“Aqualisa” is a powerful name in the U.K Shower market who has maintained its current 3rd position due to its proper segmentation of customers and proper positioning of its existing products. But in May 2001, there has been a failure of one of their best researched product “Quartz” which has to be properly justified with proper analysis of the strategy used by Aqualisa. Its really important for Aqualisa to rethink about the “Four P’s” not only to increase its sales but also to retain its premium brand quality in the market. This report aims at analyzing the company, the customers and the current strategy (for Quartz) with the development of a new marketing strategy for Aqualisa’s Quartz shower.
“Shower in the U.K. were plagued with problems”. (case study pg 1)
In U.K. only 60% of homes had showers with many dating back to Victorian era and had problems like low water pressure and fluctuations in temperature. These problems were mainly addressed by the shower company with their ‘Electric showers’ or special ‘U.K. shower Valves’. The three main types of shower that existed in the market were Electric showers, mixer showers and power showers each having their own positive and negative features.
TYPES OF SHOWER
TOTAL UNITS SOLD BY AQUALISA
% OF TOTAL UNIT SOLD
Does not require hot water supply
*Results in bulky
box in the wall.
*Low flow rate.
Thermostatic type creates comfortable temperature.
*Requires both hot
and cold water
pump to address
Aquavalve and Aquavalve 609
Integral Power Shower
*Requires both hot
and cold water
*Results in bulky
box in the wall.
Quastream manual and thermotatic
Mira and Triton
(Figure A & Exhibit 2,Aqualisa case study,pg 3 & 13 )
Fig : 1
From the above table it is evident that Electric showers had one advantage over the other two types and that was “not requiring hot water supply” and Aqualisa has its maximum units sold in the market in this category covering 57% of its total units sold. (See figure 1) But to maintain its present premium brand image and to penetrate the low cost market it has launched “Gainsborough” brand but its major competitor in this field is Triton covering 88% (see exhibit 1) of its total sales and somehow managed to build considerable brand awareness in this field.
With 35% share of the total sales, mixer shower were the second best selling product for Aqualisa. Out of the 2 variants available, Thermostatic ones are mre convenient than the manual ones in respect of creating comfortable temperature. Though it has a problem with mixing hot and cold water and excavation of the bathroom but still Aquavalve and Aquavalve 609, later became the core product of Aqualisa.
The third type was integral power showers which covered only 8% of the units sold in the market for Aqualisa with major competition from Mira and Triton. These showers not only require both hot and cold water supply but also adds a bulky box on the bathroom wall. Not only these even they are regarded as less reliable to mixer showers. The main product that Aqualisa had in this range is ‘Aquastream Thermostatic’.
The most important thing that is noticed while analyzing the industry was that there was no proper innovation of the existing products in terms of its functional aspect although there has been some up gradation in the looks of the shower. Aqualisa quickly understood the weak points in the shower industry and tried to maximize its profit by launching ‘Quartz’ with a view to be the winner in the long run.
Most customers in the UK have two major problems with the existing showers- poor pressure and varying temperature. Consumers also complained about other problems as well. They were not happy with hard-to-turn valves, leaky seals and worn-out showers. On the other hand, brand awareness was very low among the customers and only one brand (Triton) had been able to build brand awareness at the customer level (see exhibit 1).
In the figure we have seen market segmentation based on price and behaviour of customers of different segment. But one interesting group of people who are not the end customers of Aqualisa , but still have huge influence on the individual market segment, specially the value and standard customers are the ‘Plumbers’. Plumbers had a remarkably strong involvement in mixer shower selection (48%) whether directly or indirectly (see exhibit 2).Apart from that, 54% of the mixer shower installation was carried out by them (see Exhibit 3).Plumbers major concern are reliability, performance and ease of installation because they would have to bear the costs of any unforeseen problems. Because of this they love to stick to a single product brand and re quite brand loyal with stiffness towards product innovation. Following the description of the above customer categories is a discussion of the behavior of plumbers, which is essential to understand the true nature of the market. Although they are not the end customers, their role will be significant for Aqualisa when creating an effective marketing strategy.
SWOT analysis of Aqualisa
This analysis of Aqualisa is based on ‘Four P’s’ with an emphasis on their new product Quartz.
