Closing the Deal
CASE 6.4 Closing the Deal
Now that she had to, Jean McGuire wasn’t sure she could. Not that she didn’t understand what to do. Wright Boazman, sales director for Sunrise Land Developers, had made the step clear enough when he described a variety of effective “ deal- closing techniques.” As Wright explained it, very often people actually want to buy a lot but suffer at the last minute from self- doubt and uncertainty. The inexperienced salesperson can misinterpret this hesitation as a lack of interest in a property. “ But,” as Wright pointed out, “ in most cases it’s just an expression of the normal reservations we all show when the time comes to sign our names on the dotted line.” In Wright’s view, the job of a land salesperson was “ to help the prospect make the decision to buy.” He didn’t mean to sug-gest that salespeople should misrepresent a piece of property or in any way mislead people about what they were purchasing. “ The law prohibits this,” he pointed out, “ and personally I find such behavior repugnant. What I’m talking about is helping them buy a lot that they genuinely want and that you’re convinced will be compatible with their needs and interests.” For Wright Boazman, salespeople should serve as motivators, people who can provide whatever impulse was needed for prospects to close the deal. In Wright’s experience, one of the most effective closing techniques was what he termed “ the other party.” It goes something like this. Suppose someone like Jean McGuire had a hot pros-pect, someone who was exhibiting real interest in a lot but who was having trouble deciding. To motivate the prospect into buying, Jean ought to tell the person that she wasn’t even sure the lot was still available because a number of other salespeople were showing the same lot, and they could already have closed a deal on it. As Wright put it, “ This first move generally increases the prospect’s interest in the property, and more important to us, in closing the deal pronto.” Next Jean should say something like, “ Why don’t we go back to the office, and I’ll call headquarters to find out the status of the lot?” Wright indicated that such a suggestion ordinarily “ whets their appetite” even more. In addition, it turns prospects away from wondering whether they should purchase the land and toward hoping that it’s still available. When they return to the office, Jean should make a call in the presence of the prospect. The call, of course, would not be to “ headquarters” but to a private office only yards from where she and the prospect sit. Wright or someone else would receive the call, and Jean should fake a conversation about the property’s availability, punctuating her comments with contagious excitement about its desirability. When she hangs up, she should breathe a sigh of relief that the lot’s still available— but barely. At any minute, Jean should explain anxiously, the lot could be “ green- tagged,” meaning that headquarters is expecting a call from another salesperson who’s about to close a deal and will remove the lot from open stock. ( An effective variation of this, Wright pointed out, would have Jean abruptly excuse herself on hanging up and dart over to another sales representative with whom she’d engage in a heated, although staged, debate about the availability of the property— loud enough, of course, for the prospect to hear. The intended effect, according to Wright, would be to place the prospect in a “ now or never” frame of mind.) When Jean first heard about this and other closing tech-niques, she felt uneasy. Even though the property was every-thing it was represented to be and the law in her state allowed purchasers three days to change their minds after closing a deal, she instinctively objected to the use of psycho-logical manipulation. Nevertheless, Jean never expressed her reservations to anyone, primarily because she didn’t want to endanger her job, which, as a single mother with two children to support, she certainly needed. Besides, Jean had con-vinced herself that she could deal with closures more respectably than Wright and other salespeople might. But the truth was that, after six months of selling land for Sunrise, Jean’s sales lagged far behind those of the other sales repre-sentatives. Whether she liked it or not, Jean had to admit she was losing a considerable number of sales because she couldn’t close. And she couldn’t close because, in Wright Boazman’s words, she lacked technique. She wasn’t using the psychological closing devices that he and others had found so successful. Now as she drove back to the office with two hot pros-pects in hand, she wondered what to do.
1. Do you disapprove of this sales tactic, or is it a legitimate business technique? How might it be morally defended?
2. Suppose you knew either that the prospect would eventu-ally decide to buy the property anyway or that it would genuinely be in the prospect’s interest to buy it. Would that affect your moral assessment of this closing technique? Do customers have any grounds for complaining about this closing technique if the law allows them three days to change their minds?
3. What ideals, obligations, and effects must Jean consider? What interests and rights of the customer are at stake?
4. What weight should Jean give to self- interest in her delib-erations? What do you think she should do? What would you do?
5. What rule, if any, would a rule utilitarian encourage real-estate agents in this situation to follow? What should the realtors’ professional code of ethics say about closing techniques?
