MKTG 207 Marketing Strategy Case Presentation: Aqualisa Quartz
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Singapore Management University MKTG 207 Marketing Strategy Ivey Case Presentation: Aqualisa Quartz
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MKTG 207 Marketing Strategy Case Presentation: Aqualisa Quartz
- 1. Team Maven Cristian. Jason. Michelle. Paul. Terence.
- 2. 2 Timeline Pre 1998 • Market split into three products: Mixer Showers, Power Showers, and Electric Showers
- 4. 4 Timeline Pre 1998 • Market split into three products: Mixer Showers, Power Showers, and Electric Showers May 1998 • Rawlinson enters the company
- 5. 5 Timeline Pre 1998 • Market split into three products: Mixer Showers, Power Showers, and Electric Showers May 1998 • Rawlinson enters the company 1998 - 2001 • Substantial R&D is conducted
- 7. 7 Aqualisa Quartz • 3 years of Research and Development • Invested 5.6 million Euros • Conducted numerous surveys and tests • Innovative Breakthrough
- 8. 8 Timeline Pre 1998 • Market split into three products: Mixer Showers, Power Showers, and Electric Showers May 1998 • Rawlinson enters the company 1998 - 2001 • Substantial R&D is conducted • Developed remote pressure/temperature control May 2001 • Launch of Aqualisa Quartz
- 9. 9 Timeline Pre 1998 • Market split into three products: Mixer Showers, Power Showers, and Electric Showers May 1998 • Rawlinson enters the company 1998 - 2001 • Substantial R&D is conducted • Developed remote pressure/temperature control May 2001 • Launch of Aqualisa Quartz Septemb er 2001 • Disappointing Sales
- 10. Key Issues
- 11. 11 Small Sales Force 40% of the UK shower market was still untapped Plumbers Resistant to Change Cautious of Electronic Showers Wanted Assurance of Reliability Is greater efficiency better? Distribution
- 12. 12 Internal Misalignment “We’ve got to sell 100- 200 [per day] to break into the mainstream” “To sell it, we have to point out [deficiencies] in other products.” “It’s a really niche product…for homes with children, elderly, and the handicapped.” Henry Rawlinson Tim Pestell National Sales Manager Martyn Denny Marketing/Sales Director
- 14. 14 Industry Analysis Rivalry Among Existing Competitors Threat of New Entrants Bargaining Power of Suppliers Bargaining Power of Buyers Threat of Substitutes MODERATE LOW HIGH LOW HIGH
- 17. Company Analysis
- 18. 18 Company Analysis - SWOT Strengths 1. Relationships with plumbers 2. Strong emphasis on R&D 3. Premium brand with top quality showers Opportunities 1. 40% of UK homes do not have showers installed 2. Consumers not fully satisfied with current showers Weaknesses 1. Brand awareness low among consumers 2. Plumbers distrust innovation (Quartz) Threats 1. Competitors catching up in product quality 2. Market starting to see brand as overpriced 3. Service levels deteriorating
- 20. 20 The UK Shower Market Segment Product Knowledge Product Determinant Decision Maker Shopping Channel Premium Low to Moderate Style Consumer Showrooms Standard Low Performance & Service Plumber Trade Shops Value Low Convenience & Price Plumber Trade Shops DIY High Price & Ease of Installation Consumer DIY Sheds Developer market also present outside of retail market Generally price sensitive Relationships with plumbers
- 22. 22 Aqualisa’s Customers Aqualisa’s main target market were those from the standard & value segments Formed approximately 64.42% of the company’s sales Aqualisa Shower Sales (2000) 46,212,000.00€ Model Units Sold MSP Revenue Contribution % Contribution Aquastyle 6,000 155€ 930,000€ 2.01% Aquavalve 609 60,000 380€ 22,800,000€ 49.34% Aquavalve Value 34,000 205€ 6,970,000€ 15.08% Aquastream Thermostatic 20,000 350€ 7,000,000€ 15.15% Aquastream Manual 2,000 250€ 500,000€ 1.08% Aquaforce Booster Pumps - - 8,012,000€ 17.34%
- 24. 25 Importance of Plumbers Plumber Preferences Preferred to install a single shower brand Familiarity with brand, products’ problems and service from manufacturer Generally distrust innovation of showers Switching costs between brands were high
- 25. 26 Implicit Effects of Quartz Plumbers earn through no. of hours worked plus markup from excavation, materials and shower Forgone revenue from excavation Experience for master plumbers served as a barrier to entry for new plumbers Plumbers with little or no experience can now compete with them for jobs Importance of Plumbers
