Aqualisa Quartz - Simply a Better Shower

Case Analysis: AQUALISA QUARTZ SIMPLY A BETTER SHOWER

Group Name: NewBee

Group Members：

Mengshi Li

Jie Min

Zezhong Shen

Kailin Mai

Rui Xu

Wanjun Sun

Problem Statement:

The problem that the company Aqualisa faces is that after spending three years on bringing innovation to the shower market, the company launched as product in the shower market called Quartz which does not receive a good response from the sales perspective. The company was expecting a good response to the product due to innovative features in the shower (Exhibit 1) which were tested before launching of the product on the mass market.

The type of innovation which the company wants to bring in the industry is not seen in the near past and according to the Managing director of the company, Mr. Harry Rawlinson, a graduate of the Harvard Business School of year 1990, this level of innovation has not been pursued in the past whole history. The product launched after this long spent time has so many benefits associated with it, like it was easy to install, the installation time is one fourth of what is required in the installation of a typical shower. These benefits are according to the perspective of the plumber. For consumer, it offers efficient and reliable water pressure and temperature, one touch control which blinks red light until the desired temperature is reached. With all these features, the company was not able to get the desired level of sales which is unexpected to the company who has been enjoying seventeen million Euros of net income and is comfortably placed in the UK shower market.

Recommendations:

The recommendations for the management of the Aqualisa are that:

• First of all company should consider its cost structure.
• The company should consider the steps for improving the sales numbers which do not cannibalize the existing products which are bread and butter for the company.
• The company should increase the sales staff.
• The company should change its current channel strategy.
• The company should change its promotional strategy.
• The company should change the positioning of the new product in the context of the existing products of the company.

 Analysis:

 The analysis of the recommendations is given below:

First of all, when the company will reconsider the cost structure of its new innovative product, Quartz, it will help it in assessing what are the value added steps and what are the non- value added steps in the manufacturing of the Quartz shower and its different variants. By assessing the cost-benefit analysis, the company can consider the removing of the non-value added steps in the manufacturing of the showers. This will help it to reduce the costs of manufacturing of showers and in turn the minimum selling price to the primary market participants, the showrooms, Do-it-yourselfers, etc. And after getting reduction in price from the manufacturers, these primary market participants will reduce the price for the secondary market participants, the customers of the showers. The efficiency and effectiveness in the costing of the products will help the company to increase its sale’s numbers and hence the bottom-line also.

Secondly, the company should increase the sale’s number of Quartz by closely watching its steps that they do not cannibalize the existing products of the company which are the bread earner for it. Like, the company should not bring in increase in sales numbers of Quartz by listing out the shortcomings in the existing products. This will damage the reputation of the existing products which have a proven market performance and they will be disliked by the existing customers of these products. This will decrease the revenue from existing products and if the new product Quartz will not raise excitement in the customers to adopt this product, the company will be badly affected. The sales numbers from the total products will decline leading to the failure of the whole company and ultimately it will cease to exist.

The company should consider changing the sales staff ratio. Currently there are 20 sales staff members. The current total revenue per sales person is calculated in Exhibit 2. If there is increase in sales force, the company can bring in additional revenue. However, in order to define the situation mathematically, the current revenue of 2001 is taken and divided by the new number of the total work force to get the new reduced revenue per sales person (Exhibit 2). This decrease in sales revenue per sales person will help him to increase its efficiency and effectiveness and in the future, he can surpass the current revenue per sales person very easily. Allocating the additionally hired staff to the sales of Quartz can be another option to augment the sales of these products.