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MEMORANDUM

TO: Harry Rawlinson, Aqualisa Managing Director


FROM: Vivek Durairaj, Marianna Feldmansky (Hecht), Danielle Fontaine, Chris Henshaw,
Vanessa Landry, and Scott Watson
SUBJECT: Aqualisa Quartz Marketing Mix – Product, Place, Promotion, and Price
DATE: March 11, 2009

Statement of the Problem


Aqualisa has not established the proper mix of product, place, promotion, and pricing for its
revolutionary Quartz shower valve. The company has relied on the same marketing mix approach for the
Quartz as its other products and this has resulted in disappointing initial sales numbers. Also, Aqualisa
has not devoted the necessary time and effort to soothe the fears of consumers who are wary of electronic
showers. Finally, the sales force has not spent adequate time recruiting new customers and securing
distribution through the existing network of plumbers. The existing network of plumbers has not adopted
the product as readily as expected, which indicates that there is not a strong trust in the brand.
Issues and Analysis
The marketing mix is the combination of product, place, promotion and pricing and it is subject to
both the internal and external constraints of the marketing environment. Aqualisa has developed an
appropriate marketing mix for its existing products and has operated successfully and profitably.
Unfortunately, the same marketing mix cannot be applied to a product as radically different and
revolutionary as the Quartz.
Before we can consider the right mix of product, place, promotion, and pricing (the four Ps) for
the Quartz, we must first analyze our target customers so we know how to create the right mix for that
customer. We performed a market segmentation analysis (Exhibits 1-7 and 1-11) which identified six
potential target customers: Standard Customers, Value Customers, Premium Customers, Plumbers,
Property Developers, and Do-It-Yourselfers. The analysis revealed that the three direct customers
(standard, value, and premium) can be reached through the influence of the plumbers and showrooms. Per
Exhibit 1-1, plumbers are responsible for selecting the type of shower for more than 75% of shower
purchases in the U.K and Aqualisa could capitalize significantly by focusing on plumbers. The property
developers could generate large guaranteed sales volumes, but this would not materialize for a few years
due to lengthy construction timelines. The Do-It-Yourselfers would require direct consumer advertising
and Aqualisa does not have strong brand recognition in the market among consumers at this time.
Product – Our analysis of the Five Cs, Five Forces, and SWOT at Exhibits 1-1, 1-2, and 1-4
respectively, demonstrate the innovative qualities of the Quartz and the impact it could have on the U.K.

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shower market if properly marketed. There are currently no competitors in the market with a product that
matches the potential of the Quartz and now is the time to be aggressive and penetrate the market. The
strongest force working against the Quartz is the availability of less advanced substitutes in the market
which lack the features of the Quartz; this is compounded by the fact that consumers are wary of showers
that include electrical components due to prior failures in the market and other potential malfunctions. We
developed a sample conjoint analysis survey (Exhibit 1-10) which would help isolate the features most
important to consumers when selecting a shower.
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 main
suppliers for plumbers. With the exception of electric showers, trade shops are the dominant channel for
all other shower types (Exhibit 1-3). The trade shops would have to be reached more pervasively by
Aqualisa in order to capitalize on the attractiveness of the plumber segment. 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; however, the visual appeal
of the Quartz makes it a perfect addition to showroom inventories and Aqualisa should consider making
the necessary investments in demos and displays to increase its presence in these venues. 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 and it could be a difficult
channel to enter given Aqualisa’s lack of brand recognition in the consumer market.
Promotion – As mentioned above, 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 (see Value Equation at Exhibit 1-5).
Pricing – To evaluate our pricing strategy, we have prepared a pro forma income statement
(Exhibit 1-8) and a breakeven analysis (Exhibit 1-14). Our breakeven analysis shows that Aqualisa’s
breakeven quantity is 13,335 units when we assume fixed costs of 4.1 million Euros per year. This
equates to 36 units per day, which is not an unreasonable outcome given the current sales volume of
approximately 15 units per day. Our breakeven analysis maintained the introductory pricing of both
versions of the Quartz (standard and pumped) in order to evaluate the current pricing strategy. Lowering
the price would result in a higher breakeven quantity, which means it would take longer to see

