Vacuum Pump Oil

Kunst 1600 Dry Piston Vacuum Pump

Introduction

Kunst 1600 Dry Piston Vacuum Pump is an aluminum pump with fractional horsepower and injection molded. Injection molded refers to the lesser working parts as compared to the traditional models. The unique feature of Kunst 1600 is that it is oil free and is equipped with a screen over its input nozzle so that it can easily catch the pollutants. Per minute pumping speed of Kunst 1600 is 1.6 cubic feet. Weight of the pump is 16.5 pounds. The suggested resale price of the kunst 1600 is five hundred dollar and will sell to the wholesalers for about four hundred dollar. Apart from this, it has a projected life time of six years (Anderson & Narus, 2003, June).

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Kunst vacuum pump differs from the traditional vacuum pump as it is oil free, in this vacuum pump there is direct exhaustion of acid vapors into the air and there is no chance of leakage in the system. In this pump, the rule that is followed is called rule of seven. This rule successfully links the vacuum pump with the refrigeration system. In comparison to the traditional pump, it is the most lightest. Another differentiating feature is that it doesn’t look like the vacuum pump (Anderson & Narus, 2003, June).

Quantifiable Value Elements

The value elements are those elements which increase the value of a product, organization, strategy, plan, etc. Quantifiable value element could be defined as the elements, which are in terms of quantity. In this case, for the Kunst 1600 dry piston vacuum pump, there are various elements, which enhance the value of the Kunst 1600 vacuum pump. These quantifiable elements are oil prices, clean up supplies, disposal cost, labor cost, etc. In order to set the price of the product, it is essential to analyze the various factors regarding the quantifiable value elements. With the help of this, it would be possible for the company to establish a price of the product, which will be accurate and beneficial for both the organization and the consumers (Kotler, 2002).

The cost savings per change in oil can be obtained by:

Oil price + Clean-up supplies + Oil disposal cost + Labor cost

Where,

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

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

Labor cost = rate with which individual is changing oil, Hourly x time required per change in Hours

Residential AC Repair segment:

Cost savings per change in oil = $8 + (.50 +. 15) + (.25 x $5) + (.5 x $12)

= $15.90

Now, Cost savings per year (oil changes) = Cost savings per change in oil x per year number of oil changes => $15.90 x 20 = $318

Home Refrigerator Repair segment:

Cost savings per change in oil => $4 + (.15+.50) + ($5 x .125) + ($15 x .5)

= $12.775

Therefore, Cost savings per year (change in oil) = Cost savings per change in oil x per year number of oil changes => $12.775 x 12 = $153.30

Light Commercial Refrigerator:

Similarly, the Cost savings per change in oil = $4 + (.15+.50) + ($5 x .125) + ($24 x .5)

= $17.275

The Cost savings per year (oil change) = Cost savings per change in oil x per year change in number of oil = > $17.275 x 12 = $207.30

Per year Incremental profit can be calculated by:

Per week Number of additional jobs x Average profit obtained per job x Weeks per activity season

It was found that Kunst 1600 allow the contractor to perform the additional jobs in case of light commercial refrigerator on the other hand, in case of the residential AC repair or home refrigerator repair segments Kunst 1600 does not allow the contractors to execute any additional jobs.

Incremental profit per year: For Light Commercial Refrigerator:

• ($30 x 2) x 12

• $60 x 12

• $720

In order to calculate value-in-use for the Kunst 1600, price of alternative pumps must be included. Value-in-use is referred as an economic term, which implies the greatest price in theoretical sense that a customer would pay willingly. If there is alteration in the expected lives of the offering, it is expressed as the differential price per year (Mathew, 2000).

This can be calculated as follows:

Differential price per year = (present pump price per predictable number of years) – (Kunst 1600 price/Expected number of years).

An assumption that lies here is that Kunst 1600 expected life is 6 years. In this way, the estimates might be problematic when one or more supposition made in the accelerated lab tests does not hold the proper use of the Kunst 1600 in the application given; for example, carelessness in handling and pitching the pump at the back of the truck (Anderson & Narus, 2003, June).