Case 6.5 The Rise and Fall of Four Loko
IF YOU ’ RE SERIOUS ABOU T YOUR PAR TYING ,how do you manage to keep awake when drinking late into the night? That question may seem absurd to some people, but it has long bedeviled club- hoppers and other revelers. Some of them drink cola on the side or mixed with alcohol; others favor Red Bull and vodka. Recently, however, a few entrepreneurial companies came to their aid, by combining alcohol and caffeine into one convenient package. Joose and Four Loko are two examples. The former added 54 mil-ligrams, the latter 156 milligrams, of caffeine to a malt bever-age that is 12 percent alcohol. ( In comparison, a can of Coke contains 35 milligrams of caffeine, and an eight- ounce cup of coffee between 100 and 200 milligrams. Beer is usually around 5 percent alcohol and wine 12 percent.) Made with fruit flavors and packaged in bright colors, Joose and Four Loko were sold in large, 23.5 ounce cans. 107 While these innovative products made some consumers happy, they soon alarmed colleges and health officials around the country when they led, or appeared to have led, to a growing number of intoxicated students and other young people landing in hospital emergency rooms, some with seri-ous alcohol poisoning— for example, the New Jersey student who showed up in a local hospital with a blood alcohol level of .40 ( at least four times the legal limit for driving a car) after drinking three cans of Four Loko and several shots of tequila in an hour. In response, several colleges and universities banned the drinks from their campuses or tried to warn stu-dents about their dangers. Peter Mercer, the president of Ramapo College, where the New Jersey student was enrolled, says, “ I do not see any socially redeeming purpose being served by these beverages.” Senator Charles E. Schumer of New York calls Four Loko “ a toxic and dangerous brew.” Dr. Michael Reihart, an emer-gency room physician in Lancaster, Pennsylvania, agrees: “ This is one of the most dangerous new alcohol concoctions I have ever seen.” He adds, “ It’s a recipe for disaster because your body’s natural defense is to get sleepy and not want to drink, but in this case you’re tricking the body with caffeine.” With these drinks, “ you have a product where people don’t appreciate how much alcohol they’re consuming,” says Rob McKenna, an attorney general in the state of Washington. These concerns didn’t dent the popularity of Four Loko, however. On a fan- operated Facebook page, for example, more than 25,000 people have displayed their support of the beverage, many posting photos of themselves with empty cans stacked or strewn about. Some say they like the drink because it doesn’t take many to get intoxicated. Stores near many college campuses found themselves giv-ing the beverages increased shelf space because of the high demand, especially after Four Loko expanded the fla-vors it offered. “ You can get drunk for $ 5 all night,” says Boston College junior, Christine Binko, though she doesn’t like the cans littering the streets near the campus, and she thinks “ it brings out the aggression in people.” Many observers were worried by the colorful packaging of the beverages and the fact that they come in flavors like water-melon, blue raspberry, and lemon- lime. Senator Schumer, for one, charges that the beverages are “ explicitly designed to attract under- age drinkers.” And it’s true that the brightly colored cans resemble iced tea, soda, or energy drink con-tainers and can be mistaken for nonalcoholic beverages. “ I’ve talked to parents who were shocked because the can was in their refrigerator and they didn’t realize it was an alcoholic beverage,” Dr. Reihart said. “ It looks like every other energy drink out there.” Chris Hunter, the co- founder and managing partner of the company that owns Four Loko, believes that his product is being unfairly singled out and says that his company takes steps to prevent its product falling into the hands of minors. “ Alcohol misuse and abuse and under- age drinking are issues the industry faces . . . The singling out or banning of one product is not going to solve that. Consumer education is what’s going to do it.” Not wanting to wait for consumer education, Michigan and Washington banned caffeinated alcoholic beverages in November 2010, and legislators in several other states were considering the same course of action. “ Disappointed” by calls to ban the drink, Four Loko contended that its product is safe. “ We want to open a dialogue to discuss specific concerns and try to reach solutions,” a statement issued by the company said. “ When consumed responsibly, our products are just as safe as any other alcoholic beverages.” That dialogue never happened because, at the urging of Senator Schumer and other politicians, the Food and Drug Administration ( FDA) soon stepped in. It sent a warning to Four Loko and three other manufacturers that the caffeine added to their malt alcoholic beverages is an “ unsafe food additive” and that the beverages are a “ public health concern” because they mask the sensory clues that drinkers rely on to determine their level of intoxica-tion. The products, the FDA ruled, cannot remain on the market in their current form. In response, some partygoers rushed to stack up on Four Loko before the ban went into effect. Four Loko, for its part, has released a new version of the drink, which now contains no caffeine. Sales of the new product, however, have been comparatively poor. One of the beverages caught up in the FDA crackdown is Moonshot ’ 69, a craft beer produced by tiny New Century Brewery, a one- person company run by Rhonda Kallman, a co- founder of Sam Adams. Because Moonshot ’ 69 contains about 69 milligrams of caffeine, the FDA will no longer let Kallman produce it. That’s because the caffeine was put directly into the beverage and not naturally occurring ( as it would be if, say, the beer were brewed with coffee). But Moonshot ’ 69 bears little resemblance to high- alcohol, high-caffeine malt beverages like Four Loko. It’s only 5 percent alcohol and comes in standard 12- ounce beer bottles, and no one would mistake it for an energy drink. “ This is prohibition,” complains Kallman. “ It’s devastating the company, and, as a U. S. citizen, I’m just flabbergasted.” Stuck with $ 25,000 worth of inventory that she cannot sell, Kallman says that instead of outlawing caffeinated alcoholic beverages across the board, the FDA should set parameters for alcoholic bever-ages with caffeine, including those where the caffeine comes from naturally occurring sources. “ Give us a base line,” she argues. “ I’m happy to comply. Regulate, but don’t ban. . . . I’m a responsible marketer who has more than twenty- five years in the business.”
1. Are these drinks as dangerous as the critics maintain? How much of the problem is the caffeine, how much labeling and marketing, and how much is irresponsible behavior on the part of young drinkers? Are companies like Joose and Four Loko being singled out for social problems, in particular, alcohol abuse by young people, that are in fact much wider in scope?
2. Is Peter Mercer correct that caffeinated alcoholic bever-ages serve no “ socially redeeming purpose”? Is that the proper test for determining whether society should permit a product to be sold? What about the fact that there is a market demand for these products?
3. Is the banning of Four Loko and kindred beverages an example of legal paternalism?
4. Should others measures— for example, consumer educa-tion, regulation of caffeine content, changes to product labeling and packaging— have been attempted before banning these beverages?
5. Did the FDA move too quickly or was it necessary for the agency to act swiftly ( in Senator Schumer’s words) “ before more tragedies occur”? Do you think the FDA acted on the basis of scientific evidence or as a result of political pressure?
6. What responsibilities do the manufacturers of alcoholic beverages have? What steps, if any, should they take to see that their produces are not abused? Did Four Loko fall down in this respect? What about Moonshot ’ 69?
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