- 26. Objectives
- 27. 28 Objectives Increase adoption rates of Quartz Convince plumbers about the benefits of Quartz Increase penetration to distribution channels Maintain market share of current products
- 29. 30 Strategic Options 1. Target the DIY segment 2. Target the developers 3. Target consumers directly 4. Target premium segment 4. Target standard & value segments 6. Target non-shower users } } Rawlinson’s Recommendation s Our Recommendation s
- 31. 32 Product Characteristi c Definition and influence on rate of adoption Quartz Complexity • The degree of difficulty involved in understanding and using a new product. • Slows diffusion. Easy Compatibilit y • The degree to which the new product is consistent with existing values and product knowledge, past experiences, and current needs. • Incompatibility slows diffusion. Incompatible Relative advantage • The degree to which a product is perceived to be superior to existing substitutes. • Speeds diffusion Not superior Observabilit y • The degree to which the benefits and other results of using a new product can be observed by others and communicated to target customers. • Speeds diffusion Hard to communicat e Trialability • is the degree to which a product can be tried on a limited basis. • Speeds diffusion Not trialable Diffusion of Innovation Quartz’s product characteristics makes it an inherently slow-adoption product
- 32. 33 Basis of short term and long term strategy
- 33. 34 Basis of short term and long term strategy 1. Target the DIY segment 2. Target the developers 3. Target consumers directly 4. Target premium segment 5. Target standard & value segments 6. Target non-shower users ST LT x x O O O • Cannibalisation • High switching costs • Deeply-rooted culture and acceptance of flaws in existing shower technology • More time and cost involved • Payoffs uncertained
- 35. 36 1. Product-market fit Premium Segment Style Premium segment
- 36. 37 1. Product-market fit Purchase at Premium segment Premium Segment
- 37. 38 2. Helps to overcome resistance from Plumbers Installed by Independent Plumbers Premium Segment
- 38. 39 3. Recover R&D investment more quickly Premium Segment
- 39. 40 Downside Reduce no. of other channels carrying Quartz Assuming all premium purchases are made in showrooms Showrooms only account for 8.06% of total units of showers sold in the U.K. Premium Segment Electric Mixer Power Total Units Sold By Channel % of Total Units Sold by Channel DIY Sheds 550,000 80,000 20,000 650,000 36.11% Showrooms 55,000 70,000 20,000 145,000 8.06% Trade Shops 330,000 400,000 110,000 840,000 46.67% Other (Electrical Wholesale) 165,000 0 0 165,000 9.17% Total Units Sold 1,100,000 550,000 150,000 1,800,000
- 40. 41 Short-term Marketing Mix • Retain high retail price • As a new brand entering the market, a high price can signal quality and premium standard • Ensure that showrooms fully showcase the attractive design • Associate the Quartz brand closely with Aqualisa Aqualisa: “Premium brand” with “top quality showers” • Only 25% of showrooms carried the Aqualisa brand • Expand sales force to develop new customers • Incentivise showroom “consultants” to promote Quartz
- 42. 43 Basis of short term and long term strategy 1. Target the DIY segment 2. Target the developers 3. Target consumers directly 4. Target premium segment 5. Target standard & value segments 6. Target non-shower users ST LT x x O O O
- 43. Non-shower usersStandard & value segments Market readiness Plumbers • Better understanding of Quartz’ ease of installation Opportunity in the standard, value and non-users segment in the long run End consumers • Perceived value • Cost End consumers • Solves previous problems of using a shower 44 • 840,000 units • 47% of UK Shower Market • 40% of UK homes do not have showers Market size
- 44. Long term strategy – Marketing Mix
- 45. 46 • Gradually reduce retail price (market skimming) • Publicize installation cost savings • Introduce product line extension • Reach out to more trade shops Target plumbers: • Give them the Quartz as a gift • Give them a product guarantee Long-term Marketing Mix Standard & value segments Non-shower users Long term strategy:
