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EXECUTIVE SUMMARY
The question is how to reach the target of selling 100 to 200 units per day of the Aqualisa’s Quartz. The
marketing strategies are thoroughly analyzed and the loop-holes have been spotted. The product lacks
proper promotion as it has not reached to the customers and plumbers directly. People are unaware of
benefits of the Quartz. It is a complete product without the short-comings of other showers.
It is recommended that the marketing and sales department should target plumbers, trade shops and
showrooms as by doing this the product can be popular. Also, advertisement is an alternative to make the
product known to the customers directly. But targeting developers is not the good idea as they ask for
high discount rates i.e more than 50%. This is not feasible for the company as it will incur losses.
Furthermore, lowering price by maintaining their profits and quality of the product can be a good strategy
as it will attract the customers.
Conclusion
The report is followed by appendices at the end which gives an elaborate view about the company,
markets, consumers and the product analysis. We will like to conclude that Quartz is undoubtedly better
product than the electric, mixer and power showers. Once it is popular with the customers it will be a hit
product and it can take Aqualisa to new soaring heights making it one of the highest selling companies.
The need of hour is to revise the marketing strategy only.
INTRODUCTION
Products
Aqualisa sold mixer valves under the name of Aquavalve 609 and selling 94,000 units per year making it
the top-selling shower (See table 1). Apart from this Aqualisa produced “power intergral showers” named
Aquastream Thermostatic which offered a thermostat to control temperatures combined with booster
pump. 22,000 units of this product were sold in 2000 making it top-selling product in this genre (Refer
table 1).
Problem
Initial issue
UK showers were facing two major problems that are: low pressure and fluctuations in the temperature.
These problems occurred in electric showers (sold by Aqualisa under the name Gainsborough) and mixer
shower valves. Even though boiler is installed in the electric shower to give desired temperature but it has
a poor water flow. Mixer shower valves are better than these electric showers because in addition to
temperature controlling valves a booster could be added to increase water flow. But mixer valve and
power integral showers faced installation problems as former requires excavation of the bathroom wall
and later is a very bulky product. Moreover, plumbers consider mixer valves more reliable than the power
showers.
Introduction of Quartz
Quartz innovation in May 2001 is a breakthrough in the shower market. After three years of
development—during which the company spent 5.8 million—the result was a radically different kind of
shower (called Quartz) that cost the company about €175 to €230 to make. It is designed to meet the
consumer needs which earlier were not met by electric shower and mixer valve that is good pressure at
stable temperatures. It is very easy to install as its size is of a shoe box and plumber has to drill a single
hole into the ceiling above the shower.
Issue
In spite of these benefits and being awarded best product in Bathroom Expo in London this product could
not carve a niche in the market and sold 30 to 40 units per day instead of 100 or 200 units per day.
Trade Shops
However, trade shops carry products of all types and brands and their direct customer are plumbers. In
table 8 we can clearly make out that these shops contribute to highest sales of the showers. Aqualisa
brand is available in 40% of trade shops. These shops focus on right products that are in demand as they
cannot learn features and benefits of the 45,000 items available in market. However, a low sale in Quartz
is attributed to insufficient knowledge about the new products. The trade shops are interested in selling
the existing products as they are unaware about the Quartz benefits and cannot afford to learn its
features.
Do-It-Yourself
There is Do-It-Yourself market in UK who shop at large retail outlets that catered to them. These
customers buy inexpensive product that are easy to install. Electric showers are hit selling product under
this channel as 70% of DIY outlets offer gainsborough product of Aqualisa making it second best channel
of distribution. We analyse that the Quartz product is not introduced under this channel.
Developer Market
Thirdly there is a developer market in UK. The developers prefer a reliable, sophisticated yet not too
expensive product. So Aqualisa re-designed Aquavalve into Showermax to meet developer’s needs.
Since new buildings already had high pressure systems built within, so Showermax delivered high
pressure with Aquavalve technology at lower costs. 20% of mixer showers are sold by developers. We
see that Developers have shown a reluctance to spend money on conventional Aqualisa products
because they feel our products to be premium brands and Quartz with its price being €850 does not fit
their needs. Moreover, company is not ready to offer discounts for this product.
Showrooms
Other means of distribution is showrooms. Various products of different designs and brands are displayed
and customer can select through demonstrations. 20% of market shower sales were made through
showrooms in 2000. However, we see that this channel is not approached effectively for promoting
Quartz. If we concentrate on showrooms then we can reach good sales target.
Plumbers
Apart from these channels the very important source of distribution are plumbers. It is known that most of
the customers are influenced by plumbers to install shower. Aqualisa itself has the group of plumbers who
are faithful toward the company. Pestell, however, noted that given the conservative nature of most
plumbers, “Adoption is a long, slow process. It takes time.” They don’t rely on new product as they trust
old products about which they are experienced. We have analyzed that less time and efforts are made
towards educating plumbers about the Quartz.
