1.

1 Customer Segmentation and characteristics:

Segment Characteristics Aqualisa Offerings

Aquastyle
1. Shopped in Showrooms Quartz Standard
Premium
2. Assumed high performance and service Quartz Pumped
3. Style determined the selection Aquaforce 2.0/3.0 Bar
Aquavalve 609
Standard 1. Emphasized on performance and sevice Aquastream Thermostatic
2. Relied on independent plumber for shower selection Aquaforce 1.0/1.5 Bar
1. Looked for convenience of installation
2. low price criteria Aquavalve Value
Value
3. Avoided solutions requiring excavation Aquastream Manual
4. Tended to rely on independent plumber for shower selection
1. Shopped at large retail outlets
DIY customers 2. Interested in easy to install and inexpensive models
3. Preferred electric showers Gainsborough
1. Preffered reliable, nice looking products
2. Preferred products with capability to work in multiple settings
Developers
3. Price sensitive, not interested in premium valves
4. Chose the products themselves ShowerMax

1.2 Channels:

Channels Characterstics Aqualisa Presence

1. Carried products across all available brands

2. Primary customer was the plumber
Aqualisa brand was available in 40%
Tradeshops 3. Tended to stock whatever there was demand for
of trade shops
4. Didn’t have the time to learn all the features and benefits of the
items they offer
5. Focussed only on the right stock of products that are in demand
1. Distributors supplied showrooms
2. Tended to be more high-end
3. Led consumers through the process of selecting and designing a
bathroom
the Aqualisa brand was sold in
Showrooms 4. Allowed the consumer a chance to view the product in a
about 25% of them
pleasant environment
5. Preferred to carry high-end product lines and brands
6. Offered installation services by subcontracting with contractors
and independent plumbers
1. offered discount Gainsborough brand was available
DIY sheds 2. mass-market, do-it-yourself products in 70% of the approximately 3,000
3. Electric showers led sales DIY outlets in the U.K.

1.3 Competition:

Top UK shower market competitors including Aqualisa have been shown below with their
market ranking and market share in each kind of shower products:

Market Ranking Electric Showers Market Share Mixer Showers Market Share Power Showers Market Share
1 Triton 44% Mira 36% Mira & Masco 23% & 23%
2 Aqualisa 17% Aqualisa 21% Triton 17%
3 Mira 14% Ideal Standard 11% Aqualisa 16.70%
4 Heatrae Sadia 4% Masco 9% -
1.4 Company and Market environment:

Market Environment
 U.K. shower market is a matured market and can be roughly estimated to be around
€ 400 million market
 Showers in U.K. were plagued with problems. Only about 60 percent of U.K. homes
had showers
 Archaic plumbing (mostly gravity fed) was common in many homes leading to low
water pressures
 Majority of the market revenues come from Electric showers followed by mixer and
power showers
 More than 70% of the shower selection is influenced by the plumbers
 Most of the shower companies in UK have low brand awareness except Triton

Company
 Aqualisa is the third largest company in the UK shower market by sales volumes and
second in mixer showers
 It has a good product mix with product offerings in all the segments and across all the
channels in UK
 Aqualisa has a revenue of around € 68 million with a base profit of around 25%
 It has a reputation for providing good quality and service

Aqualisa Financial Data

(€ in thousands)
Revenue €67,956
Gross margin €31,824
Expenses €14,469
Op. Mrg. €17,355

A good mix of product offerings Electronic showers not trusted by

Good business growth in a matured
market
Good profitability (around 25%)
Strong presence in Tradeshops and
DIY outlets
Strong reputation in terms of quality
and service
Aquavalve 609 highly Recommended
by plumbers
plumbers and consumers
Consumers have low awareness about
products
Sales teams do not focus much on new
customer development
Lower presence in showrooms
Considered a premium product by
developers

Unique product offering (Quartz) Maturing categories, products, or services

No competition in market with Quartz Competition may catch up soon, lead time
shower availability of only 2 years
Scope of market expansion Aqualisa´s own products may face
40% of houses do not have showers competition from quartz

SWOT Analysis
2. Quartz Shower Value proposition for consumers

The value proposition for installing Quartz premium compared to Aquavalve609 standard
with Aquaforce 1.0/1.5 has been explained below:

 Cost saving

Quartz Pumped Premium total cost calculation:

Quartz Pumped Premium

Retail Price €1,080.00
Plumbing costs for 4
hours @ €60/hr €240.00

Total Cost €1,320.00

Aquavalve 609 standard with std. Booster pump total cost calculation:

Aquavalve 609 standard with std. Booster pump

Aquavalve 609 standard MRP €715.00

Aquaforce 1.0/1.5 Bar MRP €445.00

Plumbing cost for 2 Days
(16 hrs) @ €60/hr €960.00
Total Cost €2,120.00

A cost benefit of €2120 - €1320 = €800 for the consumer.

