GROUP 4 PGPM SECTION C

ANKIT GOEL
KAUSHIK NIHALANI
MAYANK RATHORE
NIKHIL JAIN
SHASHANK SHUKLA

Conception
of
MicroFridge
in 1987

Developin
g a very
sophisticat
ed
marketing
plan

Expanding
the market
from
colleges to
military to
motels to
senior living

Building
the
product

Difficultie
s in
selling
the first
units

Sold to MacGray in 1998

with annual
sales > $25
million

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

Product Benefits
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

PRODUCER MODEL
Idea
Conceptualizat
ion

Self-sustaining
new business

Corporate
veteran
leadership

Unmet need
identification

Production
Strategy

Market
Segmentation

Competitor
Analysis

Collaboration
Strategy

Building Core
Capabilities

Risk Appetite

MARKETING MIX - MICROFRIDGE

1877 Schools -> 1.25 million

rooms
Military Barracks and
Bachelors Quarters -> 280,000
rooms
Motels
2 out of 3 million with limited
or no restaurant services
Located in smaller towns with
limited facilities
Focus on budget and midrange hotels
Targeted 1 million plus elderly
assisted living apartments
Revenue Distribution
55 % - Colleges
25% - Military

Campus Installation

Simple, one per room

$50 extra charge per person
(2 in a room)

Campus Rental
Colleges purchased or rented
on behalf of students
Mailing -> Check Collection
-> Install -> Store in
summers -> Re-install in fall
duty of college
Purchase Price: 399$
Rental Price
$110 per year
$100 for 5 years

Company Rental

Managed by MicroFridge
Yearly rental fee: 160$
Some units stored off campus
Massachusetts, Georgia,
Iowa, California

Basic MicroFridge Unit

Colleges

colleges, military bases,

motels

Products

Market

Home Away from Home

90% of revenues
600W, 0.5 ft oven on top of
Two door refrigerator - 2.1
ft storage (OR)
Freezer - 0.7 ft storage
Purchase Price: $261
Selling Price: $399 (OR)
rented
Variations single door units,
no ovens, no freezers

MicroMart
Separate refrigerated and
freezer cases with dry goods
display shelving
Intended for motel lobbies
for guests to purchase
supplies

MicroBar
Modern mini-bar for hotel
rooms
Billed as more energy
efficient and functional

DISTRIBUTION

Independent Distributors

Sales Force

Started with 17 independent distributors

Distributors had been sidelined with rise of
superstores
Sold 4000 units, only 1000 units purchased by
schools
Purchase Price: $261
Distributor Selling Price : $309 (West),
$314 (East Coast)
Distributors started looking at discount chain
retail stores

Direct Sales Force hired 4 sales people in early

1990
Cleared distributors warehouse stock
1994 -> 21 sales people, 3 regional sales
managers
Sales people -> Base salary + 4% commission
per unit sold

SALES FORECASTING
Forecast for Military

Forecast for Schools

No.
No. of
of
Student
Student
ss

Rental
Rental
program
program
ss

Housing
Housing
contract
contract

Foreca
st

Student
Student
Survey
Survey

Microwa
Microwa
ve
ve

General Services
Administration
Contract

Sales Force visit to

the Bases

Military Sales
Coordinator

Sales to
Hotel/Motels

Customer Service

National Account Agreements

First Rate Customer Service

Promotion through trade shows

Satisfaction measured
through Surveys

Direct mailing to Individual

Motels

5-year Warranty on
Compressor & 1-year on
other parts

Commission of 2%-5%.

1-extra Replacement Unit for

every 100 units

COMPETITIVE SCENARIO
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 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 Samyans $100

FUTURE STRATEGY

Bid to increase sales

Hoping for $4million from institutional

investor
Bennett ownership would reduce to 16%
from 20%
Investor ownership would be 20%

RISKS
Stake dilution Impact on decision making
New Management Strategy and Objectives
could differ

SELL OR RENT
Selling

Faster net income growth

Attract growth capital create

entry barrier for market

RENTING

Gross Margins higher

Reduced seasonal swings ->

revenue recognized throughout

year

Bennett pushed for sales in

short term

FOUR MODELS

THE FOUR MODEL

MicroFridge follows the Opportunist Model, working

without any designated organizational ownership or
resources
It will work well for emerging organizations with a
trusting culture and open to experimentation and
have diverse social networks
With increase in growth, more diffused ad-hoc
approach with more development practices which will
lead to a more complete model

CORPORATE
ENTREPRENEURSHIP

Process by which teams within

an established company
conceive, foster, launch and
manage a new business that is
distinct from the parent company
but leverages the parents
assets, market position,
capabilities or other resources.
It differs from corporate venture
capital, which predominantly
pursues financial investments in
external companies

INSTITUTIONALIZING
ENTREPRENEURSHIP

Presence of a context or a
common goal
Provides a sense of direction and
an environment conducive for
learning from each other
Innovative ideas are festered
throughout the organization

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