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Cutco

In: Business and Management

Submitted By ANDYINAUSTIN
Words 12247
Pages 49
2/22/2016

Collection – 55001.201602

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CUTCO Discussion ­ Anna Knowles Posted Date:
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RE: CUTCO Discussion ­ Anna Knowles
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Morgan Whitaker

February 22, 2016 8:10 PM
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How do you think utilizing other sales methods will impact the direct sales? Do you think there is a large chance of cannibalization? If so, how can CUTCO avoid that? Pampered Chef offered its products for sale at Target in the past, but since the independent sales people build their own businesses and their incomes from sales of the same products, most of them were extremely upset with Pampered Chef, because they were essentially taking money right out of their sales' people's pockets. Pampered Chef ended up pulling its products and reverting to direct sales.
Do you think the risk of upsetting and/or cannibalizing the direct sales force is worth the increase in revenues that would be realized by selling through other channels?
What are some of your ideas for an approach that would allow CUTCO to capture that untapped revenue without negatively impacting its direct sales?

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CUTCO analysis
CUTCO analysis

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February 22, 2016 8:05 PM
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Ivan Martinez

1. I personally cannot recall buying a product though a direct selling method. But one

of my aunts sells Princess House cookware directly. She began selling soon after she attended a selling party she was invited to, and has been selling for a few years. I have gone to a few of her sales parties and the technique she uses the most is social and demonstration. She will gather friends and people interested in the cookware at homes or restaurants and pitch the product to them. She uses the demonstration as the key to selling the product. She will have lasagna come out of the oven, feed everyone, and then simply wipe the pan clean with little to no effort. http://bb9.tamucc.edu/webapps/discussionboard/do/message?action=collectPrint&forum_id=_114755_1&nav=group_forum&group_id=_38628_1&conf_id=_8… 1/27

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This demonstration is what sells the product, not the actual sells person but the abilities of the product.
2. One of the biggest factors to consider when evaluation possible “growth drivers” is

the state of the economy in each of the geographical regions that they are operating in. While Detroit is a larger city and one that many people who would like to buy the products, the economical state of the city is such that any expansion would not be fruitful. With low incomes and the targeted consumer being more affluent this specific city would not be a good area for expansion. Also when considering growth drivers, marketers should consider the potential for sustained sales in that particular geographical area.
3. When using a company sales force there is a lot more that goes into having

seasonal sales staff. There are employment and insurance regulations that they must follow, the current method of operation allows for the most flexibility and gives CUTCO greater control over the direct selling team.
4. The company has is capitalizing on social media, many people use social media

to keep up with people and areas of interest. If a previous or potential buyer of
CUTCO products likes or follows the company, they can keep up with company activities and promotion. As the case mentioned, sales representatives use social media sites like face book to keep up with their clients and share promotions with them. I believe that a subtle and not overwhelming presence on social media is effective and keeps the product fresh on the minds of consumers while not bombarding them with tiring ads
5. Out of the five options that were presented in the case to grow sales and the

brand, I believe that the best option would be to focus on CUTCO brand recognition. Currently CUTCO is maintaining strong sales and has a good reputation behind its name, that being said, before this case I had never heard of them. Now that I am aware of the product, I will probably look into getting a set for my wife as birthday gift. Had I not read this case, I would have never known that http://bb9.tamucc.edu/webapps/discussionboard/do/message?action=collectPrint&forum_id=_114755_1&nav=group_forum&group_id=_38628_1&conf_id=_8… 2/27

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CUTCO existed. I am sure that there are millions more like me out there, people who are willing to buy the product but just don’t know that the product exists.
CUTCO needs heavily promote the brand to be able to take full advantage of their market potential. They need to focus on brand recognition, making consumers aware that the make these amazing products. A way of doing this may be through endorsements though cooking show celebrities.
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CUTCO Case Discussion
RE: CUTCO Case Discussion

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February 22, 2016 8:03 PM
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Rawley Webber

James,
While I did not pick supplemental sales channels as my strategic option, I do think it is an evolving part of
CUTCO's business. When I read the case, I was actually blown away that there wasn't an online option for purchase already. I think a lot of people would have a similar reaction to the article, and that is because consumers are now conditioned to be able to buy anything they want, from toiletries to groceries (in some cases) online. Unfortunately for CUTCO, their priciple channel may one day be at odds with online sales. It is a very unique challenge. I agree that that it could be a small investment, with almost an unbounded sales potential. Additionally, low risk was a part of my decision process in selecting a strategic option. It is important for companies to consider the risk of a failed campaign. I enjoyed your analysis!

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CUTCO analysis
CUTCO analysis

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February 22, 2016 7:56 PM
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Rawley Webber

Direct­selling today
1. Have you or someone in your household purchased products from CUTCO or another company using direct­selling? If so, which company and what approach was used? Overall, what was your experience? Although it has been many years ago, my mother bought me encyclopedias from a direct­selling source.
With the popularity and ease of the internet, this notion probably sounds pretty strange. However, I ended up getting a lot of use out of the encyclopedias. Like CUTCO, these books were sold by college students http://bb9.tamucc.edu/webapps/discussionboard/do/message?action=collectPrint&forum_id=_114755_1&nav=group_forum&group_id=_38628_1&conf_id=_8… 3/27

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during the summer. However, unlike CUTCO, they were sold door­to­door and not by appointment. The key to the sale was that the salesman offered to follow up with me and show me how to use the encyclopedias.
In home demonstration is core to CUTCO’s success. I think it is a feature of direct­selling that makes it unique. Salesmen connect with customers in their home and show them how to use the products in everyday life. I know that the demonstration was very helpful for me, and made using the encyclopedias very easy and practical. Situation analysis
2. What environmental factors should be considered when evaluating the possible “growth drivers”? According to the text, environmental opportunities should be viewed through the lens of unmet or changing consumer needs, unsatisfied buyer groups, and new means or technologies for delivering value to prospective buyers. For CUTCO, new technologies for delivering value are important to consider. While the bulk of their business is direct­selling, the text states that customers had an interest in using both the internet and catalogs to view and order products. This is one of the potential drivers. Customers have become accustomed to the ease of internet purchases. Additionally, customers probably feel they “need” to have an online channel for purchase and research of goods, which makes this driver very attractive.
Another potential driver strategy is continued entry into retail sales. This could be considered a new means for delivering value to customers. Foreign markets may contain some unsatisfied buyer groups, however, expansion into international markets has failed to generate any success for CUTCO. Sales force structure
3. What role do the “growth drivers” play in the decision to use independent contractors rather than a company sales force? CUTCO has focused on these “Growth Drivers” to move their product forward. The second phase growth driver of the company was consolidating the independent entities of the company. CUTCO eventually utilized a national sales force consisting of college students. As a result, their workforce and selling periods became seasonal. Therefore, the independent contractor system allowed for ease in utilizing college students, who are described as intelligent, trainable, and present well. The independent contractor system facilitates the sales commission method that allows sales representatives to choose their level of sales, and thus their level of compensation. When one of your growth drivers is a sales force made up of seasonal employees, who may not return from year to year, flexibility is crucial. The independent contractor system is conducive to flexibility. Social Media Marketing
4. How the company monetizes its social media presence? Do you think it is effective? Why or why not? The text states that social media is an active facet of Vector Marketing and CUTCO. Recipes are shared, products are praised, and tips are offered. Social media allows sales representatives to connect with customers and potential customers in their online space. The text states that social media has created a community for the CUTCO products. This has contributed to direct sales. Consequently, I believe that the social media presence of Vector and CUTCO is highly effective. When independent contractors are acting on their own in this space to generate sales, one must assume the company has extremely minimal costs.
The hiring of a PR person to maintain the core social media sites might be the only expense for the company. From a return on investment perspective, this online community is perfect for direct­selling and commission­based sales representatives. Customers feel that they are being reached in this space, but the products are visible on social media, and so are the sales representatives and their efforts. http://bb9.tamucc.edu/webapps/discussionboard/do/message?action=collectPrint&forum_id=_114755_1&nav=group_forum&group_id=_38628_1&conf_id=_8… 4/27

