assignment kunst 1600

7/31/2019 Assignment Kunst 1600

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An Assignment on

Business 2 Business Marketing

Case Study on: KUNST 1600

(In partial fulfillment towards the ePGP course, IIM-K) Submitted by:

Prashanti Sharma ePGP-03-143Prem Wig ePGP-03-144

Prakash Bharti ePGP-03-140


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Major Issues in the case

SEGMENTATION: Identification and selection of thepotential new market segments for the product Kunst 1600to be launched options: AC Repair segment, Refrigeratorrepair segment, home and light commercial refrigeratorrepair segment

POSITIONING: Positioning of the product in the chosensegments based on different value proposition for differentsegments i.e. Projected lifetime, light weight, the productfeatures like the pump did not require oil or cost saving.

PRICING: The product is priced highly as compared to thecompetitive products @ $500 for 1.6 CFM vis--vis thecompetitive price of $150-200 for 1.5 CFM, $250 for 3 CFMand $320 for 6 CFM


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Major Quantifiable Value & PriceElements associated with Kuntz

1600: From a quantitative perspective, the superior value and price of theKunst 1600 can be attributed to these three elements.

Value Elements: Cost savings due to the elimination of oil change expenses and messiness --Most owners and technicians trivialize oil change related costs.

Incremental revenue and profits Incremental revenue and profits refers tonew income that can be attributed to greater product efficiency. In this casestudy, this occurs in only one segment light commercial refrigeratorrepairs. In all other segments, repair firm revenues remain the sameregardless of which pumps are used.Price Element: Increased pump durability -- The Kunst 1600 lasts 2 to 3 times longer than

the incumbents in most segments. This means that repair firms will have tobuy more conventional pumps than Kunst 1600s. This impact the price arepair firm has to pay for conventional pumps (i.e., 2 to 3 times greater) andnot the number of jobs it can complete! In the economic sense, there is noincremental profit merely greater


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Additional Values Placeholders notQuantifiable in Value Model:

Value Placeholders For the most part, there are few differencesamong conventional pumps and the Kunst 1600. Here are a few

placeholders.

Weight differential The Kunst 1600 is lighter than pumps currently used inresidential AC repairs and heavier than those used in home refrigerator andlight commercial refrigerator repairs. These weight differences may impacttechnician preferences.

Durability of parts As the Kunst 1600 is constructed of molded aluminum,its parts may be subject to less corrosion and thus last longer. Moreoverlongevity can also be achieved as oil replacement is not required so there isless chance of damage to the m/c due to contaminated acid laden oil.

Brand equity Currently, Kunst and Atler have little brand equity in thepotential market segments in USA. This may put them at a competitive disadvantage with long-established rivals.

Expected value of oil dumping fines You can either treat this as aplaceholder or include the expected probability of fines into your cost savingscategory for the Kunst 1600 in the value model. You would calculate theexpected value as the sum of company and individual fines times probabilityof being caught times the amount of oil dumped per year. There is limitedcase information that enables you to do such calculations.


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Customer Value Model in Differentsegments:

Cost savings per oil change = Oil price + Labor cost + Clean-up supplies+ Oil disposal costLabor cost = Hourly rate of individual changing oil x Hours of time requiredper changeClean-up supplies = monetary amount of scouring soap used + price of clothtowel

Oil disposal cost = recycling charge per gallon of oil x number of gallonsElement Residential

AC RepairSegment

Home RefrigeratorRepair Segment

LightCommercialRepair Segment

Oil Change Savings $318.00 $153.30 $207.30

Incremental Profit $0 $ 0 $720.00

Total Value $318.00 $153.30 $927.30

Differential Price(per year)

$16.67 ($33.33) $16.67


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TARGET & SEGMENT SELECTION:

Given Kunsts status as a new acquisition, Evan and Will should target a singlesegment at this time. Given that this is a small firm, they should focus theirlimited resources on the segment that offers the most feasible chances of success. They can use this segment as a foothold to penetrate othersegments later on perhaps with other Atler products.Of the four segments, the one offering the greatest potential is a light commercialrefrigerator repair . This is the only segment where all three value/priceelements (incremental profit, cost savings from oil changes, and durability) come intoplay for the Kunst 1600. The fact that the Kunst 1600 enables firms to do more jobs per

week is the pivotal factor in that owners and technicians trivialize changing the oil andoverestimate the lifetimes of conventional pumps.The value-in-use per year (i.e., $943.97) and value created per year ($927.30) aresignificant and far greater than that created in the other three segments.The incentive to buy the Kunst 1600 in this segment is significant (i.e., around $844 peryear).The Kunst 1600 reduces repair job time by 10 minutes and increases the number of jobpossible by 2 per week during the summer months.The Kunst 1600 eliminates the hassle of oil changes for these largely independentoperators.There is no likelihood of fines due to illegal dumping of oil.The competition will probably not be as strong in this segment as it will in othersegments, namely residential AC repairs.

Although it is highly attractive in terms of size, the residential AC repair segment is not feasible because of perceptual barriers and the fact that the Kunst 1600 may beunderspecified (1.6 CFM pump in a 3-6 CFM application). Target another Atler productat this segment!

The home refrigerator repair market may be viable long-term however, the Kunst 1600may be over specified for the application (1.6 CFM pump in a 1 CFM application). TheKunst 1600 does not create incremental jobs here and pumping only takes 15 minutes.


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VALUE PROPOSITION FORKUNTZ1600 FOR TARGET MARKET

Stress that value propositions do not have to cover all points-of-difference, and instead should focus only on the most significant ones.

The faster draw -down performance of the Kunst 1600 enables your firm to

complete more jobs in the busy seasonand earn more, while eliminating theoil change mess and hassle.


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THANK YOU!

assignment kunst 1600

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