Aqualisa Quartz: ‘simply a better shower’ – a significantly advanced merchandise developed by Aqualisa. in footings of both cost and quality. has been confronting challenges in the market since its launch four months ago. The merchandise described by one of the clients ( a pipe fitter ) is a ‘push-fit-connect-you’re done’ shower and offers the clients ‘what they ( the pipe fitters ) want’ . Despite the above facts. Quartz has experienced hapless gross revenues and has non met the company’s outlooks.
Hence. the company’s pull offing manager. Harry Rawlinswon. a HBS alumnus who has the ‘itch to believe big’ is faced with many cardinal determinations sing the company’s selling scheme. He is re-evaluating their bing scheme sing the overall placement of the merchandise. distribution channels and efficaciously pricing and advancing Quartz.
This study analyzes Aqualisa’s bing scheme. get downing with market cleavage and client behavior taking to the 4Ps ( Product. Place. Price and Promotion ) . Based on the analysis. recommendations have been provided that will assist Aqualisa in developing an effectual selling scheme.
U. K Shower Market
U. K. Shower market is consists of clients who are rather uninformed about the showers and do understand the merchandise options. Based on the information in the instance. they can be divided into chiefly two classs of clients: single purchasers and belongings developers. Each of these is farther subdivided based on two variables: monetary value and client behavior. The tabular array below. lists a few features
Figure 1: Market Sections based on Price v. Customer Behaviour
A elaborate description of the above figure is as follows. along with the merchandise that Aqualisa offers to provide to their demand. Quartz is a new merchandise for Aqualisa. and therefore placing the features of their existing clients is of import. Aqualisa needs to develop an effectual placement scheme for Quartz. so that it does non cannibalise their existing merchandises and besides additions significant entry into the market at the same clip.
Broadly talking the clients in the single market section have one common characteristic i. e. they are faced with jobs of low H2O force per unit area. But. within this single client class there are sub-segments based on changing demands. However. the belongings developers do non confront the jobs of H2O force per unit area and are faced with the different set of issues.
The three distinct clients in the single class based on monetary value are:
* Value Customers.
* Standard Customers and
* Premium Customers
The belongings developers who form an wholly different class are rather price-sensitive with the exclusion of a few luxury developers.
One interesting group of people in all the classs. who are non the consumers and hence could non be placed in the above figure are the pipe fitters – people who really install the showers so that the clients can really derive the benefits that they seek. As mentioned earlier. the consumers’ cognition of showers is really limited. Hence the information hunt / rating during the purchasing procedure is mostly influenced by these pipe fitters.
Following the description of the above client classs is a treatment of the behavior of pipe fitters. which is indispensable to understand the true nature of the market. Although they are non the terminal consumer. their function will be important for Aqualisa when making an effectual selling scheme.
Customers in this class are chiefly concerned with low monetary value and convenience. Style or looks is non their primary concern ; but. functionality plays an of import function. Since. monetary value is really of import to this class they do non like to pass money on solutions that require diggings ( as they would increase installing costs ) . Hence. easiness of installing is really of import to them. The consumers’ determinations are mostly influenced by the pipe fitter – either the pipe fitter selects the shower or advices them on the type ( non the trade name ) . Concluding installing was normally carried out by the pipe fitters. This besides includes a class of clients called DIY. dwelling chiefly of landlords and flat inhabitants – who install and select their ain showers.
Merchandises offered by Aqualisa for this class are: Gainsborough. Aquavalve and Aquastream Manual runing from 95 to 480.
Customers in this class are chiefly concerned with dependability and public presentation. Assuming that they fall in the center of the two classs. manner would be a consideration but non of import. They besides rely on the single pipe fitter to non merely urge or choose a merchandise for them but finally put in it.
Merchandises offered by Aqualisa for this class are Gainsborough. Aquavalve 609 and Aquastream Thermostat runing from 155 to 670. offering better quality and state-of-the-art engineering.
Customers in this class expected public presentation and service as a base standard to be on their qualifying list of merchandises. Style is what dominated their choice. They normally shopped at salesrooms which had proficient experts to explicate the assorted merchandise options and assist them in measuring and choosing the right merchandise. Being better informed than the other two sections. pipe fitters had really small influence on this class. The salesrooms besides offered installing service.
The lone merchandise offered by Aqualisa for this class was Aquastyle at 230.
Customers in this section are rather price-sensitive and require showers that are dependable. fashionable and flexible i. e. those that could work in multiple scenes. They do non necessitate showers that have premium valves because the new places are built with hard-hitting systems. Besides. they do non trust on the single pipe fitters while doing purchase determinations. However. they do hold relationships with the pipe fitters who will put in the showers that the developers select.
Aqualisa offered the ShowerMax trade name to this class at a significantly lower monetary value than their other merchandises and fewer characteristics.
Although the pipe fitters are non Aqualisa’s premier clients. they have immense influence on the single market section. particularly the value and standard clients. Their major concern is dependability. public presentation and ease-of-installation because they would hold to bear the costs of any unanticipated jobs. Hence. they would familiarise themselves with a merchandise trade name. They are rather loyal to the trade name that they have chosen and are discerning of any merchandise inventions.
