Cutco Case Strengths÷ Products can be purchased individually or as a package.÷ 20-cutlery items account for 60% of sales.÷ Prices have increased 5% every other year.÷ Every product has lifetime guarantee and free product sharpening.÷ Alcas acquired Vector Marketing to re-create nationwide in-house Cutco sales and marketing infrastructure.÷ Expanded internationally in 1990 to Canada.÷ Cutco International operating margin was 2.5% in 1991.÷ Vector employs promotional activities, events and competition to increase corporate revenues and motivate sales representatives.÷ No door to door selling. First sales are to representative?s parents, relatives or friends.÷ 4.4M customers have been added to Vector?s database of customers.÷ All representatives are commissioned based.÷ Catalog operating margins are 15% Opportunities÷ Web users in the U.S. are male 35-54 with average income of $50K.÷ U.S households are expected to grow 1.1% until 2010.÷ Consumer prices have been stabile, but rising at a rate of 3.0% per year.÷ Predictions for web purchases are to increase exponentially in the next few years.
Weaknesses÷ Sales reps are college student who sell Cutco during their summer vacations.÷ Commissions are given to area representative and Manager when purchased through a catalog.÷ Web costs range from $200K ? 500K.÷ Vector consumers prefer to order from web site.÷ Cutco has always marketed through direct selling.÷ Majority of sales are between May & August.÷ Top 500 sales reps earn $5,500= $2,750,000÷ Only 97K orders are received from 2.8M mailed catalogs.÷ Web selling is not a Cutco core competency. Threats÷ Competition markets through department stores and mass merchandisers.÷ Direct selling industry is relatively unknown.÷ Direct selling firms do little advertising.÷ Direct selling firms are small, privately owned firms and operated by entrepreneurs.÷ Most direct selling firms web sites are limited to customer service and contact information.÷ Henckels cutlery offers 30% less on web site than retail list price.÷...