Product : The long term problems faced by the U.K. shower market has been analyzed by Aqualisa and they have their new product Quartz which is a one word answer to the problems that the customers had including poor water, pressure and varying temperature. Aqualisa’s research team came up with the idea of placing the mechanism remotely outside the shower which would totally remove the problem of excavation and after 3 years of research ‘Quartz’ finally hit the shower market in May 2001 with great optimism. One of the major advantages of installing Quartz is the reduction in installation time from 2 days to less than half a day and this could be a source of pleasure for both customers and the plumbers. The feature that appealed to the customers most is the one touch control which will make it easy to use by the children and the elderly persons. Aqualisa has some more innovation like slave remotes and body jet waiting in the line to be launched in the future which could boost up the sales further.
Position : During the development phase Aqualisa had tried the product with all the different segment of customers and finally the product was tuned to fit every consumers expectation. Because of this R&D Aqualisa targeted all the channels including trade shops, showrooms, developers and plumbers. Due to the good image among the customers and developers and good relation with the plumbers there was more stress given on the sales team rather than investing on advertisement. After four months of the initial launch Aqualisa has only managed to sell 1800 units (@15 units/ day) which is considered to be a big failure for the company.
Trade shops : The channel with the largest customer base with a maximum sales of 8,40,000 units annually, seems to be the best place for quality products like Quartz. But this is the section where it struggled the most. The major customers of trade shops are plumbers. Despite of the fact that what plumbers wanted, Quartz provided everything (breakdown guarantee and ease of installation), plumbers are quiet skeptical for Quartz and their brand loyaty made them very reluctant to switch brands. Hence poor ales figures.
Showrooms : Aqualisa always ad a niche maket in these shops with some loyal premium customers who does’nt bothered about the price but the quality, style and reliability. The showrooms with better sales figures.
Developers : One of the possible target for marketing Quartz are the property developers, forming 20% of the mixer shower market (see exhibit 5). However the price sensitivity is one of the most important constraint for this channel. Though there are no clear mentionabout the developers but even with a 50% discount on Quartz standard (450 to 225 â‚¬), it will be imposible for Aqualisa to sell Quartz (with only 50â‚¬ profit margin) to developers. So it is unsuccessful in selling Quartz standard to developers.
Do-it-yourself : There has been no clear evidence of Quartz being made available in the DIY shops. Though in terms of flexibility Quartz becomes ideal DIY product but th premium image of Quartz will have got a hit as Rawlinson mentioned that they are careful of introducing any product in DIY stores.
Promotion : Aqualisa has always maintained its premium brand image in the market with 18% market share (3,25,500 units of 18,00,000).
Quartz has been developed just as an improvement over Aqualisa’s existing product range with all the answersfor the problems of the shower market in U.K. . a product way ahead from other products in terms of features, performance and flexibility.
For promoting Quartz, Aqualisa has tried different approaches like exhibitions, face to face contact with plumbers and finally advertising in ‘The mail on Sunday’. Even Quartz was awarded with the top prize at the Bathroom Expo and also received some great reviews from all reporters.
The problem mentioned by Rawlinson about advertising was the money factor (Expected 3 to 4 million over 2 years) which constrained Aqualisa from targeting the customers directly.
Price : Normally Aqualisa enjoys a gross profit of 60â‚¬ to 225â‚¬ per unit sales with a maximum manufacturers margin on Aqualisa’s cash cow- Aquavalve 609 i. e. 225â‚¬ which is comparable to both the Quartz model. The cost of manufacturing Quartz is higher than Aquavalve and Quartz offer good value for the end customers, hence the retail price is higher i. e. 850â‚¬ to 1080â‚¬ (see exhibit 8).
Now its time to recommend some strategies to Mr. H. Rawlinson to select the best target market for Quartz, which could revive its fortune. Its my recommendation that Aqualisa should maintains its premium position prising and target the end customers directly.
Before discussing the strategies for targeting the end customers we should have a look at DIY shops and the developers as it has not been mentioned in the marketing mix of Quartz.
