Case-2

Commercializing the
Kunst 1600 Dry Piston
Vacuum Pump
Q1. What are the major, quantifiable value and price elements associated with the Kunst 1600?

Answer-

Value element associated with Kunst 1600:

a) Oil-free – The pump operates without oil and this eliminates all the costs associated with the oil change. It
includes cost of oil, labor, cost of scouring soap and towels.
b) Higher efficiency of the pump reduces the cycle time that is much demanded in case of Light commercial
refrigerator. Extra time helps to do at 2 more jobs per week.
Price element associated with Kunst 1600:

a) The expected life of the Kunst 1600 is 6 years compared to 2-3 years of the competition. This brings extra
benefits to the customer. Compared to best alternatives in segments of residential AC and Light commercial
refrigerators, Kunst 1600 is having least cost/year.

Q2. What additional value placeholders, elements not presently quantified, merit consideration in your value
model?

Answer-

Following are additional Value placeholders to be considered in value model –

a. Kunst 1600 is injection-molded and having fewer working parts compared to traditional models. It is less
exposed to wear and tear and have longer expected life.
b. Brand value of Kunst in US market.
c. It is lighter by 5-10 pounds and has high durability compared to competitor brands.

Q3. Construct a customer value model for the Kunst 1600 in the residential AC, home refrigerator, and light
commercial refrigerator repair market segments?

2
 Cost benefits related to oil-free operation of Kunst 1600
Rows Elements Residential AC Home Refrigerator Light commercial refrigerator
a Oil Cost (per change) 8 4 4
Maintenance worker cost/hr 12 15 24
Time required per oil change(hrs) 0.5 0.5 0.5
b Labour cost 6 7.5 12
c scouring soap 0.5 0.5 0.5
d towel 0.15 0.15 0.15
f Recycling cost (per job) 1.25 0.625 0.625
Total cost per oil change
(a+b+c+d+f) 15.9 12.775 17.275

average frequency of oil change weekly monthly monthly

Total # oil change per year 20 12 12
Annual cost related to oil change 318 153.3 207.3

Cost benefits due to higher durability of Kunst 1600

Elements Residential AC Home Refrigerator Light commercial refrigerator
Life of Kunst 1600(in years) 6 6 6
Price of Kunst 1600($) 500 500 500
Life of best alternative (in years) 2.5 3 2
Price of best alternatives ($) 250 150 200
Annual benefits due to durability 17 -33 17

Cost benefits due to higher efficiency of Kunst 1600

Elements Residential AC Home Refrigerator Light commercial refrigerator
Reducing cycle time with higher
No Benefits No Benefits Benefit
efficiency
Extra jobs annually (considering
2/week for 12 peak summer weeks) 0 0 24

PBT per job 70 10 30

Extra labour cost saved per job 30 15 24
Cost benefits due to higher
efficiency 0 0 1296

. Home Light commercial

Residential AC
Refrigerator refrigerator

3
 Total cost benefits for
Kunst 1600 compared to 335 120 1520
best alternative ($)

Q4. Using your value model, select a target market segment(s) for commercialization efforts.  Justify your choice.

Considering 3 segments and measuring values related to it, Kunst 1600 is best suited for Light commercial Refrigerator
repairing as it provides greater value to the customers. Higher efficiency of the pump results in reducing cycle time and
ensures better profitability. This is the only segment where customer can have all the benefits from oil-free operation,
durability and higher efficiency.

case2- Kunst
1600.xlsx