The Microfridge

Case
Ishpreet Singh 12P139
Karan Jaidka 12P141
Kshitij Agrawal 12P142
Kshitij Ahuja 12P143
Manav Gupta 12P146
Vikas Jain 12P178

Group 1 Strategic Management II
PGPM 2012-14
About the Product
A unique combination of a refrigerator, freezer,
and microwave unit, fulfilling all 3 functions
Targeted at A Home away from Home segment


Benefits of the Microfridge
Helped to solve the electricity problem in schools. Saved costs.
Students using Microfridge could cook safely in their rooms
Students would purchase food from convenience stores on
campus for their Microfridge units
The concerns of students parents were addressed
Convenient, easy to use, attractive, durable and easy to clean
Very useful for military bases and hotels/motels
The Target Market Home away from Home
Institutional
Living
Situations
Colleges
Military bases
Motels/Hotels
Motels/Hotels
3 million in the US
out of which 2
million had no
restaurant space
Microfridge ideal
for budget hotels
and small town
motels
Other Markets
Small Individual
apartments
1 million in the
US, numbers
expected to
grow

Colleges
Campus wide
installation
Campus rental
program
The rental price was
$110 and students
were charged $130
as rent
Selling and Renting
Company Rental
Program
Run by
Microfridge
All operations
carried out by
Microfridge
Yearly rental fee
was $160
55%
25%
18%
2%
Revenue (1994)
Colleges
Military
Motels
Assisted Living
Apartments
Porters 5 Forces Model
Threat of new entrants: Medium
No product difference
Patent Sharing
Non compete Agreement Getting expired in 3 years
No strategic advantage in distribution network
Profitable industry with high Market potential
Threat of substitutes: Medium
Price differential between stand alone components(fridge and
oven) and Microfridge
Refrigerator leasing companies with regional presence
Low innovation level
Bargaining power of customers: Low
Few alternatives
High Switching Cost
Bargaining power of supplier: Low
Low product differential
No switching cost for Microfridge
Intensity of competitive Rivalry: Low
No competitor due to patent protection





The Competitive Scenario
Limited degree of competition with retailers selling microwaves and refrigerators
and leasing companies
Microfridge acquired Campus Equipment Company
It replaced 6,000 refrigerators with Microfridge units
Companies needed similar products and structures to compete
Microfridge was on the look out for alternate suppliers to reduce dependency on
Samyan
Daewoo agreed to charge $83 per unit, compared to Samyans $100
Problems with using two suppliers
Samyan would not accept delivery of microwaves
made by others
Microfridge could either set up a new
distribution channel or stick with the high-
priced Samyan
Attaching the refrigerator and microwave was an
issue
The Samyan bracket did not work with the
Daewoo microwave
Samyan reluctantly altered their bracket for
compatibility
Decision taken by Microfridge
Shipped roughly half the units with
Daewoo microwaves and the remainder
with Samyan
Usage of four regional warehouses
Daewoo microwaves: Shipped to a
warehouse closest to the customer
Samyan microwaves (Rented):
Went to a warehouse
Samyan microwaves (Selling):
Went directly to the customer

The Plan for the Near Future
Though the company was on track, Bennett
was not content at the current growth
Taking advantage of its structure, the company
would focus on new products in the home
away from home category
In order to be able to withstand competition,
Microfridge would increase sales rapidly
To receive USD 4 million in additional equity
The funds would be used to purchase Microfridge
units (rental) and to repay old debt
Aim to increase entry barriers in the market
Recommendations
Product Recommendation
Innovate
Try to modify product for Travel : Bus, Rail and Air
Category Recommendation
New product for home away from home
Focused innovation
Market Recommendation
Explore New Geographies
Acquisitions for regional penetration