mktg 207 marketing strategy case presentation: aqualisa quartz

Team MavenCristian. Jason. Michelle. Paul.

Terence.

2

Timeline

Pre 199

8

• Market split into three products: Mixer Showers, Power Showers, and Electric Showers

3

Shower Types

Mixer Shower

Power Shower

Electric Shower

4

Timeline

Pre 1998


May

1998

• Rawlinson enters the company

5

Timeline

Pre 1998


May

1998


1998 -

2001

• Substantial R&D is conducted

6

Aqualisa Quartz

7

Aqualisa Quartz

• 3 years of Research and Development

• Invested 5.6 million Euros

• Conducted numerous surveys and tests

• Innovative Breakthrough

8

Timeline

Pre 1998


May

1998


1998 -

2001

• Substantial R&D is conducted• Developed remote pressure/temperature control

May

2001

• Launch of Aqualisa Quartz

9

Timeline

Pre 1998


May

1998


1998 -

2001

• Substantial R&D is conducted• Developed remote pressure/temperature control

May

2001

• Launch of Aqualisa Quartz

September 2001

• Disappointing Sales

Key Issues

11

Small Sales Force

40% of the UK shower market was still untapped

Plumbers

Resistant to Change

Cautious of Electronic Showers

Wanted Assurance of Reliability

Is greater efficiency better?

Distribution

12

Internal Misalignment

“We’ve got to sell 100-200 [per day] to

break into the mainstream”

“To sell it, we have to point out

[deficiencies] in other products.”

“It’s a really niche product…for homes

with children, elderly, and the

handicapped.”

Henry Rawlinson

Tim PestellNational Sales

Manager

Martyn DennyMarketing/Sales Director

Industry Analysis

14

Industry Analysis

Rivalry Among Existing

Competitors

Threat of New

Entrants

Bargaining Power of

Suppliers

Bargaining Power of Buyers

Threat of Substitutes

MODERATE

LOW

HIGH

LOW

HIGH

Competitor Analysis

16

Competitor Analysis

Triton30%

Mira22%

Gains-borough

11%

Aqualisa 7%

Masco 7%

Ideal Standard

3%

Heatrae Sadia2%

Bristan 1%

Grohe 1%

Hansgrohe 1%

Others 15%

Company Analysis

18

Company Analysis - SWOT

Strengths1. Relationships with

plumbers2. Strong emphasis on

R&D3. Premium brand with

top quality showers

Opportunities1. 40% of UK homes do

not have showers installed

2. Consumers not fully satisfied with current showers

Weaknesses1. Brand awareness low

among consumers2. Plumbers distrust

innovation (Quartz)

Threats1. Competitors catching

up in product quality2. Market starting to see

brand as overpriced3. Service levels

deteriorating

Customer Analysis

20

The UK Shower Market

Developer market also present outside of retail market Generally price sensitive

Relationships with plumbers

21

Aqualisa’s Customers

Exhibit A.

22

Aqualisa’s Customers

Aqualisa’s main target market were those from the standard & value segments

Formed approximately 64.42% of the company’s sales

24

Importance of Plumbers

25


Plumber Preferences

Preferred to install a single shower brand

Familiarity with brand, products’ problems and service from manufacturer

Generally distrust innovation of showers

Switching costs between brands were high

26

Implicit Effects of Quartz

Plumbers earn through no. of hours worked plus markup from excavation, materials and shower Forgone revenue from excavation

Experience for master plumbers served as a barrier to entry for new plumbers Plumbers with little or no experience

can now compete with them for jobs


Objectives

28

Objectives

Increase adoption rates of Quartz

Convince plumbers about the benefits of Quartz

Increase penetration to distribution channels

Maintain market share of current products

Strategic Options

30

Strategic Options

1. Target the DIY segment

2. Target the developers

3. Target consumers directly

4. Target premium segment

4. Target standard & value segments

6. Target non-shower users

}}

Rawlinson’s Recommendati

ons

Our Recommendati

ons

Quartz’s Characteristics

32

Product Characteristic

Definition and influence on rate of adoption Quartz

Complexity

• The degree of difficulty involved in understanding and using a new product.