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Strategic options
5. CUTCO executives narrowed down the strategic options to five. In your view, which approach is better designed to meet the needs of marketing management? Explain your answer. I believe that investing in increased CUTCO Brand Recognition is the strategic option that is designed to meet the needs of marketing management. CUTCO and Vector Marketing have no formal mass­marketing, according to the text. However, there is brand equity behind the CUTCO name, and the sales force of college students has credibility. The company has built their business around demonstration and word of mouth. The text states that one staff member suggested that minimal public relations expenditures could generate sales worth up to ten times the value of the advertising expense. This strategy requires the least investment with a high degree of potential return. Furthermore, it does not require much commitment and produces measureable results. The company could evaluate the efforts and phase the strategy out with ease, if need be. I believe that most marketing managers would jump at an opportunity like this.

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CUTCO Case Discussion
RE: CUTCO Case Discussion

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February 22, 2016 7:46 PM
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Morgan Whitaker

I think CUTCO is in a unique situation. If you look at the prevalence of Amazon, especially for Prime members, you can get anything within days and never leave your home. I live in Hawaii and because of the cost of shipping, Prime is a huge hit out here. We buy stuff on Amazon at least a few times a month. So the convenience factor of ordering online is definitely a huge benefit. However, direct selling is CUTCO's lifeblood. If the company did anything to undermine direct sales and directly negatively impact its contractor sales force, it risks losing the driving force behind the large majority of its sales. I think having a website for product information is a great start. The best way to allow a customer that is not in contact with a sales rep to conveniently access a rep, the company should have a simple online form for the potential customer to fill out, and then give those leads to its sales reps based on some qualifying criterion (sales, number of units sold, etc). This would at least allow CUTCO to tap into the potential market that isn't being seen by sales reps or consumers that are adverse to door to door sales (since this would allow them to schedule an appointment rather than feel bombarded), yet it would still employ the talents of its sales force and give them the sales credit. That would be a win­win situation.

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CUTCO ­ Morgan Whitaker
RE: CUTCO ­ Morgan Whitaker

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February 22, 2016 7:25 PM
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Morgan Whitaker

Sorry, I missed the details of the direct purchases we have made. They have primarily been in person
(Avon, Pampered Cheg, 31 Bags), however I am a coach for Beachbody and the large majority of marketing and sales are done through social media with a strong preference toward facebook. http://bb9.tamucc.edu/webapps/discussionboard/do/message?action=collectPrint&forum_id=_114755_1&nav=group_forum&group_id=_38628_1&conf_id=_8… 5/27

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CUTCO ­ Morgan Whitaker
CUTCO ­ Morgan Whitaker

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February 22, 2016 7:22 PM
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Morgan Whitaker

Purchased from CUTCO?
My family and I have not purchased anything from CUTCO, however we have purchased and I do promote for another direct selling company.
Situation Analysis
Past growth drivers have included focusing on the product, consolidation of companies to gain better control of the marketing channel, a focus on recruiting a large number of highly qualified direct sales associates, and investing in people and organization structures to ensure reps are adequately trained and there is a good system in place to manage and fulfill orders.
Looking forward, some relevant environmental factors include the state of the US and
National economies as well as the determination to what degree retail stores cannibalize direct sales.
Sales Force Structure
The recruiting growth driver shows that a good recruiting program resulted in a significant increase in revenue. A direct sales force of independent contractors allows the company to benefit from a highly motivated sales force (paid only on commissions, no salary), as well as avoid fixed overhead costs of paying salaries of an in house sales force. This also allows the company to hedge against a weak economy since they will only pay

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the sales force when actual sales are realized.
Social Media
The company has an effective social media presence in terms of recruiting, but the site is directed at the selling opportunity and gives prospective contractors the ability to ask questions relating to selling. The company should have a social media presence directed at building brand awareness and interacting with the target market in a meaningful way. This would allow them to present the benefits of owning CUTCO products and get the audience involved, building brand loyalty.
Strategic Options
Of the five strategic options to choose from, the best use of resources would be to build brand awareness. With an average expenditure of just $1.5 million and average increased revenues of $15 million annually, building brand awareness is a great investment. A great place to start would be with social media marketing as discussed above. The reasons the other options should be forgone follow:
Recruiting: the company already has a highly effective recruiting practice, and only incremental gains would be realized by devoting more resources to recruiting at this point in time.
International Expansion: with global markets in decline, expansion is a risky move, especially considering past failures in foreign markets.
Selling through Other Channels: this poses too great a risk of negatively affecting direct sales, which are the lifeblood of sales for CUTCO.
Retail Sales: for CUTCO to operate its own stores, this initiative would require a large investment in infrastructure and would depend on there being enough business in the

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immediate area to support the costs of a store that retails Only CUTCO products.
Offering CUTCO through other retailing intermediaries results in the same issue as selling through other channels; it could negatively affect direct sales.
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Case: CUTCO Corporation
RE: Case: CUTCO Corporation

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February 22, 2016 5:18 PM
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Ashley Pool

I think they need to hire individuals within international countries to see what method of sales works best.
The little bit of knowledge I have on China, is that it is more focused on online purchasing rather than door­ to­door selling. There is the possibility of building a storefront to expose the brand and from there, focus in on interent and catalog sales.

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CUTCO Discussion ­ Anna Knowles Posted Date:
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RE: CUTCO Discussion ­ Anna Knowles
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Ashley Pool

February 22, 2016 5:12 PM
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Anna,
I agree that CUTCO should invest in supplementary channels. I would rather purchase products on my own time and in the comfort of my own home, rather than on the spot when a salesperson comes to my door. I also would prefer to research the products on my own rather than make an impulse decision before the salesperson leaves.

