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.