Situation

Aqualisa Quartz, a significantly innovative product developed by Aqualisa, in terms of both cost and

quality, has been facing challenges in the market since its launch four months ago. The product

described by one of the customers (a plumber) is a 'push-fit-connect-you're done' shower and offers

the customers 'what they (the plumbers) want'. Despite the above facts, Quartz has experienced

poor sales and has not met the company's expectations.

Brand awareness was low in the industry, problems were frequent breakdowns, re-installations, and

leaking/stiff valves, besides pressure and temperature inconsistencies, and nearly half the sales

were from replacements. The new Quartz product line is experiencing a very slow adoption process

probably mostly due to the stigma that has remained from other electronic showers that have failed.

Consumers and plumbers do not have much faith in the current quality of existing shower products

much less an electronic version.

The Market

Showers were affected by low pressure and varying temperature of water. Aqualisa sold the electric

showers, one of the solutions, through their Gainsborough brand; electric showers were visible in the

shower stalls and did not solve the pressure problem.

Mixer showers were the other solution. Manual mixers and Thermostatic Mixers were available.

Aqualisa sold the Aquavalve in this segment, it was thermostatic, but could be supplemented by a

booster for pressure. 94,000 units sold at a margin of € 225 if without a booster, total margin would

then be at least € 21.1 million. Assuming all sales is without boosters. Installing a mixer valve meant

excavating the bathroom wall, which was a 2 day job.

Integral power showers combined thermostatic mixer valves with booster pumps, but were

considered less reliable than when installed together. Aqualisa sold Aquastream Thermostatic in this

category. (22,000 units @ € 175, at least € 3.85 million margin, again assuming all sales are

without... [continues]

uartz marketing Case

Quartz Value Proposition

1. Easy to install. Half day for plumbers.

2. Aqualisa‟s good reputation

3. Overcame the problem of low pressure with pump

4. Overcame problem of fluctuation in temperature

5. No bulky boxes. Can be hidden

6. Stylish. Electronic lights and buttons

7. Easy to use. One touch control.

8. Safe for children

9. Elderly didn‟t have to fight with stiff values

10. Easy to sell in showrooms as easy to demonstrate.

11. Awarded top prize and good press

Challenges

1. Plumbers reluctant to switch because uncertain of performance of new product, second visit.

2. Selling only 15 units and projected to 30-40 in 6 months. But needed 100-200.

3. Distribution

a. Trade Shops – Focused on demand and no time to explain benefits of new products

b. Showrooms – Easy to demonstrate but only premium customers

c. Do-it-yourself Sheds – Association may undermine the value and need to give discounts

d. Direct to consumers – High cost 3 million to 4 million euros

e. Plumbers – Build loyalty, explain benefits, service more consumers. 20% + 25+ 28

f. Developers – time lag

4. Competing with existing products while need to focus on increasing market share

5. 20 persons concentrating on 90% on maintaining existing accountsv

As defined by Wikipedia, a value proposition is “a promise of value to be delivered and a belief from the

customer that value will be experienced…developing a value proposition is based on a review and analysis of

the benefits, costs and value that an organization can deliver to its customers.”

One useful approach to evaluating the value proposition of the Aqualisa Quartz product line is to assess the

needs of the major segments (both pricing and channel segments) in the shower market, and then reviewing the

benefits and costs that the Quartz offers each of them, assuming current price points.

Segment | Needs | Quartz value = Benefits - Costs |

| | Benefits | Costs |

Premium | - High performance* & service- Prestige | - Efficient and reliable product- Stylish design-

Upgradable with „body jet‟ etc | - Not exclusive to certain channels |

Standard | - High performance* & service- Good design- Advice from experts (ie plumbers) | - Efficient and

reliable product- Safety- “Neat” design, box not visible in the shower | - More expensive per unit (although

may be fully offset by cost savings for installation) |

Value & DIY consumers | - Convenience & Value for money- Ease of installation & reliability | - Efficient and

reliable product- Easy to use | - More expensive per unit (although may be fully offset by cost savings for

installation) |

Developers | - Value for money & performance*- Reliability- Flexible install and good design | - Efficient and

reliable product- Less expensive & flexible product installation | - More expensive per unit (although may be

fully offset by cost savings for installation) |

Plumbers | - Price-agnostic- Familiarity- Ease of installation & reliability- Good service from manufacturer | -

Speed of installation: 0.5 not 2 days (hence cost benefits, apprentice labour and higher volumes) | - Unfamiliar

product- Uncertain reliability

AQUALISA - COMPANY OVERVIEW

Aqualisa is a shower manufacturing company in the U.K. They make electric, mixer and power showers. They cater to people in all the three segments namely Premium, Standard and Value. They sell electric showers under the name 'Gainsborough'. Rawlinson took over as the managing director of Aqualisa in 1998. Aqualisa was having a 25% net return on sales and was having a growth of 5 to 10% in mature market when Rawlinson took over. Aqualisa has come out with a new product by name Quartz. Quartz is one of its kinds in the shower market. It has

been developed over a period of three years with a huge investment of � 5.8 million. Rawlinson, the managing director of Aqualisa, aims at a sale of 100 or 200 units a day from the current 15 units a day.