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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.
Recommendations
• Target two main market segments: Plumbers and Premium Consumers (Exhibit 1-7).
• Position product in showrooms and trade shops to reach target markets.
• Create segment specific print advertising to address individual concerns and needs for the product
(Exhibit 1-15).
• Work internally with Sales team to focus more time on generating new accounts and not just
maintaining existing clientele.
• Maintain current pricing while appealing to new consumers in all segments by providing
introductory promotions specific to their purchasing channels.
Initial sales goal is to sell 100 units per day and maintain profit margins as outlined in the Pro Forma
Income Statement (Exhibit 1-8). Long-term recommendations include targeting additional markets such
as the Do-It-Yourselfers and exploring discontinuation of low margin products to increase Quartz market
share (Exhibits 1-6 and 1-9).
Support
Studies show that two of the three consumer segments (Standard and Value) rely heavily on
Plumber opinions and/or suggestions for the purchases of their bathroom fixtures (Exhibit 1-7). Given
the strong influence they have over their client’s purchases, we want to be the number one brand
recommended by plumbers. Plumbers will become our main target market to tap into several consumer
segments and greatly increase our market share within the industry.
In order to appeal to plumbers, we need to demonstrate the value of utilizing our new electronic
product (Exhibit 1-12). We will emphasize its installation time being one quarter of what they are used
to, and how this will allow them to install more showers in less time. Therefore, they will be able to take
on more jobs and make more money per year (Exhibit 1-16). Due to its simple installation, they will also
be able to train apprentices on how to use the product and focus their time and energy on more intensive
and monetarily rewarding projects. A specific brochure and advertisement will be released exploring the
ease and innovation of our product (Exhibit 1-15).
Our second target market will be the Premium Consumers who are mostly influenced by style and
looks when deciding which shower to purchase (Exhibit 1-7). They are not price sensitive and take
performance and quality for granted. Since the Quartz has a higher price point and its aesthetics are
unparalleled in the current market, we are confident that it will do well with the premium customers.
To reach these consumers, we will focus on placing the product in showrooms and positioning the Quartz
as being similar to “spa treatments in your home” to elicit a luxurious and comforting feel (Exhibit 1-13).

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The product will be positioned as high quality with innovation that makes life easy. Despite the fact that
they are not price sensitive, we will find ways to emphasize its comparably reasonable pricing and how
money saved on the shower will allow more money to be focused elsewhere for bathroom renovations.
In addition to focusing on new ways to target the main market segments, we intend to re-evaluate
the methods used by our Sales Team. Instead of the current 90% focus on maintaining and expanding
existing accounts, we would like to increase our energy toward soliciting new relationships with prospects
for large accounts. We suggest a 30/70 split on time spent with new clients versus existing. To motivate
our employees to build these relationships, we suggest implementing a bonus plan. Each Sales
Representative will have individual goals for a number of new accounts to contract each month, based on
their experience and years in the industry. If these goals are met, they will receive a bonus of 10% of
their monthly salary. We anticipate that this incentive plan will greatly assist in reaching the company
goal of selling 100 units per day as employees will be encouraged and motivated to sell.
As mentioned previously, we aim to maintain current pricing on Quartz products. However, to
increase initial enthusiasm we will offer several monetary and informational promotions targeted to our
different segments. For plumbers, we will offer a product guarantee and will cover repair costs. Since
most plumbers pay repair costs out-of-pocket, this will make them less hesitant to try our product. We
will also provide an informational brochure outlining cost and installation time comparisons between
similar products on the market. In showrooms, we will have working demonstrations to pull customers to
our booths. In different showrooms we will offer promotions such as 20% discounts if purchased that
day, to promote day-of purchases. We will educate consultants on Quartz as well, so that they are
adequately prepared and willing to promote the product.
In the long-term, we will also expand our target segments to include the Do-It-Yourselfers, a
sizable group of consumers who install products on their own and generally shop at large retail outlets
(Exhibit 1-7). They are interested in inexpensive models that are easy to install, without much emphasis
on aesthetics. Since this group is already attracted to electric showers, we will grasp their attention with
more emphasis on effortless use with easy-to-read instructions and advertisements in weekly flyers and
home improvement magazines. The product will be positioned as “affordable luxury” for those
consumers who are price conscious, but still want the latest and greatest gadgets with swanky reputations.
Quartz will be rolled out into large scale home improvement stores such as B&Q. Additionally, once
Quartz sales have proven to be more profitable than existing products, we will explore discontinuing less
productive products that are no longer generating high sales numbers. This will allow more time and
resources to focus on promoting and producing the Quartz (Exhibit 1-6).
Market research shows that consumers want a shower that looks great, delivers good pressure at
stable temperatures, and is easy to use; Plumbers want a shower that is easy to install, with a guarantee

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not to break down or require servicing. Our product already embodies all these qualities and we are
confident that the correct mix of product, place, promotion, and price along with targeted advertisements
and sales strategies will help us to achieve our yearly sales goals.

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