Kunst 1600 – Dry Piston Vacuum Pump

ContentContentCase Preparatory QuestionsCase Preparatory QuestionsKunst 1600 case overviewKunst 1600 case overviewPreparatory calculations and analysisPreparatory calculations and analysisSolutionsSolutions

1. What are the major, quantifiable value and price elements associated with the Kunst 1600?

2. What additional value placeholders, elements not presently

quantified, merit consideration in your value model? 3. Construct a customer value model for the Kunst 1600 in the

residential AC, home refrigerator, and light commercial refrigerator repair market segments.

4. Using your value model, select a target market segment(s) for

commercialization efforts. Justify your choice.

5.Write a value proposition for the Kunst 1600 for the target market(s)

Case Preparatory QuestionsCase Preparatory Questions

Atler Gmbh: Parent company of Kunst 1600, founded in 1875, Atler Gmbh: Parent company of Kunst 1600, founded in 1875, headquartered in Frankfurt, Germanyheadquartered in Frankfurt, Germany

Kunst 1600: injection-molded aluminum pump, 1.6 CPM, weight 16.5 Kunst 1600: injection-molded aluminum pump, 1.6 CPM, weight 16.5 poundpound

Atler acquired Kunst toAtler acquired Kunst to Penetrate new market segment in US.Penetrate new market segment in US. Complimentary product lines and market segmentsComplimentary product lines and market segments Shared Atler’s commitment to superior craftsmanshipShared Atler’s commitment to superior craftsmanship

3 Market Segments3 Market Segments

Kunst 1600 case overviewKunst 1600 case overview

home refrigerator

light commercial refrigerator

residential AC

Size (units) 60,000 40,000 125,000

Pumps used 1 CPM 1.5 CPM 3-6 CPM

Unit costs $150 $200 $250-320

Made from injection molded aluminum: Light weight, non-Made from injection molded aluminum: Light weight, non-

rustingrusting

Pumping speed of 1.6 CFMPumping speed of 1.6 CFM

Light Weight: Weighs 5 to 10 pounds less than competitive Light Weight: Weighs 5 to 10 pounds less than competitive

productsproducts

Fewer internal parts than competitive models: more robust Fewer internal parts than competitive models: more robust

and durableand durable

Oil free: Cost saving in terms of cost of oil, labor cost, Oil free: Cost saving in terms of cost of oil, labor cost,

consumables and oil recycleconsumables and oil recycle

Better precisionBetter precision

Kunst 1600 offerings and value Kunst 1600 offerings and value proposition:proposition:

Question 1: What are the major, quantifiable value and price elements associated with the Kunst 1600?

Price Elements:Price Elements: Oil Free pump: Oil Free pump:

Kunst claims that the most important benefit it provides in Kunst claims that the most important benefit it provides in all potential market segments is that technicians will not all potential market segments is that technicians will not have to change the oil. have to change the oil.

Cost savings per oil change = Oil price + Labor cost + Cost savings per oil change = Oil price + Labor cost + Clean-up supplies Clean-up supplies + Oil disposal + Oil disposal costcost

Cost savings per year = Cost savings per oil change Cost savings per year = Cost savings per oil change x No. of oil changes per x No. of oil changes per

year year

Question 1: What are the major, quantifiable value and price elements associated with the Kunst 1600?

Price Elements:Price Elements: Additional revenue due to more jobs done: Additional revenue due to more jobs done:

More jobs can be performed by the technicians as they save More jobs can be performed by the technicians as they save their productive time for no changing oil in Kunst pumpstheir productive time for no changing oil in Kunst pumps

Additional revenue = Revenue per job x (time saved/time Additional revenue = Revenue per job x (time saved/time taken per job)taken per job)

Value Elements:Value Elements: Durability:Durability:

As the Kunst 1600 is constructed of molded aluminum, its parts may be subject As the Kunst 1600 is constructed of molded aluminum, its parts may be subject to less corrosion and thus last longer. to less corrosion and thus last longer.

Question 1: What are the major, quantifiable value and price elements associated with the Kunst 1600?

Question 2: What additional value placeholders, elements not presently quantified, merit consideration in your value model?

Light Weight:Light Weight:The Kunst 1600 will weigh 5 to 10 pounds less than The Kunst 1600 will weigh 5 to 10 pounds less than competing products. Technicians working for Residential competing products. Technicians working for Residential AC will appreciate the light weight pumps however AC will appreciate the light weight pumps however competitors’ pumps in refrigerator segment is lighter competitors’ pumps in refrigerator segment is lighter than Kunst 1600.than Kunst 1600.

Robust and durable:Robust and durable:Due to fewer internal parts, Kunst 1600 will take more Due to fewer internal parts, Kunst 1600 will take more physical abuse and be far durable than traditional physical abuse and be far durable than traditional vacuum pumpsvacuum pumps Also aluminum body won’t rust like vacuum pumps Also aluminum body won’t rust like vacuum pumps made of steelmade of steel

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

Question 3: Construct a customer value model for the Kunst 1600 in the residential AC, home refrigerator, and light commercial refrigerator repair market segments.

Customer Value of Kunst 1600 was evaluated over various Customer Value of Kunst 1600 was evaluated over various parameters – cost and time saved due to no oil change, profit parameters – cost and time saved due to no oil change, profit due to higher efficiency, higher life time.due to higher efficiency, higher life time.

Question 4: Using your value model, select a target market segment(s) for commercialization efforts. Justify your choice.

Based on our value model, we conclude that Kunst should target Based on our value model, we conclude that Kunst should target Light Commercial RefrigeratorLight Commercial Refrigerator segment initially segment initially

The Kunst 1600 reduces repair job time by 10 minutes and increases the number of job possible by 2 per week during the summer months

This is the only segment where all three value/price elements (incremental profit, cost savings from oil changes, and durability) come into play for the Kunst 1600.

As explained in previous slide, Kunst 1600 provides $1123.97 worth value to customer

Residential AC segment is not a feasible option because of the fact that the Kunst 1600 may be considered as under specified by the technicians to perform the job (1.6 CFM pump compared to a 3-6 CFM pump).

For Home Refrigerator segment the Kunst 1600 may be over-specified for the job (1.6 CFM pump in a 1 CFM application). The Kunst 1600 does not create incremental jobs here and pumping only takes 15 minutes.

Question 5: Write a value proposition for the Kunst 1600 for the target market(s).

The Kunst 1600 pump provided below value proposition over its competitors in Light Commercial Refrigerator segment .  

Because it is a compressor, the Kunst 1600 can run longer and cooler than conventional products. This enables the Kunst 1600 to function more efficiently than competing products thereby enabling the technicians to reduce the vacuuming time by 10 min on a typical job

Kunst 1600 is oil-free. Cost savings due to elimination of oil change expenses and messiness.

Kunst 1600 projected a lifetime of 6 years. As per market standard projected lifetime of a vacuum pump is 2 years only

Kunst 1600 is made from injection-molded aluminum. It wont rust like vacuum pumps made of steel

Thank youThank you