Aqualisa Quartz: Simply a Better Shower

1. Aqualisa Quartz: Simply a Better Shower By: Alex Bottausci Mark Lemoine Yousef Madani A Harvard Business School Case Analysis

2. Today’s Agenda Current Problem Company Analysis Market Analysis Four Alternatives Recommendation and Rationale Implementation and Plan of Action

3. Final Recommendation Target Trade Shops and Plumbers!

4. The Current Problem • The Quartz’ sales have not met expectations. • To generate a sales momentum, Aqualisa is considering a shift in marketing strategy.

5. Company Analysis • Strengths • The Aqualisa Quartz is a new and innovative product, and has a two-year lead on the competition. • The Quartz shower system takes less time and less costly to install, and can be installed by an apprentice • Aqualisa has a strong reputation regarding its service and the quality of its showers (won the top prize at Bathroom Expo, featured on the covers of several prominent trade journals) • Aqualisa invests in R&D, has nine patents, and a large sized engineering team. • The company’s sister brand Gainsborough has had some significant success in the electric shower market.

6. Company Analysis • Weaknesses • Aqualisa is poorly distributed. The company’s products are available in only 40% of trade shops, 25% of showrooms and is non-existent in the DIY category. • 90% of the sales force focuses on maintaining existing accounts. Only 10% focuses on developing new customers. • Sales are low and channels partners may write off the product as a failure. • Brand awareness at the consumer level is low. • Net profit of €17 million signifies that this is still a relatively small company; therefore it can be assumed that its marketing budget is small compared to competitors like Triton. • 10% of all Aqualisa shower’s malfunction.

7. Market Analysis • Opportunities • The Quartz will interest plumbers since its installation only takes half a day and is easy enough for apprentices to install. • More than 50% of end consumers depend on plumbers to choose their shower. • Most homes throughout the UK have poor water pressure and varying temperature controls. • Most consumers are generally uninformed about showers. • 40% of UK homes do not have showers.

8. Market Analysis • Threats • The competition is expected to match the Quartz’ advanced technology within a couple of years. • Triton is the only company with an established brand awareness. • Plumbers distrust innovation. • Plumbers are brand loyal. • Viewed and perceived as overpriced

9. Four Alternatives • Target Do-It-Yourselfers • Target Trade Shops and Plumbers • Target Consumers Directly • Target Developers

10. Target Consumers Directly Pros • Target consumers directly, essentially a “pull” strategy, and build a consumer brand. • Will be able to better compete against Triton, the market leader. Cons • A costly strategy for Aqualisa. • Must be consistent to be effective (out of sight, out of mind).

11. Target Do-It-Yourselfers Pros • Gainsborough already successful in this category and Aqualisa could take advantage of its channels of distributions. • DIY may be willing to pay a premium because of its ease of installation. Cons • Expensive consumer advertising. • Must be consistent to be effective (out of sight, out of mind). • Potential cannibalization.

12. Target Developers Pros • Could sell in large volume. • Dealing with developers could simplify sales and make it less costly for Aqualisa. • Will force plumbers to familiarize themselves with the product. Cons • It could take time for the product to get to consumers. • Could be a tough sell due to premium price. • Only represents 15% of the market.

13. Target Trade Shops and Plumbers Pros • Plumbers have direct contact with final consumer. • 54% of mixer showers installations are done by plumbers, and trade shops represent 46.7% of the UK shower market • Plumbers have big influence on decision making process. Cons • Plumbers distrust innovation. • Plumbers may be difficult to sway and could take time to change their perception. • Trade shops carry other brands.

14. Evaluation of Alternatives

15. Recommendation and Rationale

16. It is recommended that Aqualisa targets the Trade Shops and Plumber market to increase sales!

17. Rationale • Quartz sales are expected to reach €184,500,000 (most likely scenario), which is 4 times Aqualisa’s current sales. • Plumbers will become interested because they can become 4 times more productive and 2 times more profitable. • Consumers will become interested because they can get a better product for their money: a premium product with more benefits for less, and will experience less discomfort. • Aqualisa will develop and strengthen its relationship within the distribution channels and establish long-term bonds. • Product awareness and knowledge of its benefits will increase.

18. Revenue Projections (1 Year)

19. Productivity and Profit Advantage to the Plumber

20. Cost Advantage to the End Consumer

21. Implementation and Plan of Action

22. Recommended Actions • Give plumbers a free Quartz System to try. • Change sales team strategy focus form 10% prospecting to 50%. • Hire 20 additional sales persons with plumbing experience. • Introduce sales pitch (benefits package) for plumbers and end consumers. • Create promotional material for sales team. • Send regular newsletters and surveys to plumbers. • Donate Quartz Systems to trade schools to practice on. • Advertise in Trade and Lifestyle Magazines.

23. Allocated Marketing Costs

24. Schedule

25. Thank you!

26. Promotional Costs Trade Schools Promotion ** €230 per unit X 500 Trade Schools = €115, 000

27. Projected Revenues

28. Target Trade Shops and Plumbers