Targeting DIY Shops : From the case study it is evident that DIY shops is a place for cheap products and placing a premium product like Quartz with high price would be rather foolishness. On the other hand DIY shops has a huge market potential with 5,50,000 electric showers units sold annually (see exhibit 6). Until and unless the customers are aware of the product features they will go for the cheapest one available. So the first thing that Aqualisa should do through ad-campaigns is to provide the knowledge of hidden charges of installation (see table below) to customers. The customers who will remember about this hidden charges will go for Quartz because of its ease of installation and value for money. It is even possible that they will recommend it to others after experiencing the convenience in using Quartz.
2 days : 12hr/ day
Half day : 6 hr
Cost per hour charged by plumbers
40 to 80â‚¬(average 60â‚¬)
12 X 2 X 60 = 1440â‚¬
6 X 60 = 360â‚¬
Cost of the product
Targeting Developers : Targeting Developers seems to be very profitable in terms of sales but one thing that should be bear in mind that they want the cheapest product which will deeply harm Quartz premium image. Even if the company provides a discount of 50% it will only cover 15% of its overall sales in the U. K. (see exhibit 6) leaving the replacement or new penetration section which covers around 70% of the overall sales in the U. K. (see exhibit 6). However it might be said that targeting Developers can be beneficial as they subcontract plumbers but this doesn’t sound good from the Plumbers point of view as they will receive less money for installation while with other products they can receive higher installation fees.
Targeting End Customers : In the first go it may look like a costly option with more risk associated with it. Targeting customers through ad-campaigns will cost around 3 to 4 million â‚¬ but the anticipated higher return from that will cover the cost very quickly. Aqualisa should consider this as an investment and not cost. Presetly the company has a 25% net return on sales and so it is quiet feasible to invest a part of that profit.
The total number of units sold per year by Aqualisa (except Gainsborough) is 12,20,000 (see exhibit 1) whereas the calculated breakeven point for Quartz is 18710 units (see exhibit 5). So Aqualisa should take advantage of this promising figure by flooding the trade shops and DIY shops with Quartz after launching a large scale ad-campaign. Though this strategy looks insane and irrational with deadly cannibalization of its other brands but this can be explained with a simple pessimistic approach of unit cannibalization (see table below)
SALES AFTER CANNIBALIZATION CAUSED BY QUARTZ
6000units X 155â‚¬ = 930000â‚¬
0 X 155â‚¬ = 0 â‚¬
60,000units X 380â‚¬ = 22800000â‚¬
50000units X 380â‚¬ = 19000000â‚¬
34000units X 205â‚¬ = 6970000â‚¬
14000units X 205â‚¬ = 2870000â‚¬
22000units X 300â‚¬ = 6600000â‚¬
10000units X 300â‚¬ = 3000000â‚¬
36000units X 512â‚¬ = 18432000â‚¬
All the figures in the third column are assumptions
** The sales figure considered for quartz is 36000 units
(i.e. 100units/day X 30 days/month X 12months = 36000units/ year)
***The MSP considered for Quartz is the average of two Quartz variants like Standard and Pumped (450â‚¬ + 575â‚¬/2 = 512.5â‚¬)
****The number of total mixer shower sales is 94000units (Aquavalve 609 and Aquavalve valve) and as Aquavalve 609 is the best selling product of Aqualisa the sales figure considered over here in the 2nd column is 60,000units out of 94000units.
So this pessimistic approach seems quite optimistic from Aqualisa’s point of view with an increase in sales of 16% (see table above). There should be more stress given on the increase in penetration to trade shops and Showrooms (Trade shops – 40% to at least 70-75% and Showrooms – 25% to at least 50%) through the launch of Quartz. All these will definitely bring Quartz to mainstream and with a proper positioning in the market it will be more profitable for Aqualisa to earn back their investment of 3 to 4 million â‚¬ on marketing. Apart from this the long term image of product overprising will be gone.
U.K. Market Share Data: Units Sold (2000)
Total Units Sold
Total Units Sold
Exhibit 2 shower selection for mixer showers
Exhibit 3 U.K. Shower Market, by Installation Method (Mixer Showers Only)
U.K. Shower Market, by Product Type and Channel (Total Units Sold, 2000)
Trade Shops Other (Electrical wholesalers)
Total Units Sold
Exhibit 6 U.K shower sales, by reason for installation
Exhibit 7 probable number of Units sold after the launch of Quartz
Total Units Sold
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