Additional Value Elements

The additional value elements that are not quantified includes the value placeholders, these are the value elements, which the suppliers believes are significant to customers. But these elements are sometime hard to obtain. Apart from this, most of the repair firm do not keep the updated record of their purchase for vacuum pump and also sometime overestimate the life time of the pump (Anderson & Narus, 2003, June).

Target segment(s): Target segment or target market could be defined as the particular area for which the organization is going to produce or develop a service or product. This includes a particular group of the consumers, who are the present customers and who will be the future customers. By using the above derived values and customer value model, the target market segment can be identified. Through the analysis, it was found that residential air conditioning would bring huge opportunity for the Kunst. Hence, this target segment is suitable for the commercialization effort (Kotler, 2002). Another reason for choosing this segment was that Kunst 1600 was delivering greatest value to this segment. It also targeted the repairs of home refrigerator and light commercial refrigerator. Maximum sales were obtained in the segment of residential AC repairs i.e. 125000, 60,000 units in home refrigerator repairs and about 40,000 in light commercial refrigerator (Anderson & Narus, 2003, June).

Apart form this, the other target segment includes laboratories that are highly demanding, heath care and industrial application. This is so because in lab, engineers require pump for freeze- drying, vacuum oven and also for the process of distillation. On the other hand, operational personal in the tech industries require pump for the production of tubes of cathode ray and computer chips. Therefore, Kunst can successfully acquire market share in health care, laboratory and applications related to the industries (Mathew, 2007).

By targeting residential AC repair market, Kunst can surely earn huge profit, as the annual sale is growing with a rate of fifteen percent each year and they can successfully reap the values from the Kunst 1600 (Anderson & Narus, 2003, June).

Customer Value Propositions

Value proposition could be defined as an extra feature, which receives due to the strong relations with the customers. This could be defined as the unique added value which would be offered by the organizations to their customers through their operations. In the area of marketing, value proposition is the summation of entirety benefits and advantages which a vendors promises to serve to their customers. In a simple term, value proposition is what features a customer gets for his payment according to the price of the product and services (Kotler, 2002). Value proposition of a company could be evaluated on the basis of two factors by a customer: What are the additional features that a customer gets from the vendor in comparison to its competitors and another is the relative prices of the product in comparison to its competitors. It is one of the best marketing tools to develop a strong customer base in the industry (Ramaswamy & Namakumari, 2007).

Market Offering and its Management

In a business market segment, changing marketplace requirements are seen as the creation of inconsistency for the suppliers. In the market, due to the globalization, changes in the technology, standard of living and life styles customers always request for more customized offerings. According to their preferences, they suppose more value added and distinguish features in the product in the form of a supplementing collection of services, systems, program, etc. (Ramaswamy & Namakumari, 2007). In these circumstances, the customers still demands the lowest cost and the lowest price of the product with best features. It is an important activity of the management to manage the value statement according to the requirements and needs of the target market and rate of the competition (Kotler, 2002).

Value-Based Pricing in Business Markets

The prices of the product, which is offered by the vendors in the market are based upon the value features and target customers. It is a very difficult job for the vendors to analyze the true cost including the profit and offer best price and low price to the customers in comparison to its competitors. The frame work of value based pricing on the basis of traditional approach includes the cost-plus pricing and competition based pricing. This includes the considerations in managing pricing strategies, tactics, transaction level, etc. (Kotler, 2002).

The value propositions of the Kunst include the following:

• Kunst has created value proposition in such a manner that supplier easily gain the possibility to engage the buyers or the consumers in a conversation, in this they discuss about the market offering. The marketing offering of this pump are much better for its target markets in comparison to its competitors. Kunst 1600 is a modify model of this pump, which is based on the demands and needs of the target market. In order to fulfill the requirements of the customers, the company has created this model by adding more value features in its traditional model (Anderson & Narus, 2003, June).

• The important and unique benefit it is providing to the segment is that the technicians are not required to change the oil after completing the repair job. This is valuable feature for both the customers and company because this would save the operating expenses of organization and repairing expenses of the customers (Mathew, 2007).

