Faculty : Prof.

Joffi Thomas

Case Analysis Note : Commercializing the Kunst 1600 Dry Piston Vacuum Pump

Name : Karan Aggarwal

Roll Number : EPGCMM -11-020
Organization : Varroc Polymers Pvt. Ltd.
(Manufacturer of Automotive Plastic Injection molded parts)
Designation : Manager (Business Development)
Introduction: Kunst Vacuum Pumps an established player in Pump industry for laboratory, health care,
and industrial application with 60% market share and at $120 million/annum. Most of the competition is
basically small in size and revenue as compared to Kunst(~$50million).
Kunst is bought by Alter GmbH to enter into US market as both the companies are known for reliability,
accurate products and competent technical services.
Alter GmbH wants to launch Kunst 1600 in untouched market segments and has done market research via
focused groups and found out surprising outcomes from discussions:

Product features are as below:

1. Fractional horsepower
2. Injection -molded aluminum pump- fewer working parts
3. 1.6 Cubic feet/min (CFM)
4. Pump weight is 16.5Pound
5. It is a reconfigured compressor outfitted with a screen over its input nozzle to catch containments.
Product benefits
1. Longer run and cooler than conventional pumps
2. Functional more efficiently at lower pressure levels
3. Oil-free
Market Segments

 Home refrigerators repairs – 60,000 units

 Light commercial refrigerator repairs- 40,000 units
 AC repairs 125,000 units
Issues surfaced from focused group discussions:
1. Time: Lost time due to pump failure was considered negligible
2. Precision: No one was able to link the Ac downtime with poor quality of pumping job.
3. Life of Pump: As cost of Pump was equal to revenue from one Job, no one cared for cost of Pump
actually.
4. Oil Free Feature: Owners were more worried about cost of labor then cost of Oil change.
5. Fear of being confused with Hand held vacuum cleaners
6. No one believed that it can replace 6CFM pump because of Rule of seven
7. Considered tool small and to do 1 job, they may have to use 2-3 of Kunst 1600.
  Value in terms of Pump Life

Brand Segment Capacity price life Cost/yr

Pump Wizard (Popular) 3CFM $ 250 2.5 $ 100
Residential AC
Pump Wizard (Popular) 6CFM $ 320 2.5 $ 128
repair
Kunst 1600 1.6CFM $ 500 6 $ 83

Air master (Popular) Home 1CFM $ 150 3 $ 50

& Light commercial
Air master (Popular)
refrigerator 1.5 CFM $ 200 2 $ 100
1.6CFM $ 500 6 $ 83

 For Residential AC repair work

If we see comparison of Kunst1600 with 3CFM pump’s cost/yr is $100 for Pump wizard whereas for
Kunst it is only $83 and hence is giving differential value/benefit of $17

 For home repair works

If we see comparison of Kunst1600 with 1 CFM pump’s cost/yr is $50 for Air Master whereas for Kunst
it is only $83 and hence is giving negative differential benefit of $33

 For Light Commercial refrigerator repair works

If we see comparison of Kunst1600 with 1.5 CFM pumps cost/yr is $100 for Air Master whereas for
Kunst it is only $83 and hence is giving differential Value/ benefit of $17

Value in terms of Saving due to additional Jobs/week and Oil Free Pump

No of
Value by Total expense weeks oil Additional Total Value
Segment
Pump due to oil work is expense revenue Kunst can
Brand Capacity price life Cost/yr life cleaning done /yr jobs/annum add
Pump Wizard (Popular) 3CFM $ 250 2.5 $ 100 $ 17 $ 15.90 20.00 $ 318 $ - $ 335.00
Pump Wizard (Popular) Residential AC repair 6CFM $ 320 2.5 $ 128 $ 45 $ 15.90 20.00 $ 318 $ - $ 335.00
Kunts 1600 1.6CFM $ 500 6 $ 83 $ - 20.00 $ - $ -
Air master (Popular) Home 1CFM $ 150 3 $ 50 $ (33) $ 12.78 12.00 $ 153 $ - $ 120
& Light commercial
Air master (Popular)
refrigerator 1.5 CFM $ 200 2 $ 100 $ 17 $ 17.28 12.00 $ 207 $ 720 $ 944
1.6CFM $ 500 6 $ 83 $ - 20.00 $ - $ -
  For Residential AC repair work
If we see comparison of Kunst1600 with 3CFM pump’s Oil expense (A) is $15.90/ week
Oil expense (B)= Cost of Quart of oil+cost of soap+ cost of towel
Labor cost (C)= cost of labour(on contract)*time for oil change
Oil Disposal Cost (D)= cost of disposal (in gallons) / 4 { to convert in quart}
A= B+C+D i.e. ($8+$0.5+$0.15) + ($12*.5) + (5/4)= $15.90
As per case they work of 20 weeks so for expense/annum
=15.90*20= $318
So total Value Kunst1600 will add is $17+$318 = $120/annum

 For home repair works

If we see comparison of Kunst1600 with 3CFM pump’s Oil expense (A) is $12.78/ month
Oil expense (B)= Cost of Quart of oil+cost of soap+ cost of towel
Labor cost (C)= cost of labour(on contract)*time for oil change
Oil Disposal Cost (D)= cost of disposal (in gallons) / 4/2 { to convert in pint}
A= B+C+D i.e. ($4+$0.5+$0.15) + ($15*.5) + (5/4/2)= $12.78/month

As per case they work of 12 months so for expense/annum

=12.78*12= $153
So total Value Kunst1600 will add is -$33+$153 = $120/annum

 For Light Commercial refrigerator repair works

If we see comparison of Kunst1600 with 3CFM pump’s Oil expense (A) is $17.28/ month
Oil expense (B)= Cost of Quart of oil+cost of soap+ cost of towel
Labor cost (C)= cost of labour(on contract)*time for oil change
Oil Disposal Cost (D)= cost of disposal (in gallons) / 4/2 { to convert in pint}
A= B+C+D i.e. ($4+$0.5+$0.15) + ($24*.5) + (5/4/2)= $17.28/month

As per case they work of 12 months so for expense/annum

 =17.28*12= $207
Profit from additional jobs for 12 weeks
= 2*12*30= $720
So total Value Kunst1600 will add is $17+$207+$720 = $944/annum

Recommendations:

We recommend Kunst to launch the product in light commercial vehicle market as it gives most
value / benefits to that segment of market.
As in all the 3 markets of AC repair, Home appliances & light commercial Ac’s Kunst is not currently
present, they need to do branding and establish them as value suppliers and gradually target biggest
market of AC repair by demonstrating their product can replace 3/6CFM pumps.