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Case Study – Aqualisa Quartz

Important Facts of the case

 In May 2001, Quartz shower was launched by AQ, significant in terms of technological advancement. However, till Sept 2001, it was not selling as expected in spite of being advanced in water pressure, ease of installation, use and design.

 UK Shower Market stats:

- Only 60% of UK homes had showers (significant potential for target market expansion)

- Plumbing was gravity fed, a cold water tank sat on the roof, while a separate boiler was needed to store water in a nearby cupboard.

- 2 Problems with gravity fed plumbing – low pressure and fluctuations in temperature.

- Gravity fed plumbing was addressed by Electric Showers, Mixer shower valves and Integral power showers

- Electric Showers – Took water from cold tank and heated it instantaneously. Eliminated separate boiler. Large white box in the bathroom and did not do anything to address flow of water. AQ sold electric showers under the “Gainsborough” brand. (Brand confusion and competition within same company)

- Mixer shower valves – Came in 2 variants which is Manual and Thermostatic. Involved excavating the bathroom wall which was a 2 day job. Additional booster pump needed to boost water rate ($350 to $600). AQ609 was its top selling shower with 60,000 units per year. Plumbers regarded it as high quality. COGS of $155, but sale price of $675 to $750.

- Integral Power Showers – combination of Mixer and Electric showers with a booster pump as well. Required mounting on the shower and hence a bulky box on the wall. Regarded as less reliable. AQ Thermostatic was its primary product in this category. COGS of $175, but sale price of $670 and at about 20,000 units in a year, it was AQ’s best in this category.

- Showers tend to breakdown after a while due to accumulation of lime scale. The valves become stiff and hard to turn and they start to leak as well. Replacement showers are a big market in the UK contributing to at least half of the...