PART A

1. Using DECIDE formula, analyze the above case?

Below are steps using DECIDE formula:i)
STEP 1 : Define the problem
- CUTCO Corporation has to decide on how to grow their revenues to at least
$500 million annually in the next 5 years.
ii)
STEP 2 : Enumerate the decision factor
PRODUCT
- Originally consisted of 10 basic product line.
- Now it include more than 500 SKUs (stock-keeping units)
- Homemaker set plus eight.
- 5 piece set of flatware
- 6 serving pieces
- Complimentary line of accessory kitchen product
- Sets (homemaker set plus eight) price starts from $27 to $945.
PRICE
- Increase by 5% every year (2003, 2005, 2007)
PROMOTION
- Direct selling.
- CUTCO cutlery was marketed via wear ever sales force then ALCAS Cutlery
Corporation takes over its marketing activities.
- Distributor : VECTOR Marketing Corporation and CWE Industries
PLACE
- United States of America
- VECTOR organized its sales effort through geographic location.
- United States 6 sales regions (central, Midwest, northwest, eastern, southwest
and western.
- UPS and US Postal service are used to delivered products to customer) .
- Website (online selling)
iii)
iv)

v)

STEP 3 : Consider relevant information

Situational analysis
Industry
Direct selling industry The direct selling industry consist of numerous well
known firms such as AMWAY etc. Customer are affluent, educated, age 35-54,
with an annual income $50,000
- Cutlery / kitchen utensils industry - Competitors are usually found in retail
outlets. German Corporation called Henkels is the top competitor and uses
department stores and mass merchandisers to market their product.
ffda

2. How is CUTCO cutlery marketed?

CUTCO Customers
- CUTCO customers are most likely to be married, affluent homeowners with children.
Customers.
- Typically have household incomes over $50,000 and often over $100,000 in certain
locations, and sixty percent are between 40 and 59 years of age.
- CUTCO estimates that 16 million customers have purchased products since 1949
CUTCO cutlery marketing trough several method:
i)

Direct Marketing
- CUTCOs business model is, and has always been, to market its cutlery through
direct marketing.
- This model requires that products be demonstrated in person, a method that
CUTCO has determined to be highly effective in making a successful sale.
- Vector has harnessed the power of college students to sell
- CUTCO cutlery on a commission-based compensation plan, typically during the
summer months of May through August.
- In 2011, CUTCO received 750,000 orders through direct marketing, with an
operating margin of 7%.

ii)

Internet sales
- Vector Marketing has used the Internet to recruit sales representatives as well as
to promote.
- Vector Marketing has used the Internet to recruit sales representatives as well as
to promote
- CUTCO products. Initially, CUTCO offered only an informational product website,
without the option for visitors to make online purchases.
- CUTCO later expanded the website to provide existing customers the opportunity
to make additional purchases.
- However, CUTCO has maintained the belief that in-person demonstrations are
critical to its brand identity.
- As a result, the company has refrained from offering full online purchasing access
to the general public, in fear that it might alter the sales landscape for its direct
marketers.
- CUTCO has since performed testing to determine whether Website sales interfere
with direct marketing.
- It has concluded through testing that online sales do not affect direct sales
opportunities. In 2011, CUTCO received 56,000 orders from Internet sales, with
an operating margin of 9%.

iii)

Catalogs
- Vector uses catalogs to provide direct sales customers the ability to place orders
throughout the year, rather than just during the summer months.
- Additionally, when an existing customer places an order, his or her original sales
representative still receives a commission.
- In 2011, CUTCO received 120,000 orders from catalogue sales, with an operating
margin of 9%