By: Hadi Radwan
Problem statement: With the launch of the new innovative Quartz shower by Aqualisa, the Company expected to have a boost in its sales. Yet the sale of the product was not picking up. The Company was facing a big challenge with communicating its product to the consumer/target. The Company wants to ensure that the innovative technology, which is leaps and bounds ahead of competition, will generate more sales to capture market share before the competition can imitate the technology. Accordingly, the CEO of the Company will have to re-devise a new positioning, distribution and pricing plan, if necessary. Situation Analysis:
1. Company: Aqualisa, a premium brand in the shower market, has been able to sustain a high reputation brand in the UK shower market. Target consumers’ perceive its product as being of high quality yet overpriced. Its current market share is around 18% (17% of Electric showers and 21% of Mixed showers) and ranks third among other competing firms. As of year 2000, the company had an annual profit of €17 million which translated into a net return on sales of 25%. 2. Collaborators: The Company distributes its products through three main channels: (a) Trade shops (40% of which have the Aqualisa product). Their primary customers were the plumbers and represent 47% of the total sales of Aqualisa products. (b) Showrooms (25% of which have the Aqualisa product). Their primary customers were the high end consumers looking for style and represent 8% of the total sales of Aqualisa products. (c) DIY outlets (70% of which have the Gainsborough product). It represents 36% of the total sales of Aqualisa products. In addition, Aqualisa has a sales force of 20-personnel that focus their time 90% on the existing consumers and 10% on new customers. Finally, the plumbers, who, although not a direct distribution channel, have direct influence on the sales of the Company’s products. Aqualisa has a long-standing relationship with a number of loyal plumbers. 3. Competition: The top five players in the industry comprise 78% of the total shower units sold in the UK market with Aqualisa having 18% of the total market share. Top Competition that the Company faces is dominated by: (a) Triton with a market share of almost 30% of the total UK shower market (44% of Electric showers and 7% of Mixed showers). (b) Mira with a market share of almost 22% of the total UK shower market (14% of Electric showers and 36% of Mixed showers). 4. Customers: The current customers of Aqualisa are broken down into three pricing segments: (a) premium segment, which mainly shops in showrooms with a greater focus on style. (b) Standard segment, which rely on plumber recommendation and stress on the importance of performance and service. (c) Value segment, which chiefly were concerned with convenience and price mainly relying on independent plumbers to select the shower product. Accordingly, the market customers can be divided into consumers influenced by plumbers’ decisions and consumers who choose independent of the plumbers’ advice. In addition, there was a sizable Do-It-Yourself (“DIY”) market and a developers’ market. In the DYI market, consumers bought shower solutions in large retail shops. The main focus of DIY was inexpensive models that are easy to install. Whereas the developers’ market relied on products which are nice-looking and work in multiple settings. Further analysis is displayed in Exhibit (2). 5. Context: The UK shower market is not yet fully developed with only 60% penetration rate. Most UK homes have an old gravity-fed installation system and use mainly bathtubs instead of showers. A lot of customers are dissatisfied with the low water pressure and fluctuations in temperature. Currently, few innovative products are out in the market and Aqualisa has a first mover-advantage when it comes to innovative products. In addition, a SWOT...