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Indian Institute of Management - Kozikhode

Commercializing the Kunst 1600 Dry Piston Vacuum Pump Case Analysis Note

By S.N. 1. 2. 3. 4. Name Mr. Umesh R. Sonawane Mr. Raj Kumar Mr. Marripudi Jaya Rao Mr. Roshan Joseph Pauly Roll No. EPGCMM-06-024 EPGCMM-06-015 EPGCMM-06-010 EPGCMM-06-016 Designation Manager Corporate Communications Key Account Manager Area Business Manager Sales Manager Organization Sahara India Pariwar Nestle India Ltd Biogen Idec India Dell India Pvt. Ltd.

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Tasks at hand: 1. Identify and justify the value proposition for Kunst 1600 (K16) for new or existing market segment 2. Analyze the unique value Kunst 1600 can provide to the market 3. Submitting quantifiable savings and value benefits to the contractors 4. Awareness building for Kunst brand name amongst service providers, technicians and end consumer Value elements - quantifiable value benefits of Kunst 1600 1. Oil free nature of Kunst 1600 provides a considerable amount of cost savings for contractors. These cost savings are comprised of the cost of oil, cleaning material (soap & paper) and time saved due to the elimination of this process. 2. Enhanced product efficiency will add it to the product value for light commercial refrigerator market with the reduction in time for one repair job. 3. Light commercial market can be benefited from additional revenue by performing a number of jobs per week using K16

Price elements - quantifiable price benefits of Kunst 1600 1. Durability due to Kunst 1600s aluminum body and lesser working parts, multiple purchases and frequent repairs will be avoided. These characteristics also expands Kunst 1600s lifespan by 2-3 times than that of competitor products.

Value placeholders - additional non-quantifiable benefits which differentiates the product 1. Anti-corrosive and usage - Injection-molded aluminum avoid K18 to corrode like traditional vacuum. Fewer parts also ensure seamless operation for K16 pump despite rough usage 2. Weight - Lesser weight due to aluminum body works in favor for K16 as technicians have to travel with the pumps at unusual places. Technicians can also carry more than 1-pump hence saving on time required for calling the new pump in case of technical failure 3. Brand name and parent company - Kunst as a brand has its own goodwill in the market (for its other products) and with technically superior company like Atlar joining hands with Kunst, consumer can expect to get best of both worlds. 4. Environment friendly - As K16 is an oil free equipment unlike its traditional counterparts, its more sustainable and green to the society.

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CalculationsValue ElementsCost of oil saved per change = Oil price + Labor cost for changing the oil (hourly rate x time required for change) + Cost of cleaning supplies (Soap + cloth) + Cost of recycling the oil (cost of recycling x gallons of oil recycled per oil change) Market Residential AC Repair segment (maintenance worker) Home Refrigerator Repair segment Light Commercial Refrigerator No. of times oil changed in a year (B) $8 + ($12 x 0.5) + ($0.5 20 + $0.15) + ($0.5 x 0.25) = $15.9 $4 + ($15 x.5) + (.50 + 12 .15) + ($5 x.125) = $12.78 $4 + ($24 x .5) + (.50 + 12 .15) + ($5 x .125) = $17.28 Cost of Saving (A) Total Savings (A x B) $15.9 x 20 = $318

$12.78 x 12 = $153.3

$17.28 x 12 = $207.3

Additional profit for Light commercial refrigerator market Additional profit/year = profit per job x number of additional jobs per week x number of seasonal weeks in a year Additional profit/year = $30 x 2 x 12 = $720

Price elementDurability - K16 claims to have a lifespan of 6 years, which is 2-3 times more than any competing product, this gives rise to differential price customer pays/save in compare to other products. Differential pricing = (Existing product price/expected number of working years) - (K16 price/ expected number of working years) K16 price = $500 K16 expected number of working years = 6 years Market Residential AC Repair segment (maintenance worker) Home Refrigerator Repair segment Light Commercial Refrigerator Existing product price $250 Expected number Differential of working years Pricing 3 $16.67

$150 $200

3 2

$-33.33 $16.67

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Consumer value model for K16Particulars Saving ($) Additional Profit/year ($) Total Value Differential Price/year ($) Residential AC Repair segment 318 0 318 16.67 Home Refrigerator Repair 153.3 0 153.3 -33.33 Light Commercial Refrigerator 207.3 720 927.3 16.67

SWOT Analysis for Kunst 1600 across all 3 markets-

Target market recommendations: 1. Given the calculation, we recommend Kunst 1600 for Light commercial refrigerator market for the following reasons a. Its giving savings of $207.3 per year and additional profit of $720. Combining these contractor is getting incremental value of $927.3 per year. b. Kunst 1600 reduces repair job for this segment by 10 minutes hence giving time for doing 2 extra jobs per week c. Light commercial refrigerator technicians are using 1-1.5 CFM of pump currently and K16 pump is an efficient 1 CFM pump. So rule of seven also works in favor of K16. 2. Kunst 1600 is an oil free machine so technicians will be free from messy job of oil changing 3. The contractor can forget about fine for illegal dumping of residual oil 4. Kunst have to make an effort towards awareness for the Kunst brand amongst a. Contractor - Buyer - by the way of one days, seminars and knowledge sharing platform

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b. Technician - User - by actually spending a day on the field with a technician c. Consumer - Influencer - making awareness programs about how K16 is more efficient 5. As new in this market Evan and team should only focus on one category that is Light Commercial Refrigerators 6. Evan and the team can look at other products from Atlars and Kunsts product range for other 2 market categories. Value Proposition for Kunst 1600Looking at the first product from the partnership Evan and team should focus only on the Light Commercial Refrigerator market with the following value proposition statement:

Do more with less with Kunst 1600 you can not only perform better, but perform more jobs in the same time. This oil free machine will save cost for you while you make more bucks from those extra jobs you always wished to finish in the season

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