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Micro Fridge

Bob Bennett founded MicroFridge Inc. in 1987 after developing the idea of combining a microwave, refrigerator, and freezer into a single appliance targeted at college students living in dorms. He conducted a market survey that found college students were interested in such a product. MicroFridge raised $35,000 initially and partnered with a Japanese company, Samyan, to develop the first prototype. By 1994, 55,000 MicroFridge units had been installed in college dorm rooms across the U.S. The company expanded into other markets like military bases and hotels. MicroFridge experienced rapid growth by focusing on direct sales and developing new products for its "home away from home" market segment.

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Sachin Gupta
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247 views20 pages

Micro Fridge

Bob Bennett founded MicroFridge Inc. in 1987 after developing the idea of combining a microwave, refrigerator, and freezer into a single appliance targeted at college students living in dorms. He conducted a market survey that found college students were interested in such a product. MicroFridge raised $35,000 initially and partnered with a Japanese company, Samyan, to develop the first prototype. By 1994, 55,000 MicroFridge units had been installed in college dorm rooms across the U.S. The company expanded into other markets like military bases and hotels. MicroFridge experienced rapid growth by focusing on direct sales and developing new products for its "home away from home" market segment.

Uploaded by

Sachin Gupta
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Group 1

Dhruv Gupta 14P076


Sachin Gupta 14P101
Sameer Jain 14P102
Shivender Singh 14P107
Tanvi Aggarwal 14P113
Anil Vavilala 14P119

The Start
Bob Bennet Masters Degree in Engineering Management
Restless in his present job
Desires to start his own company
His forte - Sales
A unique idea combination of microwave oven + refrigerator
Idea liked by the Housing Director of Boston University
Asks for royalty from GE for this idea. Later, rejects it

MicroFridge

Microwave

Freezer

Refrigerator

The Survey
5000$ spent on market survey
Findings
College students unhappy with current single-door refrigerator models
Wanted a 2-door model with separate freezer compartment
Willing to pay for one (new model) in their room

Conclusion College students are most interested


Awarded a Patent

About the product


Combination of refrigerator, freezer and microwave unit
Targeted at home away from home segment
Benefits
Would help solve electricity problem in school
Energy efficient
Students could cook safely
Students could purchase food from stores on campus
Parents concerns were addressed
Convenient and easy to use
Very useful for military bases and hotels/motels

MicroFridge Inc.
Co- Founded by Bennet in mid-1987
35,000$ - his initial investment (60% ownership)
Raised another 1.2M $ in next 3 years

Japanese Foresight
After initial rejection, Bennet approaches Japanese companies
Samyan shows interest in the product
1987 - Work on 1st prototype starts
2nd Patent obtained giving equal rights to both parties
Contract signed
Samyan to supply all Microfridge units through July 1995
Samyan cannot sell or license the manufacture of units to anyone else through July 1997

1988 - Samyan completes 1st Prototype


Samyan condition 100$/unit to be paid at time of order

MicroFridge Products
Microfridge unit
Microwave oven - 600W,
0.5 cubic foot storage
Refrigerator - 2.1 cubic
feet storage
Freezer - 0.7 cubic feet
storage
Price 399$

MicroBar
A modern design minibar
for use in hotel rooms
Only refrigerator
segment
More energy efficient

Under consideration
Combination of TV/VCR/Stereo

MicroMart
Dry good storage and
display unit
Side by side
refrigerator/freezer

Target Market
Home away from Home
Potential market elderly assisted living apartments (over 1 M)

Colleges
1877 schools with housing
1.25M dorm rooms
1994- 55,000 rooms had
their unit
55% revenue share
Revenue Model (Sell or
rent) :
Campus wide Installation
Campus rental program
Company Rental Program

Military Bases
200 military bases
Military barracks/
bachelors quarters 280,000 rooms
25% revenue share
Major success factor
Military sales coordinator

Hotel/Motel
Over 3 M hotel/ motel
rooms
Many of them not having
on-site restaurants
Difficult for guests to find
food service away from
hotel
Revenue model

with or without Microfridge in


the room (3$ charge)
Selling food through MicroMart
unit at motel lobby

Sales and Distribution


Initial Failure Distributors
Reason unable to sell MicroFridge units through retail
Success Direct Sales Force
Sales Forecasting

Customer Service
Aimed to deliver 1st rate Customer service
Customer feedback every 6 months
Immediate shipment of product within 48 hrs in case of repairs
1 extra replacement unit given free for every 100 units ordered

Competition
Limited degree of competition with retailers selling microwaves and refrigerators, and
leasing companies
15% of colleges on contract with leasing companies
Acquisition of Campus Equipment Company
To run Midwestern leasing operations
Got contracts with 16 large colleges
Established relations with 39 schools

Options and Decisions


Options
Set up new distribution channel
Stick with high priced Samyan

Decision
Daewoo (Korean Company) to supply microwave ovens at 83$
Since Samyan did not accept delivery from them, Microfridge decided to use 4 regional warehouses
So, Daewoo microwave shipped to warehouse closest to customer
Samyan microwaves (rented) Went to warehouse
Samyan Microwave (Selling) went directly to costumer

Plan for the future


Focus on new products in home away from home category
Increase entry barriers in the market
Increase sales rapidly

Growth so far
First-mover advantage: Home away from home market
-Technological leadership
- preemption of assets
- buyer switching costs

Strategic Acquisitions

ANSOFF MATRIX

Growth in the future


More products to sell to home away from home market

Internal Corporate Venturing


Autonomous
Strategic Behavior
-No direct reference to existing
strategic concept
-Radical innovations eg iPod

Induced Strategic
Behavior
-Implementation of objectives &
measures within the strategic concept
-Incremental innovations eg iPhone

Four Models of Corporate Entrepreneurship


THE
ENABLER
Dedicate
d
Resourc
e
Authorit
y

Ad Hoc

Provide funding
and senior
executive
attention to
prospective
projects

THE OPPORTUNIST
No deliberate
approach; internal,
external networks
drive concept
selection& resource
allocation

Diffused

THE
PRODUCER
Support full
service group
with a mandate
for corporate
entrepreneurship

THE
ADVOCATE
Strong
evangelization by
co; business units
primary source of
funding

Focused

Organizational
Ownership

Advocate Model

STRATEGIC
GOAL

Reinvigorate/transform business units; support


corporate entrepreneurship teams

FUNCTION

Coach and facilitate business units in pursuing new


opportunities

INPUTS

Well connected corporate veterans with small staff


of business building coaches and CEO imprimatur

OUTPUT

New businesses relatively close to business unit core


or significant business unit process efficiencies

Thank you

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