A Report - Microfridge: The Concept by Group 3A
Background and concept of the product
In 1987, Mr. Robert Bennett wanted to explore and exploit his idea to combine a refrigerator, freezer, and 500-watt microwave oven into a single unit called “Microfridge”. He is 31 years old and has a Master’s degree in engineering. He had devised electronic circuitry that shut off power to the refrigerator/freezer whenever the microwave was switched on. A hot plate and a refrigerator would draw 20 amps whereas the unit he designed would never pull more than 10 amps of current.
Financials
To this end, he approached a number of major electronic goods’ manufacturers and Samsung and Sanyo agreed to consider its production. Sanyo offered to provide the product at the rate of $263 per unit. According to them, the estimation of upfront tooling payment was $170,000. Following that, Bennett added $300,000 for the first year of selling and administration hoping he would earn a return of 15% of the selling price (Selling price of $309 on Sanyo’s Landed price). He also is planning to leave his job and use the proceeds of $50000 in funding.
Surveys
To go ahead with his idea, Bennett approached Boston’s Atlantic Research to conduct interviews with 200 Massachusetts. This gave him an idea about the demand of the product in the market and his end customers’ expectations. His research found that students were interested in the concept of micro-fridge because 90% of the students were using hazardous appliance like hotplates. The 52% of the respondents were ready to pay $75 and 90% were ready to pay $50 per year extra in the dorm rates.
Subsequent to the survey, Mr. Bennett met college administrators whose initial response was negative because they feared that the students would not adhere to the meal plan and there was no demand from the students. Another major concern of the administrators