Cutco Co - Educational Q&A Site

Cutco Co

This activity is important because, as a manager, you must be able to understand the decision of which foreign markets to enter, when to enter them, and on what scale. In addition, managers need to recognize the advantages and drawbacks of each market entry mode. The goal of this exercise is to demonstrate your understanding of market entry decisions: which markets to enter, the timing of entry, and the scale of entry. Read the case below and answer the questions that follow.

The name Cutco comes from "Cooking UTensils COmpany," a name once owned by Alcoa. Alcoa is a U.S. company now concentrating on work with lightweight metals and advanced manufacturing techniques. Together with W. R. Case & Sons Cutlery Company, Alcoa created the joint venture Alcas Corporation in 1949, which subsequently became Cutco Corporation in 2009.

Cutco Corporation includes the wholly owned subsidiaries Vector Marketing Corporation, which it acquired in 1985, and Cutco Cutlery Corporation. Vector Marketing is the U.S.-based sales arm of Cutco Corporation, which is headquartered in Olean, New York. More than 700 manufacturing and administrative employees work at the Olean location. Cutco is now the largest manufacturer of high-quality kitchen cutlery in the United States and Canada. The product line includes kitchen knives and utensils, shears, flatware, cookware, and sporting knives.

Look around your house and your friends' houses, and you are likely to see one of their well-known blocks of knives in the kitchen! The price for one of the blocks with a dozen or so knives ranges from about $100 to upwards of a couple of thousand dollars. Some 16 million people have bought Cutco knives. Originally, Cutco was created as a product for Wear-Ever Aluminum (a company focused on cookware), which at the time was a division of Alcoa. Cutco evolved from there, eventually adding its signature Wedge-Lock handle and Double-D recessed edge on some of its knives.

Two things that have never changed are Cutco's commitment to fine craftsmanship and the Forever Guarantee. The guarantee means what it implies—that Cutco stands behind its knives' performance and sharpness forever. They also have a forever guarantee of replacing their knives for any misuse or abuse at half the cost. Cutco, as it operates today, was formed in 1982 following a management buyout that took the company private. It was a strategic move that secured the company's future for generations. In 1985, Vector Marketing Corporation became the exclusive marketer of Cutco products directly to consumers via sales representatives throughout the U.S. and Canada. The international marketing is managed by Cutco International Inc. Its annual worldwide sales are approximately $200 million, mainly in North America. The product line includes over 100 choices, including kitchen utensils, gadgets, flatware, sporting and pocket knives, and garden tools.

Cutco employs a direct selling model, particularly in the U.S. and Canada, where Vector Marketing employs mainly college students to sell directly to consumers. This sales strategy emphasizes personal engagement, flexible schedules, and an emphasis on quality and service. Internationally, however, sales are managed through independent representatives in Australia, Costa Rica, Germany, South Korea, and the UK, with independent offices or arrangements that operate outside a unified brand structure. This diverse approach creates a complex branding landscape, which can be confusing for customers—particularly because sales are often attributed to Vector Marketing, which is just one sales channel of the broader Cutco brand. Therefore, if Cutco were to expand into a new international market, strategic branding decisions would be critical to establish a clear, cohesive brand identity that resonates locally while maintaining the brand’s core values and reputation.

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When expanding into a new international market, Cutco must carefully consider its branding strategy to ensure clarity, consistency, and resonance with local consumers. Given the company’s complex branding structure—where “Cutco” is associated with multiple corporate entities, and where sales channels vary internationally—an effective branding approach should aim to streamline perceptions and reinforce the premium quality and warranty aspects of the brand. This essay explores the optimal branding structure for Cutco’s entry into a new international market, analyzing various international branding strategies and their implications.

One of the primary considerations in international branding is whether to adopt a “branded house” or a “house of brands” approach. A “branded house” strategy involves emphasizing the master brand—“Cutco”—with sub-brands or product lines under a unified brand identity. This approach can enhance brand recognition and trust, especially given Cutco’s reputation for high-quality craftsmanship and the Forever Guarantee. Conversely, a “house of brands” approach involves creating distinct identities for each product line or market, which might be suitable if consumer preferences differ significantly across markets.

Given the premium positioning of Cutco’s knives and its reputation for quality and lifetime guarantees, adopting a “branded house” strategy would be advantageous. This would involve positioning Cutco’s name as a symbol of durability and excellence worldwide. The branding should emphasize the core values of craftsmanship, the Forever Guarantee, and the company’s American heritage—attributes that appeal universally to consumers seeking premium kitchenware. This central brand image can be reinforced through consistent messaging, packaging, and promotional campaigns in the new market.

Furthermore, the company should consider local cultural nuances when positioning its brand internationally. For instance, emphasizing craftsmanship and durability can resonate well across many cultures, but specific appeals, such as environmental sustainability or innovation, may be tailored to local preferences. The branding communication should highlight these core values in ways that align with consumer expectations—for example, emphasizing the sustainable sourcing or eco-friendly manufacturing processes if such qualities are valued locally.

Regarding the sales channels, Cutco should evaluate whether to employ a direct selling model similar to its U.S. operations or partner with local distributors and retailers. While direct sales through representatives foster personal engagement and emphasize the company’s unique guarantees, this model might be less effective in markets where direct selling or door-to-door approaches are culturally less acceptable. In such cases, establishing a hybrid model—combining online marketing, retail partnerships, and local representatives—could broaden reach and brand visibility.

To further strengthen its branding, Cutco should also develop a localized marketing campaign that leverages digital platforms and social media to educate consumers about the product quality, the lifetime guarantee, and the brand’s American heritage. Influencer collaborations, testimonials, and demonstration videos can effectively communicate the value proposition and build trust in the new market.

In conclusion, for international market entry, Cutco should adopt a “branded house” strategy centered on strengthening its core brand attributes—quality, lifetime guarantee, and American craftsmanship—while tailoring marketing messages to local cultural preferences. Clear branding will help eliminate consumer confusion, particularly regarding the different sales entities and channels. By focusing on consistent brand messaging and adaptable sales and marketing strategies, Cutco can successfully establish itself as a premier kitchenware brand in new international markets, ensuring sustainable growth and brand loyalty.

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