The document discusses the Microfridge product, which combines a refrigerator, freezer, and microwave. It is targeted at institutional living situations like colleges, military bases, and hotels/motels. The main markets in 1994 were colleges (55% of revenue), military (25%), and motels (18%). Microfridge faced medium competition but had patent protection. It acquired another company and replaced refrigerators with Microfridge units. While using two suppliers reduced costs, it created compatibility issues. Microfridge planned to focus on new "home away from home" products, rapidly increase sales, get $4M in equity, and repay debt to withstand future competition. Recommendations included innovating for new markets, focused product development, and exploring new

1. The Microfridge
Case
Ishpreet Singh – 12P139
Karan Jaidka – 12P141
Kshitij Agrawal – 12P142
Kshitij Ahuja – 12P143
Manav Gupta – 12P146
Vikas Jain – 12P178
Group 1 – Strategic Management – II
PGPM 2012-14

2. 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

3. 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
Military
Motels
Assisted Living
Apartments

4. 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

5. 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

6. 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

7. 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