CASE ANALYSIS: COMMERCIALIZATION THE KUNST 1600 DRY PISTON VACUUM PUMP

Group 14: Jyotsna Gautam (PGP/16/026) Preet Inder Verma (PGP/16/) Nayanika (PGP/16/327) Sahil Katyal (PGP/16/) Thomas Poignet( IE/

BACKGROUND
Evan Stone Senior Product Manager Kunst, subsidiary of Alter GmbH.(Parent Co.) Kunst sales touched a 75 yrs record $120 million Manufactures top- end vacuum pumps for labs, healthcare and industrial

applications with a 60 % market share Known for its competent technical service , reliable and accurate products Competitors: AirMaster, Pump Wizard, Toledo Pump and Valve, Vacuum Technologies Annual U.S. Sales potential:
Market Segment Annual Sales potential 60,000 units 40,000 units 1.25,000 units Home Refrigerator Repairs Commercial Refrigerator Repairs Residential AC Repairs

Prospective market segments

Residential AC repairs, Home Refrigerator Repairs Light Commercial Refrigerator Repairs

KEY MARKET RESEARCH FINDINGS

As per Evan, repair is an art and not a science Many of the technicians are not trained and

uncertified
work is based on personal opinions, preferences

and Rules of Thumb

SEGMENT-WISE RESEARCH FINDINGS

Residential AC Repair Segment

contractors owned vacuum pumps with a 3-6 CFM capacity 3 CFM model was most popular

Estimated Lifetime of the pump = 5 years sales price:

3 CFM = $250 6 CFM = $320

On failure of vacuum pumps on the job, another pump can be brought to the site

Most repair firm owners considered vacuum pumps as disposable operating supplies
once a week

Oil should be changed after every job however, an average technician changes oil

Kunst 1600 did not require oil and oil changes

Kunst 1600 had no brand recognition in the market

commercial refrigerators repairs

Participants recommended that pump could be better suited for home and light

HOME AND LIGHT COMMERCIAL REFRIGERATOR REPAIR SEGMENT

On home refrigerator jobs, a 1 CFM capacity pump was used

Repair work is spread out evenly across the year

emergency repairs in light commercial work skyrocket during

the summers reduce vacuuming time by 10 minutes AirMaster was the major competitor ( No.1 brand of 1 to 1.5 CFM pumps) None of the refrigerator owners or technicians knew about the Kunst brand

QUANTITATIVE ANALYSIS
Two Factors Oil Change cost saving Incremental Profit will be calculated on the basis of

Number of additional jobs per week Differential price per year ( per year $ paid for pump)

Oil Changing Cost Saving has 4 elements Oil price Labor cost Clean-up supplies Oil disposal cost

FOR RESIDENTIAL AC REPAIR SEGMENT

Cost savings per oil change

Cost of 1 quart - $8 Labor - $12 per hour * ( half hour time for oil change)

Paper cost - .50 Soap scourge - .50

Oil disposal cost - $5 per gallon

Total Cost= $8 + ($12 x .5) + (.15 + .50) + ($5 x .25) = $15.90

Cost savings per year for oil changes

Cost savings per oil change x Number of oil changes per year

=$15.90 x 20 (oil changed once a week) =$318

FOR RESIDENTIAL AC REPAIR SEGMENT

Cost savings per oil change

Cost of 1 quart - $4 Labor - $15 per hour * ( half hour time for oil change)

Paper cost - .50 Soap scourge - .50

Oil disposal cost - $5 per gallon

Total Cost= $4 + ($15 x .5) + (.15 + .50) + ($5 x .125) = $12.775

Cost savings per year for oil changes

Cost savings per oil change x Number of oil changes per year

=$12.775 x 12(oil changed once a month) =$153.30

FOR RESIDENTIAL AC REPAIR SEGMENT

Cost savings per oil change

Cost of 1 quart - $4 Labor - $15 per hour * ( half hour time for oil change) Paper cost - .50 Soap scourge - .50 Oil disposal cost - $5 per gallon

Total Cost= $4 + ($24 x .5) + (.15 + .50) + ($5 x .125) = $17.275

Cost savings per year for oil changes

Cost savings per oil change x Number of oil changes per year

=$17.275 x 12(oil changed once a month) =$207.30

DIFFERENTIAL PRICE PER YEAR

This would be calculated as difference of Incumbent pump price/Expected number of years& Kunst 1600 price/Expected number of years For Residential AC: = ($250/2.5) ($500/6)= $100 - $83.33= $16.67 For Home Refrigerator: = ($150/3) ($500/6)= $50 - $83.33= - $33.33 For Light Commercial Refrigerator = ($200/2) ($500/6)= $100 - $83.33= $16.67

INCREMENTAL PROFIT PER YEAR

Only for the light commercial refrigerator repair segment was it found

that using the Kunst 1600 would enable the contractor to perform additional jobs
Is calculated based on Number of additional jobs per week = 2 Average profit per job = 30 Weeks per busy season = 12

Profit = 2*30*12
= $720

KUNST 1600 VALUE PER YEAR

Element Residential AC Repair Segment Home Refrigerator Repair Segment $153.30 $0 $153.30 - $ 33.3 Light Commercial Repair Segment $207.30 $720 $927.30 $ 16.6

Oil ChangeSavings Incremental Profi Total Value Differential Price(per year)

$318.0 $0 $318.00 $ 16.6

CHOOSING TARGET SEGMENT

There are other popular brands in market and Kunst has

less brand equity so its necessary to create foothold into market Hence focus should be on first entering into market using one segment which is providing maximum customer value (Light Commercial Repair Segment) It also eliminates the hassle of oil changes thus eliminating likelihood of fines due to illegal dumping of oil Also it reduces repair job time by 10 minutes. Thus, the value proposition of this market segment i.e to increase number of jobs per week(2) and cutting operating costs is being met by Kunst 1600

THANK YOU !