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Heliflex Cable: Situation Analysis
Heliflex Cable: Situation Analysis
Situation Analysis
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.
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.
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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.
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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.
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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.
Pattern2
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.
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.
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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
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.
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