Case Study Analysis

Group Assignment

Table of Contents
Table of Contents..........1

1. Introduction..............................................................................2

2. Background...............................................................................2

3. SWOT Analysis...........................................................................4

3.1. Strengths and weaknesses...............................................................................4

3.2. Threats and opportunities................................................................................7

4. Problems...................................................................................8

5. Course of action.......................................................................10

6. Conclusion...............................................................................12

7. References..............................................................................13

8. Appendix.................................................................................17

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1. Introduction
Vector Marketing is a subsidiary of ALCAS Corporation and markets the cutlery

products in North America. The company’s sales have increased at 5% but the management is

convinced the performance is below par and there is a need to improve the existing marketing

strategy or even adopt a different marketing strategy. Some of the issues available include

adopting e-commerce, the emphasis to be put on international marketing and domestic marketing

and whether to expand the product line. This work will offer an in-depth analysis of the Vector

Company and offer recommendations in increasing the volume of the sales. It is also worth

noting that this report will also refer to its competitors and their marketing strategies.

2. Background
Alcas corporation is the parent company to CUTCO Cutlery Corporation, Vector

marketing, CUTCO International Inc and KA-BAR knives. As a subsidiary of the ALCAS

Corporation, Vector marketing is charged with the responsibilities of selling the cutlery products

in North America. Currently Michael Lancellot is the CEO of Vector Sales North America while

Erick is the Chairman and Chief executive officer of ALCAS Corporation. The corporation is

also doing fine and this is evident from the record sales being registered. However, with a record

increase of only 5% Michael Lancellot is convinced that some measures needs to be taken to

increase the sales.

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The CUTCO international sells the cutlery in the international markets in Australia, Costa

Rica, Germany, Korea and Puerto Rico. On the other hand, CUTCO Cutlery is in charge of the

manufacturing the cutlery. The final subsidiary, the KA-BAR knives deals with sport and utility

knives.

Currently, the ALCAS Corporation sells its products directly to its customers. However

in 1940s to 1970 the company used small and independent distributors. In 1985 the company

acquired Vector Marketing Corporation which had a wide distributorship network. The Vector

Marketing uses independent contractors in selling the cutlery items and who are paid on

commission basis. These representatives are students who are recruited during the school

vacation. But there is a need to increase the sales volume and this leads to the evaluation of the

direct selling method.

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3. SWOT Analysis

3.1. Strengths and weaknesses

The cutlery products are manufactured exclusively by ALCAS Corporation and have

been successful in eliminating outsourcing the production of components. This has been

instrumental in ensuring that the quality of its products is maintained. Although ALCAS

Corporation has a broad product line it has managed to ensure its product meet excellent quality

standards. For instance, CUTCO cutlery is recognized for its quality products such as wedge-

lock handle and Double-D knife blade grind. The wedge lock is ergonomically designed and is

comfortable to handle. Similarly, the Double-D knife has enhanced features that make it

comfortable to use. Indeed, Anderson (2005) argues that the customer value proposition should

have characteristics such as good quality of products, a broad product line and innovative

product. Vector Marketing lives to this proposition and is able to depend on referrals due to high

quality of its products. The company maintains a good relationship with its customers and this is

illustrated by the product-replacement system where defective cutlery items are exchanged at no

cost to the customer. This is one strategic option besides the customer intimacy (Bijmont &

Tammo, 1996).

The Alcas Corporation made a wise decision by acquiring Vector Marketing Canada

which at the time was the biggest independent distributor. This move was helpful in accelerating

its international expansion pace. With the unsuccessful Vector marketing approach in North

Korea the company changed its recruitment approach which increased the sales. The decision to

create CUTCO international to deal with the international markets was also another important

decision. Global strategies involve creating global associations in order to obtain scale of

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economies (Cooper, 2000). Such strategies also enable businesses to enjoy the national

incentives while accessing cheap labour and materials (Day & Wensley, 1983). This could

explain a huge contribution of Vector marketing to the total revenue to ALCAS Corporation.

Vector marketing motivates its employees by rewarding them directly, giving them

trophies, bonuses, arranging trips and offering them scholarships. The sales representatives are

thus encouraged to make more sales and this explains why the company continues to register

success in its sales growth. Although the Vector Marketing uses direct selling method, it has

been effective in recording increased volumes in sales. In particular, the company depends on the

period from May to August when it makes most of its sales. This method is further enhanced by

in-house presentation which has seen the company maintain sales growth for the few years. Most

of the consumers enjoy reading thus the catalogues becomes a good way of advertising and

selling the CUTCO cutlery. Vector marketing concentrates in the market segmentation that

offers the most benefits. This is besides maintaining customer relationship and a great variety of

products to choose from. In addition, use of websites in recruiting sales representatives is a noble

idea and this has been encouraging considering the number of recruits has increased.

ALCAS Corporation has a stretched product line consisting of 250 stock keeping units.

With the twenty cutlery items accounting for 60% of the sales volume the rest of the products

have a very minimal contribution to the revenue. Vector marketing makes its sales during the

summer selling season and depends heavily on the sales representatives. Through in-house

presentations the representatives take orders which are then taken to Olean where they are filled.