- 46. 47 • Gradually reduce retail price (market skimming) • Publicize installation cost savings • Introduce product line extension • Reach out to more trade shops Target plumbers: • Give them the Quartz as a gift • Give them a product guarantee Long-term Marketing Mix Standard & value segments Non-shower users Long term strategy:
- 47. 48 • Gradually reduce retail price (market skimming) • Publicize installation cost savings • Introduce product line extension • Reach out to more trade shops Target plumbers: • Give them the Quartz as a gift • Give them a product guarantee Long-term Marketing Mix Standard & value segments Non-shower users Long term strategy:
- 48. 49 • Introduce production extension line, “Quartz Basic” Product Save costs on non-crucial aspects to lower price Reduce channel conflict Leverage on brand awareness and familiarity among plumbers Key considerations Course of action • Manufacture more basic version • Launch new product line
- 49. 50 • Gradually reduce retail price (market skimming) • Publicize installation cost savings • Introduce product line extension • Reach out to more trade shops Target plumbers: • Give them the Quartz as a gift • Give them a product guarantee Long-term Marketing Mix Standard & value segments Non-shower users Long term strategy:
- 50. 51 Target the plumbers • Free Quartz shower 1. Educational value Easy installation Superior shower experience 2. Emotional value • Provide product guarantee for plumbers Promotion
- 51. 52 • Gradually reduce retail price (market skimming) • Publicize installation cost savings • Introduce product line extension • Reach out to more trade shops Target plumbers: • Give them the Quartz as a gift • Give them a product guarantee Long-term Marketing Mix Standard & value segments Non-shower users Long term strategy:
- 52. Conclusion
- 53. 54 Recommended sta Increase adoption rates Convince plumbers about the benefits of Quartz Increase penetration to distribution channels Maintain market share of current products Objectives Problem identificatio n Industry analysis Competitor analysis Recommended strategy Short term strategy Target premium segment Long term strategy Target standard, value, non- users segment Case analysis Customer analysis Company analysis
- 54. Thank you :D Please don’t shower us with too many questions.
Editor's Notes
- We first begin the analysis by understanding the pricing of the overall UK shower market, and their shopping behaviours. The following table shows the main pricing segments, along with their level of product knowledge, the determinant factors considered by these segments, the main decision maker of shower purchases, as well as the channels in which their selected products are purchased.Probably can freeze this slide.
- The information in the case seems to point out that Aqualisa’s main customers are those from the standard and value segments. This can be seen from Figure A of the case, where Aqualisa’s core product offerings across the various types of showers are shown. Among the 7 core products shown, 6 of them fall in the value and standard segments, while only 1 falls in the premium segment. The case then further elaborates that the Aquavalve range are its core products and are the “bread and butter” of the company.
- We can also see this from what was presented earlier, Aquavalve products contributed 64.42% of its total revenue. This goes on to further reiterate that current end consumers of Aqualisa products are mainly those in the standard and value segments. These consumers have low product knowledge, and often rely on independent plumbers to recommend or select products for them. Trade shops are counted as their shopping channels because plumbers often frequent them.
- It is also important to understand the reasons as to why end consumers purchase showers for their bathrooms. We see that 44% of the time, the reason consumers installed showers was to replace an existing shower in the home, while 25% of the time, showers are installed in bathrooms with no existing showers. For the purchase of replacement showers, we can reasonably assume it is because the existing showers have broken down, hence the need for a replacement.
