Indian Institute of Management Kozhikode

Post Graduate Program

PGP 25

Managing Business Markets

Case Study on Commercialising Kunst Pump

Name- Chirayu Vijaywargiya

Roll no. – PGP/25/077
 1. What are the major, quantifiable value and price elements associated with the Kunst
1600?

Value Elements:
 Kunst 1600 is an oil-free vacuum pump which does not require changing oil thereby
eliminating oil changing costs and resulting in savings.
 Incremental revenue and profit attributed to the higher product efficiency in low pressure
settings. These higher profits are only generated in the light commercial refrigerator repair
segments since in these segments, the technicians can complete more jobs with a faster pump
in comparison to the more traditional pumps thus saving 10 minutes. This enables the
technician to perform more jobs than normally and this implies higher revenues and profits.
These extra jobs will be performed during the 12 hectic weeks in the summer.

Extra profit per year = (number of extra jobs per week * net profit of one job) * 12 = (2 *
$30) * 12 = $720

Price Elements:
 Increased Pump Durability: The Kunst 1600 lasts longer than the competitors’ product in
almost all segments. This means that repair firms will have to buy more conventional pumps
than Kunst 1600 thereby directly affecting the price that the repair firm has to incur.

2. What additional value placeholders, elements not presently quantified, merit

consideration in your value model?

 Durability of parts: The Kunst 1600's parts may experience less corrosion and stay longer
because they are made of moulded aluminium.
 Brand value: Since Kunst and Atler are less known in the market as compared to their
competitors, their brand’s low familiarity puts them at a competitive disadvantage.
 Oil recycling and dumping costs: As the Kunst 1600 pump does not require oil changing, it
saves the oil dumping/recycling costs.
 Weight: The Kunst 1600 is heavier than pumps currently used for home refrigerator and light
commercial refrigerator repairs, but lighter than pumps currently utilised for residential AC
repairs. These disparities in weight could influence technician preferences

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

Cost savings per oil

change
(A)
Residential AC
Repair segment
Home
Refrigerator
Repair segment
Light
Commercial
Refrigerator
Oil Price $ 8 $ 4 $ 4
Labor cost $ 6 $ 7.5 $ 12
Clean-up supplies $ 0.65 $
0.65 $ 0.65
Oil disposal cost $ 1.25 $
0.625 $ 0.625
Total $ 15.90 $ 12.775 $
17.275
Number of oil changes per
year 20 12 12
Cost savings per year for
oil
changes (A)
$ 318 $ 153.30 $ 207.30
Incremental profit per year
(B)
NA NA $ 72
Cost savings per Residential AC Home Refrigerator Light Commercial
oil Change (A) Repair Segment Repair Segment Refrigerator
Oil Price $8 (for a quart) $4 (for a pint) $4 (for a pint)
Labour cost $6 ($12/ hour for 30 $7.5 ($15/hour for $12 ($24/hour for 30
minutes) [worst 30 minutes) minutes)
situation of hiring
part time labour]
Clean-up supplies $0.65 (Scouring $0.65 (Scouring $0.65 (Scouring
soaps and towels) soaps and towels) soaps and towels)
Oil Disposal cost $1.25 ($5/gallon for $0.625 ($5/gallon for $0.625 ($5/gallon for
a quart) a pint) a pint)
Total $15.90 $12.775 $17.275
Number of oil 20 12 12
changes per year
Cost Savings per $318 $153.30 $207.30
year for oil
changes (A)

Customer Vale Model for Kunst 1600 (per year)

Elements Residential AC Home Refrigerator Light Commercial

Repair Segment Repair Segment Refrigerator
Oil Change $318 $153.30 $207.30
Savings(A)
Incremental Profit $0 $0 $720
 Total Value $318 $153.30 $927.30

Extra profit per year = (number of extra jobs per week * net profit of one job) * 12 = (2 *
$30) * 12 = $720

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

A light commercial refrigerator repair is the one of the four segments with the most potential.
For the Kunst 1600, this is the one area in which all three value/price factors—incremental
profit, cost savings from oil changes, and durability—come into play. 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 Kunst 1600 allows the owners to earn more in light commercial refrigerator repair
segment by creating value of $927.3 (oil change cost savings and incremental profit). It also
increases the number of jobs possible by 2 per week by reducing the repair job time by 10
minutes.

5. Write a value proposition for the Kunst 1600 for the target market(s)

Kunst 1600 allows your company to save more and earn more by creating value of $927.3 per
year as compared to the competitors. It lasts long and increases the number of jobs that can be
done in a week by 2 by saving 10 minutes from each job.