Aqualisa’s Marketing Strategy ( 4Ps ) and Quartz
Until now. Aqualisa has had a successful selling scheme. basking 25 % net return on gross revenues and a growing of 5 % to 10 % in a mature market. They have efficaciously segmented their markets and have merchandises that cater to each segment’s demands. Their channel relationships are strong and placement has helped them accomplish a good trade name name in the market. Following is a brief treatment of Aqualisa’s 4Ps with an accent on their new merchandise Quartz. It highlights certain challenges that Aqualisa presently faces with Quartz and later supplying recommendations.
Aqualisa offers a broad scope of merchandises to provide to the demands of each of its market sections. as has been described above.
The recent debut of Quartz showers has been a great spring for Aqualisa in footings of both merchandise quality and cost. The company spent about 3 old ages and 3. 8 million in developing the merchandise. It was developed after set abouting a thorough market analysis and placing the jobs in bing merchandises – ensuing in a merchandise that ‘customers really want’
The merchandise is offered in two theoretical accounts – the Quartz criterion ( non necessitating a pump to hike H2O force per unit area ) and Quartz Premium ( including the pump ) . The usage of electronics has enabled the merchandise to offer alone advantages. both in footings of characteristics ( the usage of index visible radiation to signal that needed temperature has been achieved ) and in footings of installing. Quartz provides high flexibleness of installing – the usage of remote processor to command the thermostatic sociable valve has overcome the demand to unearth ( since it can be handily placed anyplace near to the shower where there is entree to H2O pipes ) and has enormously reduced installing times and costs. As such. the easiness of installing makes it attractive for the most novice client. In add-on. no bulky package translate into better expression and manner.
Last. as described by Rawlinson. Quatrz will open up doors for development of new merchandises. So. what are the issues that Rawlinson faces?
The usage of electronics ( which was a failure in the 80’s ) has caused pipe fitters to be doubting about the Quartz. But. that was 20 old ages ago and we have seen a great trade of technological promotion. Field trial that were conducted before the launch of the merchandise to guarantee that it met the demands of its clients resulted in the ‘wow’ factor.
Second. Rawlinson feels that Aqualisa’s bing merchandises face the menace of cannibalization. particularly their hard currency cow – the Aquavalve.
So what should Rawlinson make? Following is Ansoff’s matrix that suggests corporate growing strategis:
Beginning: Jobber 2000
Clearly. Aqualisa falls in the Product development box. As suggested by Ansoff. this is riskier than the market development scheme. While a house pursues new markets with bing merchandises in market development. Aqualisa’s strengths lie non merely in relationship with its bing markets ( being No. 3 in the market ) but besides with the merchandise itself ( the excellent technology and R & A ; D squad involved in development ) .
The suggestion is that Aqualisa should non alter the merchandise. It is decidedly a riskier attack. but is a deliberate hazard i. e. Aqualisa has developed a merchandise that its clients want. who are merely non cognizant of its benefits. Second. Aqualisa can look at market incursion for its Aquavalve trade name and develop market in other parts or geographical locations.
The ‘itch to believe big’ taking to acceptance of such calculated riskier options will take Aqualisa to success.
Topographic point ( Distribution Channels ) :
Aqualisa offers its merchandises through a broad scope of distribution mercantile establishments – from trade stores. salesrooms. DIY Sheds. pipe fitters and contract mercantile establishments.
Quartz has been made available through all of Aqualisa’s distribution mercantile establishments. but in changing grades. In add-on. the Aqualisa’s gross revenues squad has besides targeted its ‘loyal’ group of pipe fitters by presenting them to the new merchandise. However. gross revenues have non picked up since the four months of its launch.
Aqualisa’s gross revenues squad targeted ‘their group’ of pipe fitters by presenting them to the merchandise. However. the pipe fitters are doubting of Quartz ( electronic and advanced merchandises ) for the grounds mentioned earlier. Hence. the trade stores ( plumber’s merchandisers ) have seen really hapless gross revenues. They have merely been able to sell 15 units a twenty-four hours – compared to an estimated demand of 100-200 units a twenty-four hours to interrupt through to the mainstream. However. one incident in the instance suggests that one time a pipe fitter installs Quartz he is instantly a ‘convert’ .
On the other manus. salesrooms have shown better consequences. They are able to offer clients ( the existent users ) with a show – which is a cardinal to Quartz success. Once the client has ‘seen’ the benefits. the merchandise is sold and the ‘love it’ . Quartz has become the prima merchandise of the salesrooms. where it has gone on show.
The instance does non give adequate grounds of Quartz being made available in the DIY shops. However. it can be assumed that Rawlinson has non to the full exploited this channel. because he mentions that they are careful of presenting any merchandise in DIY shops. Once a merchandise goes into DIY. it is about impossible to endorse out. However. Quartz flexibleness of installing makes it a DIY merchandise.
