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Group :- Jaimin N Dave , Dhananjay & Shishir Purohit Subject :- Marketing Management Batch : - B Centre :- 132 feet ring

road , Ahmedabad

Aqualisa Quartz : Simply a better shower

Case Background :Aqualisa was regarded as a premium brand with top quality showers and great service. They had a market share of no.3 in U.K. shower market. When Rawlinson came onboard to Aqualisa as Managing director the shower market was dominated by some orthodox brands which had their own sets of problems such as Poor pressure Varying temperature Low life cycle of showers Consumers were generally unaware about the shower. Except for Triton no company had created its brand awareness in the U.K.market. He also identified some problems with the way Aqualisa was positioned in this market. Competitors were almost head to head with Aqualisa in terms of product quality Market had begun to perceive Aqualisa shower as overpriced Service quality had started lacking in its effectiveness and the breakage ratio of showers was still 10% which did not improve since a long time. After doing a lot of R & D, brainstorming and spending 5.8 million Euros the company came with a radically different shower named Quartz. They lunched it in May, 2001. During the field trials Quartz received some excellent reviews. Plumbers were able to complete their installation work in just a half a day, instead of normal 2 to 3 days work. Consumers just loved it as the Quartz provided them with perfectly right pressure and temperature. At a Bathroom expo in May, 2001, Quartz was given the top prize. The trade press also raved about it.

Major decision issues,


At the lunch of Quartz company called upon their significant and trustworthy no of loyal plumbers and gave them training but it resulted in only few sales. At the end of 4 months sales performance was poor. Rawlinson was confused about how to create sales momentum? Was Quartz priced too high? Should it be discounted? But the quartz was a breakthrough product and why not to charge premium for this kind of innovation? It was also difficult to sell it alongside the current offerings of Aqualisa. To sell Quartz a sales guy had to show deficiencies in the current products of Aqualisa amongst which Aquavalve was a core product. Should the company take a risk on Quartz and promote it as its mainstream product? Rawlinson was confused about whom to target? Should they target the consumers directly? If so they would have to run a major marketing campaign which would require an additional expenditure of about 3 to 4 million Euros over 2 years with the net income of 17 million Euros which Rawlinson thought was a tough sell. Targeting DIY sheds was risky business as Quartz was such an innovative product and it would be difficult to get out of it once they get in. Developers required a discounted product with only a few exceptions.

Rawlinson thought that he had maximum 2 years of time before the competitors caught up with them. He had to do something. He thought that historically companies emerged out of a pack because they had a right product and right vision. Why cant Aqualisa repeat the history?

Analysis
Consumers in the UK market fell into three categories: Premium, Standard & Value. Premium consumer were conscious about service , high performance & style . They mostly shopped from a showroom. Consumers in standard category were dependent on plumbers for getting them a shower with high performance and service. Value consumers were also dependent on independent plumbers while selecting a shower for themselves but for them the main criteria was price and convenience. A sizeable was also made of DIY customers (do it yourself) who shopped at large retail outlets. They were mainly interested in cheap showers with ease of installation. Property developers were also there but except for a few developers all of them wanted a model which was very price effective and also easy to install. As seen from the above Plumbers played a major part in influencing the brand & type of the showers in 73% of the sales of the showers. There were about 10,000 master plumbers in the U.K. market. For plumbers switching brands meant installation and service problems due to which they were reluctant to new innovations. Sticking to a single brand created installation and service expertise for a plumber. The distribution happened through the following channels Tradeshops were the place where almost all the barands were available and their primary customers were plumber. Their sales persons were not taking customers through the features of all their products. Showrooms were the place for premium customers where they gave consultancy services to the customers in choosing a right design for their bathroom. Although shower was a small part of it these outlets but there were about 2000 showrooms in all and Aqualisa was sold in 25% of them. DIY sheds were selling Gainsborough brand of showers which were available in 70% of them. The UK market shower installation could be divided in 5 categories as per the following table. Replacement shower New showers in existing bathrooms where plumbing is there 25% Shower installation where no plumbing exists 10% New build Second shower

Percentage

44%

15%

10%

We could see from the above table that the showers sold in by the developers consisted only 15% of the market. So there was no point in targeting them .

The following table shows the nos of total showers sold by different distribution channels DIY shelfs Qtys 650000 Showrooms 145000 Tradeshops 840000 Other wholesalers 165000

The breakeven point is about 8 to 9 million Euros. From the above exhibit showrooms are selling a huge qty of showers. If we consider the averages margin of 300 Euros on the sale of each shower Breakevent point = qty of shower X margin. Qty of showers = Breakeven point / Margin = 8500000 / 300 = 28333.33 showers. As you can see the qty is very less which is very easily achievable.

Suggestions / Reccomendations :Company should not let go off its margin for such a product which had a lot in store for everyone who used it. They should not reduce the price of the shower as the total price of the package is not much higher compared to the other products as Quartz eliminated installation and excavation cost to almost 25% . Also the ease of installation, use and precision were the features that were not available with any of the competitors in the market. Then why not cash in for these features. Aqualisa should make showroom sales their primary target as they would help them create a brand image for Quartz. As mentioned previously 25% of the showrooms sold Aqualisa brand and the customers visiting them were premium customers. If only showroom sales were the target it can make Aqualisa reach the breakeven point very easily. But the main target for the Aqualisa must be direct consumers and they should not hesitate to parallely spend 2 to 3 million Euros on marketing and brand promotion as they could cover the expenses by charging premium on its features. Company must understand that the marketing and brand promotion was the most important thing to do as that would give a lot of earnings in the longer run. Aqualisa should gradually stop selling the Aquavalve product and if the plan went successfull should completely withdraw it from the market. They could also incentivise the plumbers to some extent but not to much higher extent as there was a lot of time saved on installing Quartz as Plumber can easily cover the shortfall in their earnings by devoting the extra time in doing multiple installations in a day. The company should keep on training the Master plumbers slowly alongside targeting the customers directly. To give confidence to these plumbers company can also provide something like 3 or 5 years of warranty.

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