• It saves cost because the requirement of the quart is reduced as changing of oil require quart and per quart require $8 for specialty oil. Apart from this, it also saves the time of the customers and provides an uninterrupted service. This is a value based pricing model for both the organization and customers (Anderson & Narus, 2003, June).

• The nuisance associated with the changing oil was reduced with the use of Kunst 1600. Due to these features the customers gave attentions to the various plans and offers of the company. This way the company could explain more about the valuable features of this product as well as the other related products.

• The main aim of the vendor is to convince the customer to try the product, in a general term the value propositions of the company for the consumers is that “the product will save your money (customer), time and provide an uninterrupted services.” This is the best value statement for the company because this shows the features of the product as well as explains about the low price structure of the product to its target customers (Anderson & Narus, 2003, June).

• Another feature, which differentiate it from other is that it is free from the rust i.e. shows the similar feature as that of steel. Due to this distinctive feature, the value of the product ultimately increases and attracts the consumers from the specific target market.

• It has high durability as compared to the traditional vacuum pump. As the Kunst is made of aluminum. Therefore, it weight five to ten pounds less as compared to the competing products. In the present competitive environment, a customer wants a product with low price and high quality stricture. In comparison to its rival products, Kunst 1600 has low price as well as high quality and distinctive features. These features describe the best quality structure of the product and it achieves a position of valuable product in the industry and among the target cuatomers.

Kunst 1600 has made its value statement keeping in mind the requirement of the customers, which are capable of drawing the attention. In order to support and deliver the value proposition and value statement to the customers successfully, value calculators are integral tools. This tool of marketing allows a firm to compare its competencies according to its market segments and target market (Kotler, 2002). An effective value statement helps in gaining the market share among the target segment and enhances the operational efficiency. Its value statement focuses on providing superior value for the price. Customer perceives the value in terms of the product price that is capable of providing overall benefits and costs to the users after they utilize the product. This is reflected by the annual sale in the residential AC repair market, which were 125,000 units. Apart from this, the firms owe a strong reputation in the Europe for its discoveries, reliability and exact products. It is also competent in providing technical service (Ramaswamy & Namakumari, 2007).

Conclusion

Kunst is having unique features as a result; it is widely preferred over the traditional vacuum pump. Its feature of acting as a compressor provides it with the ability of running faster, longer and cooler than the traditional pump. It was able to draw the attention of customer and targeted the right market segment, which provided it huge profits. It had developed value proposition and value statement for each and every market segment. It focused on the facts like kunst doesn’t require oil and it had projected life time of about six years. Because of its better services and reliable products, it occupies a good reputation in the Europe. It had well differentiated its products from the competitors. It can work efficiently under lower pressure and enables technicians in reducing vacuum time by ten minutes on those jobs that are typical. It has given equal emphasis to all the segments. Best opportunity was provided to the kunst by the residential air conditioning repair segment. Apart from this, it is looking for penetration into the new segments such as, refrigerator repairs.

References

Anderson, J.C. & Narus, J.A. (2003, June). Commercializing the Kunst 1600 Dry Piston Vacuum Pump. Retrieved June 4, 2008 from http://209.85.175.104/search?q=cache:EgqycvOPt7kJ:www.busi.mun.ca/lpuddester/b7250/w08/Ch2_casestudy_Kun600.doc+KUnst+1600+dry+pISTON+vacuum+pUMP&hl=en&ct=clnk&cd=3&gl=in

Kotler, P. (2002). Marketing Management (11^th Edition). New Delhi: Prentice Hall of India Private Ltd.

Mathew, M.J. (2000). Sales Management and Sales Promotion (3^rd Revised Edition), Jaipur: RBSA Publishers.

Mathew, M.J. (2007). Functional Management: Tools and Techniques (3^rd Revised Edition). Jaipur: RBSA Publishers.

Ramaswamy, V.S. & Namakumari, S. (2007). Marketing Management (3^rd Revised Edition). New Delhi: Macmillan India Ltd.