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Case: CUTCO Corporation
RE: Case: CUTCO Corporation

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February 22, 2016 5:12 PM
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Monica Briones

Hi Ashley, I foud your international ideas and thoughts very interesting and on point for CUTCO's future expansion. http://bb9.tamucc.edu/webapps/discussionboard/do/message?action=collectPrint&forum_id=_114755_1&nav=group_forum&group_id=_38628_1&conf_id=_8…

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If CUTCO were to put monies into international markets, how would you propose doing so? Would you suggest investing in retail spaces or international trade shows? Or, as you noted, hire an outside firm to push the first phases of international expansion out.
Thanks!
Moni

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CUTCO ­ Group Discussion
RE: CUTCO ­ Group Discussion

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February 22, 2016 5:01 PM
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Monica Briones

Hi Michelle, Yes, safety is my number one concern as I've had a lot of strange people pop by my house trying to sell everything from chocolates to boomerangs! Rgarding your thoughts, I just shared a similar answer to them in my response to Anna, which I've italized below. Overall, I think with each new summer season and fresh college recruits there should be a new set of company sales goals to meet and expand upon throughout the year. Independent representatives should proceed with business as usual, but use
CUTCO's new e­commerce site as a point of purchase option aside from home visits. And if CUTCO incorporates "personal" websites for its sales force, then it will be that much easier for fresh recruits to promote and reap the benefits of potential commission from world wide sales! Gracias, Moni
For example, CUTCO's e­commerce site could showcase a majority of the products and have the capability for customers to find regional sales representatives. BeautyCounter.com is a great example of a company that started with independent sells reps and has grown substantially due to their online and social media flash sales. Their website is filled with beauty tips, products and advocates "finding your sells representative" via zip code: http://join.beautycounter.com/Locate And, if you have a consultant, you may shop from his/her site that is branched off the BeautyCounter.com hub: http://www.beautycounter.com/catherinejones/
A site such as this allows CUTCO to track incoming sales from it's representatives and customers to freely buy products 24/7. I also think this type of e­commerce structure gives sales representatives more legitimacy to thier businesses.

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Case: CUTCO Corporation
Case: CUTCO Corporation

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February 22, 2016 4:59 PM
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Ashley Pool

Direct­selling today http://bb9.tamucc.edu/webapps/discussionboard/do/message?action=collectPrint&forum_id=_114755_1&nav=group_forum&group_id=_38628_1&conf_id=_8… 9/27

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1. Have you or someone in your household purchased products from CUTCO or another company using direct­selling? If so, which company and what approach was used? Overall, what was your experience? ­ I have had experiences with Pampered Chef, Young Living Essential Oils, Mary Kay, and It Works. The encounters that I have had with these companies were mainly with people I already knew. I believe the first three companies have great products that are reasonably priced, but I am not on board with the It Works waist transforming wraps and shakes that are supposed to replace a day’s worth of fruits and vegetables. My experiences were basically the same for all (parties at a hostesses’ house where you are shown all of the products).
My family also had an encounter with Rainbow vacuums that used to be sold door­to­ door several years ago. My parents bought one, as well as well as my grandparents.
I am not a huge fan of direct selling, especially because (in my experiences) at some point, the seller will invite you to join the company and sell that product (thank you pyramid scheme). I either want a product or I don’t. I more so trust what I have heard through word of mouth and reviews on various websites. I can also buy a variation of most of these products at Target or on the internet for less. I, along with most of the US population, lead a very busy lifestyle and do not have the time to sit down and watch a live demonstration on a product.
Situation analysis
2. What environmental factors should be considered when evaluating the possible
“growth drivers”? ­ They will need to create all new selling documents and tactics in order to market in different countries (different languages). They may also be able to create different utensils based on what popular cooking methods may be prominent in certain areas.
The average American does already have a busy schedule and does not have time to watch live demonstrations. On the other hand, they are looking for ways to be more efficient in the kitchen to get a meal on the table in minimal time. Marketing strategies could be focused on showing how these utensils can save time in the kitchen.
Sales force structure
3. What role do the “growth drivers” play in the decision to use independent contractors rather than a company sales force? ­ The possible increase in revenues can be estimated without the cost of hiring new employees. Since all sellers are contracted and only receive commissions as their pay, the contractors are more inclined to sell the products and come up with new ideas to increase profits. There are many incentives that companies provide if they are hiring full time employees. Many companies provide company vehicles, cell phones, laptops, and insurance benefits, but Vector does not have to account for these with their contracted sellers. Social Media Marketing
4. How the company monetizes its social media presence? Do you think it is effective?
Why or why not?
­ The company encourages social media use so contractors can stay close to their customers. Consumers are more likely to buy from someone they know, than from a http://bb9.tamucc.edu/webapps/discussionboard/do/message?action=collectPrint&forum_id=_114755_1&nav=group_forum&group_id=_38628_1&conf_id=_… 10/27

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Collection – 55001.201602 customers. Consumers are more likely to buy from someone they know, than from a stranger. One way they can monetize their social media presence is by the number of inquiries they receive for job opportunities. All individuals hired through social media outlets can be tracked to see how much extra revenue is created by them. Strategic options
5. CUTCO executives narrowed down the strategic options to five. In your view, which approach is better designed to meet the needs of marketing management? Explain your answer. ­I believe the company will be most successful if they further expand into the international markets. They have created significant revenue growth goals that will be hard to meet with simply rebranding their products. Expanding into unsaturated markets seem to have the greatest potential for drastic growth. Direct selling may not be as successful in other countries, as stated in the textbook. Vector and CUTCO need to find business minded individuals and groups in other countries that know what works best there. (Post is Unread)

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CUTCO ­ Group Discussion
RE: CUTCO ­ Group Discussion

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February 22, 2016 4:53 PM
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Whitney Monique Smart

I completely agree with you strategic approach of creating an e­commerce. It IS the 21st century and so many people purchase so many things online. That along would increase revenues exponentially. That way it would be accesible for consumers to purchase at all times. I know alot of people have not heard of
CUTCO at all. So how would they even find a representative to give them a demonstration and to purchase their products if they can't even find a sales rep? They are missing out on so much revenues by not fully utilizing their marketing skills and by not letting people purchase on their website.

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CUTCO case discussion
RE: CUTCO case discussion

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February 22, 2016 4:48 PM
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Whitney Monique Smart

I agree that it is very hard to say no to cute little girl scouts especially when they’re selling delicious cookies for only $5/box!!! I'm not very fond of direct­selling because It puts a lot of pressure on consumers to purchase right then and there. The products are not available at all times. For instance, I was walking out of the grocery store and already spent so much money. When I saw the Girl Scout cookies table, I decided to pass on them at that time. I've been regretting it since because now I keep wishing I had bought some and I unfortunately can't find them. So sad.... But imagine how much more their revenues would increase if the product was available and easily accessible for consumers at all times? http://bb9.tamucc.edu/webapps/discussionboard/do/message?action=collectPrint&forum_id=_114755_1&nav=group_forum&group_id=_38628_1&conf_id=_… 11/27

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I know a lot of people who have not heard of CUTCO. That’s why I’m actually surprised that I own their cutlery. I do think their products are top quality and speak for itself. That’s why they’ve been so successful all these years. But I don’t agree that the best marketing strategy is to expand internationally. I feel like there is still so much opportunity for them in the US to expand because they haven’t exhausted marketing possibilities and could put their products on the shelves in the US which is much less risky and costly than doing so internationally. They could also start selling their products on their website which could really increase their revenues exponentially.That way it would give people time to research and have the product available so when they're ready to purchase they can do so online unlike direct­selling.

