Cutco Knives
Cutco Knives
Vector Marketing
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 case study will also refer to its competitors and their marketing strategies.
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 Chairman is the 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.
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.
Strengths and weaknesses
The cutlery products are manufactured exclusively by ALCAS Corporation and have been successful in eliminating the 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 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 re then taken to Olean where they are filled. The Southwestern Company uses a similar strategy in selling educational material but there 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 labour 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 the 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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