Kunst Company

Case study review by

Aylwin Noel Varghese (2009005) Jasmine Sujithra (2009017) Joel Johnson (2009019) Rajeev Batra (2009048) Utkarsh Maheshwari (2009075)

7/1/2010

12/11/2009

Analysis
The Kunst 1600 is priced far higher than the current market leaders in both AC and refrigeration repair segments. It has no brand value in either market, and no previous record of reliability amongst the same. The workforce (or end-users of the vacuum pump) are not highly trained, and dont have precise procedures to follow. They look to their work more as an art, based on opinions, preferences and rules of thumb. The industry as a whole believes the Rule of Seven strongly. Everybody hates changing oil. Refrigerator repair operators are typically single-person operations. AC repair is seasonal, require extra durable machines due to the corresponding loads.

Analysis
Refrigerator repair is far more consistent through the year. Though there is a spurt in the summer months. Nobody really cares about the time it takes, so time is not too strong a selling point. Even if it is, it appears to matter a little more to the refrigerator repair segment. AC repair firms by nature of their size have agreements with disposal agencies (for oil) and can afford to put a person to change oil at lower hourly rates, while the refrigeration sector does not have the luxury. There seems to be quick turnover in the sales of vacuum pumps due to low life caused by improper care, and careless spending.

Segmentation/Target/Positioning
Value Proposition of Kunst
incremental profit cost savings from oil changes, and durability

Segment
Residential ACRepair Segment Home Refrigerator Repair Segment Light Commercial Repair Segment

Going Forward..
Looking at all the above, I would recommend we get into the Commercial refrigerator repair segment. For the following reasons: AC repair segment has a very strong view of what their device should be like, and very concretely set expectations. It is far more difficult to change the mindset of a group of people in a company, than it is to change the mind of a single person. It will be very difficult for a newcomer to break into a segment and try to correct "possible" misconceptions especially when preliminary results prove inconclusive. This shows that if there really is a difference, or an element of truth in Kunst' claims, that difference is not readily visible

Going Forward..
The advantages of the device are far better suited towards the refrigeration industry, since it is typically a single person operation, where the person has to do manual tasks of changing the oil, and pay for maintenance regularly. Since it is aluminum body, it is less prone to damage, more durable and hence more useful for a year-round usage. It is already claimed that it can withstand more physical abuse, has fewer internal parts, and is more efficient. The home refrigerator repair market may be viable long-term however, the Kunst 1600 may be overspecified for the application (1.6 CFM pump in a 1 CFM application).

Going Forward..
Brand awareness , Product Know-how& value proposition should be created at channel level first And through channels to customers. Field interactions can be helpful. Can be a hit in light Commercial segment if the extra earning of 60$ per week is projected. To be successful in home refrigerator segment Price reduction possibility has to be explored. An Entry planned in phased manner is recommended targeting the Commercial Refrigerator Market First and then look at the AC market with improved offering and product makeover as per the expectation of customers.