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CUTCO ­ Group Discussion
RE: CUTCO ­ Group Discussion

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February 22, 2016 4:44 PM
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Monica Briones

Hi Anna,
Thanks for taking time to read my post. I do not think sales will not drop so long as CUTCO builds a website that promotes all aspects of it's business.
For example, CUTCO's e­commerce site could showcase a majority of the products and have the capability for customers to find regional sales representatives. BeautyCounter.com is a great example of a company that started with independent sells reps and has grown substantially due to their online and social media flash sales. Their website is filled with beauty tips, products and advocates "finding your sells representative" via zip code: http://join.beautycounter.com/Locate And, if you have a consultant, you may shop from his/her site that is branched off the BeautyCounter.com hub: http://www.beautycounter.com/catherinejones/
A site such as this allows CUTCO to track incoming sales from it's representatives and customers to freely buy products 24/7. I also think this type of e­commerce structure gives sales representatives more legitimacy to thier businesses.
Thank you!
Moni

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CUTCO Corporation
CUTCO Corporation

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February 22, 2016 3:03 PM
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Mark Maginnis

Maginnis_case 7 Cutco corporation.docx (148.479 KB)

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Case 7­ Group 3 ­ Jessica Rodriguez
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RE: Case 7­ Group 3 ­ Jessica Rodriguez
Author:
James Brooks

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February 22, 2016 12:03 PM
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Hi Jessica, good case summary. You mentioned you would have preferred to have taken your time researching and purchasing the product online rather than the perceived “pressure” of the direct selling approach. Even if the outcome had been the same via online (i.e. determining the products cost more than you were willing to spend), do you think this could have saved you some time as a consumer? In other words, would you have spent less time online versus the direct sell approach?

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CUTCO/Vector case discussion
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RE: CUTCO/Vector case discussion Status:

February 22, 2016 11:49 AM
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James Brooks

Undoubtedly, the internet recruiting segment should prove to be a useful tool for CUTCO. I also think the internet sales segment should not be totally ignored by the company as so many people these days prefer to shop online. The case stated that previous studies on CUTCO internet sales had no measurable impact on direct sales, but this mix could change if the internet sales segment is enhanced and therefore cut into the direct sales component which will be a major challenge for CUTCO.

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CUTCO/Vector case discussion
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RE: CUTCO/Vector case discussion Status:

February 22, 2016 10:34 AM
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Michele King

Hi Jessica ­ I do think they can continu to be successful with their direct­selling approach, though I do think they need to increase online sales and marketing as well ­ I think a real dilemna is how to keep from cutting into the commissions of the sales people, and i'm not sure how to make that not happen, other than maybe assign a lower commission percentage based on territories or something. I know personally I prefer internet shopping over retail or having someone come into my house (I would seriously just never do this), but I think there are enough people that would appreciate the personal attention and hands­on experience.

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CUTCO ­ Group Discussion
RE: CUTCO ­ Group Discussion

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February 22, 2016 9:58 AM
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Michele King

Monica, good point about selling knives vs makeup! Safety is definitely a concern that needs to be kept in mind. I agree that the compnay needs to utilize online sales and recruitment more fully, which seems to be a goal for them, but how would you propose making sure they're not cutting into the commission for their sales force? I agree that it would make sense in the fall, winter and spring when the student sales force is less active... would be frustrating as a consumer to have the POP link available for some months but not others, though. I also agree that a more interactive website presence will help increase brand awareness, just not sure how to handle online sales without competing for these college kids summer income, which has been the foundation of the sales for CUTCO.

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CUTCO case discussion
CUTCO case discussion

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February 22, 2016 3:44 AM
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Eric Bahra

Have you or someone in your household purchased products from CUTCO or another company using direct­selling? If so, which company and what approach was used? Overall, what was your experience?
I have never purchased any CUTCO products and I don’t know anyone who has. Until this assignment I had never even heard of them. When it comes to purchasing products through the use of direct­selling I have purchased many products. I can’t count the number of girl scout cookies, magazine subscriptions, and candy bars I have purchased from the children of my family and friends. This is an extremely good method of selling junk that I would never have purchased otherwise, but when my friends 7­ year­old daughter asks me to buy girl scout cookies how can I say no? Situation analysis
2. What environmental factors should be considered when evaluating the possible “growth drivers”? when considering possible drivers for growth there are many areas that CUTCO should be aware of.
Demographic changes are the first thing they should be aware of. CUTCO is currently targeting married homeowners with one or more children. The annual income of their customers is $50,000 a year CUTCO considers this demographic to be affluent, but that actually puts their average customer in the middle class when it comes to income. This could be a problem for the company when they believe their target audience to be something they are not. economic and social changes are also important when determining drivers for growth. Today many people are on social media and will generate word of mouth about products and then research the product on their own. This is a great way to build brand awareness that is not very expensive. With our current economic conditions CUTCO should be aware artificially low unemployment rates and stagnant wages when making decisions concerning the growth of their company. Sales force structure
3. What role do the “growth drivers” play in the decision to use independent contractors rather than a company sales force? Currently CUTCO is using a sales force comprised of mainly college students. This method has been successful for them, so I don’t see any reason why they should make drastic changes to something http://bb9.tamucc.edu/webapps/discussionboard/do/message?action=collectPrint&forum_id=_114755_1&nav=group_forum&group_id=_38628_1&conf_id=_… 14/27

