Aqualisa Case

I. The Problem:

Aqualisa has a wide variety of products, but none other like their Quartz system they introduced in 2001. The use of an automated shower system backed by state-of-the-art computer technology was a new concept to the UK shower market, and was the only product of its kind. Automatic temperature settings and a remote control device that allowed the user to turn the shower on from another room was another highlight. Additionally, the channels that Aqualisa provides its products through are showing little support for the Quartz shower systems, and therefore a new target market must be designated to sell to. The quartz shower system is not profitable for Aqualisa at its current sales level because it is an expensive product that is not gaining support through the company's current distribution channels. A new channel has to be established to sell the Quartz system through and a marketing strategy on how to introduce it to that market has to be developed. A top concern is determining if the Quartz could potentially hedge out other Aqualisa products in the electric shower market through targeting DIY sheds. Entering the electric shower market with another product could potentially cause a disruption in Aqualisa's own sales, but not if a clear difference between the products is established.

II. The Analysis:

The alternative advertising plan that would be implemented by selling in a direct consumer market effectively would cost an estimated €3 to €4 million. That money can be saved and applied to developing innovations for the Quartz system, which has already begun to put out add-ons such as the body jet. The Aqualisa team believes that incorporating a computer into the bathroom will yield many future products. Therefore, making a deal with B&Q would save revenue that might otherwise be spent on direct consumer advertising and can be applied to research and development of other products that would enhance the Quartz system.

Additionally, fluctuating demand for a product means that a small change in consumer demand causes a large change in business demand. The demand B&Q has for Quartz systems may fluctuate greatly as it attempts to penetrate the DIY market based on how many units B&Q can sell in its stores. If the price falls too low, the Quartz will lose its exclusive premium appeal, and then the need to create a market segment for premium electric showers will not be necessary. With that being established, the Quartz products provide the highest profit margin among all of Aqualisa's lines (Exhibit 8), and lowering the price slightly will lower those profit margins, but they will still be high in regards to the rest of their products and still be profitable.

Installation of shower systems usually takes two full days for plumbers to install, but the Quartz system reportedly only takes about