a prospect’s office 30 minutes earlier than his appointment time. What should Austin do?
    A. Reschedule the appointment.
  2. Read the local newspaper.
    C. Meditate and stretch.
    D.Catch up on paperwork.
    E. Leave for the next call.

Answer: d

Learning Objective: 14-02

Topic: Elements of Time and Territory Management

Blooms: Remember

AACSB:

Level of Difficulty: Easy

Explanation: Top salespeople work while waiting. Austin should stay until the scheduled time and catch up on paperwork or prepare for the presentation.

 

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