MicroFridge: The Concept

Group - 7B
Arun kumar P Neha Tare Parikshit Kapila Santosh Meena Vinay Tejasvi Y

Introduction
Robert Bennett, a computer salesman, wants to start MicroFridge Inc. a company that sells MicroFridge: a combination of a refrigerator, freezer and a microwave. Drawing only 10 amps of current because of its specially designed circuit, the device reduces the risk of fires and is primarily aimed at college students. Mr. Bennett has concerns regarding his target market, how to source and distribute the product and competition from other companies.

Target Markets
College students: MicroFridge will enable students living in the college dormitory to store food and reduce the risk of fires as students mostly used hot plates for cooking. This will help college authorities address the issue of fire safety in the dorms. Motels: Increasing room rate by $3, motels can provide MicroFridge service to customers. In 1989, with an annual growth rate of 10% there were a million motel rooms in US that had little or no room service. (Ref: http://www.inc.com/magazine/19900201/5031.html) Potential buyers from the general market. The average price of a standard refrigerator in 1987 was $750. The proposed product provides the feature of both refrigerator as well as a microwave oven at comparatively less cost.

Addressing the concerns

Financing his business: Mr. Bennett has an estimate of $300,000 for selling and administration and $60,000 for incorporation, patents and legal costs but has only $50,000 available. A venture investing firm declined to invest citing his inexperience. He should approach other venture investing firms and also explore the option of availing a bank loan. Whom to Source From: Samsung Electronics and Sanyo were willing to discuss the terms of offshore manufacture. Sanyo offered a landed price of $263 for an upfront payment of 170,000. Further negotiation should be carried out with Samsung Electronics to fix a deal that is more competitive than the deal offered by Sanyo or else he should go with Sanyo. Building reputation: College administrations and a venture investment did not fully believe in his idea. He should carry out extensive research on the product. By erecting MicroFridge stalls during college fests and displaying the results of the research the product will get attention and gain acceptance. Sales Channel: The alternatives available are to supply through a distributor network or through house accounts. For selling MicroFridge to colleges he should go with house accounts. College administrations would place orders in large numbers for their dormitories and hence will bring good returns for the business. For supplying to motels and retail stores he should go forward with a network of 20 distributors who already have a strong presence and relationship with the retailers.

Staying ahead of Competition

Patenting the MicroFridge: Some major appliance maker can come up with its own product. Before launching the product, Mr. Bennett should get a patent for the Electronic circuitry and the combined refrigerator and microwave unit. This will prevent similar devices from entering the market during the patent period. Market analysis and Feedback: Regular feedback has to be taken from customers to ensure that any suggestions or requirements can be incorporated. From distributor network, get information about the competitors and their products available, measure relative performance of the products and effect improvements. Post Sale Services: Get into an agreement with manufacturer or hire technicians locally to provide technical support for the product. Extend onsite service on large orders and provide timely service along with technical support through telephony. Schemes like one year warranty can be provided to the customers, supported by offers of faulty parts being replaced in this one year period. Once business is established, bargain with suppliers to extend credit facility to the company. Only a percentage of the total cost will have to be paid up front and this will reduce the burden on cash requirement. He can commercialize his patent for electronic circuitry and earn revenue through it by means of royalty.

Recommendations
Mr. Bennett can also look at the following options as markets for his product. Railway Coaches: The MicroFridge can serve the purpose of stocking items and heating food during train journeys for passengers. Corporate offices: Because of its compact nature (under 4 feet in height) MicroFridge will find use in offices where both space and monetary constraints prevent the purchase of either refrigerators or microwaves. Rented Apartments: MicroFridge will prove useful in furnished apartments that are leased to tenants. The owner can install MicroFridge for its monetary and space advantage.

Alternative
Considering the fact that Mr. Bennett would have to quit his secure job and sell his assets to start the business, an alternative would be to patent his idea and lease it on a contractual basis and receive loyalty for it.