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that is not broken. However, they do want to grow their company and they want to expand internationally.
Why not keep doing what has been successful in the U.S. and try selling your product in large department stores in China and Japan? This would give them a better way to compare and contrast both sales methods of their product. They can also contrast and compare labor costs and revenue between using an independent direct sales method versus using retail stores. Social Media Marketing
4. How the company monetizes its social media presence? Do you think it is effective? Why or why not? in order to monetize their social media presence and convert that presence into a monetary reward
CUTCO needs to understand how to communicate with their target audience online. This could prove to highly effective, using Twitter, Facebook, Pinterest, and other similar social networking sites can allow them to gather specific information about their customers wants and needs. This is also a great way to build brand awareness. This way CUTCO’s customers can engage directly with them this two way. communication will build more awareness and increase revenue. This is also a great way to recruit their direct sales representatives. It is also a great way for their direct sales representatives to find customers, book appointments, and maintain a relationship with their customers. Strategic options
5. CUTCO executives narrowed down the strategic options to five. In your view, which approach is better designed to meet the needs of marketing management? Explain your answer. CUTCO, wants to literally double their revenues from $500 million to $1billion dollars. The best way to do this in my opinion is to expand their business internationally. For example, China now has a market that rivals that of the U.S. if they can be as successful their as they are here that would almost double their current revenue. As I have already stated they could try selling their product in large department stores in China. Rather than enter into a new market with a direct sales method which would take a great deal of time and training, not to mention the fact that China may not have the large college sales force that exists in the U.S. Partnering up with a large retail chain which may be the best approach since they will have their pulse on the wants and needs of the consumers in the market that CUTCO does not currently have. Partnering up with a large retail chain saves money on buildings, employees and offices that they will already have in place. Each country has their own unique way of doing things, so they will need experts in those countries that understand the local laws, regulations, culture, and language. This would also help them diversify their customer base their can always be a decline in one market while another market maybe doing quite well. This way they don’t always have to depend on the economy of the
U.S. expanding internationally will also allow CUTCO to protect themselves from their competitors. This is a good defensive move for CUTCO as well.

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CUTCO ­ Group Discussion
RE: CUTCO ­ Group Discussion

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February 21, 2016 9:00 PM
Published

Anna Knowles

I really liked your explanation of how CUTCO is under­utilizing their social media presence. I agree that the best option is for CUTCO to invest in supplemental sales channels (as mentioned in my post). However, something I forgot to consider when I made my post was the effect that adding opportunities to purchase
CUTCO products online would have on the results the salespeople CUTCO already employs are getting. Do you think it will cause their numbers to drop, since it's more convenient to purchase online without having to find a representative? Or will it stay the same, since the type of person that prefers to shop online is probably avoiding door­to­door salespeople anyway? I'm inclined to say it'll stay the same, now that I've http://bb9.tamucc.edu/webapps/discussionboard/do/message?action=collectPrint&forum_id=_114755_1&nav=group_forum&group_id=_38628_1&conf_id=_… 15/27

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thought about it. I don't think the consumer groups will overlap enough to be a problem.

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CUTCO Case Discussion
RE: CUTCO Case Discussion

Posted Date:
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February 21, 2016 8:51 PM
Published

Anna Knowles

Do you think that the opportunity for in­person demonstrations of the product outweighs the convenience of ordering online? I know that a lot of people, myself included, would rather do some research on a product before purchasing instead of making a decision immediately in a direct­selling situation. On the other hand, it can be difficult to come across clear reviews for a product on the internet. I agree with you about the environmental factors and the sales force structure, as well as your opinion of how CUTCO is handling their social media. Increasing brand recognition is a good option, but I'm not sure how much it will help as there is no permanent place (on­ or offline) to purchase their products.

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CUTCO ­ Group Discussion
CUTCO ­ Group Discussion

Posted Date:
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February 21, 2016 7:42 PM
Published

Monica Briones

Have you or someone in your household purchased products from CUTCO or another company using direct­selling? If so, which company and what approach was used? Overall, what was your experience? The only "direct­selling" experience I've ever had was from our local Avon reprsentative. She would maker personalized "beauty" visits at our home and host seasonal product parties at my grandmother's house. At first, these parties were of no interest to me as I too young but once I reach the age of 17, I began to avidly participate. What I remember most was the hands­on­approach of the Avon representative and her deep knoledge of all the products. Upon entering her parties, she'd distribute personalized "goodie bags" and immediately encourage guests to try on products right then and there. We'd then flip through the latest catalog and pick out additional items or make our "wish list" for future purchases. And, if I remember correctly, there was also a bonus system where if your purchased a certain amount of product you'd reach
"pink" status (or something of the sort) and be privi to future discounts. Overall, my experience with Avon was positive and educational; something to look forward to. It definitley left an impact on how I currently choose make­up products and price compare.
What environmental factors should be considered when evaluating the possible “growth drivers”?
In consideration of CUTCO the key environmental factors are economic changes, technology, competitors and physical determents for direct selling. Economic changes are in reference to the actual buyers and their ability to afford CUTCO products. With the average median income of potential customers in flux and a resounding lack of cash flow across America due to economic slumps, CUTCO will have to "push" affordable products as opposed to thier higher end cuttlery packages. Next, with the rise of technology and consumer web shopping, CUTCO will need to highlight the benefits of trying out their products in person as opposed to buying a competitor product "cold" from the internet. Last, weather implications and the safety of CUTCO sales personell as well as their customers, will always demand constant evaluation, because at the end of the day, knives are being sold, which is far more dangerous than make­up. Hence the need for http://bb9.tamucc.edu/webapps/discussionboard/do/message?action=collectPrint&forum_id=_114755_1&nav=group_forum&group_id=_38628_1&conf_id=_… 16/27

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retail or even office space within each sales region to serve as a safe point of sale location for each sales representative and their customer base.
What role do the "growth drivers" play in the decision to use independent contractors rather than a company sales force?
Growth drivers play a huge role in setting up the landscape for future business initiatives to take shape. In an effort to "roll up" and consolidate (CUTCO growth driver number two), CUTCO wisely invested in recruiting and educating independent contractors to sell thier products rather than relying on outside distributors. This business move falls in line with cutting salery overhead costs and at the same time, expanding geographical sales beyond the physical means of their corporate sales team. And because their target recruits are intellegent, college aged students, it makes perfect sense that CUTCO opted to enhance their sales "field tranining" programs as their ROI yields greater growth per year.
How the company monetizes its social media presense? Do you think it is effective? Why or why not? As for monetization, I'm not sure CUTCO or their sales representatives are reaping their full sales potential via social media. Let me explain:
The most valuable aspects of CUTCO and Vector Marketing's social media strategy is that they are used for both brand promotion and independent sales recruitment. What better way to market the flexibility of being a sales representative than through a social atmosphere such as FaceBook and Twitter. Also, the fact that CUTCO has an active FaceBook and Twitter stream, sharing the latest products, only gives more fodder for independent sales representatives to boast over via their personal feeds.
The downside is that neither CUTCO or their sales representatives are providing actual point of purchase
(POP) links for their current customer base or potential customers, foregoing a huge monetization opportunity. Yes, CUTCO corporate can share recipies and positive consumer stories, but one must remember that the attention span of any online consumer or repeat customer is very short. Consumers need easy POPs to save, revisit and ultimately shop from, even at 2am from the comfort of their home.
CUTCO executives narrowed down the strategic options to five. In your view, which approach is better designed to mee the needs of maketing management? Explain your answer.
Given that CUTCO currently holds strong brand recognition and favor amoung its consumers, it would be wise to invest in supplemental sales channels, specifically online, immediately. Direct selling is by far the foundation of CUTCO sales, however it's the 21st century and consumers are online. Therefore offering products for sale via online, or even through flash sale websites, would be a step forward in the evolution of
CUTCO. A full fledged CUTCO e­commerce site would ultimately act as another marketing vehicle,leveraging brand awareness and CUTCO sales potential. More importantly, data gathered from online sales would contribute substantially to yearly company forecasts.

