Case Analysis - Problem Statement

8/10/2019 Case Analysis - Problem Statement

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Problem Statement

Aqualisa launched the most significant shower innovation in recent British history: the Quartz

shower. The shower rovides significant imrovements in terms of quality! cost! and ease of

installation. "n roduct testing! the Quartz shower received rave reviews from both consumers

and lumbers ali#e. $owever! early sales of the Quartz have been disaointing. %ow! the

comany is faced with some #ey issues about whether to change the channel strategy!

romotional strategy! and the overall ositioning of the roduct &niche or mainstream roduct' in

the conte(t of his e(isting roduct line.

Situation Analysis

)omany: Aqualisa! *rd in the shower mar#et with +,- coverage has had a successful

mar#eting strategy! which allowed it to enoy /0- net return on sales and a growth of 0- to +1-

in a mature mar#et. They have effectively segmented their mar#ets and have roducts that cater

to each segment2s needs &roduct range of 3 models covering the three tyes of showers used in

the 45! ranging between /*1 and 671'. Their channel relationshis are strong and ositioning

has heled them achieve a good brand name in the mar#et. The comany used the shower ma(

&secialized roduct similar to Aqualvalve at lower riced than the before mentioned' toenetrate the develoer2s mar#et.

)omany2s Strengths

8 Strong reutation in the shower mar#et

8 $ighly rofitable comany

8 $igh quality roducts

8 9(cellent service


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8 Strategic use of ainsborough brand to enetrate low cost mar#et

)omany2s ;ea#nesses

8 they could identify roblems in current showers which were oor ressure! varying

temerature and brea#ing down. ;ithin this individual customer category there are sub?segments

based on varying needs.

@ollowing the descrition of the customer categories is a discussion of the behavior of lumbers!

which is essential to understand the true nature of the mar#et. Although they are not the end

consumer! their role will be significant for Aqualisa when creating an effective mar#eting

strategy.

alue )ustomers: )ustomers in this category are mainly concerned with low rice and

convenience. ;hile style or loo#s is not their rimary concerns! functionality lays an imortant

role. Price is very imortant to this category as they do not li#e to send money on solutions that

require e(cavations &as they would increase installation costs'. $ence! ease of installation is very

imortant to them. The consumers2 decisions are largely influenced by the lumber ? either the

lumber selects the shower or advices them on the tye &not the brand'. @inal installation was

usually carried out by the lumbers. This also includes a category of customers called "C!

consisting mainly of landlords and aartment dwellers ? who install and select their own

showers.


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Standard )ustomers: )ustomers in this category are mainly concerned with reliability and

erformance. Assuming that they fall in the middle of the two categories! style would be a

consideration but not imortant. They also rely on the individual lumber to not only recommend

or select a roduct for them but eventually install it. Products offered by Aqualisa for this

category are ainsborough! Aquavalve 613 and Aquastream Thermostat ranging from +00 to

671! offering better quality and state?of?the?art technology.

Premium )ustomers: )ustomers in this category e(ected erformance and service as a base

criteria to be on their qualifying list of roducts. Style is what dominated their selection. They

usually shoed at showrooms which had technical e(erts to e(lain the various roduct

otions and hel them in evaluating and selecting the right roduct. Being better informed than

the other two segments! lumbers had very little influence on this category. The showrooms also

offered installation service. The only roduct offered by Aqualisa for this category was Aquastyle

at /*1.

eveloers: )ustomers in this segment are quite rice?sensitive and require showers that are

reliable! stylish and fle(ible i.e. those that could wor# in multile settings. They do not require

showers that have remium valves because the new homes are built with high?ressure systems.

Also! they do not rely on the individual lumbers while ma#ing urchase decisions. $owever!

they do have relationshis with the lumbers who will install the showers that the develoers

select. Aqualisa offered the ShowerDa( brand to this category at a significantly lower rice than

their other roducts and fewer features.

