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Case Memo of Aqualisa Quartz - Simply a Better Shower

- GROUP KAPFERER NATAHARALI RAZVI (PGDMB13/032) PRITAM SATPATHY (PGDMB13/077) ROHIT MEHBOOBANI (PGDMB13/042) SHIKSHA NICHANI (PGDMB13/113) SOHINI BANERJEE (PGDMB13/052) VIJAYDURGA. R (PGDMB13/088)

The Problem: The managing director of Aqualisa, Harry Rawlinson, launched a new shower called Quartz. Despite its features such as quality, safety, cost of installation and ease of installation and usage, the early sales had been disappointing. The problem is not low sales, but the reasons for it being so. Some of the reasons are related to distribution channel, promotional strategy and positioning of the product. Thus, the question is how to boost sales. The biggest issue is the problem with reaching plumbers because they are the key players in terms of being a reliable source for consumers when choosing the product. Facts available: Company: Aqualisa, 3rd in the shower market with 18% coverage has had a successful marketing strategy, which allowed it to enjoy 25% net return on sales and a growth of 5% to 10% in a mature market. They have effectively segmented their markets and have products that cater to each segment's needs (product range of 9 models covering the three types of showers used in the UK, ranging between 230 and 670). Their channel relationships are strong and positioning has helped them achieve a good brand name in the market. The company used the Showermax (specialized product similar to Aqualvalve at lower priced than the before mentioned) to penetrate the developer's market. Main role players: 1) Customers 2) Plumbers 3) Developers 4) Do-It-Yourself (DIY) and other Collaborators. 1) Customers:- Three types:-a)Value b)Standard and c) Premium. 2) Plumbers:- Main role players as all other players depend on this player and so Aqualisas main problem as they dont like electronics gadgets and Quartz is more of an electronic shower. 3) Developers:- Customers in this segment are quite price-sensitive and require showers that are reliable, stylish and flexible i.e. those that could work in multiple settings. 4) DIY:- Consisting mainly of landlords and apartment dwellers - who install and select their own showers.
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MARKET SITUATION: SWOT ANALYSIS Company's Strengths 1. Strong reputation in the shower market 2. Highly profitable company 3. High quality products(Better water and temperature control) 4. Excellent service 5. Strategic use of Gainsborough brand to penetrate low cost market 6. Strong brand recognition 7. Patent in the Aqualisa Quartz design Company's Weaknesses 1. 2. 3. 4. 5. 6. Only available in 40% of trade shops, 25% of the total showrooms, and 70% of total outlets 10% defective products, along with bad customer service reputation Competition is catching up in product quality Considered as an expensive brand Lacked the ability to relate to end users. Unfamiliar product to plumbers

Companys Opportunities 1. High demand in U.K market 2. Rare real breakthrough in shower market 3. Current faults like high pressure and temperature fluctuations in the current shower models Companys Threats 1. 2. 3. 4. 5. 6. Market perception of products being overpriced Patent expiry Erosion in number of customers Declining service quality Plumbers loyal to single brand and distrusted innovation. Other companies were catching up to Aqualisa product quality

MARKET SITUATION: 4Ps AND DISTRIBUTION Product - Our SWOT analysis shows us the innovative qualities of the Quartz and the impact it could have on the U.K shower market if marketing can be carried out properly. Currently, no competitors in the market have a product that matches the potential of the Quartz and now is the time to be aggressive and penetrate the market. It had two types- Quartz standard and Quartz Premium. These catered to the needs of all segments.

Place Aqualisa has a presence in two of the three main distribution channels in the market. Aqualisa products are available in approximately 40% of trade shops in the U.K., which are the mainsuppliers for plumbers. With the exception of electric showers, trade shops are the dominant channel for all other shower types. The showrooms are the main outlet for premium customers because they utilize displays and demos to entice customers with style and design. Aqualisa products are currently available in only 25% of showrooms. The third channel is the DIY sheds which offer discount, mass market, and do-it-yourself products directly to consumers. Aqualisa brand products are not offered through this channel at all. Plumbers also worked as distribution channels since customers took their inputs while choosing showers. Promotion Aqualisa does not have brand name recognition in the consumer market and does not actively advertise to specific market segments. Most of the existing products are in the mature stage of their respective product lifecycles and as such, sales growth and innovation have not been key concerns. The Quartz is in the introductory stage of the lifecycle, but it is being marketed in the same way as current Aqualisa products. Therefore its need for an aggressive promotion strategy to reach its target markets and drive sales has been overlooked. The promotion strategies have not been customized for each segment and they do not demonstrate the benefits to be gained. Pricing The current premium charged is justified by the additional features in the shower. Using the value proposition in targeting customers, lowering the price results in higher breakeven quantity. This means it would take longer to see profitability for this product line. Increasing the price would lower the breakeven quantity, but it could also price the product out of reach of certain customers. Distribution Channels Main channels of distribution are :- 1)Trade shops 2) Showrooms and 3) DIY Sheds. *It is evident that Do-it-Yourself Sheds are dominant in sales for Electric Showers (550,000 units), which are cheap and easy to install and designed for mass-market. Followed by Mixer Showers (80,000 units) and Power Showers (20,000 units). This represents buyers of lower pricing segment. *Showrooms tend to be for more high end products and customers with higher income. Here the best-selling products are Mixer Showers (70,000 units), followed by Electric Showers (55,000 units) and Power Showers (20,000 units). *Trade Shops are places most applicable for plumbers, where reliable product availability is more important than technical advice. Mixer Showers are here also the best-selling product (440,000 units), followed by Electric Showers (330,000 units) and Power Showers (110,000 units).

