Aqualisa

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 long-standing 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

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