- In continuation to above point, we see the importance of plumbers and their influence in the decision making process of the end consumers of Aqualisa’s products. Referring to Exhibit 4 of the case, we see that for 53% of the Mixer Shower market, the plumber has a significant influence on both the type and brand of the shower to be used by the end consumer. For 73% of the Mixer Shower market, the plumber has a significant influence on the type of shower used.
- In continuation to above point, we see the importance of plumbers and their influence in the decision making process of the end consumers of Aqualisa’s products. Referring to Exhibit 4 of the case, we see that for 53% of the Mixer Shower market, the plumber has a significant influence on both the type and brand of the shower to be used by the end consumer. For 73% of the Mixer Shower market, the plumber has a significant influence on the type of shower used.
- In continuation to above point, we see the importance of plumbers and their influence in the decision making process of the end consumers of Aqualisa’s products. Referring to Exhibit 4 of the case, we see that for 53% of the Mixer Shower market, the plumber has a significant influence on both the type and brand of the shower to be used by the end consumer. For 73% of the Mixer Shower market, the plumber has a significant influence on the type of shower used.
- Now that we’ve identified the problems and the 3C’s of the case, we’ll take a look at the objectives and strategy formed by our team.
- In continuation to above point, we see the importance of plumbers and their influence in the decision making process of the end consumers of Aqualisa’s products. Referring to Exhibit 4 of the case, we see that for 53% of the Mixer Shower market, the plumber has a significant influence on both the type and brand of the shower to be used by the end consumer. For 73% of the Mixer Shower market, the plumber has a significant influence on the type of shower used.
- Now that we’ve identified the problems and the 3C’s of the case, we’ll take a look at the objectives and strategy formed by our team.
- In continuation to above point, we see the importance of plumbers and their influence in the decision making process of the end consumers of Aqualisa’s products. Referring to Exhibit 4 of the case, we see that for 53% of the Mixer Shower market, the plumber has a significant influence on both the type and brand of the shower to be used by the end consumer. For 73% of the Mixer Shower market, the plumber has a significant influence on the type of shower used.
- Before we share with you our recommendations, let us understand Quartz’s product characteristics
- Easy to understand and useTechnology was not consistent with existing product knowledgeNot perceived to be superior, especially among plumbersExperiential product > Hard to communicateNot trialable
- Michelle will elaborate on the Long-Term viability of targeting segments 5 & 6
- Michelle will elaborate on the Long-Term viability of targeting segments 5 & 6
- Style was a defining factor in choosing which type and brand of shower to purchaseWhile performance and service are taken for granted
- Premium customers did not rely on plumbers to make a purchase decision
- Premium customers did not rely on plumbers to make a purchase decisionShowrooms contracted with independent plumbers to install the shower
- Consumers are less price sensitive > Charge a premium on Quartz > Increase revenue and recover R&D investment more quickly
- But we recognise a downside in targeting this segmentIf they want to convince more showrooms to carry Quartz, they need to stop selling Quartz through other channelsAssuming that premium segment shops at showrooms only, the total sales by volume in this segment is relatively low
- Underscore importance of ST LT strat2 year lead, after which competitors will…So jason has brought u thru why we wanna … in the STAnd now ill explain to you why we see an opportunity in these 2 segments, in the LT
- Opportunity – in terms of Market size and market readinessFor standard and value,Market size is hugeMarket wil be ready by thenFor non shower users,Market sizeMarket wil be ready by then
- Down market strretch
- Down market strretch
- What we’ve done
- Distributors are Aqualisa’s direct customers.
- Although Quartz seems to meet the needs of these segments
- If we were to grow our sales of Quartz in these segments, we need to do so slowly
- Pronounced improvement in shower technology that required modest change in behaviourThis option is attractive but not viable in the short-term
- Given facts from the case, we do not have information on the reasons