4. 4
Timeline
Pre 1998
• Market split into three products: Mixer Showers, Power
Showers, and Electric Showers
May 1998
• Rawlinson enters the company
5. 5
Timeline
Pre 1998
• Market split into three products: Mixer Showers, Power
Showers, and Electric Showers
May
1998
• Rawlinson enters the company
1998 -
2001
• Substantial R&D is conducted
7. 7
Aqualisa Quartz
• 3 years of Research and Development
• Invested 5.6 million Euros
• Conducted numerous surveys and tests
• Innovative Breakthrough
8. 8
Timeline
Pre
1998
• Market split into three products: Mixer Showers, Power
Showers, and Electric Showers
May
1998
• Rawlinson enters the company
1998 -
2001
• Substantial R&D is conducted
• Developed remote pressure/temperature control
May
2001
• Launch of Aqualisa Quartz
9. 9
Timeline
Pre 1998
• Market split into three products: Mixer Showers, Power
Showers, and Electric Showers
May
1998
• Rawlinson enters the company
1998 -
2001
• Substantial R&D is conducted
• Developed remote pressure/temperature control
May
2001
• Launch of Aqualisa Quartz
Septemb
er 2001
• Disappointing Sales
11. 11
Small Sales Force
40% of the UK shower market
was still untapped
Plumbers
Resistant to Change
Cautious of Electronic Showers
Wanted Assurance of Reliability
Is greater efficiency better?
Distribution
12. 12
Internal Misalignment
“We’ve got to sell 100-
200 [per day] to break
into the mainstream”
“To sell it, we have to
point out [deficiencies]
in other products.”
“It’s a really niche
product…for homes with
children, elderly, and the
handicapped.”
Henry Rawlinson
Tim Pestell
National Sales Manager
Martyn Denny
Marketing/Sales Director
18. 18
Company Analysis - SWOT
Strengths
1. Relationships with
plumbers
2. Strong emphasis on
R&D
3. Premium brand with top
quality showers
Opportunities
1. 40% of UK homes do not
have showers installed
2. Consumers not fully
satisfied with current
showers
Weaknesses
1. Brand awareness low
among consumers
2. Plumbers distrust
innovation (Quartz)
Threats
1. Competitors catching up
in product quality
2. Market starting to see
brand as overpriced
3. Service levels
deteriorating
22. 22
Aqualisa’s Customers
Aqualisa’s main target market were those from the
standard & value segments
Formed approximately 64.42% of the company’s sales
Aqualisa Shower Sales (2000) 46,212,000.00€
Model Units Sold MSP Revenue Contribution % Contribution
Aquastyle 6,000 155€ 930,000€ 2.01%
Aquavalve 609 60,000 380€ 22,800,000€ 49.34%
Aquavalve Value 34,000 205€ 6,970,000€ 15.08%
Aquastream Thermostatic 20,000 350€ 7,000,000€ 15.15%
Aquastream Manual 2,000 250€ 500,000€ 1.08%
Aquaforce Booster Pumps - - 8,012,000€ 17.34%
24. 25
Importance of Plumbers
Plumber Preferences
Preferred to install a single shower brand
Familiarity with brand, products’ problems
and service from manufacturer
Generally distrust innovation of showers
Switching costs between brands were high
25. 26
Implicit Effects of Quartz
Plumbers earn through no. of hours
worked plus markup from
excavation, materials and shower
Forgone revenue from excavation
Experience for master plumbers served as
a barrier to entry for new plumbers
Plumbers with little or no experience can
now compete with them for jobs
Importance of Plumbers
27. 28
Objectives
Increase adoption rates of Quartz
Convince plumbers about the benefits of Quartz
Increase penetration to distribution channels
Maintain market share of current products
31. 32
Product
Characteristi
c
Definition and influence on rate of
adoption
Quartz
Complexity • The degree of difficulty involved in understanding and
using a new product.
• Slows diffusion.
Easy
Compatibilit
y
• The degree to which the new product is consistent
with existing values and product knowledge, past
experiences, and current needs.
• Incompatibility slows diffusion.
Incompatible
Relative
advantage
• The degree to which a product is perceived to be
superior to existing substitutes.
• Speeds diffusion
Not superior
Observabilit
y
• The degree to which the benefits and other results of
using a new product can be observed by others and
communicated to target customers.
• Speeds diffusion
Hard to
communicat
e
Trialability • is the degree to which a product can be tried on a
limited basis.
• Speeds diffusion
Not trialable
Diffusion of Innovation
Quartz’s product characteristics makes it an inherently slow-adoption product
33. 34
Basis of short term and long
term strategy
1. Target the DIY segment
2. Target the developers
3. Target consumers directly
4. Target premium segment
5. Target standard & value segments
6. Target non-shower users
ST LT
x
x
O
O
O
• Cannibalisation
• High switching costs
• Deeply-rooted culture
and acceptance of
flaws in existing
shower technology
• More time and cost
involved
• Payoffs uncertained
39. 40
Downside
Reduce no. of other channels carrying Quartz
Assuming all premium purchases are made in
showrooms
Showrooms only account for 8.06% of total units of
showers sold in the U.K.
