Franc Ouedraogo Case Assignment: CUTCO Corporation 1) Direct selling is defined as any kind of selling that is made outside a fixed business location. Therefore, most of the company that use direct selling are not well-known, are small, privately owned or do not have physical stores. Direct selling is essentially a push marketing strategy, and the firms that use it do very little traditional advertising. Most of the direct sales take place in a residence and on a one-to-one basis. 2) CUTCO Corporation roots go back in 1902 with the creation of Aluminum Company of America (ALCOA). In 1948, ALCOA and W.
R Case & Sons formed a joint venture to manufacture high-quality kitchen cutlery that would be marketed through ALCOA’S WearEver subsidiary. In 1949, the first CUTCO cutlery was produced. After a period of aggressive growth and a series of reorganizations and acquisitions, ALCAS Cutlery Corporation changed its name to ALCAS Corporation in 1990 and morphed into a family consisting of six interrelated companies including CUTCO Cutlery Corporation. CUTCO Cutlery Corporation manufactures the cutlery that Vector Marketing Corporation markets in North America and CUTCO international markets CUTCO products outside North America.
CUTCO Cutlery Corporation manufactures 75 percent of other merchandiser’s product, and the other 25 percent is manufactured by a US supplier and several suppliers located in Asia. The ALCAS corporate vision was to become the largest manufacturer of high-quality kitchen cutlery and accessories in the United States. In 2009, ALCAS Corporation became CUTCO Corporation. The company employs more than 800 people at its dean headquarters and has revenues in excess of $200 million. Vector Marketing Corporation is the largest independent distributor which operated in the eastern United States.
Vector Marketing Corporation is an in-house CUTCO marketing capability that gave it complete control over it major market. With that capability, marketing decisions relating to new office locations, expansion plans, rate of growth, and distribution methods were under the control of the company. Vector Marketing Corporation, sales efforts are organized regarding the six geographical regions of the United States. These six regions are combined into two companies: Vector East and Vector West and the president of each vector report to the CEO/Chairman of CUTCO Corporation.
Each of the six regions is headed by a regional sales manager. Within each region are 5-7 divisions, and within these divisions are a total of approximately 280 districts or permanent offices and another 280 branch office. Branch offices are summer offices that operate for about 17 weeks every summer. A district office operates throughout the year and typically is located in a area with a population base at least 200,000 people. 3) SWOT analysis for CUTCO Cutlery | Internal Factors| | | External Factors| | | Strengths| Weaknesses| | Opportunities| Threats|
Management| Good management| Excessive Independent Management structure| Competition| No real competitors; leadership in the business| Entry of new brands, specially foreign brands| Marketing| Potential number of sale representatives | Lack of advertising program/sale representatives not professional| Consumer Trends| Unfulfilled customer needs for new brands of cutlery and kitchen furniture| Growing preference for new products and trends| R&D| Innovation to costumers; possibility to try new product line| Poor innovation/ too narrow a product line| Economic| Good environment| | Manufacturing| Available Facilities and equipment| Very few plant to manufacture product| Industry/ market structure| New distribution channels with possibility to reach foreign customer| Difficulties to reach foreign markets| Finance| Excellent cash flow position| | | | | 4) People that are actually selling CUTCO Cutlery are independent contractors who operate their own business. For the most part, they are college students who sell the products during their summer vacations. Each summer tens of thousands of college students are recruited to sell CUTCO products. Sales are made through in home presentations in which sales representatives demonstrate the superiority of CUTCO cutlery. Over all,
Vector Marketing Corporation uses a direct selling model as a marketing strategy to sell CUTCO Cutlery. Among the different method used to market CUTCO Cutlery, we have: * Vector Catalog Sales: to maintain a continuing relationship and service with the customers created by sale representatives. This catalog is mailed to 4 million CUTCO customers as often as four times in the fall. * Vector Internet Activities: Vector Marketing Corporation created a website to recruit college students to be sales representatives. Then, customer service and product information was created. Customers are offered the opportunity to make their catalog purchase online using a web site. Other Marketing Initiatives: in addition to catalogs sales and internet, Vector Marketing Corporation uses other sales channels to broaden its offering portfolio beyond direct selling. One opportunity has been booths at country fairs and show. * Vector Customer: since 1989, Vector Marketing Corporation began systematically capturing and retaining customers’ names and addresses; a database of more than 9 million customers has been constructed. 5) When evaluating the possible growth drivers, the qualitative factors that should be considered are the ones that involve a comparative analysis of the existing and new drivers. The factors should help to respond to the following aspects: * Improve the effective coverage of the target markets sought * Improve the satisfaction of buyer needs Determine the right marketing functions to make the change * Does the organization have the resources to perform the new functions? * What will be the effect of the change on the achievement of long range organizational objectives? * What effect will the change have on other channel participants? 6) The recruiting approaches should serve as a strategic focus. In fact, the number of recruits is such an obvious driver of vector’s revenue growth. Additional investment and intensive efforts to improve the recruiting approaches could be a major growth driver. It was agreed that an investment of at least $5-10 million in technology and recruiting management infrastructure would be necessary to produce any measurable results.