Marketing I
Day 4 Report – Jeremy Pichitphan G595484 1. Breakdown of UK shower market is as below,
Overall Characteristics * Every household had a bathtub but only 60% of them had showers. This shows big market growth opportunity (another 40%)

* Shower market in UK is still undeveloped compared to other market for example in U.S. Consumers’ satisfaction is often low due to the following issue; * Low pressure of water * Unreliable water temperature * Low quality shower causing breakdown
In addition, products in the market did not have any real innovation to solve all of this problems. This can be viewed as an opportunity for manufacturers who can come up with innovation that answer to these problems.

* Consumers were also uneducated regarding products and can barely understand the different value given by each type of showers. Brand-awareness is low and decision often came from the advice from plumbers who mostly responsible for installation. This show another opportunity to educate both consumers and plumbers to create both demands. Products * Products in shower market can be categorized into 3 categories. Each has different pros and cons and suit to different type of consumers

Product Type | Product Cost | Additional Cost (Plumber cost, etc.) | Installation | Pros | Cons | Electric Shower | Low | Low | Self-install or plumber | -Does not require hot water supply | -Low water pressure-Bulky box on the wall | Mixer Shower | Medium to high | High | Plumber | -Easy temperature control for thermostatic | -Requires both hot and cold water supply-Requires excavating-Additional on pump cost | Power Shower | Medium to high | Low to medium | Plumber | -Comes with built-in pump | -Requires both hot and cold water supply-Bulky box on the wall-Less reliable than mixer type |

From table above, we can see that no type of shower can answer all the problems effectively. Mixer shower has the highest quality but comes with high price. While electric shower is cheap but has a low water pressure. This further shows us that new innovation can be benefit from these flaws.
In addition, each product types is also categorized into 3 segment by price: premium, standard and value. Consumers and Distribution Channels
From exhibit5, we can see that over 90% of installation is done by plumbers. Only 6% is done by end-consumers. Also there is a lot of influences between plumbers and consumers and in some case plumbers are decision makers. For easy understanding I will classified consumers into 2 types, plumbers and end-consumers.
Decision Makers Consumers | Channels | | Trade shops | Showrooms | DIY stores | Plumbers | Direct/ Indirect | | | End-consumers | Indirect | Direct | Direct |
*Direct: decision makers
*Indirect: Influences other parties
Sales Contribution by Channels | Electric Showers | Mixer Showers | Power Showers | Total | Do-It-Yourself Sheds | 31% | 4% | 1% | 36% | Showrooms | 3% | 4% | 1% | 8% | Trade Shops | 18% | 22% | 6% | 47% | Other(Electrical wholesalers) | 9% | 0% | 0% | 9% | Total Units Sold | 61% | 31% | 8% | 100% |

We can see that almost half of sales is made through trade shops which is bought by plumbers. This can be marked as our main sources of sales. This fact can be further identified by the contribution when considering only mixer showers, 22% out of 31%
In conclusion, plumbers is the key as they act as intermediate in majority of distribution channels. 2. Quartz Product Value & Problems
Quartz is the new real innovation by Aqualisa that took time and effort to develop to solve all the current problems consumers facing in the market. In summary we can identify product’s value as follow: 1. Convenient & Reliable
Two top problems that consumers are facing is poor pressure and unreliable water temperature. Quartz solve these problems by using electronic devices that can easily control the temperature by adjusting the dial to desired temperature. It also solve the pressure problem by having a built-in pump into the unit. Also the convenience factor comes with user friendly usage. By only adjusting the dial and push one button, consumers get the right water temperature in few moments in oppose to old school mixer valve that they have to manually adjust. 2. Aesthetic
Another problems with old types of shower is the bulk box that need to be installed in the shower. Quartz can be installed anywhere that has an electric outlet and water supply. This eliminates the necessity to install the box in the shower and give pleasure for aesthetic in the bathroom. 3. Easy to Install
Normally it takes 2 days to install mixer shower and it needs to be done by experienced plumbers. Furthermore consumers are face with additional cost for excavating the wall. However with Quartz the installation process is shortened to only half day and can be done even by an inexperienced plumbers. This also give advantages to plumber to get more job in the same amount of time. 4 installation of Quartz compared to only 1 installation of mixer shower.