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CUTCO Case Discussion
CUTCO Case Discussion

Posted Date:
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February 21, 2016 1:42 PM
Published

James Brooks

1. Have you or someone in your household purchased products from CUTCO or another company using direct­selling? If so, which company and what approach was used? Overall, what was your experience?

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A few years ago, a direct marketer working for an attic insulation company stopped by our house to give us a small door flyer and briefly discuss the benefits of re­insulating attics, especially those of older houses that still retained the original builder insulation. We already knew that we needed to re­insulate the attic as the original insulation was matted down and our summer AC bills were getting pretty hefty. We had contemplated on a DIY project, but soon realized we were in over our heads when we took into account the equipment we would have to rent (which was never available at the hardware stores) and the time investment that would be necessary. What won us over to this company was the fact that they were offering half price on blown in insulation with the purchase of the attic radiant barrier – which is a silver coating sprayed on the inside of the attic roof to help block radiant heat from the sun. The sales rep convinced us of the energy savings not only associated with the insulation, but the radiant barrier as well.
Not having any experience with this radiant barrier, we were uncertain of its effectiveness; nevertheless, we decided to take them up on their offer. In the summer months, our attic is a good 20­30 degrees cooler and our AC bill has dramatically dropped. Had it not been for the direct marketing, the sales rep, and the discounted offer, we probably would have delayed or not had the radiant barrier installed.
2. What environmental factors should be considered when evaluating the possible “growth drivers”?
When evaluating possible growth drivers, some of the factors that CUTCO should consider are the economy, culture of the target market(s) and competition. These factors can impact the growth drivers in different ways. Obviously, if the economy is in a downturn, in general, CUTCO can expect less consumption of nonessential household items. Understanding the culture of the target market is also important in developing an effective marketing strategy as CUTCO saw with its unsuccessful efforts in
South Korea, Germany, and Australia. It is also an important consideration to understand the competition in the target markets. Such questions as “Is there potential to acquire market share from existing competitors?” and “Do we have the type of product and resources to compete in the target market?” should be addressed before attempting entry into that market segment.
3. What role do the “growth drivers” play in the decision to use independent contractors rather than a company sales force?
The growth divers can play an important role in determining the mix of independent contractors and company sales reps. Typically, independent contractors are solely commissioned based with some exceptions like investment in training and recruiting. In contrast, company sales reps usually include some level of fixed costs above and beyond training which requires a certain sales volume in order to be profitable. Some of these fixed costs may include, but are not limited to, salary, benefits, company cars, etc. http://bb9.tamucc.edu/webapps/discussionboard/do/message?action=collectPrint&forum_id=_114755_1&nav=group_forum&group_id=_38628_1&conf_id=_…

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4. How the company monetizes its social media presence? Do you think it is effective? Why or why not?
CUTCO monetizes its social media presence by building strong social media communities among consumers, sales representatives, and the company brand. It would be expected that most of the social media presence would be aimed at repeat customers who already have CUTCO products, but may be looking for other products or uses as well. A strong social media presence can also help to promote the
“word of mouth” marketing strategy in which existing CUTCO customers recommend their products to new potential customers. CUTCO has an effective social media presence due to the fact that it uses social media as a conduit for recruiting sales reps, product specials, and special sales announcements for consumers. 5. CUTCO executives narrowed down the strategic options to five. In your view, which approach is better designed to meet the needs of marketing management? Explain your answer.
Given the global economic environment and insistence by CUTCO that supplemental sales channels not damage existing direct sales initiatives, it would appear that expansion of the supplemental channels
(catalogs and internet) could provide a sustainable growth rate which would allow CUTCO resources to keep up with consumer demand at the same time needing a relatively small investment relative to total sales. It has been shown from previous research that the CUTCO catalog and internet sales channels did not have a measurable effect on the direct sales force initiatives. During a time of global economic downturn, this may be the best option providing low risk and a steady growth rate for which the company’s resources can keep pace. (Post is Unread)

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CUTCO Discussion ­ Anna Knowles Posted Date:
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RE: CUTCO Discussion ­ Anna Knowles
Author:
Jessica Rodriguez

February 21, 2016 10:14 AM
Published

Anna,
I agree with you about how CUTCO is doing a great job engaging with their consumers through social media. I think the recipee sharing is smart and interactive and even if consumers were not thinking about purchasing a product they may now be inclined to purchase. I think CUTCO should keep their direct­sellng method,since that is what their company has been founded on. However, I agree with you. They need to also find new sales channels to sell through, such as online sales and print catalogs. Especially, since some consumers are not comfortable with the direct sales approach. r, http://bb9.tamucc.edu/webapps/discussionboard/do/message?action=collectPrint&forum_id=_114755_1&nav=group_forum&group_id=_38628_1&conf_id=_…

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Jessica

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CUTCO Discussion ­ Anna Knowles Posted Date:
CUTCO Discussion ­ Anna Knowles Status:

February 21, 2016 9:30 AM
Published

Anna Knowles

Have you or someone in your household purchased products from CUTCO or another company using direct­selling? If so, which company and what approach was used? Overall, what was your experience? Direct selling is defined in the chapter as “face­to­face selling away from a fixed business location”. My family has not purchased products from CUTCO. However, we have purchased some items such as Girl
Scout Cookies and a set of encyclopedias from a company I don't remember. Generally, the approach used was that someone came to our door (no appointment) and had a brief explanation and either a catalog or small sample of the product being sold. Overall, my experience has been fairly neutral, since this type of sale is relatively easy to politely refuse and purchases can be handled immediately if I do want an item.
What environmental factors should be considered when evaluating the possible “growth drivers”?
The most important environmental factor is the salesperson's safety. This concern includes how they will travel (walking, bicycle, car, etc.) and when they will be sent out, with regard to time of day and weather.
Additionally, the average income and other demographic factors will need to be considered when it comes to the product that is being sold.
What role do the “growth drivers” play in the decision to use independent contractors rather than a company sales force?
The company began with the quality of the product as the major growth driver, then consolidating the independent entities selling CUTCO products. The most recent driver has been the Vector College
Recruiting Program, which allows the company to recruit college students as outstanding salespeople due to their intelligence, trainability, and ability to present themselves well. The familiarity the students gain with the company allows them to be more easily recruited to management positions after graduation, which allows CUTCO the opportunity to open more offices.
How the company monetizes its social media presence? Do you think it is effective? Why or why not? CUTCO monetizes its social media presence by tailoring how their Facebook page appears to new visitors so they have an easier time moving around the site and becoming familiar with the company. They maintain an active page, including discussing recipes and techniques. which will keep customers coming back even when they are not actively considering a purchase. Additionally, a social community like the one
CUTCO has built allows customers to connect with local representatives, and allows representatives to discuss how their area is doing specifically.
CUTCO executives narrowed down the strategic options to five. In your view, which approach is better designed to meet the needs of marketing management? Explain your answer.
I think the best approach is to utilize supplementary sales channels. The main problem with direct­selling is that some people feel uncomfortable answering door­to­door salespeople or inviting them into their home and will avoid them as a result. If CUTCO were to release an online and/or print catalog, people who would rather research the products they use can access the information on the Internet and make a purchase from there; print catalogs could be carried by salespeople in the event that a potential customer wants time to think about their purchase. A catalog would serve as a reminder of the benefits of the product and could be handed out along with a salesperson's card so that they will not miss a sale due to indecision on the http://bb9.tamucc.edu/webapps/discussionboard/do/message?action=collectPrint&forum_id=_114755_1&nav=group_forum&group_id=_38628_1&conf_id=_… 20/27

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customer's part.

