Case 1

Introduction

  • Aqualisa, a U.K. shower manufacturer, launched the Quartz shower in May 2001, marking significant innovation in the U.K. shower market.

  • Harry Rawlinson, managing director of Aqualisa, sought to discuss this innovation for Harvard Business School.

Current U.K. Shower Market

  • Market Overview:

    • Showers in the U.K. are often plagued by low water pressure and temperature fluctuations due to outdated plumbing systems.

    • Only 60% of U.K. homes have showers; many homes feature gravity-fed plumbing, leading to pressure issues.

    • In contrast, U.S. water pressure typically exceeds 18 liters per minute.

  • Existing Shower Solutions:

    1. Electric Showers:

      • Draw water from the cold supply and use electrical heating to provide hot water.

      • Bulky installation and limited flow rate due to energy constraints.

      • Competitively sold under the "Gainsborough" brand.

    2. Mixer Shower Valves:

      • Manual and thermostatic types available; required wall excavation for installation.

      • Low pressure without additional pumps; core product, Aquavalve 609, often sees installations supplemented with booster pumps.

    3. Integral Power Showers:

      • Combine thermostatic mixing valve and booster pump in a compact unit.

      • Higher popularity due to ease of installation but perceived as less reliable.

  • Consumer Complaints:

    • Frequent breakdowns, maintenance issues, and leaks were common complaints.

    • Different consumer behaviors were noted based on price segments: premium, standard, and value.

Market Segmentation

  • Consumer Types:

    • Premium Segment: Style-driven, high performance expectations, prefers showrooms.

    • Standard Segment: Performance and service-focused, relies on plumbers' recommendations.

    • Value Segment: Price-sensitive, favors convenience, typically avoids excavation.

  • DIY Market:

    • Popular with landlords and those seeking easy installation.

    • Electric showers dominate due to ease and low cost.

  • Developer Market:

    • Builders favor high-end reliable products; typically less inclined to pay for premium features.

    • Introduced ShowerMax brand tailored to developers' needs for cost-effective solutions.

Aqualisa’s Competitive Position

  • Past Reputation:

    • Historically strong presence in the U.K. shower industry, ranked second in mixing valves.

    • Concerns arose about perceived product quality and service levels eroding.

  • Challenges:

    • Competitors catching up in quality, Aqualisa perceived as overpriced, and service standards declining.

    • 10% of products continued to fail, leading to customer dissatisfaction.

Development of the Quartz Shower

  • Innovation Focus:

    • Rawlinson aimed to build a robust R&D team to explore technological improvements.

    • Consumer feedback highlighted the need for showers with good pressure, reliable operation, and easy installation.

  • Breakthrough Concept:

    • Remotely located the mixing mechanism to simplify installation and eliminate bulky installations.

    • Initial fears of electronic integration due to previous failures in the 1980s were overcome with thorough testing.

    • After testing, the Quartz was developed featuring two variants: Standard and Pumped.

Installation & User Experience

  • Installation Benefits:

    • Simplified installation process, reducing standard two-day jobs to half-day installations.

    • Plumbers reported that even less experienced apprentices could effectively install the Quartz.

  • Consumer Features:

    • Automatic temperature control and ease of use via a push-button system.

    • Positive reception during trials, highlighted by the "wow factor" of the shower's design and functionality.

Initial Market Reception & Sales Struggles

  • Despite early excitement and positive reviews from industry shows, initial sales of the Quartz were disappointing, with only 81 units sold within the first four months.

  • Marketing Challenges:

    • Plumbers skeptical of innovations, particularly electronic components, hindered sales efforts.

    • Need for a strategic approach to reach both consumers and plumbers effectively.

Marketing Strategy Considerations

  • Potential Strategies:

    1. Targeting Consumers Directly:

      • Shift efforts to build consumer recognition rather than relying solely on plumbers.

    2. Engaging DIY Market:

      • Leverage the ease of installation, potential to attract DIY enthusiasts; risk of diluting brand prestige.

    3. Developer Engagement:

      • Focus on relationships with property developers for long-term sales growth; navigate price sensitivity.

Conclusion

  • Rawlinson faced a strategic decision on whether to lower expectations for the Quartz or pursue broader market ambitions.

  • His vision hinged on balancing Aqualisa's past with the potential for innovative growth in the future.