Problem Statement

Aqualisa launched the most significant shower innovation in recent British history: the Quartz
shower. The shower provides significant improvements in terms of quality, cost, and ease of
installation. In product testing, the Quartz shower received rave reviews from both consumers
and plumbers alike. However, early sales of the Quartz have been disappointing. Now, the
company is faced with some key issues about whether to change the channel strategy,
promotional strategy, and the overall positioning of the product (niche or mainstream product) in
the context of his existing product line.
Situation Analysis
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 shower max
(specialized product similar to Aqualvalve at lower priced than the before mentioned) to
penetrate the developer's market.
Company's Strengths
* Strong reputation in the shower market
* Highly profitable company
* High quality products
* Excellent service

* Strategic use of Gainsborough brand to penetrate low cost market

Company's Weaknesses
* Only available in 40% of trade shops, 25% of the total showrooms, and 70% of total outlets
* 10% defected products
* Competition is catching up in product quality
* Considered as an expensive brand
Costumers: Broadly speaking the customers in the individual market segment have one common
feature; they could identify problems in current showers which were poor pressure, varying
temperature and breaking down. Within this individual customer category there are sub-segments
based on varying needs.
Following the description of the 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
consumer, their role will be significant for Aqualisa when creating an effective marketing
strategy.
Value Customers: Customers in this category are mainly concerned with low price and
convenience. While style or looks is not their primary concerns, functionality plays an important
role. Price is very important to this category as they do not like to spend money on solutions that
require excavations (as they would increase installation costs). Hence, ease of installation is very
important to them. The consumers' decisions are largely influenced by the plumber - either the
plumber selects the shower or advices them on the type (not the brand). Final installation was
usually carried out by the plumbers. This also includes a category of customers called DIY,
consisting mainly of landlords and apartment dwellers - who install and select their own
showers.

Standard Customers: Customers in this category are mainly concerned with reliability and
performance. Assuming that they fall in the middle of the two categories, style would be a
consideration but not important. They also rely on the individual plumber to not only recommend
or select a product for them but eventually install it. Products offered by Aqualisa for this
category are Gainsborough, Aquavalve 609 and Aquastream Thermostat ranging from 155 to
670, offering better quality and state-of-the-art technology.
Premium Customers: Customers in this category expected performance and service as a base
criteria to be on their qualifying list of products. Style is what dominated their selection. They
usually shopped at showrooms which had technical experts to explain the various product
options and help them in evaluating and selecting the right product. Being better informed than
the other two segments, plumbers had very little influence on this category. The showrooms also
offered installation service. The only product offered by Aqualisa for this category was Aquastyle
at 230.
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. They do not require
showers that have premium valves because the new homes are built with high-pressure systems.
Also, they do not rely on the individual plumbers while making purchase decisions. However,
they do have relationships with the plumbers who will install the showers that the developers
select. Aqualisa offered the ShowerMax brand to this category at a significantly lower price than
their other products and fewer features.
The Plumbers: Although the plumbers are not Aqualisa's prime customers, they have huge
influence on the individual market segment, especially the value and standard customers. Their
major concern is reliability, performance and ease-of-installation because they would have to
bear the costs of any unforeseen problems. Hence, they would familiarize themselves with a
product brand. They are quite loyal to the brand that they have chosen and are apprehensive of
any product innovations.