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Case 7­ Group 3 ­ Jessica Rodriguez
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RE: Case 7­ Group 3 ­ Jessica Rodriguez
Author:
Michele King

Posted Date:
Status:

February 21, 2016 9:11 AM
Published

Jessica, nicely put together summary. I agree that CUTCO needs to focus on expanding demographic markets in their advertising efforts ­ younger people are becomgin more affluent, buying houses, having more expendable income, and in larger cities there is a whole segment of people that are single, upwardly mobile and concerned about quality housewares. The use of online research is under­considered in their current marketing plan, but one of the growth drivers that they were considering was to increase online presence, which would be a good idea ­ the only problem with increasing online sales, and you brought it up in your reply to my assessment as well ­ is how to control the impact of online sales on their commissioned sales force. They had discussed a system where the website had a login of soem type that you needed to obtain from a person/representative, and the commissions for those sales go in a decreased amount to the appropriate sales person.
We agree on many of these thoughts!
Michele

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CUTCO/Vector case discussion
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RE: CUTCO/Vector case discussion Status:

February 20, 2016 3:25 PM
Published

Jessica Rodriguez

Instead of choosing one option, I like how you decided to choose two strategic options that go hand in hand. I think by increasing brand recognition, they will gain new target markets and will have to increase their recruiting efforts to keep up with demand. Which is why, they should be prepared to increase their recruiting efforts and appeal different demographics besides college students and married women. I wonder, do you think this company can continue being successful with their direct­selling approach? I believe, consumer preferences are changing. I’m like you, I enjoy my privacy and do not like feeling obligated to purchase a product. However, I for one would like to see them at more home and garden expos.

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CUTCO/Vector case discussion
CUTCO/Vector case discussion

Posted Date:
Status:

February 20, 2016 9:10 AM
Published

Michele King

CUTCO Corporation Direct­selling today
Have you or someone in your household purchased products from CUTCO or another company using direct­selling? If so, which company and what approach was used? Overall, what was your experience?
I have not purchased any CUTCO products through direct­selling – truthfully, I have never heard of this company before. I have purchased other products through direct sales, however – nutritional supplements through AdvoCare, cooking ware through
Pampered Chef, and I am somewhat embarrassed to admit that I once bought a ridiculously expensive vacuum cleaner from a company that I can’t remember, though I did return that item once I realized how much it was going to cost me! I honestly don’t enjoy having someone come into my home for a demonstration, usually feel pressure to purchase which makes me uncomfortable, and I have more of a tendency to look online for items that interest me – I’ll go to a physical store if I have to, if the product line is confusing online, or if there seems to be a better selection at the physical location.
Otherwise, I do the majority of my shopping online. Situation analysis
What environmental factors should be considered when evaluating the possible
“growth drivers”?
Demographics of the target audience need to be considered – they currently target married homeowners with older children, with an annual income of $50,000 or more, between 40­59 years of age. With improving economic conditions, the potential audience for CUTCO products is expanding – for example, the group of single affluent men and women under 40 would be an interesting market for CUTCO, and they would primarily use the internet for shopping/research. Factors such as population/affluence in possible store locations and the convenience of internet/catalog shopping vs home visits/retail visits need to be considered when assessing supplemental sales channels and retail sales channels. The appeal of direct sales to the college student and the potential for increased earnings to this sales force over standard low paying jobs is an important factor in considering increasing/refining recruiting processes. Sales force structure
What role do the “growth drivers” play in the decision to use independent contractors rather than a company sales force? http://bb9.tamucc.edu/webapps/discussionboard/do/message?action=collectPrint&forum_id=_114755_1&nav=group_forum&group_id=_38628_1&conf_id=_… 22/27

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The choice between continuing to use independent contractors vs. a company sales force comes down to one of labor costs. Vector currently recruits college students and pays them on commissions alone, with the added advantage of having a potential management team once the student graduates and is familiar with the company. By transitioning more fully to a company sales force, they are going to have increased costs in salaries, benefits, and payroll costs associated with this sales force. The current system works for the company, in that motivated, talented individuals are rewarded and encouraged to continue with the company, whereas hiring a company sales force for retail outlets will be more difficult to find quality individuals from the ground up. Social Media Marketing
How does the company monetize its social media presence? Do you think it is effective? Why or why not?
Monetizing is the process of converting the social media presence into a monetary reward. Both Vector and CUTCO use social media to reach customers and recruit sales representatives, which in turn have a direct impact on sales. Both seem to be very effective, with a social media network between customers, sales reps, and management teams. Vector customer social media sites are effectively used for customers to communicate with each other and with the salesperson they work with, and social media sites shared by salespeople allow for them to communicate with their management teams and with each other, forming bonds otherwise not possible due to geographic differences. It would appear that the potential to use social media to impact direct sales has yet to be realized. Strategic options
CUTCO executives narrowed down the strategic options to five. In your view, which approach is better designed to meet the needs of marketing management?
Explain your answer.
I believe two approaches are best designed to meet the needs of marketing management to grow the company revenues to $500 million and $1 billion dollars as their desired goals.
Increasing investment and efforts to improve the recruiting approaches should be a major focus. By identifying quality sales people and retaining them to continue commission sales and transition into district management positions, Vector will continue in their success with minimal direct labor costs. With greater awareness of the potential for income, greater numbers of highly successful sales people will be interested in this opportunity. While the current approach is to target college students, this limits the time frame in which sales occur to summer months. By broadening the scope of internet recruiting, other demographics could be reached that would provide a more year­round sales force. Given that for direct selling in general, the typical direct seller is a married woman and that a significant number of these women participate in direct selling because the use and enjoy the product, this is a completely untapped demographic for commission sales. http://bb9.tamucc.edu/webapps/discussionboard/do/message?action=collectPrint&forum_id=_114755_1&nav=group_forum&group_id=_38628_1&conf_id=_… 23/27

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Increasing brand recognition seems to go hand in hand with the goal to increase recruiting efforts. For the proposed investment of $1 to $2 million dollars, a projected increase in revenues of $10 to $20 million dollars could be realized. This strategy can also be tied into the increased online presence/social media campaign. Given that I personally have never heard of this brand, the potential to increase consumer awareness and brand recognition is obviously possible.

