Aqualisa is a U.K. based shower manufacturing Company. The Company has been very reputed in the U.K. market for its top quality showers, reliability and great service. It had launched its premium brand Quartz in May 2001. The basic purpose behind launching this brand was to address the concerns of the consumers and the plumbers which perhaps were not satisfied with the existing products in the market.
Aqualisa has three products in shower market segments. This product addresses the issues of lower water pressure and allowing for proper temperature control for water. Generally speaking, due to legacy building designs, shower has low pressure and variable temperatures. Electric Showers commands around 60% of the market (Aqua has 20% or so of electric shower market) and easier to install but are positioned awkwardly in bathrooms and does not solve the pressure problem. On flip side, they do not need separate heat water supply, rather heats the water by itself. Also they are by far the cheapest among the three products with price difference in the range of 200- 400 dollars. Mixer Shower - Has two products one with pump one without. Priced at 400- 700.It takes 2 days to install. They have Great reputation in the market. Power Share - Awkwardly installed. they in 480 to 700 price range. It has average quality reputation. The quartz shower solves the awkward installation and long installation time problems. It can be installed in half a day, has easily configurable buttons to set temperature, and the installed box can be tucked away in a closed space.
However, it costs 850 -1100 which is higher than the cost of other showers in the market and hence it is perceived as a premium segment product. Because of this and also the reluctance of the plumbers to learn about the new product, Quartz has not been able to achieve its expected sales. It was able to achieve the sales of only 15 units a day. Going with the current sales of Quartz shower of 15 units a day, the Company could probably recover the amount spent on its research and development with a time period of 3-4 years. If the Company could promote the sales of the product to at least 50 units a day it will be able to achieve a break even within the next two years.
Porter’s five forces:
1)Supplier power: As seen in the case of Aqualisa, the supplier has almost no say. The market is completely customer driven. 2)Buyer power: In case of the shower industry, there are three customers. They are the plumbers, the property developers and the consumers. The plumbers here had the maximum bargaining power as they were involved in 73% of times in selecting a suitable shower. Only 17% of the times the consumers selected the shower alone without the consultation of the plumber. Hence the plumbers were the key customers. 3)Threat of new entry: The shower industry has been a growing industry. Only 60% of the U.K homes had showers and hence there were a lot of chances that new companies can come in the market to tap the huge market. This would reduce the market share of Aqualisa. 4)Threat Of substitution: Only 60 % of UK homes have a shower in spite of a bathtub being present in all homes. People are reluctant to buy showers because of the problems of fluctuations in water pressure and temperature. The aqualisa showers overcomes these problems however, if the perception about the showers are not changed in the minds of the people, the may still be reluctant and not use showers 5)Competitive rivalry: There are more than 9 rival brands to Aqualisa in the UK market. The market has been captured by Triton which captures about 30% of the UK shower market. However, Aqualisa has a superior technology which in still not available with any of the rival companies.
1)Aqualisa was perceived as a high quality shower...