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

Alternative 3: Focusing On the DIY Market

Aqualisa is currently targeting its discounted product to this target market through its Gainsborough brand name, is a stabilized product. If Quartz is introduced in the market, it will be readily accepted because of its product features. If the Quartz is introduced in this market, then it will create cannibalization, affecting its sales of current product. There will be a hard hit on the revenues of the company. Thus it is a high risk; high return category.

aqualisa quartz case solution

aqualisa quartz case solution

But the best part is that there is an established market through presence in around 70% of the DIY outlets. The channel for Aqualisa through partnering with B&Q can be beneficial. The company will have a cost advantage as well because there will be no need of expensive consumer advertising.

Alternative 4: Targeting and Selling To Developers

Targeting the developers will produce bulk sales for the company but at a lower price rate. The company’s image will fall because the core products of Aqualisa are sold at a premium. The company will have to drop down its price below 50% of the current price to target this channel. This discount will destroy the trust of the existing consumers who are buying the product at a relatively higher price margin. Aqualisa cannot afford to provide any discounts because it has invested a lot in R&D and the customers, who try the product just once, are willing to pay higher for it. So there is no need to compromise this much; just to push volume sales.

Alternative Evaluation and Selection

The pros and cons of every alternative have been identified and quantified in the evaluation grid (Exhibit 2). According to the selected criteria, the option of targeting and selling to premium consumers through showrooms is the most viable alternative. There is a need to consider the cons of targeting this market as well. The first disadvantage is the low quantity of sales volume through this channel. As it is stated in the external analysis that there is an opportunity of demand outside U.K., so the disadvantage of low sales volume can be rectified by exporting the product in the American market in order to increase the sales volume. This expansion strategy along with targeting the showrooms will be beneficial for the company.

Financial Analysis of the chosen Alternative

According to the current data of U.K.’s market share in units, a total of 1.8 Million units are sold in the U.K. market including all the price segments. The showroom comprises of 20% of the total installation. Thus, the showers installed by showrooms amount to 0.36 Million unit annually. If there are 260 working days in a year, then per day sales volume is calculated to be 1,385 units by showrooms.

An estimated amount of 8% market share will be captured by the Aqualisa Quartz in the short run by advertising the products through showrooms. This makes up a total of 110 units per day through this channel (Exhibit 3). The company’s management wanted a minimum of 100 units to be sold in a day in order to break through to the mainstream. The company’s goals are being achieved through this channel. In addition to that, the export channel to the foreign countries will result in even more sales volume, which is not incorporated in the financial statements as it will take some time to get established.

Quarts come in two versions that are The Quartz Standard Shower and The Quartz Pumped Shower. Both the brands were premium products of the company as they had additional features that were desired by the customers.

The price points for The Quartz Standard Shower were retailed at 850 pounds whereas the manufacturing selling price of this product was 450 pounds only. The channels kept as much as 53% margin from the manufacturer to the customer. The cost for developing this product was 175 pounds so the company kept a margin of 275 pounds which is around 39%. Although, the premium brand like Quartz could be sold at a higher price at the showrooms resulting in higher margins for the company, but for now the current price point is taken for calculations

Aqualisa Quartz Simply a Better Shower Case Study Solution

Thus, if 40% of the Unit Sales per day for Quartz comprise of Quartz Standard, then a total of 11,440 units per year of Quarts standard will be sold. The gross margin per year from the sale of this product will be 3.146 Million in total.........................................

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