Installing mixer valve meant excavating the bathroom wall

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In May 2001 Aqualisa had launched the Quartz shower, the first significant product innovation in the U.K. shower market since—well, to Rawlinson’s mind—since forever. But here it was early September 2001, and the euphoria surrounding the product’s initial launch had long since faded. Rawlinson knew the Quartz was technologically leaps and bounds above other U.K. showers in terms of water pressure, ease of installation, use, and design. But for some reason, it simply wasn’t selling.

The U.K. Shower Market

Professor Youngme Moon and Research Associate Kerry Herman prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Some data have been modified or disguised.

Copyright © 2002 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.

The Aquavalve 609 was the company’s core product in the mixer-shower-valve category. At about 60,000 units per year, it was by far Aqualisa’s top-selling shower. It was regarded by plumbers as being a high-quality, reliable mixer shower with state-of-the-art technology. It cost about �155 to manufacture and sold (at retail) for �675 to �750. The Aquavalve 609 was thermostatic and could be supplemented by an Aquaforce booster pump to create stronger pressure.

3.� Integral power showers consisted of a single compact unit that combined a thermostatic mixer valve and a booster pump. Although they provided up to 18 liters of blended water per minute, they had to be mounted in the shower, resulting in the presence of a bulky box on the wall. In addition, these units were generally regarded as being less reliable than a mixer-shower and booster-pump combination. The Aquastream Thermostatic was Aqualisa’s primary product in this category. It cost about �175 to produce and sold (at retail) for about �670. At about 20,000 units per year, it was Aqualisa’s strongest-selling shower in the power shower category.

were primarily concerned with convenience and price; they liked to avoid solutions that required any excavation and tended to rely on an independent plumber to select a product. (See Figure A for Aqualisa’s core product offerings in the various shower categories.)

In addition, there was a sizeable do-it-yourself (DIY) market in the U.K. Do-it-yourselfers generally shopped at large retail outlets that catered to them (for example, the popular B&Q, which modeled itself after Home Depot in the United States). These customers were primarily interested in inexpensive models that were easy to install, even though the DIY products were bulky and unattractive. Electric showers were the overwhelming choice in this segment. They could be adapted to all water systems and could be installed in a day; they were particularly popular among landlords and apartment dwellers.

502-030 Aqualisa Quartz: Simply a Better Shower

Aquavalve technology—at a significantly lower cost. Rawlinson commented, “Aqualisa’s core products are too expensive for them because of extra features aimed at the retail market. Even at a discounted price, they consider Aqualisa too high-end. But a cut-down product branded “ShowerMax” just for them, at the right price—they love it.”

Trade shops. Trade shops (or plumbers’ merchants) carried products across all available brands. Their primary customer was the plumber, who worked for developers, showrooms, contractors, or directly for consumers. Trade merchants tended to stock whatever there was demand for. The Aqualisa brand was available in 40% of trade shops. As Rawlinson put it: “The staff in these outlets don’t have the time to learn all the features and benefits of the 45,000 items they offer. They focus on making sure they have the right stock of products that are in demand. Their customers are looking for reliable product availability more than technical advice.”

Showrooms. Distributors supplied showrooms, which tended to be more high-end. Showroom “consultants” typically led consumers through the process of selecting and designing a bathroom “solution.” A shower might be one small part of an overall renovation project. Various shower and bath options were displayed in the showroom, and although no inventory was held on location, these ensembles allowed the consumer a chance to view the product in a pleasant environment. Showrooms preferred to carry high-end product lines and brands (for example, Hansgrohe, a high-end German brand) unavailable in other channels. Showrooms also offered installation services by subcontracting with contractors and independent plumbers. There were about 2,000 showrooms in the U.K.; the Aqualisa brand was sold in about 25% of them.

Aqualisa Quartz: Simply a Better Shower 502-030

A standard shower installation was usually a two-day job and required significant bathroom excavation.3 Plumbers—who installed 40 to 50 showers a year—charged about �40 to �80 per hour, plus the cost of excavation and materials (plumbers usually passed the cost of the shower and other materials on to the consumer with a small markup). Because prices to consumers were usually quotes as lump sums, consumers were often unaware of how the costs broke down (labor, materials, excavation, and so on).

However, when Rawlinson joined the company in 1998, he believed it was vulnerable, for several reasons. First, Rawlinson believed that other companies were catching up to Aqualisa in terms of product quality. Second, Rawlinson feared that the market was beginning to perceive Aqualisa products as being overpriced (see Exhibit 8). Third, while Aqualisa’s service was still regarded as being “great,” actual service had slipped over the past few years. And finally, about 10% of Aqualisa showers still “went wrong,” a percentage that hadn’t improved in many years. Rawlinson remembered:

When I first joined Aqualisa in May of 1998, what I found was a highly profitable company that was quite comfortable with its niche in the market. It had 25% net return on sales and was enjoying 5% to 10% growth in a mature market. Everyone was happy. But I was worried. I knew the current points of difference were eroding and that eventually the market might implode on us. From the start, I firmly believed that the future was to focus on innovation.

502-030 Aqualisa Quartz: Simply a Better Shower

with flip charts and felt-tip pens. And we came up with all kinds of things to improve in a shower.

Consumers told us they wanted maximum pressure. But once we gave them maximum pressure (about 18 liters per minute) consumers felt it was wasteful. So we had to give them the option to run at two-thirds speed—which they liked more than maximum pressure.