Even without the booster pump Aquavalve 609 installation would be more expensive than the
Quartz Pumped Premium for a consumer

 No requirement of excavation
 Flexibility of keeping the pump and valve unit (processor) at a convenient remote location
 Better water pressure and temperature control
 Safe and easy to use for children as well as elderly
 Satisfaction of having a latest and premium product

3. Quartz shower Value proposition for Plumbers

a). Quartz shower is easier to install, as it does not require excavation and the remote
processor can be easily placed at a convenient location

b). Since the Quartz shower is easier to install plumber can send his younger apprentices
also for installation, again, it allows him to take more work at hand

c). Quartz shower takes only half a day for installation so the plumber can take almost 4
times jobs in hand which will help him earn more money
 d). Let us consider that plumbers get 10% margin on MRP of the shower as they directly
make the purchases from the tradeshops

 On each Quartz pumper premium, with 10% margin a plumber may save €108
 On each Aquavalve 609 std. with booster pump, with 10% margin a plumber may save
€116
 In 2 days, a plumber can fix only 1 Aquavalve 609 std. with booster pump thus earning
€116 in 2 days
 In 2 days, a plumber can fix around 4 Quartz pumper premium thus earning €432 in 2
days
 Even we reduce the margin of plumber to a much smaller percentage he will be earning
more money by installing Quartz showers

Plumber Earnings with Mixer Shower installations
Number of days for each mixer
shower installation taken by
a plumbers
number of mixer shower
installation done by plumbers/
b year
number of days spent by
plumbers for shower
c installations = a*b
total hours spent by plumbers
on shower installation
d @8hrs/day
e total earning (@€60/hour)
f earnings by markup
g total earning (e+f)
Plumber Earnings with Quartz Shower installations
Number of days for each quartz
2 Days a installation taken by plumbers 0.5 Days
number of quartz shower
installation done by plumbers/
50 Installations b year 200 Installations
number of days spent by
plumbers for shower
100 c installations = a*b 100
total hours spent by plumbers
on shower installation
800 d @8hrs/day 800
800 hours * € 60 = € 48000 e total earning (@€60/hour) 800 hours * € 60 = € 48000
€116 * 50 = € 5800 f earnings by markup €108 * 200 = € 21600
€53,800 g total earning (e+f) €69,600

e). Since quartz is a new product from Aqualisa and Aqualisa would like to increase its sales
in the market, plumbers can expect better service for the shower from Aqualisa

f). As the product is very simple to install and use, second visits that are paid out of plumbers
pocket will be minimized, thus saving cost and effort for the Plumbers

4. Aqualisa should target Plumbers as well as the consumers

4.1 Considering a logical order Aqualisa should target the Plumbers first:

Looking at the below mentioned facts:

 (HBS, Aqualisa Quartz: Simply a Better Shower, Exhibit 5) Independent Plumbers make
54% of the installations of mixer showers in the UK shower market, plumbers are also
directly or indirectly involved in other installation methods

 (HBS, Aqualisa Quartz: Simply a Better Shower, Exhibit 4) The plumbers influence more
than 70% of the shower selection for mixer showers
 Shower selection

Consumer makes
the selection
himself

23%
Consumer
influenced by the
Plumber for
selection 73%

On the basis of the above-mentioned facts it can be determined that Plumbers act as
collaborators and have a very high influence over the consumers and thus largely affect the
sales of the shower products in the UK market.

Also, as initially concluded Quartz is a high value proposition for the plumbers as well though
based on their past experiences with the electronic shower products and distrust in
innovation they are unable to realize the value of this proposition for themselves.

Familiarizing the plumbers with the product and showcasing them the value that Quartz can
provide to them as well as the consumers can boost the sales of the product

Though there is a threat involved, in order to promote Quartz the plumbers may start pointing
out deficiencies in the existing Aqualisa products such as Aquavalve609.

Action Plan to Target Plumbers:

 Create special Plumber awareness programmes showcasing them the ease of

installation of Quartz and its superior functionalities.
 Emphasize on the increase in earning they may get by saving time and better utilization
of the apprentices
 Give promotional offers such as incremental discounts on buying a 200-250 showers per
quarter
 Reassure good service and quick replacements in case of any problems with the
products
 Give 2 years warranty on complete cost reimbursements including service cost of
plumbers for any break down
 Create special brochures describing the steps for installation of the shower etc.

4.2 As it is a better value proposition for consumers than plumbers it is ideal to promote the
Quartz shower in front of the consumers as well.

The product has a winning edge due to its uniqueness, overall low cost, ease of use and
safety. In order to promote the product in front of customers the following action plan must be
incorporated:
1. The sales team is currently spending 90% of the efforts for maintaining the existing
customers and 10% for the new customers, this should be changed, additional sales team
should be employed to target the new customers. A large part of the UK market i.e. 40% do
not have showers, Aqualisa can capitalize on this fact and generate more sales.

2. The product should be placed in more showrooms currently only 25% of the showrooms
have Aqualisa products, As mentioned by Rawlinson the product was an immediate hit in the
showrooms exhibiting it.

Better placement of product in the showrooms will increase customer awareness about the
product with the premium customer

3. Specific advertising campaigns targeting the premium as well as standard customer

should be launched aggressively as the product is still in its introductory stage.

For standard customers the advertising should focus on cost benefits

For Premium customers the advertising should focus on innovative features and
functionalities of the Quartz

 Considering the cost of a half page advertisement in a daily paper €5000

 Weekly ads on each Sunday for first year to target maximum readership i.e.
50 times/year
 Total cost of print advertising will be €250,000/year