The Microfridge CaseIshpreet Singh – 12P139 Karan Jaidka – 12P141Kshitij Agrawal – 12P142 Kshitij Ahuja – 12P143Manav Gupta – 12P146 Vikas Jain – 12P178

Group 1 – Strategic Management – IIPGPM 2012-14

About the Product

A unique combination of a refrigerator, freezer, and microwave unit, fulfilling all 3 functions

Targeted at “A Home away from Home” segment

Benefits of the Microfridge Helped to solve the electricity problem in schools. Saved

costs. Students using Microfridge could cook safely in their rooms Students would purchase food from convenience stores on

campus for their Microfridge units The concerns of students’ parents were addressed Convenient, easy to use, attractive, durable and easy to clean Very useful for military bases and hotels/motels

The Target Market – Home away from Home

Institutional Living

Situations

Colleges

Military bases

Motels/Hotels

Motels/Hotels

• 3 million in the US out of which 2 million had no restaurant space

• Microfridge ideal for budget hotels and small town motels

Other Markets

• Small Individual apartments

• 1 million in the US, numbers expected to grow

Colleges

• Campus wide installation

• Campus rental program

• The rental price was $110 and students were charged $130 as rent

• Selling and Renting

Company Rental Program

• Run by Microfridge

• All operations carried out by Microfridge

• Yearly rental fee was $160

55%25%

18%

2%

Revenue (1994)

Colleges MilitaryMotels Assisted Liv-

ing Apart-ments

Porter’s 5 Forces Model Threat of new entrants: Medium

No product difference Patent Sharing Non compete Agreement Getting expired in 3 years No strategic advantage in distribution network Profitable industry with high Market potential

Threat of substitutes: Medium Price differential between stand alone components(fridge and oven)

and Microfridge Refrigerator leasing companies with regional presence Low innovation level

Bargaining power of customers: Low Few alternatives High Switching Cost

Bargaining power of supplier: Low Low product differential No switching cost for Microfridge

Intensity of competitive Rivalry: Low No competitor due to patent protection

The Competitive Scenario Limited degree of competition with retailers selling microwaves and

refrigerators and leasing companies Microfridge acquired Campus Equipment Company

It replaced 6,000 refrigerators with Microfridge units Companies needed similar products and structures to compete Microfridge was on the look out for alternate suppliers to reduce

dependency on Samyan Daewoo agreed to charge $83 per unit, compared to Samyan’s $100

Problems with using two suppliers Samyan would not accept delivery of

microwaves made by others Microfridge could either set up a new

distribution channel or stick with the high-priced Samyan

Attaching the refrigerator and microwave was an issue

The Samyan bracket did not work with the Daewoo microwave

Samyan reluctantly altered their bracket for compatibility

Decision taken by Microfridge Shipped roughly half the units with

Daewoo microwaves and the remainder with Samyan

Usage of four regional warehouses Daewoo microwaves: Shipped to

a warehouse closest to the customer

Samyan microwaves (Rented): Went to a warehouse

Samyan microwaves (Selling): Went directly to the customer

The Plan for the Near Future

Though the company was on track, Bennett was not content at the current growth

Taking advantage of its structure, the company would focus on new products in the “home away from home” category

In order to be able to withstand competition, Microfridge would increase sales rapidly To receive USD 4 million in additional equity The funds would be used to purchase

Microfridge units (rental) and to repay old debt Aim to increase entry barriers in the market

Recommendations

Product Recommendation Innovate Try to modify product for Travel : Bus, Rail and

Air Category Recommendation

New product for home away from home Focused innovation

Market Recommendation Explore New Geographies Acquisitions for regional penetration