The Southwestern Company uses a similar strategy in selling educational material but there

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exists a difference in the direct selling methods, the two companies use. This company conducts

centralized recruitment program which is done in Nashville. This decreases the cost of training

the students unlike the strategy used by Vector marketing.

In strategic marketing understanding the analysis of the competitors is important and

businesses should compare the competencies that such firm portray (Rajan, 2010). Conversely,

poorly performing firms according to Douglas (1985) lack some assets and competencies.

With high labor turnover the Vector Company does not maintain a good contact with past

customers. This is explained by the fact that a student recruited in this summer may not apply for

the sales representative position in the next summer. In addition with the company depending

heavily on catalogues a lot of funds are used in the mailing of these catalogues.

Depending on referrals only from past buyers of CUTCO cutlery items is a bad decision

and Vector Marketing should be involved in more aggressive marketing (Rocks & Steve, 2005).

Take for instance, Southwestern uses sales representatives in selling its products but allows door

to door marketing. In home-presentations and referrals negatively affect the sales volumes which

need to be increased by incorporating other marketing methods as well. In addition, the Vector

Marketing limits on the sales growth by sending representatives to sell the product in their home

cities. The direct selling method creates some problems for the Vector advertising. With the

selling season being between May and August one is left wondering what happens between

September and April.

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3.2. Threats and opportunities

Most of its competitors use indirect methods in selling their products. In particular, its

main competitors such as Henckels, Chicago cutlery and wusthof-Trident use Department stores

and major distributors in marketing their products. As a matter of fact with these distributorship

methods Henckel has been successful in exceeding the sales registered by Vector Marketing

which has stuck to direct selling of its products.

Vector marketing conducts its recruitment on holidays through advertisements, direct mailing,

internet and on-campus recruitment. The market segmentation for Vector marketing involves

married homeowners, with bachelors, most likely in managerial position, with income in excess

of $50,000 and between 40 and 59 years. With this lean segmentation the less affluent customers

and with small income are left out.

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4. Problems
Direct selling method employed by Vector marketing negatively affects the sales volume.

With only 5% sales growth being recorded it is evident that this method need to be improved on

or other methods to be adopted. The direct selling industry involves independent contractors.

This method is however not popular due to its invisible nature. Multi level marketing is a form of

direct marketing where the representatives earn commissions from the sales made and from the

sales made from the individuals they have recruited. The Vector marketing system is structured

in a similar manner where the managers and the representatives receive commissions from the

sales made.

The cutlery items make the line of products that are sold using direct selling method. The

method is also popular with educated consumers who have large household income. In the

United States the direct selling customers tend to be affluent females. Besides quality, value

option, innovation, target market focus and globalization, maintaining a narrow product focus is

also another option (Klaas, 2006). The Vector Company has a broad product line and should

consider concentrating in production of twenty cutlery items and doing away with the other 230

products.

There is no doubt that internet is an important tool in marketing. The customer oriented

website currently being used by Vector internet is not being receptive to the needs of its

customers. The website is currently concerned with consumer service and production

information. The customers are unable to order the cutlery products on-line and are referred to

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customer representatives to place their order. The success of KA-BAR website can be replicated

by launching a similar Vector Marketing website to sell the cutlery items.

With internet resource the cost of marketing will definitely be cheaper. The

administrative cost of direct mails is expensive for the company while the customers can place

orders online and receive electronic newsletters through their email addresses. The target market

segmentation of Vector Marketing comprise of the affluent consumers in managerial positions.

The consumers also have relatively high annual income and being in managerial positions are

most likely to be technological-savvy. In addition, the customers will no doubt enjoy less

expensive products but of same quality. This creates a win-win situation for the company and the

buyer. The use of direct selling method in international market has proved to be unsuccessful

and this saw the sales volume momentarily collapse. Similar experiences were replicated in

German where the company continued to record losses prompting the need to have independent

owner distributorship.

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5. Course of action
With the consumers turning to the internet to buy goods and services, e commerce

is becoming popular in the global market. It is cost efficient and the benefits are passed on to the

consumers leading to reduced prices. The buyer pays for the shipping costs eliminating the

mailing and printing costs. This explains why the major Vector marketing competitors such as

Henckels and Wusthof-Trident are able to sell their Knives at a lower price through Knife Outlet

and Plum’s cooking websites. The management at Vector marketing need to be flexible in

adopting new methods of marketing such as the internet.

Adopting some of the strategies used by the Southwestern Company may help the

Company to increase its sales. Firstly the recruitment of students takes a lot of resources while

the level of retention is low. As such the company should consider complementing them with

permanent sales representatives who will continue marketing the products during the low season.

Vector Marketing should also consider improving the direct selling process by allowing the sales

representative to take door-to-door approach instead on solely relying on referrals. This improves

on the brand familiarity which should be a strategic option for any credible company

(McDonald, 1996).

The problems brought by international market expansion can be avoided by making

affiliations with the local companies in the respective countries. Such a move would be vital as

such organizations are better suited and have a better understanding of the business environment.

