Cutting Edge Quality: Cutco “Knives for Life”

What if you could have a high quality kitchen knife that wouldlast forever? Look no furtherthan Cutco. Cutco beganmanufacturing knives in Olean, New York in 1949 whenAlcoa Corp and Case Cutlery formed a joint venture to begincreating high quality cutlery. Since then, the company has grown tobecome a nationally recognized brand known for its highquality, American made products.All Cutco knives come with a “Forever Guarantee”that allows customers to havetheir knives serviced for free, regardless ofwhen the knives were purchased, sothe knives can be passed from generation togeneration.

Since 1949, Cutco has used a direct sales channel. In1981, Vector was founded in Philadelphia as the sales division. Ithas grown to over 250 district sales offices. The Vector page396 management team at Vector started as salesrepresentatives. Cutco’s direct sales force, largely collegestudents looking to make extra money during the summer, learn howto manage their time, how to interface with others, and how toexpress unique product attributes which set Cutco apartfrom the competition. There are two models of direct sellingcompensation: multilevel and single level marketing. Multilevelcompensation means direct sellers earn commission from their ownsales as well as commissions from those they have recruited andtrained. Cutco uses a single level method ofcompensation, which means the sales representatives only earn acommission on the sales they make, and they do not recruit othersales representatives.

While the driver of the Cutco distribution model isdirect selling, it has begun to experiment with different salesmethods. For example, Cutco has opened 16retail locations since 2005 in order to give existing customers aplace to service their knives while allowing potentialcustomers a place to view and handle its products. These stores arefocused on giving a “Cutco experience” where customers can tryout knives or take classes on cooking, floralarrangements, gardening, and more. The stores also offer more than100 kinds of kitchen cutlery products in addition toits knives such as utensils, kitchen shears, flatware,cookware, and a full line of sporting knives.

Cutco is proud of its history and heritage as an Americanknife manufacturer. Quality and fair treatment of employees and thecommunity are first and foremost the priorities for thecompany. Cutco’s knife blades are made from a high carbonstainless steel, which goes through a 3-stage heat treatmentprocess to ensure that blades can take a sharp edge, maximizetheir resistance to corrosion, and won’t snap under pressure.All knives have “full-tang construction,” which meansthat the blade’s metal extends all the way through the handle ofthe knife to create stability. The handles are made from an acetalcopolymer thermo-resin, which gives the handles high strength,toughness, and resistance to abrasion. Rivets that hold the handletogether are made of a nickel-silver alloy that doesn’t expand orcontract from heat. This process creates a high quality knife thatis built to last. However, wear and tear is inevitable, socustomers can get their knives serviced at any time.

Cutco, which has manufactured its product in Olean, New Yorksince it was created in 1949, is now one of the few Americancutlery companies to keep manufacturing in the U.S. Cutco’sAmerican made commitment has not always been easy to abide by.After the company entered the flatware business, its Americansupplier went bankrupt and closed down its operation. All otherflatware manufacturing was outside of the United States. In anunparalleled commitment to American jobs andAmerican-made knives, Cutco purchased thefabricating equipment for its stainlesstable knives and insourced the product into its ownfactory in Olean. The company takes pride in the town of Oleanwhere it has around 650 full-time employees. James Stitt, ExecutiveChairman, came to Olean in 1975 to work for Cutco. Hisson, James Stitt, Jr., joined the company in 1997 and is currentlythe President and CEO. Before letting his son take over thecompany, Stitt Sr. ensured that his son remained committed to thetown which relies heavily on Cutco since it employs manyof Olean’s citizens. Corey Wiktor, The Executive Director of theCattaraugus County Industrial Development Agency,described Cutco as “. . . the lifeblood of CattaraugusCounty and the Southern Tier.”

Thanks to Cutco’s high quality products and unique businessmodel, it is a nationally recognized brand for cutlerythat is synonymous with quality. Cutco continues toexpand its product offerings and has begun complimenting its directsales distribution with retail

Questions

• A summary of the case.
• List a series of positive attributes that both the product andthe organization exhibit and that can be marketable.
• Choose at least two traditional promotional strategies (excludedirect sales) and explain why these channels are the best optionsto move the product from a "push" to "pull strategy."
• Choose at least three digital communication channels andexplain how a marketing managing strategies to communicate thebenefits and positive attributes of both the product and thecompany.