Professional Documents
Culture Documents
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Durability of parts – As the Kunst 1600 is constructed of molded
aluminum, its parts may be subject to less corrosion and thus last
longer.
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Brand equity – Currently, Kunst and Atler have little brand equity
in the potential market segments. This may put them at a
competitive disadvantage with long-established rivals.
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Expected value of oil dumping fines – You can either treat this as a placeholder or
include the expected probability of fines into your cost savings category for the Kuns
1600 in the value model. You would calculate the expected value as “the sum of
company and individual fines times probability of being caught times the amount of
oil dumped per year.” There is limited case information that enables you to do such
calculations, but this will be difficult to pin down in that any calculation will involve
assumptions about how often the contractor illegally dumps the oil.
= $15.90 x 20
= $318
= $12.775 x 12
= $153.30
To move from the total value of the Kunst 1600, given by the preceding two
word equations, to thev alue - in- use of the Kunst 1600, we must also include
the price of the alternative pumps. Value-in-use is an economic term that
equals the theoretical maximum price that a customer would be willing to
pay. When the expected lives of the offering differ, this must be taken into
account, and can be expressed as the differential price per year.
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Of the four segments, the one offering the greatest potential isa
light commercial refrigerator repair. 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. 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 and overestimate the lifetimes of conventional pumps
The value-in-use per year (i.e., $943.97) and value created per
year ($927.30) are significant 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 per year).
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.
The Kunst 1600 eliminates the hassle of oil changes for these
largely independent operators.
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 other segments, namely residential AC repairs.
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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 beunde rspe cifie d (1.6 CFM pump
in a 3-6 CFM application). Target another Atler product at this
segment!
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The home refrigerator repair market may be viable long-term however, the Kunst
1600 may beov e rsp e cifi ed for the application (1.6 CFM pump in a 1 CFM application).
The Kunst 1600 does not create incremental jobs here and pumping only takes 15 minutes.
Value Proposition
Stress that value propositions do not have to cover all points-of- difference, and instead
should focus only on the most significant ones.
enables your firm to complete more jobs in the busy season and earn more, while eliminating
the oil change mess and hassle.”