RECOMMENDATIONS
Despite being the top innovations in the shower industry, Quartz didn’t show significant sales. So the
need of hour is to change the marketing strategy. The strategy has to be redefined as to increase Quartz
sales without incurring high advertisement costs. The first step is to change the company’s notion that
increases in the sales of Quartz will not affect the sales of other mainstream products of Aqualisa.
Targeting the customers: We recommend that customers can be targeted directly through
advertisements. Hoardings and brochures can be used to make people aware about the product.
They are comparatively cheap means of promotion which are feasible than the TV advertisements.
Rawlinson’s idea of large scale campaigns is not feasible.
Targeting Do-It-Yourselfers: A second alternative was to target the do-it-yourself market. Aqualisa
was currently selling its Gainsborough line to this market. The risk, as Rawlinson pointed out, was
that “once you show up in the DIY sheds, you can’t climb back out. You have to be careful about
associating your premium brand with your discount channel.” Electric showers were their leading
product and if premiums can be offered for the Quartz then this product can work in this market. In
addition, if Aqualisa could get its partners like B&Q to help push the product the need for expensive
consumer advertising can be totally avoided. So we feel that this strategy can work to increase
sales of the Quartz product.
Targeting Developers: Rawlinson’s another alternative was to target the developers more
rigorously as they can sell lot of showers and familiarize the plumbers also about the product. But
we recommend that this strategy may not work as the developers look for inexpensive products and
demand high discount rates. The company does not feel like offering high discount rates for this
break-through product.
Lowering prices: Other alternative one can think is lowering the price. From table 2 we can see
that the production costs of the Quartz vary from €175 to €230. The company further sell at €450 to
€575 to the channels like trade shops, developers, showrooms,etc. So there is margin of €275
to€345. Thus, for initial period the company can announce offers or premiums to attract the buyers.
This strategy can be considered by keeping lower prices.
Targeting trade shops: This is the most important channel of selling the product as discussed
above. We recommend that the company focus on them by promoting their product, its benefits and
give them lucrative offers. This will encourage them to sell their product to the plumbers (who are
their customers) and thereby increase sales of the Quartz.
Targeting showrooms: Another alternative is to sell this product to the showrooms. We can get
displays around the country and everyone can view its benefits through demonstration. This way the
product will attract the customer and can become a leading product in the market. It can furthermore
cut the advertisement costs.
Targeting plumbers: We believe that almost everyone takes the plumber’s advice on which shower
of which type or brand is fitted in the bathroom (see chart 2). So it is important to target the
plumbers and make them aware about the product. Apart from the existing company’s plumber’s
demonstration should be given to new or other plumbers on the fitting of Quartz. We know that
Quartz’s fitting is only 2-3 hours job and doesn’t require as much labor as in other showers this will
feature will attract the plumbers once they learn about it.
CONCLUSION
We feel that three year hard-work and 5.8-million-euro investment should not go waste. Moreover, it is a
revolutionary innovation in the market. Only a strong market strategy is required to boost up the sales and
this product can become a hit.
APPENDICES
Aqualisa being one of the largest-selling companies in the shower products, it constitutes 18% of the
market sales. Gainsborough and Aquavalve 609 are its leading products. Once Quartz is introduced it will
attract customers with its benefits and elegant look.
Situational Analysis
The current scenario is that the Mainstream products are sold through channels of trade shops,
showroom, developers, do-it-yourselfers. Plumbers buy from the trade shops directly who are the
installers and contribute to the major sales as people take their advice. The situation after the innovation
of Quartz calls for the new marketing strategies to increase the sales of the new product.
From the below table, we can see that out of 18,00,000 showers sold in UK in 2000, Aqualisa sold
325,500 showers which constitutes 18% of the market share. Aqualisa is selling 180,000 units of electric
shower under the name of Gainsborough and 94,000 units of mixer showers under the name of
aquavalve. Moreover, Aqualisa is the second largest selling product of mixer showers in UK in 2000.
Table 1
Aqualisa being a renowned company has now introduced new product Quartz to meet the customer’s
needs. With poor marketing strategy the product could not pick-up sale targets. However, targeting
customers, trade shops, developers, showrooms, DIY markets and plumbers this problem can be solved.
It is mentioned above that Aqualisa consists 18% of market sales in 2000 in UK. However since current
data is not available with Quartz sales we cannot calculate market size. However, with this break-through
in the shower market we expect a significant rise in the sales of Aqualisa.
Also Aqualisa’s new product, Quartz also gives subsequent high margins to retailers and the company.
See table below.
TABLE 2
Note: “Retail price” refers to the price charged by the retailer (trade shop, showroom, or DIY outlet) to the
customer. “MSP” refers to manufacturer selling price (Aqualisa’s price to the channel).
Breakeven analysis
Since the products of the company are priced so as to earn profits (see above section). There are two
ways of calculating the breakeven numbers. One is to multiply the number of units sold with its
manufacturers selling price (MSP). Similarly, costs are also calculated by multiplying the sales with the
production costs. But this method cannot be applied as the individual sale of the product is not available.