With the temperature settings, it was the same thing. We knew from our research that the optimal water temperature was 41° [Celsius]; anything above that would be uncomfortably hot. So we created this temperature control that had an upper limit of 41°. But people hated the fact that it required them to turn the valve all the way to the right, into the “red zone” on the indicator. Even though nobody wanted their water hotter than 41°, they all wanted the option of being able to make the temperature hotter. So we reset the maximum to 45°, people set their temperature at 41°, and everyone liked that much better.

Aqualisa Quartz: Simply a Better Shower 502-030

Source: Aqualisa.

The benefits of Quartz were significant. Whereas a traditional shower installation took two days, some plumbers were already reporting an installation time of a half-day for the Quartz. Plumbers were finding that the installation was so straightforward that they could even send their young apprentices—many with little or no experience—to complete the entire job. Rawlinson had spoken to several plumbers during the field trials, “They raved about it. They said, ‘It’s just what we want! We need something like this that we can push-fit-connect-you’re done. It’s not in the wall, and it’s very easy to use.’”

When consumers turn a traditional shower on, they almost always turn the shower to very hot … and then wait for it to warm up. They usually have to stick their hand in the shower a few times until they feel it’s hot enough to get in. Once they’re in the shower, they immediately start fiddling with the controls again. It’s incredibly inefficient and inconvenient.

With our Quartz technology, the temperature control is automatic—there’s no more fiddling. You don’t have to manipulate anything anymore. Just set the temperature once, and leave it on that setting. When you want to use the shower, just press a button, and you’ve turned the shower on. When the red light stops flashing, you know the water’s at the right temperature. Get in.

Rawlinson was already anticipating upcoming product releases. In a few months, Aqualisa would be ready to launch a Body Jet product that fit easily on top of the Quartz control valve, creating several jets of water that sprayed horizontally from the wall onto one’s body. This feature was popular in spas and health clubs; women particularly liked it because it allowed them to shower without getting their hair wet. The R&D team had also just finished designing a “slave” remote for the Quartz. Rawlinson described it: “Imagine waking up in the morning, rolling over, and pushing a ‘remote control’ next to your bed that turns your shower on. By the time you stumble in the bathroom, your shower is ready with the water at the right temperature, waiting for you to get in.

Because we’re dealing with electronics, the wireless technology to do this is almost trivial.”

Imagine a shower that takes less than a day to fit, doesn’t have flow problems, offers accurate temperature control, is simplicity itself to use and comes in versions to suit all water systems. It sounds too good to be true—but after three years of brainstorming . . . Aqualisa has achieved the apparently impossible with a product that takes a genuinely new look at a set of old problems—and solves them.6

Other reviewers had been similarly positive, and the Quartz had been featured on the covers of several prominent trade journals.

Our channel partners are sitting there having bought a thousand of these Quartz products, and they’ve sold 81. The poor product manager is looking pretty stupid at this stage. This is a huge problem for us—pretty soon they’re going to write this off as a failure and forget about us. I can see a scenario in six months’ time where real sales in the market—currently about 15 units a day—are still down at 30 or 40 units a day. We’ll look like a niche product. We’ve got to sell 100 or 200 a day to break through to the mainstream.

Part of the problem was that plumbers were wary of innovation, particularly any innovation involving electronics. Rawlinson told the story of a personal friend who had to insist that her plumber install a Quartz:

502-030 Aqualisa Quartz: Simply a Better Shower

in. He told her it would take two days. He was done by lunchtime the first day. And he said, “That was so easy. Can I have the brochure?” And now he’s got two or three more jobs. So once a plumber puts one in, he’s a convert.

Showrooms are traditionally quite a niche market. But I think we’ve made some penetration into that sector, and we’re starting to get working displays around the country. Because you put one of these things in, you press that control button, the little red light comes on: it’s sold! Everybody loves it. And where it’s gone in—a working display—it’s become the leading product in that showroom almost immediately.

A Shift in Marketing Strategy?

“We have so many problems reaching the plumbers,” Rawlinson continued. “So I’m thinking to myself, why not target consumers with this product and try to build a consumer brand? Triton has proven that it can be done. And if there’s ever been a breakthrough product to do it with, this is it. I think this is a ‘bet the company’ kind of product.”

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On the other hand, the value proposition of the Quartz was so superior to that of the electric showers that dominated this market, [that] perhaps it was possible to charge a premium for this product through that channel, Rawlinson thought. In addition, he wondered if Aqualisa could get its partners like B&Q to help push the product, avoiding the need for expensive consumer advertising.

Targeting Developers

Business school taught me to think strategically, to be a visionary. Everything I learned at HBS tells me this is a breakthrough product. My worry is we’ll miss the opportunity and in five years’ time, someone else will have got the world market for this technology. We’ve had a nice, comfortable, contented life in the U.K., and it’s hard to get a small company—particularly one that’s been so profitable all these years—to be ambitious. But one of the things that a Harvard background gives you is the itch to think big. You see other companies that break out of the pack because they’ve got the right product and they’ve got the right vision. So why not this company?

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Exhibit 4 Shower Selection for Mixer Showers

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Source: Aqualisa.

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aIncludes all Aqualisa shower lines, including Aquastyle, Aquavalve, and Aquastream. Also includes Aqualisa pumps, as well as a variety of other specialty shower models sold by Aqualisa; these were primarily differentiated by style (e.g., contemporary, antique, brass, etc.). Does not include other brands such as ShowerMax and Gainsborough.

Source: Aqualisa.

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