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


Market Size & Growth

The UK shower market is large enough to accommodate an approximate sale of 1.8 million showers in a year .The market has a very stagnant growth rate with less emphasis on innovation in technology and more focus on innovation in cosmetic designs. The market is currently in its maturity stage with manufacturers producing new designs which become replacement showers for their current products but do not manage to take away the market share from other companies. The market size includes 40% of sales of replacement showers which suggests that the product sees repeat sales and the consumers repurchase intent needs to be increased to improve chances of brand loyalty.

aqualisa quartz case solution

aqualisa quartz case solution

Market Segmentation

The market is typically segmented on the basis of price with three distinct divisions; premium, standard and value. The premium pricing segment buys through showrooms and looks for high performance, style and customer service. The standard pricing segment on the other hand is dependent on independent plumbers for the selection and recommendation of showers. Even this segment has a greater emphasis on performance and service of the product though it has a lesser say in the actual buying of the product. The value segment looks for convenience and low prices and avoids anything that requires excavation. This segment also has a heavy reliance on plumbers for product selection.

The market is further segment on the basis of psychographic factors with two identified segments; the do-it-yourself segment and the property dealers segment. The do-it-yourself market shops at retail outlets and is interested in inexpensive models. This particular segment is looking for ease of installation and does not give much preference to the style of the product. The do-it-yourself market prefers electric showers over others.

The property developer segment looks for reliability in a product and is highly price sensitive. This segment rarely invests in premium quality products unless the installation is for some luxury building project. Even this specific segment has close relationships with plumbers and allows them to do the product selection and installation.

Market Profitability

The profitability margins of the manufactures are dependent on the level of rivalry in a market. In the UK shower industry, there are several manufacturers making products without much technological distinction and with low brand awareness, the market is not dominated by any player. As per Potter’s five forces analysis (Appendix 1), the rivalry in the industry is high because the consumer does not have much product information and market share can fluctuate easily.

The power of the supplier is low because of low brand awareness. Only one supplier, Triton enjoys a 30% share in the UK shower market and enjoys brand loyalty too which gives it a monopoly over the others. Mira has a 21.67% market share while Quartz has the third place in the market with only 18% market share. Even then, these suppliers do not have much power because the actual buying is dependent on plumbers mostly who focus on ease and familiarity with product rather than product innovation.

The power of the buyer is low because he does not have much awareness about the products available in the market and does not understand their strengths in terms of their brand names. The buyer is either the direct consumer or the plumber. The plumber has the maximum power in this category through which he makes the actual selection. The actual consumer has a very low say in the decision making process.

The threat of new products (hidden)

The threat of substitutes (hidden)

Distribution Channels

The market has three distinct channels of distribution catering to the needs of the identified market segments. The trade shops or plumber merchants sell directly to plumbers who are the buyers of showers for developers, showrooms, contractors or the final consumers. This distribution channel does not give much attention to customer service and has a greater focus on stocking enough inventories which can make it easier for plumbers to buy showers from amongst a range of available products. This distribution channel focuses on reliability rather than expert advice as the plumbers make the final choice as per their own prior knowledge.

The second channel of distribution, the sale of showers through showrooms focuses on the provision of complete bathroom solutions for the high-end market and therefore provides expert advice in the form of consultants. This distribution channel does not hold inventories and provides display options in the outlet which focus on high end product lines and brands. The channel further has subcontracts with contractors or independent plumbers as well........

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Harry R., MD of Aqualisa, the largest UK manufacturer of showers has just launched the most significant shower innovation in recent history: the Quartz shower. The hower has significant improvements in terms of quality, cost and ease of use. In product testing, quartz shower received very good reviews from consumers and plumbers alike. However, the sales of Quartz are not up to the expectation. Rawlinson is faced with  key decisions on how to change its channel strategy, promotion strategy, and the overall positioning of the product in the context of its existing product line.
Youngme on the Moon, Kerry Herman Source: HBS Premier Case Collection 18 pages. Publication Date: January 16, 2002. Prod. #: 502030-PDF-ENG

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