Soren Chemical: Why Is the New Swimming Pool Product Sinking?

Although Soren Chemical has had success in the recreational pool clarifier market, the new Coracle consumer brand that targets the small recreational and household swimming pools has suffered a very disappointing sale of merely 3,725 gallons at $110,000 through the first half of the selling season when Soren has predicted a $1.5 million in sales and 100,000 unit in volume for Coracle. The issue currently faced by Soren is that Coracles sales is heavily dependent on the wholesale distributors willingness to promote or even carry Coracle. The business-toconsumers marketing strategy for Coracle is not meeting the sales target because distributors lack the economic incentives to sell Coracle. We recommend Soren to increase retail price to offer economic incentives for wholesale distributors to carry and promote Coracle. Currently, distributors are the key obstacle in Coracles distribution because even though the marketing initiative targeting service professionals and specialty retailers are well-received, many respondents have stated that Coracle is not offered by their distributors. Offering distributors higher profit margins will allow them to start carrying and promoting Coracle to retailers who have already demonstrated interest in the product, thereby translating the demand into increase in sales volume. Doing so will also continue to build Coracles brand awareness among retailers and consumers when the distributors are motivated to promote the new product and achieve a platform where Sorens pool-related products can all be sold through the Coracle name directly to consumers. The financial implication involved in the price increase is determined by the margin by which Soren can raise Coracles price to give distributors the economic incentives to carry Coracle yet still beat the industry average of annual cost savings that it can promote to end users. Our analysis shows that Soren can increase Coracles price by a margin of less than $8.50 per treatment and achieve its goals above. Aqualisa Quartz Customers Shower buyers fall in three pricing segments: premium, standard and value. First, premium segment is conducted of people who mainly shop in showrooms. Their focus is on great service and high performance. Second segment is called standard. Customers in this segment rely on plumber recommendation and emphasize performance and service. Value segment conducts mainly customers who are primarily concerned with convenience and price. Thus, they like to avoid excavation and also tend to rely on independent plumber in selecting a product. Value segment falls in with DIY market, where people tend to buy in large retail shops, interested mainly in inexpensive models that are easy to install and they are also strongly price sensitive.

Channel Main three channels of distribution are Trade shops, Showrooms and DIY Sheds. It is evident that Do-it-Yourself Sheds are dominant in sales for Electric Showers (550.000 units) , which are cheap and easy to install and designed for mass-market. Followed by Mixer Showers (80.000 units) and Power Showers (20.000 units). This represents buyers of lower pricing segment. Showrooms tend to be for more high end products and customers with higher income. Here the bestselling products are Mixer Showers (70.000 units), followed by Electric Showers (55.000 units) and Power Showers (20.000 units). Trade Shops are places most applicable for plumbers, where reliable product availability is more important then technical advice. Mixer Showers are here also the best selling product (440.000 units), followed by Electric Showers (330.000 units) and Power Showers (110.000 units). Competition UK Marketshare Data shows us that UK has five players which sell more then 100.000 units per year (data for year 2000) on the showers market. These are: Triton (545.500 units), Mira (390.000 units), Ganiesborough (203.500 units), Aqualisa (122.000 units) and Masco (120.000 units). If we focus on Electric Showers, Gainesborough (Aqualisa brand) is with 180.000 number of units sold on the 2nd place, behind Triton (479.000 units). In Mixer Showers category, Aqualisa is also second with 94.000 units (behind brand Mira with 200.000 units sold in year 2000). Company & market environment UK shower market had (has?) a big potential, since only 60 percent havent had a shower. Many homes still had archaic, gravity based plumbing and cold water tank or cistern on the roof. Separate boiler and cylinder were needed to store hot water in a nearby airing cupboard. Sound like a good opportunity. Aqualisas reputation was always strong in UK. It was perceived as a top quality shower, a premium brand with product quality. Quartz shower value (relative to consumers) Comparing Quartz shower with pump and Aqualisa 609 mixer shower with pump, gives us a few main points.

Aqualisa 609 mixer shower with pump: Standard segment Retail price = 715 EUR (+ pump 475 EUR)= 1390 EUR

Pros, Cons: + High quality, reliable, state of the art technology - excavating the bathroom wall (two day job), high price Quartz shower with pump Premium segment Retail price = 1080 EUR

Pros, Cons: + Low price in comparison with Aqualisa 609, easy to install, small remote processor applicable anywhere, Excavation not necessary, efficient and reliable water pressure and temperature, one touch control button, automatic temperature control. - None(?) Quartz shower value (relative to plumbers) Plumber is better off if installing Quartz shower. First thing we have to mention is that Quartz has a significant lower price and also installing is much easier, quicker and consequently cheaper. In this way plumbers can make the same work for cheaper price, which makes them more competitive. Plumbers are known to be distrustful to innovation and consequently they are dedicated to one single brand. Persuading plumbers to use Quartz would mean that when these converted plumbers would see the simplicity of the product and started using Quartz. In this way Aqualisa would get dedicated customers. For explaining and showing to the plumbers, the simplicity and economic value of the product, Aqualisa should strongly target them in Trade Shops presentations (In Trade Shops primary customers are plumbers), potential Newsletters, plumbers society, organizing seminars etc.

Who should Aqualisa target In my opinion plumbers have the biggest potential for further sell of Quartz. They are for sure the one who influence the biggest group of people. Since plumbers are distrustful to innovation and are reluctant to switch brands, Aqualisa should put more effort in persuading plumbers to use Quartz shower. Once we achieve that, plumbers will stay with our product. This could be done in various ways. For sure, primary focus should be on Trade Shops, where plumbers are the most frequent guest. In Trade Shops they should offer various presentations emphasized on simplicity of installation, economic value and on time saving. Another option would be finding addresses of all plumbers and sending them leaflet where shortly explaining the great benefits of Quartz shower and especially stress the time saving factor (and ability to do more and consequently to earn more). Leaflet would also include number for any question asked and also date of presentation in nearby (maybe only Trade Shops?) of their homes (this is questionable, because I imagine these plumbers dont have a lot of time: but this could be also a reason to get their attention and attract them to come).