• Slows diffusion.

Easy

Compatibility

• The degree to which the new product is consistent with existing values and product knowledge, past experiences, and current needs.

• Incompatibility slows diffusion.

Incompatible

Relative advantage

• The degree to which a product is perceived to be superior to existing substitutes.

• Speeds diffusion

Not superior

Observability

• The degree to which the benefits and other results of using a new product can be observed by others and communicated to target customers.


Hard to communic

ate

Trialability • is the degree to which a product can be tried on a limited basis.


Not trialable

Diffusion of Innovation

Quartz’s product characteristics makes it an inherently slow-adoption product

33

Basis of short term and long term strategy

34








ST LT

x

x

O

O

O

• Cannibalisation

• High switching

costs

• Deeply-rooted

culture and

acceptance of

flaws in existing

shower technology

• More time and

cost involved

• Payoffs

uncertained

Short Term Strategy

36

1. Product-market fit

Premium Segment

Style

Premium segment

37

1. Product-market fit

Purchase at

Premium segment

Premium Segment

38

2. Helps to overcome resistance from Plumbers

Installed by

Independent Plumbers

Premium Segment

39

3. Recover R&D investment more quickly

Premium Segment

40

Downside

Reduce no. of other channels carrying Quartz

Assuming all premium purchases are made in

showrooms

Showrooms only account for 8.06% of total units

of showers sold in the U.K.

Premium Segment

41

Short-term Marketing Mix

• Retain high retail price

• As a new brand entering the market, a high price can signal quality and premium standard

• Ensure that showrooms fully showcase the attractive design

• Associate the Quartz brand closely with Aqualisa

Aqualisa: “Premium brand” with “top quality showers”

• Only 25% of showrooms carried the Aqualisa brand

• Expand sales force to develop new customers

• Incentivise showroom “consultants” to promote Quartz

Long term strategy

43








ST LT

x

x

O

O

O

Non-shower usersStandard & value segments

Market

readine

ss

Plumbers

• Better understanding of

Quartz’ ease of installation

Opportunity in the standard, value and non-users segment in the long run

End consumers

• Perceived value

• Cost

End consumers

• Solves previous

problems of using a

shower

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• 840,000 units

• 47% of UK Shower Market

• 40% of UK homes do not

have showers

Market

size

Long term strategy – Marketing Mix

46

• Gradually reduce retail price (market skimming)

• Publicize installation cost savings

• Introduce product line extension

• Reach out to more trade shops

Target plumbers:• Give them the

Quartz as a gift• Give them a product

guarantee

Long-term Marketing Mix

Standard & value

segmentsNon-shower

users

Long term strategy:

47







guarantee


Standard & value

segmentsNon-shower

users

Long term strategy:

48







guarantee


Standard & value

segmentsNon-shower

users

Long term strategy:

49

• Introduce production extension line, “Quartz

Basic”

Product

Save costs on non-crucial aspects to lower price

Reduce channel conflict

Leverage on brand awareness and familiarity among plumbers

Key considerations Course of action

• Manufacture more basic version

• Launch new product line

50







guarantee


Standard & value

segmentsNon-shower

users

Long term strategy:

51

Target the plumbers

• Free Quartz shower

1. Educational value* Easy installation* Superior shower experience

2. Emotional value

• Provide product guarantee for plumbers

Promotion

52







guarantee


Standard & value

segmentsNon-shower

users

Long term strategy:

Conclusion

54

Recommended sta

Increase adoption rates Convince plumbers about the benefits of Quartz Increase penetration to distribution channels Maintain market share of current products

Objectives

Problem identificatio

n

Industry analysis

Competitor analysis

Recommended strategy

Short term strategyTarget premium segment

Long term strategyTarget standard, value,

non-users segment

Case analysis

Customer analysis

Company analysis

Thank you :DPlease don’t shower us with

too many questions.