Premium Segment
Electric Mixer Power
Total Units
Sold By
Channel
% of Total
Units Sold by
Channel
DIY Sheds 550,000 80,000 20,000 650,000 36.11%
Showrooms 55,000 70,000 20,000 145,000 8.06%
Trade Shops 330,000 400,000 110,000 840,000 46.67%
Other (Electrical Wholesale) 165,000 0 0 165,000 9.17%
Total Units Sold 1,100,000 550,000 150,000 1,800,000
40. 41
Short-term Marketing Mix
• Retain high retail price
• As a new brand
entering the market, a
high price can signal
quality and premium
standard
• Ensure that
showrooms fully
showcase the
attractive design
• Associate the Quartz
brand closely with
Aqualisa
Aqualisa: “Premium brand” with “top quality showers”
• Only 25% of
showrooms carried the
Aqualisa brand
• Expand sales force to
develop new
customers
• Incentivise showroom
“consultants” to
promote Quartz
42. 43
Basis of short term and long
term strategy
1. Target the DIY segment
2. Target the developers
3. Target consumers directly
4. Target premium segment
5. Target standard & value segments
6. Target non-shower users
ST LT
x
x
O
O
O
43. Non-shower usersStandard & value segments
Market
readiness
Plumbers
• Better understanding of
Quartz’ ease of installation
Opportunity in the standard, value and non-users
segment in the long run
End consumers
• Perceived value
• Cost
End consumers
• Solves previous problems
of using a shower
44
• 840,000 units
• 47% of UK Shower Market
• 40% of UK homes do not
have showers
Market
size
45. 46
• Gradually reduce retail
price (market
skimming)
• Publicize installation
cost savings
• Introduce product line
extension
• Reach out to more
trade shops
Target plumbers:
• Give them the Quartz
as a gift
• Give them a product
guarantee
Long-term Marketing Mix
Standard &
value
segments
Non-shower
users
Long term
strategy:
46. 47
• Gradually reduce retail
price (market
skimming)
• Publicize installation
cost savings
• Introduce product line
extension
• Reach out to more
trade shops
Target plumbers:
• Give them the Quartz
as a gift
• Give them a product
guarantee
Long-term Marketing Mix
Standard &
value
segments
Non-shower
users
Long term
strategy:
47. 48
• Gradually reduce retail
price (market
skimming)
• Publicize installation
cost savings
• Introduce product line
extension
• Reach out to more
trade shops
Target plumbers:
• Give them the Quartz
as a gift
• Give them a product
guarantee
Long-term Marketing Mix
Standard &
value
segments
Non-shower
users
Long term
strategy:
48. 49
• Introduce production extension line, “Quartz Basic”
Product
Save costs on non-crucial
aspects to lower price
Reduce channel conflict
Leverage on brand
awareness and familiarity
among plumbers
Key considerations Course of action
• Manufacture more
basic version
• Launch new product
line
49. 50
• Gradually reduce retail
price (market
skimming)
• Publicize installation
cost savings
• Introduce product line
extension
• Reach out to more
trade shops
Target plumbers:
• Give them the Quartz
as a gift
• Give them a product
guarantee
Long-term Marketing Mix
Standard &
value
segments
Non-shower
users
Long term
strategy:
50. 51
Target the plumbers
• Free Quartz shower
1. Educational value
Easy installation
Superior shower experience
2. Emotional value
• Provide product guarantee for plumbers
Promotion
51. 52
• Gradually reduce retail
price (market
skimming)
• Publicize installation
cost savings
• Introduce product line
extension
• Reach out to more
trade shops
Target plumbers:
• Give them the Quartz
as a gift
• Give them a product
guarantee
Long-term Marketing Mix
Standard &
value
segments
Non-shower
users
Long term
strategy:
53. 54
Recommended
sta
Increase adoption rates
Convince plumbers about the benefits of Quartz
Increase penetration to distribution channels
Maintain market share of current products
Objectives
Problem
identificatio
n
Industry
analysis
Competitor
analysis
Recommended strategy
Short term strategy
Target premium segment
Long term strategy
Target standard, value, non-
users segment
Case analysis
Customer
analysis
Company
analysis
We first begin the analysis by understanding the pricing of the overall UK shower market, and their shopping behaviours. The following table shows the main pricing segments, along with their level of product knowledge, the determinant factors considered by these segments, the main decision maker of shower purchases, as well as the channels in which their selected products are purchased.Probably can freeze this slide.