MARKET SHARE OF AQUALISA

As per the case study,

The major player in the shower market is Triton having sales of 30% of the total sales of showers in UK. The Gainsborough brand of Aqualisa is the third major player in the market

followed by Aqualisa. Aqualisa's leads the market in mixer shower sales and is third in powers showers. It is fourth in the overall market. Its power showers are Aquastream Manual and Thermostatic. Its mixer showers are Aquavalve and Aquavalve 609.Aquavalve 609 is the best selling shower of Aqualisa.

MARKETING PLANNING

Malcolm McDonald (2008) defines Marketing Plan as follows in his book

"It is a logical sequence and a series of activities leading to the setting of marketing objectives and formulation of plans for achieving them."(Chapter 1)

A marketing plan essentially consists of

1. SWOT Analysis

2. Marketing Objectives

3. Marketing Strategy

Further in this report, we discuss the marketing plan of Quartz

The major issues lying in front of quartz were

1. Quartz made a sales of only 15 units a day. Whereas Rawlinson was looking at selling 100 units a day. Rawlinson's managers tell Quartz is a niche product. Now the challenge is to bring quartz into the mainstream.

2. The plumbers are reluctant to try new electronic products. Even though plumbers appreciated the product at the introduction they were not ready to install it fearing it might fail like the electronic in 80's.

3. The third issue was Aqualisa had low brand awareness among consumers. So the consumers did not have much knowledge about the breakthrough product.

Analyisng the Strength and Weakness of Quartz

Strength:

The quartz was a breakthrough product in the shower market. Till then, manufacturers only recycled their main product once in five years. No shower had used technology as much as quartz did.

Quartz could be installed in half a day whereas the other showers took 2 days for installation. Moreover, the shortage of plumbers' problem could be addressed by the quartz. The plumbers could attend to more houses if they saved time and the consumers could also save money if

they had a plumber working for only half a day. Plumbers charged between �40 to �80 an

hour. Calculating plumber's wages at a rate of �60 per hour, a consumer saves a lot through quartz.

Even if the plumber raise their wages level, the product is still beneficial. A plumber could also attend to more clients.

Most showers in UK required excavation of wall. This problem was also addressed by quartz. Quartz was very simple to install and it only needed a small place to place the remote processor.

Quartz was also more reliable. The fact that they looked great is evident from the initial sales figure. The quartz was getting popular among showroom visitors. It was more suitable in houses with kids and older people as it did not require any adjustment every now and then during a bath and there was no variation in pressure of water. The quartz on the whole had a lot of strengths which when marketed well could really make this breakthrough product a huge success.

Weakness

The sales team of Aqualisa spent 90% of their time on existing customers and had very less time on developing new customers. Moreover, the sales team was smaller in size. There was only 20-person to maintain existing as well as develop new customers.

Aqualisa was not very popular with customers directly. Only triton managed to build awareness at consumer level so far. As Aqualisa was not popular with consumers, they were not aware of this wonderful product.

There could be one more challenge for Aqualisa if quartz entered mainstream. Quartz might start competing with the core product of Aqualisa. But worked out the right way, this weakness could become strength.

Opportunities

The biggest opportunity quartz has at the moment is that there is no similar product in the market at the moment. If they tap the market now, they could become market leaders.

Lots of replacements of showers happen in the UK. Quartz could tap this segment to improve their market share.

The quartz has used technology to the core in a shower like no one has ever been done before. This makes it the USP of Aqualisa. And there is a good % of new business which can be developed .

Quartz is THE PRODUCT that could really take Aqualisa popular in every segment if the marketing strategy adopted is really efficient. Discussed below are strategy which could make Aqualisa MARKET LEADER.

Objectives :

Rawlinson aims at selling at least 100 units per day. From the SWOT analysis , we can see that Aqualisa has opportunities of improving sales by developing new customers. Aqualisa has its presence only in 25% of showrooms. The goal should be to increase their presence in more

number of places. Their presence in tradeshops is also not significant. If they make their product more popular among plumbers, it is essential that they work on their channels of distribution.

Marketing Strategy

According to Kotler et al, " The logic by which the business unit hopes to achieve its marketing objectives"(Page 156, Chapter 3) is Marketing Strategy. In the marketing strategy, the company has to decide the segment it targets, position the product in such a way that it captures a place in the mind of the customers and differentiate its product from its competitors.

According to Dana Vanden Huevel

"Price segmentation is the practice of offering different prices to different customer segments with an eye on maximizing the profitability of each segment." .Based on this kind of segmentation, the UK shower market could be categorised into three namely : Premium, Standard and Value. The premium customers shopped in showrooms and gave importance to beauty. The standard insisted on performance and the value customers looked at cheaper products.

