1.1 Customer Segmentation and characteristics: Segment Premium
Standard
Value
DIY customers
Developers
Characteristics 1. Shopped in Showrooms 2. Assumed high performance and service 3. Style determined the selection 1. 2. 1. 2. 3. 4. 1. 2. 3. 1. 2. 3. 4.
Emphasized on performance and sevice Relied on independent plumber for shower selection Looked for convenience of installation low price criteria Avoided solutions requiring excavation Tended to rely on independent plumber for shower selection Shopped at large retail outlets Interested in easy to install and inexpensive models Preferred electric showers Preffered reliable, nice looking products Preferred products with capability to work in multiple settings Price sensitive, not interested in premium valves Chose the products themselves
Aqualisa Offerings Aquastyle Quartz Standard Quartz Pumped Aquaforce 2.0/3.0 Bar Aquavalve 609 Aquastream Thermostatic Aquaforce 1.0/1.5 Bar Aquavalve Value Aquastream Manual
Gainsborough
ShowerMax
1.2 Channels: Channels
Tradeshops
Showrooms
DIY sheds
Characterstics
Aqualisa Presence
1. Carried products across all available brands 2. Primary customer was the plumber Aqualisa brand was available in 40% 3. Tended to stock whatever there was demand for of trade shops 4. Didn’t have the time to learn all the features and benefits of the items they offer 5. Focussed only on the right stock of products that are in demand 1. Distributors supplied showrooms 2. Tended to be more high-end 3. Led consumers through the process of selecting and designing a bathroom the Aqualisa brand was sold in 4. Allowed the consumer a chance to view the product in a about 25% of them pleasant environment 5. Preferred to carry high-end product lines and brands 6. Offered installation services by subcontracting with contractors and independent plumbers 1. offered discount Gainsborough brand was available 2. mass-market, do-it-yourself products in 70% of the approximately 3,000 3. Electric showers led sales DIY outlets in the U.K.
1.3 Competition: Top UK shower market competitors including Aqualisa have been shown below with their market ranking and market share in each kind of shower products: Market Ranking 1 2 3 4
Electric Showers Triton Aqualisa Mira Heatrae Sadia
Market Share 44% 17% 14% 4%
Mixer Showers Market Share Mira 36% Aqualisa 21% Ideal Standard 11% Masco 9%
Power Showers Market Share Mira & Masco 23% & 23% Triton 17% Aqualisa 16.70% -
1.4 Company and Market environment: Market Environment U.K. shower market is a matured market and can be roughly estimated to be around € 400 million market Showers in U.K. were plagued with problems. Only about 60 percent of U.K. homes had showers Archaic plumbing (mostly gravity fed) was common in many homes leading to low water pressures Majority of the market revenues come from Electric showers followed by mixer and power showers More than 70% of the shower selection is influenced by the plumbers Most of the shower companies in UK have low brand awareness except Triton Company Aqualisa is the third largest company in the UK shower market by sales volumes and second in mixer showers It has a good product mix with product offerings in all the segments and across all the channels in UK Aqualisa has a revenue of around € 68 million with a base profit of around 25% It has a reputation for providing good quality and service
Aqualisa Financial Data (€ in thousands) Revenue Gross margin Expenses Op. Mrg.
€67,956 €31,824 €14,469 €17,355
A good mix of product offerings Good business growth in a matured market Good profitability (around 25%) Strong presence in Tradeshops and DIY outlets Strong reputation in terms of quality and service Aquavalve 609 highly Recommended by plumbers
Electronic showers not trusted by plumbers and consumers Consumers have low awareness about products Sales teams do not focus much on new customer development Lower presence in showrooms Considered a premium product by developers
Unique product offering (Quartz) No competition in market with Quartz shower Scope of market expansion 40% of houses do not have showers
Maturing categories, products, or services Competition may catch up soon, lead time availability of only 2 years Aqualisa´s own products may face competition from quartz
SWOT Analysis
2. Quartz Shower Value proposition for consumers The value proposition for installing Quartz premium compared to Aquavalve609 standard with Aquaforce 1.0/1.5 has been explained below:
Cost saving
Quartz Pumped Premium total cost calculation:
Quartz Pumped Premium Retail Price €1,080.00 Plumbing costs for 4 hours @ €60/hr €240.00 Total Cost
€1,320.00
Aquavalve 609 standard with std. Booster pump total cost calculation:
Aquavalve 609 standard with std. Booster pump Aquavalve 609 standard MRP €715.00 Aquaforce 1.0/1.5 Bar MRP Plumbing cost for 2 Days (16 hrs) @ €60/hr Total Cost
€445.00 €960.00 €2,120.00
A cost benefit of €2120 - €1320 = €800 for the consumer. Even without the booster pump Aquavalve 609 installation would be more expensive than the Quartz Pumped Premium for a consumer
No requirement of excavation Flexibility of keeping the pump and valve unit (processor) at a convenient remote location Better water pressure and temperature control Safe and easy to use for children as well as elderly Satisfaction of having a latest and premium product
3. Quartz shower Value proposition for Plumbers a). Quartz shower is easier to install, as it does not require excavation and the remote processor can be easily placed at a convenient location b). Since the Quartz shower is easier to install plumber can send his younger apprentices also for installation, again, it allows him to take more work at hand c). Quartz shower takes only half a day for installation so the plumber can take almost 4 times jobs in hand which will help him earn more money