The Plumbers: Although the lumbers are not Aqualisa2s rime customers! they have huge

influence on the individual mar#et segment! esecially the value and standard customers. Their

maor concern is reliability! erformance and ease?of?installation because they would have to

bear the costs of any unforeseen roblems. $ence! they would familiarize themselves with a

roduct brand. They are quite loyal to the brand that they have chosen and are arehensive of

any roduct innovations.


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)ollaborators: Aqualisa has a /1?erson sales team who sold to distributors! trade shos!

showrooms! develoers and lumbers. &"C sheds reresent *6- of the shower mar#et sales

trade shos =7-! and trade shos and showrooms +7-' )urrently! they send 31- of their time

on maintaining e(iting customers! only +1- on develoing new customers. Team has a long?

standing relationshi with a grou of loyal lumbers? Eour lumbersE.

)onte(t: Aqualisa Quartz was develoed in reaction to customer dissatisfaction with the oor

quality of showers on the mar#et! in addition to the comany2s need to innovate in order to

differentiate itself from the cometition and maintain cometitive advantage.

Alternatives and Fecommendation

Aqualisa2s mar#eting team discussed three otions for the mar#eting strategy for Quartz. The

three otions they came u with were> targeting consumers directly! target o?it?Courselfers! and

target develoers. The three alternatives have advantages and disadvantages as shown in 9(hibit

+.

@rom the analysis of this case we determine that Quartz is a niche roduct. ;e recommend that

Quartz should target the secialized bathroom retail stores! cativate the lumbers2 attention! and

raise roduct awareness amongst consumers. ;hile lumbers tend only to recommend roducts

they #now well! retailers will be hay to ta#e on roducts that stand out in showrooms!

articularly if they are highly functional and easy to use as well as attractive. As we believe that

Quartz is a niche roduct! the secialized retails stores will be the lace where the demand will

be created for this roduct. These stores are more li#ely to recommend a new! innovative or high?

end roduct than a large merchant. "n order to ensure a strong increasing mar#et enetration!

lumber2s attention should be grased. )ostumers in the shower mar#et #now little or nothing

about the roducts they buy! so they are strongly influenced by their lumber2s advice. "t is

imortant to note that lumbers install 0=- &37/!111 installations' of the showers in the 45 and

Aqualisa2s management has the goal of selling =6!,11 &/.6- of shower mar#et' showers in a year

to brea# through the mainstream. By convincing ust /1- of the +1!111 lumbers! to recommend

Quartz to their costumers! the end result would be 0,!*/1 &37/!111 showers ( /1- of lumbers (


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*1- installation of Quartz' Quartz showers installed.


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and success of Quartz will give Aqualisa the first mover advantage in the mar#et. Along with this

ad camaign Aqualisa should distribute *111 free Quartz ac#ages &shower samles with

brochures! information on installation and benefits of Quartz' to the lumbers. This will

encourage lumbers to at least recommend and install one Quartz shower to their costumers.


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? Avoid roblems reaching the lumbers ? evelo trust and loyalty of the customers that try the

roduct

? ain influence in the decision ma#ers of the mar#et

? Securing a number of sales through the year

? Kow advertisement cost

? evelo a large volume distribution channel

isadvantages

? $igh advertisement costs

? %eed of informed and good salesmen force at reasonable cost

? Dore difficult to convince lumbers to buy the roduct

? Da#e a large consumer camaign &very e(ensive'

? Place a remium roduct in an inferior segment

? )ould damage Quartz2s image

? $arder to sell the roduct

? Possible discount on rice

? %eed of informed and good salesmen force. Feasonable cost


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9(hibit /

)urrent Cear Selling +0 Selling *1?=1

+st 6 months /nd 6 months Totals

Sales L +!*=0!011 L *!+*3!011 L=!=,0!111

)osts L 0*,!/11 L +!/00!,11 L+!73=!111

Dar#eting costs M 6- of sales L ,1!7*1 L +,,!*71 L /63!+11

)ostumer services costs L =1!*60 L 3=!+,0 L +*=!001

9B"T for +st year L 6,6!/10 L +!61+!+=0 L/!/,7!*01

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Case Analysis - Problem Statement