Kunst 1600 - Case Analysis: Submitted by Anand Busam (PGP/23/202)

Kunst 1600 – Case Analysis
Submitted by Anand Busam (PGP/23/202)

1. What are the major, quantifiable value and price elements associated with the Kunst 1600?
Value Elements
 Cost savings due to no oil change and the effort that technicians/owners put in changing the
oil.
 Vaporizes hydrochloric and hydrofluoric acids preventing corrosion of copper coils, valves,
and motors.
 Light Weight: Weighs 5 to 10 pounds less than competitive products; Fewer internal parts
than competitive models: more robust and durable and better precision
Price Elements
 Kunst 1600 is priced more than 1 CFM and 3 CFM but last longer and is more efficient.
Technicians using other products have to purchase more compared to Kunst 1600 in the long
run. Kunst 1600 also helps to finish extra jobs were week, which in turn gives more revenue
 Kunst 1600 was expected to last for 6 years and at a price of $ 400, that would make it
around $ 66.66/year for the firm. Whereas, it is stated that with reasonable care, the 3 CFM
and 6 CFM pumps costing around $ 250 and $ 320 would last for an average of 2.5 years
making it to an effective $ 100/year and $ 128/year respectively. Similarly, the effective costs
for 1 CFM pump at $ 150 lasting 3 years would be $ 50 and 1.5 CFM at $ 200 lasting 2 years
would make it $ 100
2. What additional value placeholders, elements not presently quantified, merit consideration in
your value model?
 Weight Saving: Kunst 1600 weighs 5 to 10 pounds less than competing products thus making
it easy for the technicians to operate
 Durability of parts: As it is constructed of moulded aluminium, its parts may be subject to

less corrosion and offer better heat resistance and fatigue failure resulting in longer life
period.
 Brand Equity: Consumers might be willing to pay premium price for vacuum pump’s with
Kunst’s brand name. However, from the research it was found that a lot of technicians were
not familiar with the Kunst brand
 Design and Performance: For operators of residential air conditioner repairs, the model
doesn’t look like a traditional pump. They feel that it is too small and different to operate as
expected and won’t result in effective operation. So, no matter how economic it may be a
proposition on paper, the model won’t be able to cross the perception barrier in consumer
mind.
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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 = Oil price + Clean-up supplies + Oil disposal cost + Labour cost
We Consider wholesaler price for Kunst 1600 = $400.
Residential AC Home refrigerator Light Commercial

Oil cost 8 4 4
Scouring soap 0.5 0.5 0.5
Towels 0.15 0.15 0.15
Labour 6 (part time) 7.5 12
Disposal-recycling 1.25 0.625 0.625
costs
Total 15.9 12.775 17.275
Number of oil 20 12 12
changes per year
Total cost per year (oil 318 153.3 207.3
change) ($)
Price per year(others) 250/2.5 = 100 150/3=50 200/2 = 100

Price per year (Kunst) 400/6= 66.66 400/6=66.66 400/6=66.66
Differential price ($) 33.34 -16.66 33.34
Total Saving ($) 351.34 136.64 240.64
Incremental Revenue NA NA 12*2*30=720
(Summer)/annum
Total Value ($) 351.34 136.64 960.64
4. Using your value model, select a target market segment(s) for commercialization efforts. Justify
your choice.
Of the three segments, the one offering the greatest potential is a 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 Kunst 1600 reduces repair job time by 10 minutes and increases the number of job
possible by 2 per week during the summer months.
 It is mentioned that refrigerator repair technicians are more likely to toss used oil in
dumpsters instead of proper disposal or recycling leading to an increased probability of
related fines. Thus, a vacuum pump without the need to change oil is an attractive
proposition.
 Durability is another significant aspect.
 The Kunst 1600 is essentially 1.6 CFM which is widely used already in the refrigeration
segment and is in conformance with the Rule of Seven, the popular industry heuristic.
 On the whole, a total value created of $ 960.64 is significantly high when compared to $
351.34 and $ 136.64 of the other two segments.
 Hence, targeting Light Commercial Refrigeration would be an ideal choice
5.Write a value proposition for the Kunst 1600 for the target market(s).
Kunst1600 – More jobs - More Revenue - Oil free- No worries of dumping oil – More efficient- Longer
Life.
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Kunst 1600 – Case Analysis

Submitted by Anand Busam (PGP/23/202)

 Durability of parts: As it is constructed of moulded aluminium, its parts may be subject to

We Consider wholesaler price for Kunst 1600 = $400.

Residential AC Home refrigerator Light Commercial

Price per year(others) 250/2.5 = 100 150/3=50 200/2 = 100

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