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Case 7­ Group 3 ­ Jessica Rodriguez
Post:
Case 7­ Group 3 ­ Jessica Rodriguez
Author:
Jessica Rodriguez

Posted Date:
Status:

February 19, 2016 8:36 PM
Published

Direct­selling today

1. Have you or someone in your household purchased products from CUTCO or another company using direct­selling? If so, which company and what approach was used? Overall, what was your experience?
I have bought some products from CUTCO such as a knife sharpener and a steaming kit. The transaction was made through direct­selling. In this case, a female coworker set up an appointment, met me at my home and performed demonstrations of the product.
Unfortunately, I returned the steamer after realizing it was just a steamer and not the entire set. I found it to be incredibly overpriced. Honestly, I really did not enjoy having to invite someone into my home. At the moment I committed to the appointment, I felt obligated to buy something. I also had no idea how expensive these products were. I would have preferred to have taken my time researching and purchasing the product online, had it been an option.
Situation analysis

2. What environmental factors should be considered when evaluating the possible “growth drivers”? Some environmental factors to be considered when evaluation possible “growth drivers,” include:
• Social changes­ Most consumers perform research, view advertising, and purchase products, using online forums and websites. Consumers also network with each other and potential sales representatives, generating brand awareness. • Demographic changes­ CUTCO is targeting families with higher incomes and mortgages. Specifically, direct­selling incomes tend to be affluent females 35­54 years of age. CUTCO needs to remember that the millennial generation is starting to buy houses. They should consider what this means for them in terms of revenue and marketing.
• Economic changes­ American’s are spending more money since we have http://bb9.tamucc.edu/webapps/discussionboard/do/message?action=collectPrint&forum_id=_114755_1&nav=group_forum&group_id=_38628_1&conf_id=_… 24/27

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emerged from the recession. Unemployment rates are dropping and wages are increasing. This suggest consumers may have more disposable income and may be eligible to purchase CUTCO products if they were unable to do so in the past due to the economy.
Sales force structure

3. What role do the “growth drivers” play in the decision to use independent contractors rather than a company sales force? The Vector College Recruiting program allowed the company to bring in sales representatives who are intelligent, trainable, and presentable. This recruit process enabled the company to attract more recruits than ever before. In addition, these college students are ideal candidates for management positions after graduating. These large number of qualified managers, would allow for the expansion of offices into other geographical areas. Since most of the sales representative are college students, they typically sell during the summer break to family, friends and neighbors. For CUTCO, having a sales force would be costly. The company would have to pay increased costs to run “branch offices” yearlong versus during the summer. In addition, they would have to pay labor costs to employ this sales team. Currently, independent contractors are paid commission and do not receive a salary from the company.
Social Media Marketing

4. How the company monetizes its social media presence? Do you think it is effective? Why or why not? Thankfully, by having an avid social media presences, CUTCO has not isolated consumers who otherwise may have never heard of their product. CUTCO took their direct­selling approach with a focus on networking and customer relationships and translated it online. Now, they are building an online social community which will correlate with their direct­selling approach. Their social media approach has been effective. They can reach current and potential customers, and recruit sales representatives. Strategic options

5. CUTCO executives narrowed down the strategic options to five. In your view, which approach is better designed to meet the needs of marketing management?
Explain your answer.
To meet the needs of marketing management, CUTCO executive should choose the
CUTCO Brand Recognition strategic option. Increasing brand recognition, is a necessary market component to generate consumer product sales. The company has never used formal mass­market advertising and has done well generating brand recognition and brand preference. Imagine the increase in sales with a little additional expenditure. Marketing staff members have suggested an annual public relations expenditure of $1 to $2 million, could increase annual revenue by as much as $10 to
$20 million.

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CUTCO Case Discussion
CUTCO Case Discussion

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February 19, 2016 1:39 PM
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Whitney Monique Smart

Direct­selling today
1. Have you or someone in your household purchased products from CUTCO or another company using direct­selling? If so, which company and what approach was used? Overall, what was your experience?
Direct selling: face­to­face selling away from a fixed business location. It is a form of non­store retailing.
My family and I have purchased multiple products such as CUTCO cutlery, Avon products, alarm systems, and Girl Scout cookies through direct­selling. My household has purchased CUTCO kitchen cutlery when I was younger. I remember my mom had a
CUTCO representative come to the house and show us the kitchen cutlery and different packages we could purchase them. The price was costly but we were impressed with how well the products worked and the lifetime guarantee and free sharpening services the company offered.
I also remember attending a home demonstration for pots and pans with my mom at her friend’s house for dinner. We didn’t purchase any products at that time but we enjoyed the free dinner.
My current home security system was also through direct­selling from a college student who walked door to door offering promotions. He showed my husband and I the benefits of having Vivint as our security system and the products they offered with the promotion at the time which included a carbon monoxide detector, in­ door video camera, glass shatter detector, doorbell camera, and the home alarm system. We couldn’t resist and ended up purchasing after an hour of talking with them.
I have also purchase from AVON from their catalogs by placing orders through AVON sales reps. Recently,
I purchased their products online and found it was much easier that way.

Situation analysis
2. What environmental factors should be considered when evaluating the possible “growth drivers”?
An obvious environmental factor that needs to be considered is the weather. It’s important for the weather to be bright and sunny, but not extremely hot either. I tend to not want to answer my door especially when it’s gloomy and rainy.
Another environmental factor that is important is the safety of the area. Since sales reps walk door­to­door, you want to make sure your sales representatives are unharmed.

Sales force structure
3. What role do the “growth drivers” play in the decision to use independent contractors rather than a company sales force?
For CUTCO, their growth driver played an important role to recruit college students to sell to consumers directly. They know their sales representatives are presentable, educated, and ready to learn, making the perfect sales representative.

Social Media Marketing
4. How the company monetizes its social media presence? Do you think it is effective? Why or why not? By creating a social media community, the company is monetizing by advertising CUTCO products through recipes, promotions, contests, and best of all through word­of­mouth.

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I think it is somewhat effective to utilize social media, but I don’t think it’s as successful as it could be. It still is not as widely know as AVON or Tupperware products.

Strategic options
5. CUTCO executives narrowed down the strategic options to five. In your view, which approach is better designed to meet the needs of marketing management? Explain your answer.
In my opinion, out of the five strategic options CUTCO chose, the best approach meeting needs of marketing management is to increase brand recognition. It is affordable and has a very high potential to increase annual revenues as much as $10­$20 million. The product line has grown significantly over the last 20 years with no formal mass­marketing advertising. With mass­market advertising, I believe it can really increase revenues considerably.

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