Second method is to use the Aqualisa’s financial statement. Here the gross margins are calculated by
deducting costs from the total sales. Further overhead expenditure is deducted from the gross margins to
attain the profit. This method is precise and more accurate than the first method which requires lot of
calculations. View the table below.
a Includes all Aqualisa shower lines, including Aquastyle, Aquavalve, and Aquastream. Also includes
Aqualisa pumps, as well as a variety of other specialty shower models sold by Aqualisa; these were
primarily differentiated by style (e.g., contemporary, antique, brass, etc.). Does not include other brands
such as ShowerMax and Gainsborough.
Aqualisa sold a variety of other products, including shower accessories and commercial products.
b
Electric shower the costs are equal to the revenue earned. However, to promote new product Quartz the
company can lower its prices and make low profits. Moreover, company can incur their advertisement
costs to promote their product. Either way company can be successful in increasing the sales of the
Quartz, one of the biggest innovations of the company.
Quartz was invented in may After may 2001, Quartz was introduced in the Data not Data not
2001 after 3 years of hard markets. It received overwhelming response in the available available
work of Aqualisa’s R&D Bathroom Expo in 2001 in UK. But it disappointed
department and investment of the company with negligible sales. Harry
5.8 million euros. Rawlinson, managing director, has to revise his
marketing strategies to boost the sales
COMPANY ANALYSIS
Features Aqualisa in UK
Product Quality 9↓
Distribution 6→
Service 9↓
Pricing 10↑
Customer satisfaction 8↓
The company analysis says that product quality and services have deteriorated. The customers are not
satisfied with the product as 10% of the Aqualisa products are replaced. Also, Aqualisa products are
considered higher than other company’s products. However, there is no change in the distribution
channels of the company as the market strategies are same. But company have devoted a substantial
time towards new product innovation. Quartz is considered as a breakthrough invention by Aqualisa in the
shower industry. But having bought a thousand of these Quartz products, distribution sources have sold
81. The poor product manager is looking pretty stupid at this stage. This is a huge problem as pretty soon
they’re going to write this off as a failure. I can see a scenario in six months’ time where real sales in the
market—currently about 15 units a day—are still down at 30 or 40 units a day. The need of the hour is to
sell 100 or 200 a day to break through to the mainstream. There has to significant revision in the
marketing strategies to achieve this target.
SWOT refers to strength, weakness, opportunities and threats to the company. A SWOT (strengths,
weaknesses, opportunities, and threats) analysis was performed for aqualisa. The results are
summarized in the table below:
TABLE 5
STRENGTHS WEAKNESSES
Aqualisa comprises 20% share in the shower About 10% of the company showers are replaced
market. as they went wrong. The product quality has
The company has workers who are loyal to deteriorated
the company like trade shops and plumbers. Aqualisa products are considered over-priced
Quartz is the break-through innovation of the Aqualisa services had slipped over the period of
company in the shower market. time
Quartz was voted the best product in the Poor marketing strategies for the Quartz product.
Bathroom expo in UK in 2001 Customers are unaware about the product yet.
The company owns its monopoly in this 90% of the sales department employees are busy
quartz product with their existing customers and only 10% is
The Quartz offers stable pressure and available to make new customers.
temperatures with easy installment which no
product offers till date.
OPPORTUNITIES THREATS
Quartz if pick-up sales can be a hit product. Due to above mentioned weaknesses other
Opportunities are seen in showroom’s companies have gained sales in the market. They
displays and trade shops to increase sales of are threat to the company’s market share.
this product. Increasing competition in the shower industry.
Company has been earning good profits The company feels that rise in Quartz product wil
which can be diverted towards the promotion affect the already market of the existing products.
of the product.
Triton is the largest selling electric shower company with the share of 43.5% followed by 16.4% in
Gainsborough, Aqualisa. Mira is the highest selling mixer company which share of 36.4% followed by
aqualisa with 17.1%. see the table below. Apart from these huge companies there has been significant
share of the other companies like Masco, Ideal Standard,etc. hence, we see that Aqualisa has a tough
market to compete with. So the marketing strategies have to be redefined.
TABLE 6
Shower buyers in the U.K. tended to fall into one of three pricing segments: premium, standard, and
value. Consumers in the premium segment typically shopped in showrooms; they took for granted high
performance and service, and for them style determined their selection. Consumers in the standard price
range tended to emphasize performance and service; they usually relied on an independent plumber to
recommend or select a product for them. Products offered by company in this category are Aquavalve
609, Aquastream thermostatic and Gainsborough. Consumers in the value segment were primarily
concerned with convenience and price; they liked to avoid solutions that required any excavation and
tended to rely on an independent plumber to select a product.( see table below)
TABLE 7
Apart from these above mentioned channels, the shower is installed by the plumbers. The 28% of the
customer takes advice of the plumber, whereas 27% of the plumbers install showers without the
customer’s advice. So plumbers are very important source of the shower sales. Even though Aqualisa
has their faithful plumbers to promote their existing product, they are not aware about the Quartz working
and installation. So effort should be made to impart knowledge to existing and new plumbers about
Quartz.(see chart below).
CHART 2
SOURCE AQUALISA
CHART 3
SOURCE AQUALISA