Besides. it does non give adequate grounds on the merchandise being made available to belongings developers. This group forms 15 % . a significant part of the market. In add-on. their determinations are non influenced by the pipe fitters but the merchandise. The pipe fitters in bend are influenced by the belongings developers. Quartz glass seems to offer precisely what the developers want – a value merchandise with much desired flexibleness.
Therefore. it is suggested that Aqualisa concentrates more on working these three channels for the following six months i. e DIY shops. the belongings developers and the salesrooms. These in bend will hold a trickle down consequence on the pipe fitters ( a major channel spouse for Quartz ) . since they are forced to put in what the clients want in the above instances. Once the pipe fitters have been influenced and there are many ‘converts’ . Aqualisa should do Quartz available in the trade stores ( since they tend to transport the merchandises that are in demand ) . As for now. Aqualisa should non concentrate its resources on the trade stores and pipe fitters.
Aqualisa enjoys a good repute and trade name name in the market. Its bing merchandises. being of high quality and public presentation have helped it achieve figure 3 place holding close to 18 % market portion ( 325. 500 units of 1. 8 million ) .
Quartz is an betterment over Aqualisa’s bing merchandise scope. However. it is safe to state that Quartz is an wholly new merchandise because of the advanced capablenesss offered by it in footings of characteristics. public presentation and flexibleness. In order to advance Quartz. Aqualisa has adopted several attacks – exhibitions. face-to-face contact with pipe fitters. and advertizement in The Mail on Sunday. The Quartz was awarded the top award at the Bathroom Expo and received great reappraisals from all newsmans. who were enthusiastic about the ‘cleverness’ of the merchandise and ‘elegant design’ .
Rawlinson points out that aiming the clients straight with an ad run will be approximately 3million to 4 million over two old ages and is really hard for a company with net net income of about 17 million.
So what should Aqualisa make?
As described above. Quartz is a reasonably new merchandise and launch of a new merchandise requires awareness. The clients need to be educated about the merchandise and its characteristics. As pointed out in the instance. clients are by and large incognizant of merchandise characteristics and have limited cognition. Merely one company has been able to make some merchandise consciousness i. e. Trinton.
Hence. Aqualisa should utilize its bing trade name image and consciousness in the market to establish the ad run for Quartz and construct merchandise consciousness. It is agreed that the costs will be high and is a hazardous proposition. But. this should be viewed as an investing and non as a cost ; since Quartz is traveling to take Aqualisa’s market for other electronic merchandise inventions and success of Quartz will give Aqualisa the first mover advantage in the market.
A few of import facts can be seen from the tabular array as below:
* Retailer borders across all merchandise classs is reasonably the same. runing about 47 % .
* Aqualisa’s hard currency cow – Aquavalve has a manufacturer’s border of approximately 60 % – comnparable to both the Quartz theoretical accounts.
* The cost of fabricating Quartz is higher than that of Aquavalve – hence the higher retail monetary value.
As will be described below. Quartz offers good value for the terminal clients non merely in footings of merchandise characteristics but besides monetary value. even though it is their highest priced merchandise.
Comparing Aquavalve Value to Quartz Standard:
A typical installing of Aquavalve will take from 1-2 yearss. Assuming that pipe fitters charge on an mean 70/hour ( including labor and stuffs for digging ) and it takes 12 hours to put in. clients would pay 840. over and above the retail monetary value of 390 – the sum being 1230.
Assuming similar labor charges ( even though digging is non required ) . and 6 hours installing clip for Quartz – a client pays about 420 for installing – the entire cost being 420 + 850 = 1270.
Hence. the entire cost for the client is reasonably the same in both instances. In add-on. they receive a merchandise that is much advanced and better in all respects.
Therefore. it is suggested that Aqualisa maintains its current monetary value for Quartz and utilize the above value proposition in aiming clients to demo so benefits gained.
Aqualisa has genuinely developed a merchandise that is traveling to take the market – nevertheless has faced challenges in footings of efficaciously positioning it and presenting it to the terminal client. Slow gross revenues have worried Rawlinson who was taught ‘think big’ .
Introducing a new merchandise in the market can be disputing for a company. particularly when the clients have had a ‘previous bad’ experience with similar merchandises. But. we have to account for the fact that Quartz is a mastermind in itself and a batch of attempt and resources has been put into its development. making a merchandise that clients ‘want’ . Technological promotion in the last 20 old ages has been enormous and although clients are wary of inventions. it is non impossible to sell a technologically expert merchandise to them.
As pointed out in the instance. one time pipe fitters use the new Quartz. they are instantly a convert i. e the station rating of purchase during the purchasing purchase is in favor of Aqualisa. This offers immense potency for Aqualisa in footings of repetition concern. because bulk of the UK shower market is made of replacing showers and pipe fitters tend to stay loyal to their selected trade name.
The challenge for Aqualisa is in efficaciously pass oning to its clients and doing them cognizant of the fact that they have developed such a merchandise. before their rivals catch up.
Jobber. D. ( 2004 ) . Principles and Practices of Marketing. McGraw Hill.
Youngme. M. ( 2003 ) . Aqualisa Quartz: Simply a Better Shower. HBS