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Market Analysis
Company Analysis
– Highly profitable (GMar 47%)
– No 3 in the market
– Capability to Innovate
Competition
– Very Complacent
– Breakthrough innovations are
rare; More “face lift” centric
– Stable market share, high
margins
– Status quo orientation
Collaborators
– Plumbers
– Trade Shops
– Show rooms
– DIY Sheds
Consumers
• Dissatisfaction with showers is
high, but switching is difficult
due to:
– It‟s a „sight unseen‟ product, as
one can‟t experience before
purchase
– Consumers lacks expertise
hence more uncertainty while
purchasing
– Inconvenience in installation
– Costly purchase and customers‟
understanding of costing is
fuzzy
– Plumbers have more say than
the consumers themselves
Consumer Segments
Premium Standard Value/DIY
Likely type of
purchase
Voluntary Grudge Grudge
Likely motivation for
purchase
Renovation (New
penetration or 2nd
shower)
Existing shower has
broken down
(replacement
shower)
Existing shower has
broken down
(replacement shower)
Shower Criteria Stylish design
“WoW”
Good performance,
plumber provides
installation services
Price / Convenience;
No Excavation
Price point Premium price Fair price Cheap price
Tolerance for
inconveniences
High Low Zero
Preferred channel Showroom Independent plumber Independent plumber
or DIY shed
The Quartz
• Potentially disruptive innovation
• Challenge is to achieve critical mass in
sales
• „Make-or-Break‟ time for quartz
• Remaining niche would be a major
disappointment for the company
• It is at the early stage of the classic
diffusion curve (S-curve).
The Quartz‟s Value Proposition
• For Consumers
– Superior to existing products
– Consumers „fell in love‟ during trials with products outstanding performance, elegant design, and ease of use.
– Called “too good to be true”
– Saving of at least $875 for average consumer
– The problem is consumers are unaware of the product.
– Even awareness could create appreciation of higher cost is not sure
• Without Quartz
Aquavalve 609 $715 +
Aquaforce pump $520 +
2 days work
@ 60 / hr $960
which means $2195 TOTAL at least
plus excavation costs and other
materials and 2 days of
inconveniences
• With Quartz
Quartz pumped $1080 +
0.5 days work $240
which means $1320 TOTAL at least
plus No excavation; 1/2 day of
inconveniences; better
performance; Ease-of-use; More
stylish design
The Quartz‟s Value Proposition
• For Plumbers
• Since it takes 1/4th of the
time to install each can do
more business given the
shortage of plumbers
• Plumbers can send their
apprentice as the
installation is so easy,
creating opportunities for
incremental business for
them.
• Lifetime value for plumbers
One plumber 40 -50 showers / year
Each shower contributes about $ 310
i.e., $13,950 per year
A plumber tends to stick with the same
product for many years
Imagine five years:
LTV $ 69,750
The Big Picture: Organizational Transformation
• Rawlinson‟s Long Term Vision for the firm
– Given eroding points of differentiation and poor perception he adopted more offensive market position.
– Putting together development team; developing field testing capabilities; putting in place market feedback mechanisms; testing facility; more engineers…6 to 20; and nine patents are some of the new competencies acquired in recent times.
– Long term goal is to overhaul business model of the firm to make way for ongoing new product development and the efficient marketing of a steady stream of innovative products.
• Rowlinson is transforming Aqualisa into an innovation-focused firm.
• The idea is to build a portfolio of well differentiated brands that will appeal to different segments of the market and allow Aqualisa to „Milk‟ the maximum value out of each product over the course of its lifecycle.
The Marketing Plan
• Out of the three options outlined DIY and developer options are
unappealing as targeting these segments would leave too much
money on the table. As these are both discount channels (price
sensitive).
• These are not attractive in the long term.
• Direct to consumer option is unattractive because of efficiency
issues.
• What should Aqualisa do?
• Showrooms seems to be the early adopters channel!!!!
• Focus on Plumbers….??????
The Marketing Plan
Aqualisa Wants…. The Showrooms….to stimulate the diffusion process Are the “early adopter channel”
To convert plumbers Outsource installation to independent
plumbers, who must install whatever
product the customer has selected
To extract maximum value for the
product
Charge a premium price to price-
insensitive consumers
To educate the consumer about the
product benefits
Offer consultative selling, point-of-
sales service, and show-and-tell
displays to „wow‟ the customer
To build a reputation as an innovator Tend to embrace innovation; it is a key
point of differentiation for them.
Ingredients of a Strong Marketing Plan
• Place
– The most obvious channel fit would be showrooms, so the plan must focus on
cultivating this channel.
• Product
– The plan must position the Quartz in the context of Aqualisa‟s overall strategy of
maximizing value extraction over the PLC using channel placement, pricing and
brand labeling as managing the obsolescence process.
• Promotion
– The plan must recognize and respond to the fact that building brand equity would
not only be economically inefficient for aqualisa, it would also require
competencies which they don‟t have at present.
• Price
– The plan must recognize that Quartz should be priced such that ROI can be
maximized as well as position the company for the future stream of premium-
priced innovations. It should also anticipate cannibalization of existing product
lines and consider change in both price and volume to maximize contribution.
Your TakeawaysDispelling the Marketing Myths
• MYTH 1 : It is easy to sell a great product !!!
• Not necessarily true, as the case illustrates.
• Good product can fail, if consumer don‟t recognize the value.
• Status Quoists rules, and are well entrenched
– Mythe 1a: It‟s tough to sell a bad product.
• In markets characterized by complacency, inertia and consumer
dissatisfaction one can still sell a product with high failure rate (as in case of
Aqualisa).
• Despite having high marins, no one is under cutting…reason…they don‟t
have killer instinct and they SIMPLY LOVE Status quo
• MYTH 2 : Brand Equity equals Brand Power !!!
• Not necessarily true, specially in markets where loyalty is directed towards
products rather than suppliers.
• Loyalty may not be transferable necessarily.
Your TakeawaysDispelling the Marketing Myths
• MYTH 3 : Innovations tend to diffuse linearly, with early adopters
leading the way !!!
• Not necessarily true, in all the cases.
• It may follow a hub and spoke pattern, the challenge is to identify critical
nodes in ecology of the market. (as plumbers in this case)
• These nodes some times are deeply entrenched in their behavior pattern
and are highly resistant to change or adopt.
• MYTH 4 : The easiest way to go to market is the best way to go to
market !!!
• Planning is everything, Plans are nothing.
• Process and details are important and there is no short cut to success (in
the case DIY or developers seems obvious choice due to efficiencies, but
not the best one as the facts suggests).
