Case Submission - Kunst 1600

Managing Business Markets.

By Md Jawed Manzoor
EPGCMM -09 -08
1. What are the major, Quantifiable value and price elements associated with Kunst
1600?

About Kunst:

1.6 CFM
Weight: 16.5 Pounds
Price: $500 and to Wholesalers: $400

Quantifiable Price and Value Elements associated with kunst are in terms of

a. oil prices
b. clean up supplies
c. Disposal cost
d. labour expenses

Where?

a. Clean-up supplies = price of cloth towel + amount of scouring soap used in money
terms

b. Oil disposal cost = recycling charge per gallon of oil x number of gallons recycled

c. Labour cost = rate at which individual is changing oil i.e. Hourly x time required per
change in Hours

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

consideration in your value model?

a. It is an aluminum pump with fractional horsepower and injection molded i.e. it has
lesser working parts
b. It is oil free.
c. Its input nozzle so that it can easily catch the pollutants.
d. Weight is less compared to other pumps in the market i.e. lighter 16.5 pounds.
e. Projected life is about 6 years compared to other pumps which has 5 years.
f. No chances of leakage in the system.

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

Word Equation for the market segments are as follows:

 Quantifiable Price and Value Elements associated with kunst are in terms of oil prices,
labour expenses, clean up supplies and...

Construct a customer value model for Kunst 1600 in residential AC, home refrigerator, and light
commercial refrigerator repair market segment?
Among different value placeholders (durability, weight savings, Brand value & Oil savings) only
oil saving is major differentiator for Kunst 1600.
Cost of savings per oil change for Residential AC segment:
Cost savings per oil change = Oil price + labor cost + clean up supplies + Oil disposal cost
= $8 + ($12 * 0.5) + ($0.5 + $0.15) + ($5 *0.25)
= $15.9
NOTE: 1 Quart of oil = 0.946 lit; 1 U. S. gallon = 3.785 lit. Therefore, 1 Quart = 0.946 /3.785
=0.25

Average oil change frequency is weekly (50 jobs per week) and there are 1000 jobs done per
season.
Total frequency of oil change per season /year is 20 times.
Cost of savings per year for oil changes= $ 15.9 *20
=$ 318.0
Cost of savings per oil change for Home Refrigerator segment:
Cost savings per oil change = Oil price + labor cost + clean up supplies + Oil disposal cost
= $4 + ($15 * 0.5) + ($0.5 + $0.15) + ($5 *0.125)
= $12.775
NOTE: 1 Quart of oil = 0.946 lit; 1 U. S. gallon = 3.785 lit. Therefore, 1/2 Quart = 0.946/3.785/2
=0.125
Average oil change frequency is weekly and hectic weeks of summer are for 12 weeks.
Total frequency of oil change per season /year is 12 times.
Cost of savings per year for oil changes= $ 12.775 *12 =$ 153.0

Cost of savings per oil change for Light Commercial Refrigerator segment:
Cost savings per oil change = Oil price + labor cost + clean up supplies + Oil disposal cost
= $4 + ($24 * 0.5) + ($0.5 + $0.15) + ($5 *0.125)
= $17.275
NOTE: 1 Quart of oil = 0.946 lit; 1 U. S. gallon = 3.785 lit. Therefore, 1/2 Quart = 0.946/3.785/2
=0.125
Average oil change frequency is per month and works for 12 months.
Total frequency of oil change per year is 12 times.
Cost of savings per year for oil changes= $ 17.275 *12
=$ 207.3
Kunst 1600 customer value can be summarized as below

Home Light
Residential AC
Refrigerator Commercial
Cost of savings
peryear for oil 318 153 207
changes

Few other value propositions that Kunst 1600 lighter than the traditional pumps used for AC
repairs. Also it provides durability as it is constructed with molded aluminum preventing it from
rusting. There is great chance that potential customers can buy Kunst due to its features and low
Cost of ROI.

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

From the market research and study we can conclude that greater potential lies in the light
commercial refrigerator repair segment where the incremental profits are higher delivering more
value as there is less chances of dumping of the oil and Kunst eliminates hassles of oil changes
for the technicians.
 5. Write a value proposition for the Kunst 1600 for the target market(s).

On long term basis Kunst can target the home refrigerator repair segment market with a lower
end capacity pump as the current 1.6 CFM pump will not deliver the value to the customer in the
targeted sector.
For Kunst to sustain in the market, it is important to focus on Light Commercial Refrigerator
Repair Segment as the specific requirements of the technicians almost match with the value
delivered by Kunst 1600 pumps. The only concern is, segment technicians are looking out for
minimizing operational cost, which can be achieved through proper marketing channels by
enhancing the image of the product through by its features and USPs. Also projecting the cost
benefit and ROI which customer will gain through the saving in the time of the usage of the pump
as lesser time needed when Kunst pumps will enable in defining the customer value with the
pump. It is also essential in conducting a higher reach and awareness marketing as the
refrigerator segment customers are not familiar with the brand image of Kunst.