Consumer Behaviour

Further, based on installation of showers, customers can be classified as shown.

Kotler et al points out that "By going after segments instead of the whole market, companies have a much better chance to deliver value to customers". (Chapter 9, Page 420). The next step is to target the segments which Quartz can best satisfy and go ahead in the market.

Aqualisa's best "target market" would be the premium and standard category. As per the case study, Quartz has had a good response in showrooms. People have loved its aesthetic. So, Aqualisa sales team has to concentrate in introducing quartz in new showrooms. But to enter mainstream, premium customers alone will not be sufficient. Aqualisa has to target the standard users as well. The features the standard customers look for in a shower namely: performance and service, both were best satisfied by quartz. Moreover, Aqualisa was coming out with more additional features for quartz. So, it is very important that quartz enters the mainstream failing which such a great innovation may not reach a wide number of consumers.

Unlike the other traditional showers which take time to warm up and require adjustment every now and then, quartz has an automatic temperature control. Quartz has features which is lacking in its customer's product. Positioning the quartz compared with its competitor's in the market would improve its sales substantially.

Marketing MIX

Pricing is the most important of the product mix. According to Kotler,Amstrong, et al "To increase the pricing power, many companies add value added strategies. Rather than cutting prices to match competitors, they attach value added services to differentiate their offers and thus support higher prices". Rawlinson in the case study has given an option of reducing the

price. But for a unique product like quartz price need not be reduced. Rather, quartz can be marketed highlighting the cost consumers can save on plumbing and excavation.

Promotion Mix

Kotler, Armstrong et al "Marketers can choose from two basic promotion mix strategies - push promotion or pull promotion."(Page 715).

Push Strategy

Kotler,Armstrong et al"A promotion strategy that calls for using the sales force and trade promotion to push the product through channels." The push strategy can be used to target consumers who take independent decision of the plumber. As per the case study, a good 27% buy their showers without consulting the plumber. Among these , the percentage which buys its showers from showroom can be targeted by adopting this strategy.

Pull Strategy

Demand

From exhibit 4 of the case study, we understand that 83% of shower purchase decision in the UK is done by plumbers. So marketing Quartz to the plumbers should be given priority. Rawlinson mentions in the case study that during the initial meeting with plumbers, plumbers had appreciated the product but it did not turn to sales. This is because plumbers are wary of innovation. The sales team should hold more fact-to-face meeting with the plumbers.

Meetings with plumbers who have already installed quartz could be arranged so that plumbers who are reluctant to install Quartz can get confidence on the product. Quartz has other advantages as well. Master plumbers could send their apprentice to fix Quartz shower. Master plumbers are shortage in the UK. The average waiting time for a plumber is reduced if they install quartz. If a plumber can install 10 ordinary showers in 20 days, he can install 40 quartz in the same duration. The sales team has to target the plumbers with the benefits of quartz and help the plumbers overcome their fear of electronic showers.

Kotler, Armstrong et al "Sales promotion includes a wide variety of promotion toold designed to stimulate earlier or stronger market response" (Page 799,Chapter 17).There are various types of sales promotion technique available as per Kotler, Armstrong et Al. The most appropriate among the methods for Quartz is "Point-of-Purchase Promotions". Kotler,Armstrong et al, "POP include displays and demonstrations that take place at the point of purchase or sale" . If the customers at showroom are given a POP about Quartz, they will be able to appreciate the product which in turn would turn to sales. Similarly, if the plumbers get to see the easy installation of Quartz, they will start using the product more.

Kotler , Armstrong et al "However great the design, however grand the plan, it is a sale that makes a dream a reality".(Page 779, Chapter 17) There is no point in having made such an innovative product as Quartz if it does not reach a big number of people. The fear of plumber towards electronic items did not allow them to go ahead with the Quartz even though they appreciated its features. Aqualisa's sales team concentrated mainly only on maintaining existing

accounts and very less time was spent on developing new customers. There was no follow up on the plumber's meeting after the one that was arranged in the initial stage.

Rawlinson gives three options to improve sales. Targeting consumers directly will increase the advertising budget heavily. The profit reduces very much if huge money is spent on that. Moreover, very few consumers make their own decisions on showers. So targeting the consumer directly will give slow returns and is not the best option at the moment.

"Brands are viewed as the major enduring asset of a company, outlasting the company's specific products and facilities"(page 521, chapter 11). As rightly pointed out in the case study, if quartz enters the D-I-Y market, it can never bring back its brand again. "Brands are more than just names and symbols" So targeting the D-I-Y market just because sales have to be improved is not the right option. Quartz may be sold more, but its segment would change completely.

The third option is targeting the developers. Out of the three this is a better option but can only be second to the option of targeting plumbers directly. Developer installation is only 20% of the total market and moreover only developers building luxury houses went for costlier products. Changing the entire developer section would take time and in the two years time frame very few sales would be made. Whereas the independent plumbers comprised 54% of the total market and targeting them would help improve sales. The strategies discussed above will help in bringing the plumbers section.

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