This could then be followed by buyout of the partners share in those nations. However with the

expected increase in the US households the domestic market still possesses a lot of potential

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which should be exploited by aggressive marketing. The strategy should involve having

alternative tools of marketing such as departmental stores, distributorships with the awareness of

the company’s products being enhanced through aggressive advertising. Marian (1984) dictates

that businesses should strive to make the most benefit after entering the market by making

minimal investment and later divesting the business. This strategy may be helpful to Vector

Marketing by forming affiliations and partnerships.

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6. Conclusion
The strategic decisions in a company should be structured according to the organizational

strengths and weaknesses, competitor strengths and weaknesses, market needs and success key

factors (McDonald, 2006). It is obvious from this case study that Vector Marketing needs to

make strategic decisions which include using market tools such as the internet. The company

produces quality goods and observes high levels of innovation and when these options are

coupled with aggressive marketing will give the company the competitive edge. There are

several market expansion alternatives available to Vector Marketing. With its high quality

products and differentiation from its competitors planned expansion and better marketing

strategies will make the company desirable. This should also be accompanied by divesting in

international markets where the company is making losses. Future global strategies should also

involve making partnerships, making minimal investment and selling off its share or total buy

back if the venture seems lucrative.

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7. References
• Anderson, F. (2005). Strategic planning and the Theory of the firm. Journal of

Marketing, 46(2), 15-26. Retrieved from

• http://ehis.ebscohost.com.ezproxy.ballarat.edu.au/ehost/detail?

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• Bijmolt, S., Ruud, F., & Theo, V.(1996) Strategic marketing research. Journal of

marketing management, 12(3), 83-98. Retrieved from

http://ehis.ebscohost.com.ezproxy.ballarat.edu.au/ehost/detail?

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044f3%40sessionmgr112&bdata= JnNpdGU9ZWhvc3Q tbGl2ZQ%3d

%3d#db=bah&AN=13603122

• Cooper, L. (2000). Strategic Marketing Planning for Radically new products. Journal of

Marketing, 64(1), 1-16 Retrieved from

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vid=27&hid=114&sid=450783d6-3ebd-49be-b1c7-370c 1bb0 44f3%

40sessionmgr112&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bah&AN=

2748385

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• Day, G. & Wensley, R. (1983)Marketing theory with strategic orientation. Journal of

Marketing, 47 (4), 79-89. Retrieved from

http://ehis.ebscohost.com.ezproxy.ballarat.edu.au/ehost/detail?

vid=11&hid=114&sid=450783d6-3ebd-49be-b1c7-370c 1bb0 44f3%

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%3d#db=bah&AN=5005088

• Douglas, B. (185). Strategic marketing concepts ad models. Journal of Marketing

Management, 1(2), 157-194. Retrieved from

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%3d#db=bah&AN=13582892

• Klaas, P. (2006). Strategic marketing and the global banking industry: elements of

excellence Journal of Business Strategy, 27 (4), 50-59. Retrieved from

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450783d6-3ebd-49 be-b1c7-370c 1bb0

44f3%40sessionmgr112&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d

%3d#db=bah&AN=22913377

• Marian, C. (1984). Strategic choice and marketing managers: An examination of business

level marketing objectives. Journal of Marketing Research 21(4) 345-359. Retrieved

from http://ehis.ebscohost.com.ezproxy.ballarat.edu.au/ehost/detail?

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vid=9&hid=114&sid=450783d6-3ebd-49be-b1c7-370c 1bb0

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%3d#db=bah&AN=5009442

• McDonald, M. (2006). Strategic Marketing Research: Theory and practice.Marketing

Review, 6(4), 375-418. Retrieved from

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%3d#db=bah&AN=23437289

• McDonald, M. (1996). Strategic marketing planning, Theory, practice and Result

Agenda. Journal of Marketing Management, 12(3), 5-27. Retrieved from

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vid=23&hid=114&sid=450783d6-3ebd-49be-b1c7-370c 1bb0

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%3d#db=bah&AN=5478867

• Rajan, V. (2010). Strategic marketing and marketing strategy: domain, definition,

fundamental issues and foundational premise. Journal of the Academy of Marketing

Science, 38 (2), 119-140. Retrieved from

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vid=5&hid=114&sid=450783d6-3ebd-49be-b1c7370c 1bb0

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• Steve, F., Audrey, G. & David, C. (2005). Strategic marketing and the global banking

industry: elements of excellence. Journal of Strategic Marketing, 13 (2), 81-92. Retrieved

from http://ehis.ebscohost.com.ezproxy.ballarat.edu.au/ehost/detail?

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17018709

• Tony, C. & Whitelock, J. (2007). Relationship marketing in the subsidized arts.. Journal

of Marketing Management, 12 (3), 83-98. Retrieved from

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vid=25&hid=114&sid=450783d6-3ebd-49be-b1c7-370c 1bb0

44f3%40sessionmgr112&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d

%3d#db=bah&AN=24512053

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8. Appendix

• Case – Vector Marketing Corporation. “CUTCO, World’s Finest Cutlery”

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