d). Let us consider that plumbers get 10% margin on MRP of the shower as they directly make the purchases from the tradeshops
On each Quartz pumper premium, with 10% margin a plumber may save €108 On each Aquavalve 609 std. with booster pump, with 10% margin a plumber may save €116 In 2 days, a plumber can fix only 1 Aquavalve 609 std. with booster pump thus earning €116 in 2 days In 2 days, a plumber can fix around 4 Quartz pumper premium thus earning €432 in 2 days Even we reduce the margin of plumber to a much smaller percentage he will be earning more money by installing Quartz showers
Plumber Earnings with Mixer Shower installations Number of days for each mixer shower installation taken by a plumbers 2 Days number of mixer shower installation done by plumbers/ b year 50 Installations number of days spent by plumbers for shower c installations = a*b 100 total hours spent by plumbers on shower installation d @8hrs/day 800 e total earning (@€60/hour) 800 hours * € 60 = € 48000 f earnings by markup €116 * 50 = € 5800 g total earning (e+f) €53,800
Plumber Earnings with Quartz Shower installations Number of days for each quartz a installation taken by plumbers number of quartz shower installation done by plumbers/ b year number of days spent by plumbers for shower c installations = a*b total hours spent by plumbers on shower installation d @8hrs/day e total earning (@€60/hour) f earnings by markup g total earning (e+f)
0.5 Days
200 Installations
100
800 800 hours * € 60 = € 48000 €108 * 200 = € 21600 €69,600
e). Since quartz is a new product from Aqualisa and Aqualisa would like to increase its sales in the market, plumbers can expect better service for the shower from Aqualisa f). As the product is very simple to install and use, second visits that are paid out of plumbers pocket will be minimized, thus saving cost and effort for the Plumbers 4. Aqualisa should target Plumbers as well as the consumers 4.1 Considering a logical order Aqualisa should target the Plumbers first: Looking at the below mentioned facts: (HBS, Aqualisa Quartz: Simply a Better Shower, Exhibit 5) Independent Plumbers make 54% of the installations of mixer showers in the UK shower market, plumbers are also directly or indirectly involved in other installation methods
(HBS, Aqualisa Quartz: Simply a Better Shower, Exhibit 4) The plumbers influence more than 70% of the shower selection for mixer showers
Shower selection Consumer makes the selection himself
23% Consumer influenced by the Plumber for selection
73%
On the basis of the above-mentioned facts it can be determined that Plumbers act as collaborators and have a very high influence over the consumers and thus largely affect the sales of the shower products in the UK market. Also, as initially concluded Quartz is a high value proposition for the plumbers as well though based on their past experiences with the electronic shower products and distrust in innovation they are unable to realize the value of this proposition for themselves. Familiarizing the plumbers with the product and showcasing them the value that Quartz can provide to them as well as the consumers can boost the sales of the product Though there is a threat involved, in order to promote Quartz the plumbers may start pointing out deficiencies in the existing Aqualisa products such as Aquavalve609. Action Plan to Target Plumbers:
Create special Plumber awareness programmes showcasing them the ease of installation of Quartz and its superior functionalities. Emphasize on the increase in earning they may get by saving time and better utilization of the apprentices Give promotional offers such as incremental discounts on buying a 200-250 showers per quarter Reassure good service and quick replacements in case of any problems with the products Give 2 years warranty on complete cost reimbursements including service cost of plumbers for any break down Create special brochures describing the steps for installation of the shower etc.
4.2 As it is a better value proposition for consumers than plumbers it is ideal to promote the Quartz shower in front of the consumers as well. The product has a winning edge due to its uniqueness, overall low cost, ease of use and safety. In order to promote the product in front of customers the following action plan must be incorporated:
1. The sales team is currently spending 90% of the efforts for maintaining the existing customers and 10% for the new customers, this should be changed, additional sales team should be employed to target the new customers. A large part of the UK market i.e. 40% do not have showers, Aqualisa can capitalize on this fact and generate more sales. 2. The product should be placed in more showrooms currently only 25% of the showrooms have Aqualisa products, As mentioned by Rawlinson the product was an immediate hit in the showrooms exhibiting it. Better placement of product in the showrooms will increase customer awareness about the product with the premium customer 3. Specific advertising campaigns targeting the premium as well as standard customer should be launched aggressively as the product is still in its introductory stage. For standard customers the advertising should focus on cost benefits For Premium customers the advertising should focus on innovative features and functionalities of the Quartz • • •
Considering the cost of a half page advertisement in a daily paper €5000 Weekly ads on each Sunday for first year to target maximum readership i.e. 50 times/year Total cost of print advertising will be €250,000/year
