Case: Aqualisa Quartz: Simply a Better Shower Names: Roll no:

Major decision issues in this case: Should the product be positioned differently? In particular: o Should Aqualisa/Rawlinson allow Quartz to remain a niche product (sold mainly in showrooms)? o How Quartz should be positioned against other Aqualisa products: should Aqualisa stop treating Quartz as a breakthrough product and instead sell it at a discounted price in alignment with its other products? o Should the company take a gamble (high-risk, high-reward strategy) on Quartz and target customers directly with it, positioning Aqualisa as a consumer brand in the process? Should Aqualisa explore other markets in the world with this breakthrough product as the spearhead? Should the channel strategy change for Quartz? In particular: o Should plumbers/trade shops be targeted? o Should showrooms be targeted? o Should the focus be on Do-It-Yourselfers? o Should the focus be on targeting Developers? Should the promotional strategy change? In particular: o Should Aqualisa conduct a large scale consumer campaign? Should there be sales incentive program for Plumbers?

Recommendations: Aqualisa should continue to treat Quartz as a breakthrough product far superior to other products. Quartz should be positioned as a mainstream product in the premium segment, and therefore prices should be maintained high with respect to its other products. Increase product availability in showrooms from 25% to have improved sales in Premium segment The company should embark on a large scale advertising campaign, targeting the consumers directly. The ease of installation, reliability, technological advancements,

superior user experience (wow factor) need to be emphasized. Customer testimonials could be published. Aqualisa has about a 2-year technological head start, and they should build on this advantage by using Quartz to penetrate global consumer markets directly. A global multimedia advertising campaign could kick-start the effort. Plumbers should be educated about the ease of installation, the superiority of Quartz and that the innovation could be trusted. Road-shows could be organized. If workshops do not convince Plumbers, Aqualisa should consider offering attractive incentives to Plumbers to promote sales.

Analysis supporting recommendations: Positioning strategy: The Quartz digital shower is a breakthrough product technologically speaking, and Aqualisa has at most a 2 year head-start (Rawlinsons estimate) on all of its competitors in the U.K. Of all the shower units sold in 2000, the facts observed are: mixer showers accounted for 30.55% of the market. Aqualisa accounted for 20.82% of the mixer showers sold, making it the second largest player in this segment. electric showers were the largest kind sold, and firmly positioned in the value segment.

With a margin of 275 euros for the standard model and 345 euros for the pumped model, about 18000 units of Quartz would have to be sold in order to recover the R&D costs (5.8 million euros). Lowering the price would not only lower the margin, it would also place it in the same segment (standard) as the companys mainstay, Aquavalve 609. If Quartz and Aquavalve 609 were both positioned in the standard segment, there would be detrimental direct competition. If Quartz were re-positioned in the standard segment, and sale price of Aquavalve 609 were in turn reduced to avoid direct competition, there would be a significant impact on revenue as margins realized would be far lower. All things considered, especially the numerous benefits due to the technological advancements, it is imperative that Quartz be positioned as a premium product far superior to Aqualisas own offerings and those of its competitors. Additionally, we propose that Aqualisa should consider enter global markets by promoting Quartz (more explanation in last section of our analysis) as a revolutionary product in the premium segment.

Channeling strategy: 54% of installations in 2000 were done by plumbers who in turn sourced from trade shops. Plumbers had a highly influential role in the choice of brand and type of shower installed by developers, contractors or consumers. Therefore it was necessary to continue to target plumbers. Targeting DIYs is not a good proposition in our opinion since associating Quartz with the discount channel would conflict with its intended positioning in the premium segment. Similarly, targeting Developers was not an option if it meant lowering the price of Quartz, since we clearly wish that Aqualisa charge a premium for its superiority. Showrooms were the only place were sales of Quartz were showing an increasing trend. This can be explained by taking note of the following points: Showrooms typically stocked high-end products Customers got the opportunity to experience the Quartz showers first-hand, and its superiority ensured that it was an instant hit.

Given these facts, and that only 25% of the 2000 showrooms sold Aqualisa products, it would be a good idea to actively target distributors and showrooms.

Promotional strategy: The leader in the U.K. shower market, Triton, was the only company that had managed to create brand awareness at the consumer level. Also, consumers complained about hard-to-turn valves and durability. This could be a reason why only 60% of U.K. homes had showers as of 2000. By directly targeting consumers to inform them of the following benefits could really open up the market and convert the remaining 40% into installing showers. Ease of installation Lower cost of installation due to reduced excavation Efficient and reliable water pressure and temperature Hard-to-turn valves replaced with easy-to-push electronic buttons and even remote control units

Many of the customers could also be influenced to opt for Quartz showers when there was need to replace the old units (In year 2000, replacements accounted for 44%). Once customers became aware of the advantages, they would even ask directly for the product in the showrooms and from plumbers, thus spiraling an increase in demand. Secondly, it would put an end to the almost

complete reliance on the choice of plumbers influencing the number of units of Quartz installed. Therefore, we believe that a large scale consumer campaign in all forms of media is essential. In addition, we propose that Aqualisa should research the market in other countries. Aqualisa should then decide whether or not to launch an advertising campaign directly targeted at premium segment consumers in other countries as well, thereby widening the potential market for Quartz. Having said that however, it is important to promote the quartz shower amongst the plumbers as well, mainly by educating them about the savings in installation time and the reliability. Since they have a significant power to influence (73% of the installations), it would be important to remove the negative bias they have about innovation. Occasional road shows and all-around-theyear training workshops all over the country should be conducted.