Aqualisa launched the most signifcant shower innovation in recent British history: the Quartz shower. The shower provides signifcant improvements in terms of quality, cost, and ease of installation. n product testing, the Quartz shower received rave reviews from !oth consumers and plum!ers ali"e. #owever, early sales of the Quartz have !een disappointing. $ow, the company is faced with some "ey issues a!out whether to change the channel strategy, promotional strategy, and the overall positioning of the product %niche or mainstream product& in the conte't of his e'isting product line. (ituation Analysis )ompany: Aqualisa, *rd in the shower mar"et with +,- coverage has had a successful mar"eting strategy, which allowed it to en.oy /0- net return on sales and a growth of 0- to +1- in a mature mar"et. They have e2ectively segmentedtheir mar"ets and have products that cater to each segment3s needs %product range of 4 models covering the three types of showers used in the 56, ranging !etween /*1 and 781&. Their channel relationships are strong and positioning has helped them achieve a good !rand name in the mar"et. The company used the shower ma' %specialized product similar to Aqualvalve at lower priced than the !efore mentioned& to penetrate the developer3s mar"et. )ompany3s (trengths 9 (trong reputation in the shower mar"et 9 #ighly profta!le company 9 #igh quality products 9 :'cellent service 9 (trategic use of ;ains!orough !rand to penetrate low cost mar"et )ompany3s 1, over and a!ove the retail price of *41 @ the total !eing +/*1. Assuming similar la!or charges %even though e'cavation is not required&, and 7 hours installation time for Quartz @ a customer pays appro'imately >/1 for installation @ the total cost !eing >/1 K ,01 L +/81. #ence, the total cost for the customer is fairly the same in !oth cases. n addition, they receive a product that is much advanced and !etter in all respects.Thus, it is suggested that Aqualisa maintains its current price for Quartz and use the a!ove value proposition in targeting customers to show then !enefts gained.mplementation Clan Quartz will !e positioned as the easy to install, most aesthetic, advanced and unpro!lematic shower. Quartz is an improvement over Aqualisa3s e'isting product range. #owever, it is safe to say that Quartz is an entirely new product !ecause of the advanced capa!ilities o2ered !y it in terms of features, performance and De'i!ility. The launch of a new product requires awareness. Thecustomers need to !e educated a!out the product and its features. As pointed out in the case, customers are generally unaware of product features and have limited "nowledge. #ence, Aqualisa should use its e'isting !rand image and awareness in the mar"et to launch the ad campaign for Quartz and !uild product awareness. t is agreed that the costs will !e high and is a ris"y proposition. But, still !y the end of the current year Quartz will ma"e profts, which can !e used to fnance the ad campaign %see :'hi!it /&. This should !e viewed as an investmentand not as a cost? since Quartz is going to lead Aqualisa3s mar"et for other electronic product innovations and success of Quartz will give Aqualisa the frst mover advantage in the mar"et. Along with this ad campaign Aqualisa should distri!ute *111 free Quartz pac"ages %shower samples with !rochures, information on installation and !enefts of Quartz& to the plum!ers. This will encourage plum!ers to at least recommend and install one Quartz shower to their costumers. =nce this is done as mentioned !efore Hspread of wordH will wor" within the plum!er population. Ainally Aqualisa, as a niche product, should place the products in the specialized !athroom retail stores. Quartz allows high margins %,,- on Quartz standard and ,8- on Quartz pumped& for retailer and isa very attractive product to carry. The company should use half of its sales force to convince these retailers to ta"e Quartz in their shelves. Ainally, as mentioned in the recommendation section, Quartz3s price should remain at what is proposed. :'hi!it + )onsumers Eirectly Eo@t@Fourself Eevelopers M Clum!ers Advantages @ ;etting directly to treat with the fnal customer @ Nower dependence from plum!ers @ (maller !argaining power from customers @ Iaise company3s image @Croduct awareness @ :asy to install %no need for plum!ers& @ Eepend on the fnal consumer @ #igh quality product, with great design @ Avoid pro!lems reaching the plum!ers @ Eevelop trust and loyalty of the customers that try the product @ ;ain inDuence in the decision ma"ers of the mar"et @ (ecuring a num!er of sales through the year @ Now advertisement cost @ Eevelop a large volume distri!ution channel Eisadvantages @ #igh advertisement costs @ $eed of informed and good salesmen force at reasona!le cost @ Gore diOcult to convince plum!ers to !uy the product @ Ga"e a large consumer campaign %very e'pensive& @ Clace a premium product in an inferior segment @ )ould damage Quartz3s image @ #arder to sell the product @ Cossi!le discount on price @ $eed of informed and good salesmen force. Ieasona!le cost :'hi!it / )urrent Fear (elling +0 (elling *1@>1 +st 7 months /nd 7 months Totals (ales P +,*>0,011 P *,+*4,011 P>,>,0,111 )osts P 0*,,/11 P +,/00,,11 P+,84>,111 Gar"eting costs Q 7- of sales P ,1,8*1 P +,,,*81 P /74,+11 )ostumer services costs P >1,*70 P 4>,+,0 P +*>,001 :BT for +st year P 7,7,/10 P +,71+,+>0 P/,/,8,*01