Aqualisa Quartz: Simply a Better Shower Harvard Case Solution & Analysis

Aqualisa Quartz: Simply a Better Shower

Introduction

Aqualisa is a shower manufacturing company that exists in the U.K. market. The company has been affected by the trends of the external markets because the demand for showers is low in U.K. and the image of electric showers is stereotyped by the customers that they don’t work properly and give very hard times.

aqualisa quartz case solution

aqualisa quartz case solution

Background

Customers in the U.K. market have been facing many problems related to showers. The problems included low pressure and high fluctuations in temperature. Along with that, the rate of breaking down of the shower was very high so most of the sales of the showers were for the replacement purpose. The rate of innovation in the shower market was not very high so the product line was just recycled by the manufacturers and the main product was launched after a certain time that had the same mechanism inside.

Problem Statement

In a market where the product growth rate was very slow and the innovations were rare, Aqualisa managed to develop an innovative product that had the capability to solve the problems of the market related to showers.

Besides all the innovativeness of the product and high hopes of the company about its success, the product turned out to be a failure as the sales were not increasing even near to the expected level. For this purpose, the company had to take major marketing initiatives in order to boost up the sales because the competitive advantage of being the first mover of this product would fade down within two years as other companies would imitate the product.

 

Situation Analysis

Internal Analysis

Aqualisa has many strengths and weaknesses that are important to consider before taking any decision or step. Aqualisa’s major strength was that it sold its products under different brand names for different target markets. Thus, there was no overlapping or cannibalization of products as every product was targeted on a different market. The product categories were divided as Value, Standard and Premium Product Offering. The products of Aqualisa were quite reliable and of high quality as well. The major strength of the company was its high quality service. Aqualisa had the third largest market share and was present in 70% of the 3,000 DIY outlets in the U.K.

Despite the strengths, the brand awareness of the company was low as it was selling low-involvement products and the customers did not buy the products themselves, they relied on the plumbers for suggestions. There was only one company in the market that achieved brand awareness at the consumer level. The plumbers did not want to switch the brands for the purpose of ease of installation.

Moreover, Aqualisa brand was available in only 40% of trade shops and 25% of 2000 showrooms. The company was losing its main strength of high service over time. The rate of breaking down of the product was not reducing so, 10% of Aqualisa showers still “went wrong”. The market perceived core products of Aqualisa as highly expensive because of the extra features aimed at the retail market.

External Analysis

The fact that showers had so many defects and problems was taken as an opportunity by Aqualisa. No other competitor was able to provide a satisfying solution to the market as the innovation was not a breakthrough in shower market. The market wanted nice looking, non-bulky showers. All of these opportunities were capitalized by Aqualisa through its Quartz. However, there was still another opportunity that is the shortage of plumbers in the U.K. market and the demand outside the U.K. market. The plumbing cost is high due to excess demand and low supply situation. The company’s management is trying to approach the American market but the opportunity of limited number of plumbers is still not capitalized.

The major threat for the company at the moment is that the market is quite saturated and the 40% of U.K. homes do not have showers at their homes. Since other competitors are constantly trying to catch up to Aqualisa, so they have to move fast. If the competitors became successful in imitating the product, they would be able to sell it at a fairly low price because there would be no additional charges for R&D that Aqualisa has paid and needs to recover through sales. The market already perceives Aqualisa as an expensive product, so they would be attracted towards the low price product if it is offered in the market by the competitors.

A summarized view of Analysis is depicted in Exhibit 1.

Alternative Generation

Aqualisa has three alternatives for selecting the proper target segment from the overall market. There are pros and cons for each alternative. The consumer target markets are fragmented in a very complex manner. If the company chooses to target the consumers directly, then there are three pricing categories that need different marketing channels. The premium brand can be targeted through showrooms, the standard brand through plumbers because they heavily rely on the suggestions from them and the value segment through large retail stores. The DIY market is same as value segment because both have same buying and installing characteristics so they are counted as one category. The last targeting technique is though the property developers..................

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