Aqualisa Quartz: Simply A Better Shower

YOUNGME MOON

Aqualisa Quartz:

Simply a Better Shower

By:

Marjan Hozjan

Ljubljana, February 2007

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1. Conduct a situation analysis

a) Customers (segmentation, characteristics)

According to the HBS case (p.2-3), shower buyers in the United Kingdom fall into one of three pricing segments: premium, standard and value segment. Consumers in the premium segment typically shopped in showrooms; they took for granted high performance and service, and for them style determined their selection. They bought in showrooms based on style, they assumed performance was assured. Consumers in the standard price range tended to emphasize performance and service; they usually relied on an independent plumber to recommend or select a product for them. Consumers in the value segment were primarily concerned with convenience and price; they liked to avoid solutions that required any excavation and tended to rely on an independent plumber in selecting a product. Value customers wanted to »Do-It-Yourself« (DIY); there were also property developers, but they considered Aqualisa products as premium or pricey, unless they were luxury builders. Developers also relied on independent plumbers.

b) Channel (products sold, primary customers, channel characteristics)

Showers in UK were sold through a variety of channels: trade shops, distributors, showrooms, and DIY outlets. Trade shops carried products across all available brands. Their primary customer was the plumber who was looking for reliable product availability rather than technical advice. Trade shops stock whatever there was demand for and Aqualisa was present in 40 percent of trade shops. If we look at the Table 3 in appendix, we can see that mixer shower sales represent almost half of the whole trade shop channel. Showrooms (2,000 in UK; Aqualisa in 25 percent) tended to be more high-end and were supplied by distributors. Showroom has consultants, which led consumers through the process of selecting and designing any bathroom solution (shower might be one small part of an overall renovation project). They prefer to carry high-end product lines and brands. Showrooms enabled costumers to view the product; they also offered installation services. If we look at the Table 3 in appendix, we can see that mixer shower sales represent almost half of the whole showroom channel (the same as in previous). Do-it-yourself retail outlets offered discount, mass-market, do-it-yourself products (most common were electric showers → cheap and easier to retrofit). Aqualisa brand was unavailable, but its Gainsborough brand was available in 70 percent of 3,000 UK DIY outlets. If we look at the Table 3 in appendix, we can see that electric showers represent 85 percent of the whole DIY channel.

c) Competition (who are the key players)

If we look at the table 1 in the appendix, we can see that Aqualisa's products are competing mainly (77%) in Mixer showers and little (18%) in Power showers segment. Main competitors are therefore those who are also very strong in these two segments. In Mixer showers category the strongest company is Mira with 36 percent market share. Aqualisa is the second strongest with 17%. The third is Ideal, followed by Masco and Triton. In Power showers category Mira and Masco are the strongest, both with 23 percent market share. They are followed by Triton with 17 percent and Aqualisa as fourth largest with 15 percent. There is also another brand name under which Aqualisa is competing. It is called Gainsborough and competes mainly (88%) in Electric shower category. The strongest competitor in this category is Triton. Gainsborough is the second with 16 percent, but Mira is not close behind with 14 percent market share. If we look at the overall situation in Table 1, we can see that the most attractive category (according to number of units sold) is electric showers with 61 percent. The least attractive category is power showers with only 8 percent. From Table 2 in appendix we can see that the strongest companies in the shower business are Triton, Mira and

d) Company & market environment (the Aqualisa Company and the nature of the market)

Showers in the United Kingdom were plagued with problems. Only about 60 percent of U.K. homes had showers. Archaic plumbing (mostly gravity fed) was common in many homes. Gravity-fed plumbing meant poor-to-low water pressure, about 3-4 litres per minute and it also created frequent fluctuations in pressure. These were mainly problems from the consumer side, but there were also many problems from producer side. Showers often broke down (leaking valves) and mechanisms often gummed up with lime scale (making the valves stiff and hard to turn). Aqualisa was competing in all three categories. Only in a category of electric showers, solutions were offered through their Gainsborough brand. All the categories had their benefits and their weaknesses (see Figure A in HBS case, p.3). Another problem company faced was its low brand awareness. This was also true for other players in the industry. There were also problems concerning sales. Nearly half the sales were from replacements.

2. What is the Quartz shower value proposition to consumers

The nature of the purchasing in this product category is that consumers buy a shower out of necessity. Only for showrooms there is some impulse purchase. In this category majority of people have very little knowledge of the different specifications of the products. Only 27 percent of costumers select type and brand of shower alone, without any advice from the plumber. Majority of the costumers therefore rely on plumbers. This means that 73 percent of the overall shower selection is contributed by value propositions to plumbers and not so many to costumers itself. Nevertheless, main benefits for costumers are: Better water pressure and temperature control, safer and easier to use (no sticking hand in hot water, less manual adjustments required than with previous shower models), one touch control with light indicator (more user friendly), only half a day to install (costumer saves one and a half day), current shower systems are bulky and in »wrong places« (not esthetical). Aqualisa solution is all in one (the processor contains the thermostatic mixing valve, and when applicable, the pump) and can be located in hidden areas (under a