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1. What are the major, quantifiable value and price elements associated with the Kunst 1600?

ANS: Major Quantifiable value and price elements associated with the Kunst 1600 are: First and foremost it does not require changing oil so reduces the load for the technicians. Also avoid a lot of mess it used to create. Cost savings as oil change is no longer required Reduces maintenance cost as its made by moulded aluminium it has a longer life as there is less corrosion Works more efficiently at lower pressures as compared to competition Long life

2. What additional value placeholders, elements not presently quantified, merit consideration in your value model? ANS: Additional Value Placeholders are: Positives: a. Durability a. Its more durable (with moulded aluminium design) than completing products. b. Also it wont rust b. Weight Being a moulded aluminium design its much lighter than competing products Negatives: c. Brand Equity: the company has very little Brand Equity as compared to large players and thus will face a situation of slight competitive disadvantage

3. Construct a customer value model for the Kunst 1600 in the residential AC, home refrigerator, and light commercial refrigerator repair market segments. ANS: Key Value Elements Oil disposal cost = recycling charge per gallon of oil x number of gallons recycle Labor cost = Hourly rate of individual changing oil x Hours of time required per change Cost savings per oil change = Oil price + Labor cost + Clean-up supplies + Oil disposal cost Clean-up supplies = monetary amount of scouring soap used + price of cloth towel

a.

For Residential AC Repair segment (using maintenance worker): Cost savings per oil change = $8 + ($12 x .5) + (.15 + .50) + ($5 x .25) = $15.90

Cost savings per year for oil changes = Cost savings per oil change x Number of oil changes per year = $15.90 x 20

= $318 b. For Home Refrigerator Repair segment: Cost savings per oil change = $4 + ($15 x .5) + (.50 + .15) +($5 x .125) = $12.775 Cost savings per year for oil change = Cost savings per oil change x Number of oil changes per year = $12.775 x 12 = $153.30 c. For Light Commercial Refrigerator: Cost savings per oil change = $4 + ($24 x .5) + (.50 + .15) + ($5 x .125) = $17.275 Cost savings per year for oil change = Cost savings per oil change x Number of oil changes per year

= $17.275 x 12 = $207.30

Incremental profit per year = (Number of additional jobs per week x Average profit per job) x Weeks per busy season Incremental profit per year = (2 x $30) x 12= $60 x 12= $720

3. Using your value model, select a target market segment(s) for commercialization efforts. Justify your choice. ANS: Of the four segments, the one offering the greatest potential is a light commercial refrigerator repair. The Reasons are: As its a small firm, it should target a single segment so that the focus their limited resources and achieve feasible results. They can use this segment as a starting point and plan to penetrate other segments later on perhaps with other Atler products. 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 Kunst1600. The fact that the Kunst 1600 enables firms to do more jobs per week is the pivotal factor. Most owners and technicians trivialize oil change related costs

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 The Kunst 1600 eliminates the hassle of oil changes for these largely independent operators. There is no likelihood of fines due to illegal dumping of oil Kunst 1600 projected a lifetime of 6 years. As per market standard projected lifetime of a vacuum pump is 5 years

5.

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