8/13/2019 Case Analysis of Micro Fridge

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The MicrofridgeCase

Ishpreet Singh 12P139Karan Jaidka 12P141

Kshitij Agrawal

12P142Kshitij Ahuja 12P143Manav Gupta 12P146Vikas Jain 12P178

Group 1 Strategic Management IIPGPM 2012-14

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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 oncampus for their Microfridge units

The concerns of studentsparentswere addressed

Convenient, easy to use, attractive, durable and easy to clean

Very useful for military bases and hotels/motels

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The Target MarketHome away from Home

InstitutionalLiving

Situations

Colleges

Military bases

Motels/Hotels

Motels/Hotels

3 million in the USout of which 2million had norestaurant space

Microfridge idealfor budget hotelsand small townmotels

Other Markets

Small Individualapartments

1 million in theUS, numbers

expected togrow

Colleges

Campus wide

installationCampus rental

program

The rental price was$110 and studentswere charged $130as rent

Selling and Renting

Company RentalProgram

Run byMicrofridge

All operationscarried out byMicrofridge

Yearly rental feewas $160

55%25%

18%

2%

Revenue (1994)

Colleges

Military

Motels

Assisted Living

Apartments

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Porters 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

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The Competitive Scenario

Limited degree of competition with retailers selling microwaves and refrigeratorsand leasing companies

Microfridge acquired Campus Equipment Company

It replaced 6,000 refrigerators with Microfridge units

Companies needed similar products and structuresto compete

Microfridge was on the look out for alternate suppliers to reduce dependency on

Samyan Daewoo agreed to charge $83 per unit, compared to Samyans$100

Problems with using two suppliers

Samyan would not accept delivery of microwavesmade by others

Microfridge could either set up a new

distribution channel or stick with the high-priced Samyan

Attachingthe refrigerator and microwave was anissue

The Samyan bracket did not work with theDaewoo microwave

Samyan reluctantly altered their bracket forcompatibility

Decision taken by Microfridge

Shipped roughly half the units withDaewoo microwaves and the remainderwith Samyan

Usage of four regional warehouses Daewoo microwaves: Shipped to a

warehouseclosest to the customer

Samyan microwaves (Rented):Went to a warehouse

Samyan microwaves (Selling):Went directly to the customer

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The Plan for the Near Future

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

Taking advantage of its structure, the company

would focus on new products in the homeaway 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

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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

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