Alternatives and Recommendations:Aqualisa's marketing team discussed three options for the marketing strategy for Quartz. (1) Targeting consumers directly (2) Target Do-it-Yourselfers and (3) Target developers 1. From the analysis of this case we determine that Quartz is a niche product (Product). It is advisable for Quartz to target the specialized bathroom retail stores, captivate the plumbers' attention, and raise product awareness amongst consumers. Since retailers will be happy to take on products that stand out in showrooms, particularly if they are highly functional and easy to use as well as attractive the problem of plumbers recommending only products that they know well will not be there. 2. Demand for this product should be created in retail stores as Quartz is a niche product (Place) This is because these stores are more likely to recommend a new, innovative or high-end product than a large merchant. Plumber's attention should be grasped for increasing market penetration. Costumers in the shower market know little or nothing about the products they buy, so they are strongly influenced by their plumber's advice. It is important to note that plumbers install 54% (972,000 installations) of the showers in the UK(Place) and Aqualisa's management has the goal of selling 46,800 (2.6% of shower market) showers in a year to break through the mainstream. 3. By convincing just 20% of the 10,000 plumbers, to recommend Quartz to their customers, the end result would be 58,320 (972,000 showers x 20% of plumbers x 30% installation of Quartz) Quartz showers installed. Once the plumbers realize this product satisfies their needs, the word of "Quartz being a great product"(Promotion) will spread amongst the small plumbers' population quickly. 4. It is also important that Aqualisa does not lower Quartz proposed price for two reasons(Pricing): (1) To avoid cannibalism towards Aquavalve (bestseller for Aqualisa) and (2) Create lower installation costs for consumer Quartz offers good value for the end customers not only in terms of product features but also price, even though it is their highest priced product. Comparing Aquavalve value to Quartz Standard: a typical installation of Aquavalve will take from 1-2 days. Assuming that plumbers charge on an average 70/hour (including labor and materials for excavation) and it takes 12 hours to install, customers would pay 840, over and above the retail price of 390 - the total being 1230. Assuming similar labor charges (even though excavation is not required), and 6 hours installation time for Quartz - a customer pays approximately 420 for installation - the total cost being 420 + 850 = 1270. Hence, the total cost for the customer is fairly the same in both cases. In addition, they receive a product that is much advanced and better in all respects. Thus, it is suggested that Aqualisa maintains its current price for Quartz and use the above value proposition in targeting customers to show then benefits gained.

Solution:The best solution for Aqualisa is to focus on plumbers as they are the primary customers of trade shops which have the most sales volume in the U.K. shower market. Along with this, plumbers should also work for developers, showrooms, contractors or directly for consumers since they play an important role in the distribution channel and reaching the end consumers. Once plumbers are convinced and informed about the benefits of the new product like ease of installation, they will become a source of word of mouth to push showrooms to call attention to Quartz by emphasizing the low cost of installation. Similarly, plumbers will help convince developers by suggesting the new product. Lastly, consumers in the standard price range trusted an independent plumber to advise or choose a product for them. Sales will automatically be increasing by getting plumbers to select Quartz for this consumer segment. As a result, I think that plumbers have a huge influence on the showers choice and thus Aqualisa has to find ways to reach plumbers and to make them loyal to the brand.

Implementation:Arranging a conference for plumbers and developers: - A conference should be held to present the benefits of the new product and demonstrate the ease of installation, which plumbers and developers can be invited to. The number of plumbers and developers should be made not of. The cost of this conference should include the staying, traveling and sample product cost. In order to incentivize people to devote their time to this conference, the Quartz shower should be gifted to every participant because when they try it, they will get over with the skepticism toward technologically new products at least for Quartz. The demonstration and presentation will be done by plumbers who are old users of the product. Giving away a free product to try:- Aqualisa should give a free product to those consumers who might not want to buy it due to its relatively higher price, despite suggestions form plumbers. Customers will experience better shower performance due to absence of the problems of low pressure with pump and fluctuation in temperature. This will also help build brand awareness, so the company can also target those types of consumers which will eventually lead more and more word of mouth. Providing an unconditional guarantee to plumbers and customers:- Aqualisa should accept products that are returned within 6 months if there is any problem with installation or product without any conditions.

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