Collaborators: Aqualisa has a 20-person sales team who sold to distributors, trade shops,
showrooms, developers and plumbers. (DIY sheds represent 36% of the shower market sales
trade shops 47%, and trade shops and showrooms 17%) Currently, they spend 90% of their time
on maintaining exiting customers, only 10% on developing new customers. Team has a longstanding relationship with a group of loyal plumbers- "our plumbers".
Context: Aqualisa Quartz was developed in reaction to customer dissatisfaction with the poor
quality of showers on the market, in addition to the company's need to innovate in order to
differentiate itself from the competition and maintain competitive advantage.
Alternatives and Recommendation
Aqualisa's marketing team discussed three options for the marketing strategy for Quartz. The
three options they came up with were; targeting consumers directly, target Do-it-Yourselfers, and
target developers. The three alternatives have advantages and disadvantages as shown in Exhibit
1.
From the analysis of this case we determine that Quartz is a niche product. We recommend that
Quartz should target the specialized bathroom retail stores, captivate the plumbers' attention, and
raise product awareness amongst consumers. While plumbers tend only to recommend products
they know well, 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. As we believe that
Quartz is a niche product, the specialized retails stores will be the place where the demand will
be created for this product. These stores are more likely to recommend a new, innovative or highend product than a large merchant. In order to ensure a strong increasing market penetration,
plumber's attention should be grasped. 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 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. By convincing just 20% of the 10,000 plumbers, to recommend
Quartz to their costumers, 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" will spread amongst the small
plumbers' population quickly.
It is also important that Aqualisa does not lower Quartz proposed price for two reasons: to avoid
cannibalism towards Aquavalve (bestseller for Aqualiza) and 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.
Implementation Plan
Quartz will be positioned as the easy to install, most aesthetic, advanced and unproblematic
shower. Quartz is an improvement over Aqualisa's existing product range. However, it is safe to
say that Quartz is an entirely new product because of the advanced capabilities offered by it in
terms of features, performance and flexibility. The launch of a new product requires awareness.
The customers need to be educated about the product and its features. As pointed out in the case,
customers are generally unaware of product features and have limited knowledge. Hence,
Aqualisa should use its existing brand image and awareness in the market to launch the ad
campaign for Quartz and build product awareness. It is agreed that the costs will be high and is a
risky proposition. But, still by the end of the current year Quartz will make profits, which can be
used to finance the ad campaign (see Exhibit 2). This should be viewed as an investment and not
as a cost; since Quartz is going to lead Aqualisa's market for other electronic product innovations

and success of Quartz will give Aqualisa the first mover advantage in the market. Along with this
ad campaign Aqualisa should distribute 3000 free Quartz packages (shower samples with
brochures, information on installation and benefits of Quartz) to the plumbers. This will
encourage plumbers to at least recommend and install one Quartz shower to their costumers.
Once this is done as mentioned before "spread of word" will work within the plumber
population. Finally Aqualisa, as a niche product, should place the products in the specialized
bathroom retail stores. Quartz allows high margins (88% on Quartz standard and 87% on Quartz
pumped) for retailer and is a very attractive product to carry. The company should use half of its
sales force to convince these retailers to take Quartz in their shelves. Finally, as mentioned in the
recommendation section, Quartz's price should remain at what is proposed.
Exhibit 1
Consumers Directly Do-It-Yourself Developers & Plumbers
Advantages
- Getting directly to treat with the final customer
- Lower dependence from plumbers
- Smaller bargaining power from customers
- Raise company's image
-Product awareness - Easy to install (no need for plumbers)
- Depend on the final consumer
- High quality product, with great design

- Avoid problems reaching the plumbers - Develop trust and loyalty of the customers that try the
product
- Gain influence in the decision makers of the market
- Securing a number of sales through the year
- Low advertisement cost
- Develop a large volume distribution channel
Disadvantages
- High advertisement costs
- Need of informed and good salesmen force at reasonable cost
- More difficult to convince plumbers to buy the product
- Make a large consumer campaign (very expensive)
- Place a premium product in an inferior segment
- Could damage Quartz's image
- Harder to sell the product
- Possible discount on price
- Need of informed and good salesmen force. Reasonable cost

Exhibit 2
Current Year Selling 15 Selling 30-40
1st 6 months 2nd 6 months Totals
Sales $ 1,345,500 $ 3,139,500 $4,485,000
Costs $ 538,200 $ 1,255,800 $1,794,000
Marketing costs @ 6% of sales $ 80,730 $ 188,370 $ 269,100
Costumer services costs $ 40,365 $ 94,185 $ 134,550
EBIT for 1st year $ 686,205 $ 1,601,145 $2,287,350