In summary, Quartz’s offer value to both end-consumers and plumbers as below

| Value Offered | End-consumers | Convenience, reliability and aesthetic | Plumbers | Easy to install |

Even though Quartz has many competitive advantages, sales still not went as planned. The reasons for this slow sales can be analyzed from the case as following: 1. Plumbers are not convinced
As mentioned in question 1, plumbers play an influential part in recommending shower brands to end-consumers. However in this case even though the sales team had a face to face explanation to numbers of plumbers, plumbers are still not convince of this new innovation due to few issues. They still stuck with the old stereotypes of shower, installing what they accustomed with to minimize breakdown and time used. They also have the belief that electronics will break down easily from their experience. 2. Awareness and trial rate are low
Shower market consumers have little understanding in each type of showers as it is not a commodity goods. This resulted in low awareness for end-consumers and the effect is that they did not request Quartz with plumbers when install new shower. On the other hand, plumbers are used to install only what they accustomed to and would not recommend anything new to end-consumers. Especially with this totally new innovation, they did not want to risk their time on new products that they are not used to even though Quartz are advertised as easy to install.

From these reasons, demand were not created and thus resulted in the sluggish sales.

3. Quartz Marketing Plan
First we need to identify our target customer. From exhibit4 we can see that 73% of decision making is from plumbers. We can say that plumbers is our main target customer.

To further confirm this fact, we can see that over 50% of installation is made by plumbers that can make or influence the decision. Another 20% decision making in showroom is made by end-consumers.

From this fact we will target plumbers as our main customers. However we will target end-consumers too as they can influent plumbers when they install new shower. Marketing Mix 1. Product
We will skip this part as the product is already completed. 2. Place
For distribution part. We will mainly focus on trade shops. Current distribution is only 40% so we still have room to improve. However trade shops have limited spaces and tend not to give a lot of advice due to wide variety of products and customers (plumbers) experience. To be able to generate sales through this channel we need to: * Offer additional incentives to trade shops for each of Quartz sold. Quartz already has high margin per unit. By giving incentives and sales talk that selling one unit of Quartz will give you much larger profit ($400-500) than other products. * However, this should be done for only a period of time, the reason behind this strategy is not to push sales out but to increase trial rate for plumbers. Once plumbers are used to Quartz they will automatically request this product and we will not need to give more incentives.
Another channel that ensure sales is showrooms. Any showroom that has a display Quartz will become leading products in no time. Strategy for this channel is very easy, install displays for real experience. Ensure that display is installed in all showrooms around the country to create demand from end-consumers. 3. Promotion

For plumbers, my strategy is * To increase awareness and trial rate among plumbers. We need to have them experience the real installation. * Arrange a seminar for plumbers in each region, educate them on selling points of Quartz and focus on installation part as it directly related to them. * To tackle the problem that they might not join the seminar due to wages they will lose, we will offer each of them one Quartz for free (cost $230 each). This way they will get very high profit ($850 profit) for that Quartz in return of attending that seminar. * Another benefit of giving Quartz for free is to ensure that at lease each plumbers will have an opportunity to install them in real situation and with high satisfaction will ensure our future sales. * However, this strategy will required big amount of budget compared to net profit ($2.3 million vs. $17 million)

For end-consumers, my strategy is * Establish consumer campaign, but not large-scale because we will focus our budget at plumbers. * Revise marketing message, currently our ad features only the water pressure. However we need to feature total convenience and reliability. We still miss reliable water temperature, easy to use and aesthetics.
Focusing only on water pressure does not tackle all current problems in shower market and will less attract end-consumers.
Focusing only on water pressure does not tackle all current problems in shower market and will less attract end-consumers.

4. Price
Current price for Quartz is in premium segment. My strategy is to remain the same price due to the fact that Aqualisa strategy is to positioning Quartz as a premium product. Aqualisa does not need to price this product low for penetration as they will increase penetration through plumbers. However if we are to maintain the price, we need to consistently communicate the value of products to consumers.

Challenges This marketing has two challenges that will need cooperation within company 1. Budget
Money will be used a lot especially through trade shops and plumbers seminar. However this investment is for the long run. By ensure that plumbers are attached to our brands will generate much more profit in the future. 2. Sales Effort
Plumbers seminar is a crucial factor in this plan to ensure our success. We will need sales team to put their effort to make this events success. Although sales had face to face talk with plumbers in the past but plumbers did not deeply understand the benefit. This seminar is a chance to correct those mistakes in the past.

Reasons to reject DIY and Developers strategies
DIY channels are mainly for budget customers who does not fit the positioning of Quartz that has very premium price, in addition they are very price sensitive. For developers it may gain big sales per each project but the effect of plumbers trial is small and it takes too much time for end-consumers to have an experience. In addition the price is too high for developers.