The information in the case seems to point out that Aqualisa’s main customers are those from the standard and value segments. This can be seen from Figure A of the case, where Aqualisa’s core product offerings across the various types of showers are shown. Among the 7 core products shown, 6 of them fall in the value and standard segments, while only 1 falls in the premium segment. The case then further elaborates that the Aquavalve range are its core products and are the “bread and butter” of the company.
We can also see this from what was presented earlier, Aquavalve products contributed 64.42% of its total revenue. This goes on to further reiterate that current end consumers of Aqualisa products are mainly those in the standard and value segments. These consumers have low product knowledge, and often rely on independent plumbers to recommend or select products for them. Trade shops are counted as their shopping channels because plumbers often frequent them.
It is also important to understand the reasons as to why end consumers purchase showers for their bathrooms. We see that 44% of the time, the reason consumers installed showers was to replace an existing shower in the home, while 25% of the time, showers are installed in bathrooms with no existing showers. For the purchase of replacement showers, we can reasonably assume it is because the existing showers have broken down, hence the need for a replacement.
In continuation to above point, we see the importance of plumbers and their influence in the decision making process of the end consumers of Aqualisa’s products. Referring to Exhibit 4 of the case, we see that for 53% of the Mixer Shower market, the plumber has a significant influence on both the type and brand of the shower to be used by the end consumer. For 73% of the Mixer Shower market, the plumber has a significant influence on the type of shower used.
In continuation to above point, we see the importance of plumbers and their influence in the decision making process of the end consumers of Aqualisa’s products. Referring to Exhibit 4 of the case, we see that for 53% of the Mixer Shower market, the plumber has a significant influence on both the type and brand of the shower to be used by the end consumer. For 73% of the Mixer Shower market, the plumber has a significant influence on the type of shower used.
In continuation to above point, we see the importance of plumbers and their influence in the decision making process of the end consumers of Aqualisa’s products. Referring to Exhibit 4 of the case, we see that for 53% of the Mixer Shower market, the plumber has a significant influence on both the type and brand of the shower to be used by the end consumer. For 73% of the Mixer Shower market, the plumber has a significant influence on the type of shower used.
Now that we’ve identified the problems and the 3C’s of the case, we’ll take a look at the objectives and strategy formed by our team.
In continuation to above point, we see the importance of plumbers and their influence in the decision making process of the end consumers of Aqualisa’s products. Referring to Exhibit 4 of the case, we see that for 53% of the Mixer Shower market, the plumber has a significant influence on both the type and brand of the shower to be used by the end consumer. For 73% of the Mixer Shower market, the plumber has a significant influence on the type of shower used.
Now that we’ve identified the problems and the 3C’s of the case, we’ll take a look at the objectives and strategy formed by our team.
In continuation to above point, we see the importance of plumbers and their influence in the decision making process of the end consumers of Aqualisa’s products. Referring to Exhibit 4 of the case, we see that for 53% of the Mixer Shower market, the plumber has a significant influence on both the type and brand of the shower to be used by the end consumer. For 73% of the Mixer Shower market, the plumber has a significant influence on the type of shower used.
Before we share with you our recommendations, let us understand Quartz’s product characteristics
Easy to understand and useTechnology was not consistent with existing product knowledgeNot perceived to be superior, especially among plumbersExperiential product > Hard to communicateNot trialable
Michelle will elaborate on the Long-Term viability of targeting segments 5 & 6
Michelle will elaborate on the Long-Term viability of targeting segments 5 & 6
Style was a defining factor in choosing which type and brand of shower to purchaseWhile performance and service are taken for granted
Premium customers did not rely on plumbers to make a purchase decision
Premium customers did not rely on plumbers to make a purchase decisionShowrooms contracted with independent plumbers to install the shower
Consumers are less price sensitive > Charge a premium on Quartz > Increase revenue and recover R&D investment more quickly
But we recognise a downside in targeting this segmentIf they want to convince more showrooms to carry Quartz, they need to stop selling Quartz through other channelsAssuming that premium segment shops at showrooms only, the total sales by volume in this segment is relatively low
Underscore importance of ST LT strat2 year lead, after which competitors will…So jason has brought u thru why we wanna … in the STAnd now ill explain to you why we see an opportunity in these 2 segments, in the LT
Opportunity – in terms of Market size and market readinessFor standard and value,Market size is hugeMarket wil be ready by thenFor non shower users,Market sizeMarket wil be ready by then
Down market strretch
Down market strretch
What we’ve done
Distributors are Aqualisa’s direct customers.
Although Quartz seems to meet the needs of these segments
If we were to grow our sales of Quartz in these segments, we need to do so slowly
Pronounced improvement in shower technology that required modest change in behaviourThis option is attractive but not viable in the short-term
Given facts from the case, we do not have information on the reasons