AQUALISA QUARTZ: SIMPLY A BETTER SHOWER

CASE ANALYSIS
Group-10
(Section – F)

Submitted By: -
Priyanka Meena
Sunpreet Singh Bhasin
Vaishali Jaishanker
Vidolkar Aditya Sudhir

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AQUALISA QUARTZ: SIMPLY A BETTER SHOWER

Overview:
Founded in 1977, Aqualisa became one of the leading players in the shower market in UK.
The market was split into 3 categories of shower products: electric shower, mixer shower and
power showers. Aqualisa was a major manufacturer in products belonging to each of the
three categories. In 2001, with the efforts of the R&D department, they launched the Quartz
shower, a significant innovation for the UK shower market.
Boasting of remote pressure, temperature control and lesser fitting time, the Quartz shower
provided the solution to problems such as poor to low water pressure, fluctuations in
temperature and frequent breaking down of valves. With the breakthrough it offered,
Aqualisa expected high sales and an increase in the market share.

Problem Statement:

Even though Quartz was miles ahead in terms of innovation in the current shower market, the
sales wasn’t as forecasted by Aqualisa. The expectation was floored at 100-200 units/day but
the achieved sales were only 30-40 units/day.

The issue to be addressed was to gather momentum in sales by a targeted and focused market
strategy.

LONG TERM AND SHORT-TERM PROBLEMS

SHORT TERM
1. Less than expected sales for Quartz
2. Poorly organised marketing and sales department
3. Dwindling product quality

LONG TERM
1. Agile marketing strategy
2. Threat of innovation by competitors

CAUSES OF THE PROBLEM

Customer dependence on plumbers – In UK shower market, 73% of customers depend on
plumbers for the choices they make for selection of brand and product of shower. The lack of
awareness in customers and the scepticism that plumbers had regarding electronics and
innovation in showers affected the final sales of Quartz
High priced product – Aqualisa is regarded as a premium brand by the consumers. Its
products are believed to be high-end and full of extra features. Quartz, a breakthrough, was
already priced at much higher rate than the products in the market. Additionally, the retailer
margin on the product was nearly equal to the MSP charged by the company. The price made
the developers and customers dubious about making the purchase.

2
Untapped distribution channels and consumer market – The full capacity of both the
distribution channels and consumer market was not utilised by Aqualisa. Only 60% of
households had showers. In case of distribution channels, Aqualisa was available in only 40%
of the trade shops, 25% of the showrooms and no presence in DIY sheds.
Internal problems and External competition – Aqualisa had a poorly organised marketing
campaign and sales department. A small percentage of staff was dedicated to capturing new
customers. Along with that, the employees were unsure of the impact that Quartz will have
on the existing Aqualisa products in market.
Aqualisa had two existing competitors: Triton and Mira. These two brands had amongst them
51% of total shower market share. With the launch of Quartz, these brands will take it as
challenge and start designing a competitive product for themselves too.

PESTLE Analysis

Economical:
Quartz was priced higher than the other products launched by Aqualisa. Even while
developing an alternate strategy to promote sales, the company was not ready to lower its
prices because they wanted it to be in the premium segment and it was a breakthrough
product in the market. The margins retained by the retailers on the sales of Quartz was too
high which affected the sales of the product.
The cost incurred for the large-scale consumer campaign was around 25% of the net income
which was a difficult situation for the company.

Social:
Aqualisa had an image as a premium brand manufacturer. Products, such as Quartz, were
directly sold in showrooms. High performance, service and style were the factors that
influenced its price.
For the standard and value segments, the customer relied upon independent plumbers to
recommend and select a product for them to avoid excavations.
Quartz had a potential to solve existing customer problems such as fluctuation in pressure and
temperature of water and didn’t encounter the stiff valves. This might impact the sales of
Aqualisa and Gainsborough’s existing products.

Technological:
In a current shower market scenario of UK, Quartz had the innovation and design to reduce
dependence on bulky and time-consuming installations while providing a location flexibility
to set up the system.
However, the perception held by plumbers was of aversion towards innovation and electronic
equipment. Even the loyal plumbers were sceptical about Quartz.

