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Heliflex Cable

Situation Analysis Heliflex Cables is Ludhiana based manufacturer of electrical cable, the market for which is having more than 10 well established players vying for greater market share. The company has got 20 distributors in north India, its main market, who service about 500 electrical shops. There is intense competition in the market for cables and several companies have started extending credit to retailers. Heliflex is not able to create product differentiation on basis of any superior quality. Thus Heliflex cannot command any sort of premium/bargaining power . Distributors are multi product distributors hence are not only dependent on it . Retailers in this case has maximum influence on buying behavior of the consumers . The company is not in a position to extend any sort of direct credit to its distributor. To garner market share Heliflex has come up with following new scheme as per which distributor will be billed at two rates. i) ii) Distributor to be billed at existing rate of 15% less than the list price. Distributor to be billed at 16% less than the list price and the dealer to extend two weeks credit to retailer.

Six types of behavior pattern emerged and marketing manager was thinking what type of influence strategy should be used. As a company how it can use its power ( if at all it can wield in above explained situation) to bring desired behavior from its distributor is what we are trying to analyse. Power is a type of relation in which one party A may utilize some "force" to overcome the resistant of another party B in order to alter B's behavior in accordance with the desires of A. The "force" that A applies on B is suggested to accrue from the bases of power that A owns or controls. In our case analysis A is the company Heliflex & B represents the distributor.

Bases of power may be transformed into influence strategies A uses to affect the behavior and/or decisions of B. That is, the influence strategies represent the "means" or "instruments" A uses ot exert power over B . The use of some influence strategy by A to alter the behavior of B does not guarantee that the desired behavioral change will occur. Several attempts or interactions may be necessary before the desired behavioral change occurs, and the desired behavioral change may never occur if B's resistance remains too strong. It will depend on B's readiness to respond. In case of Heliflex ,the company (A) may have to conduct as above with its distributors (B) and one or more influence strategies to be used to have the desired behavior ,which however cannot be guaranteed but can be tried/reinforced. Factors that affect B's resistance may include B's dependence on A. The dependence of B on A is defined here as the extent to which B relies on A for obtaining its goals and objectives. When B has a large stake in a relationship (i.e., a significant proportion of sales and profits accrue from the relationship), B is more dependent on A and is more likely to be tolerant of demands made by A .Furthermore, when rewards achieved in a relationship are greater than those expected in another relationship, or when few feasible alternative relationships offering comparable rewards are available, B is more dependent on A and is more tolerant of the demands of A . A channel member who is more tolerant of demands made by a channel partner is less resistant to those demands and, hence, more willing to respond to demands. Channel member B's readiness to respond to a request by A is greater when B is more dependent on A than when B is less dependent on A. As per the case distributors(B) are less dependent on Heliflex (A) however as the data on their total sales, turnover,percentage of Heliflex cable sales over total sales in case of distributors is not mentioned this cannot be said conclusively.

Rewards and punishments can be effectively targeted to a specific channel member and to a specific behavior or performance. Expert, referent, and legitimate bases, in contrast, are less flexible and often unrelated to specific behaviors. Channel member B's readiness to respond to a request by A is greater when A uses a reward or coercive base of power than when A uses an expert, information, or referent base of power. In this situation, B is likely to be highly motivated to comply with A's request because of a strong desire to maintain the relationship and because of the incentive (disincentive) made contingent upon this compliance. When B is less dependent on A, the use of these same tactics by A may carry an ingratiation overtone in that B's ability to leave the relationship dulls the impact of the rewards and coercion, and B's readiness to respond will be much lower . In contrast, A's use of an expert, information, or referent base of power implies recognition of B's goals and value as an exchange partner. It promotes feelings of trust and is more likely to result in high compliance and solidarity . Dealers showing pattern type -1 can be covered under this. Attitude Behaviour Framework

Pattern1 These are the distributors who have expressed total acceptance of scheme company and placed reasonably large purchase order as per the new rates. They fall under cell1. We just need to follow the reinforcement process wherein behavior and psychological reinforcement is required. We just need to discuss general business isuues with the distributor principal which touches upon the issue concerned as said in the case. Strategy 8 of sending letter of thanks from MD will also help in reinforcement process. Pattern2 These categories of distributors are not confident of the channel program but they accept give purchase order under new scheme. They fall under cell2. We need to follow moderate rationalization process which requires attitude change. We need to follow strategy number 2 & 8 as mentioned in the case. Confidence boosting measures & communication for removing any doubts about effectiveness is required. Pattern3 These are the distributors whose attitude is pessimistic towards the channel program but gave the purchase order under new scheme. They fall under cell3. Heliflex need to follow radical rationalization process and change their attitude .Strategy no 3 can be helpful here. It is to be made clear to these distributors that non participation in the program could lead to non attainment of its goals as reaction of the retailrs would not be very favorable so that they keep on ordering on the new terms. Pattern4 These are the distributors who fall under cell4. They are supportive of the scheme but their financial constraint has prevented them from giving credit to the retailers. They have issued purchase order under old schemes only. Such distributors needed to be induced and strategy no 11 of promise made for favor in future can hasten the process of inducement.

Pattern5 These are categories of distributors who are not sure about the channel program and not issued purchase order under new scheme. They fall in cell5. Strategy no 6 & 9 will be helpful in this case They may be communicated that participation in channel program is a channel norm. Heliflex can also think of imposing a form of financial penalty for non participation.

Pattern6 These are the distributors who fall under cell6. They are totally against the scheme and are not agree to participate in the scheme. Heliflex needs to follow radical confrontation. First strategy no 13 & then no 12 can be adopted for such dealers. Such distributors needs to be communicated in no uncertain terms to face dire consequences if they dont abide by the company.