SWOT Analysis

Strengths
Share in shower market: 18%
Loyal workers like trade shops and plumbers
Innovative breakthrough by Quartz
Weaknesses
Product quality deterioration (10% of company’s
showers could not function properly)
Over priced products
Slippage of customer services over period of time

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 Poor marketing strategies for Quartz
Only 10% of sales department employees are
available to new customers
Opportunities Threats
Quartz itself, if sales picked up Competitors gaining sales in market
Sales opportunity in showroom’s display and
Effect of Quartz on existing Aqualisa’s products
trade shops
Investing earned profit in promotion Distrust in innovation by plumbers
Expand loyalty

Decision Criteria
The factors to be considered while making the decision are:
1. Competitive advantage
2. Plumber relationship
3. Developers
4. Relationship with showrooms and trade shops
5. Customer Segment

Alternate Solutions
1. Targeting consumer directly by outlets or showroom with amalgamated DIY
approach
Pros:
 Low selling price of Quartz by cutting down retail margin
 Brand and product awareness by direct interaction
 Can involve the remaining 75% showrooms in UK
Cons:
 Capital investment for setting outlet
 Additional campaign needed for brand development

2. Test runs and trainings with installers(plumbers)

Pros:
 Can increase the plumber loyalty and involvement
 Waiting time for installation decreased and plumbers can service more households
 Reduce scepticism of plumbers towards technology
 Cost reduction by involving apprentice plumbers
Cons:
 Conservativeness in plumbers to adapt to change
 Apprehension in existing plumbers for new low skilled plumbers taking up their
jobs

3. Targeting developers
Pros:
 Can make bulk offers to reduce the price of orders above a certain value
 Can sell the product to the developers involved in luxury household projects
Cons:
 Reluctance of developers to purchase a premium brand
 Limited scope for sale fixated on a particular segment of developers.

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4. Running a large-scale consumer campaign to build a consumer brand
Pros:
 Good opportunity to build a consumer brand with their most innovative and
breakthrough product
 Chance to compete with main player, Triton by spending 3-4 million Euros on
large scale consumer campaign
Cons:
 Significant time is required to create brand awareness in consumers
 At most an year is required to realize profits while 6 months will break-even the
cost incurred

A myopic model with the belief that research and development will ensure the growth[1] was
de facto, the primary reason why a holistic marketing campaign is required for the firm to
ensure growth. With the competitive edge it has, Aqualisa could rebrand the whole image and
create properly segmented products so that they can delve into existing market without killing
sales of their other products.

A marketing campaign with a focus on promotion of product and creating brand recognition
in all and sundry is the need of the hour and the plan it needs to capture the market and
eliminate the competition.

The focus of the strategy is segmented by the key players the company deals with, i.e., the
customers, the plumbers, trade shops, showrooms and developers.

Recommended Solution, Implementation and Justification

1. With plumbers contributing to 73% of the target consumers (based on Exhibit 4),
promotions targeted towards awareness about the reduction in installation times with
Quartz, loyalty programs and building confidence with the plumbers should be taken.

2. By building a direct to consumer distribution channel, the retailer margins can be

avoided and lesser prices could be provided using this route to the consumers. Since the
model has worked for the largest market share holder in the industry, prices could be
designed comparable to other brands with this route. Further, since DIY Sheds only
accommodate low price variants, introducing a DIY setup in the retail outlet would
convert more consumers that are able to try the setting up hands on. Also, 54% users are
dependent on plumbers for installation and this would prompt users who do not want to
depend on a plumber for installation considering waiting time for plumbers are high.

3. With 20% of the market contribution from developers, relationship building and offers
on bulk orders should be implemented to capitalise sales from this revenue stream. To
offset the greater price/more expensive brand image, advertisements and promotions
should be invested into, since this would create more consumer demand for the showers/
should target developers of luxury housing categories.

Reference:
[1] Levitt, Theodore. Marketing myopia. 1960.