What if you could have a high-quality kitchen knife that would last forever? Look no further than Cutco. Cutco began manufacturing knives in Olean, New York, in 1949 when two companies, Alcoa Corp. and Case Cutlery, formed a joint venture to begin creating high-quality cutlery. Since then, Cutco has grown to become a nationally recognized brand known for its high-quality, American-made products.

All Cutco knives come with a “Forever Guarantee” where customers can get their knives serviced for free, no matter how long ago the knives were purchased. Cutco knives pass from generation to generation.

Since 1949, Cutco has used a direct sales channel. In 1981, Vector was founded in Philadelphia as the sales division.

It has grown to more than 250 district sales offices. The management team at Vector started as sales representatives.

Sales representatives and managers gain skills needed for their future careers. Cutco’s direct sales force is largely college students looking to make extra money during the summer.

These students learn how to manage their time, how to interface with others, and how to express unique product attributes which set Cutco apart from the competition.

There are two models of direct selling compensation:

multilevel and single-level marketing. Multilevel compensation means direct sellers earn commission from their own sales as well as commissions from those they have recruited and trained. In the case of Cutco, it uses a single-level method of compensation. This means that the sales representatives only earn a commission on the sales they make themselves and they do not recruit other sales representatives.

While the driver of the Cutco distribution model is direct selling, it has begun to experiment with different sales methods. Cutco has opened 16 retail locations since 2005 in order to give existing customers a place to service their knives while allowing potential customers a place to view and handle its products. These stores are focused on giving a “Cutco experience” where customers can try out knives,

take classes on cooking, floral arrangements, gardening, and more. These Cutco stores also offer more than 100 kinds of kitchen cutlery products in addition to its knives. On the shelves in one of Cutco’s retail stores, you might find utensils,

kitchen shears, flatware, cookware, and a full line of sporting knives. maintain long-term relationships with customers. Because the sales force for Cutco is mainly college students who stop selling after a year or two, it is easy for customers to lose contact with Cutco. Through its retail stores, Cutco maintains better customer relationships and a very visible presence on the retail front.

In addition to opening retail stores, Cutco now sells its products online, directly to customers. Cutco has also entered into a relationship with Costco Warehouse where the Cutco product is being sold in its roadshow program.

These alternative distribution initiatives that Cutco has implemented allow consumers to have more exposure to Cutco products and are governed in a way to work synergistically with Cutco’s direct sales model.

Cutco is proud of its history and heritage as an American knife manufacturer. Quality and fair treatment of employees and the community are, first and foremost, the priorities for the company. Cutco’s knives are made from high-quality materials. Its blades are made from a high-carbon stainless steel, which goes through a three-stage heat treatment process to ensure that blades can take a sharp edge, maximize their resistance to corrosion, and won’t snap under pressure.

All knives have “full-tang construction,” which means that the blade’s metal extends all the way through the handle of the knife to create stability. The handles are made from an acetal copolymer thermo-resin, which gives the handles high strength, toughness, and resistance to abrasion. Rivets that hold the handle together are made of a nickel-silver alloy that doesn’t expand or contract from heat. This process creates a high-quality knife that is built to last. However,

wear and tear is inevitable, so customers can get their knives serviced at any time.

Cutco is now one of the few American cutlery companies to keep its manufacturing in the United States. Cutco’s American-made commitment has not always been easy to abide by. After the company entered the flatware business,

its American supplier went bankrupt and closed down its operations. All other flatware manufacturing was outside of the United States. In order to uphold its commitment to American-made knives, Cutco purchased the fabricating equipment for its stainless table knives and insourced the product into its own factory in Olean, New York. That is an unparalleled commitment to American jobs and American-made.

Cutco believes in social responsibility and making a positive difference, particularly in its hometown community.

The Cutco Foundation was founded in 1996 with the mission to contribute to the growth and betterment of the Olean community. The foundation focuses its charitable work in the areas of education, quality of life improvement,

and support of key organizations. The foundation supports many organizations, from the local hospital and university to the small nonprofits that make a difference for the less fortunate. For more than 20 years, employees at Cutco have volunteered hundreds of hours annually during the holiday season to support the Red Kettle Campaign for the Salvation Army. Cutco employees also participate in an annual toy drive for underprivileged children, an annual food drive for the local food pantries, and various charity walks.

Thanks to Cutco’s high-quality products and unique business mode, it is a nationally recognized brand for cutlery that is synonymous with quality. Cutco continues to expand its product offerings and has begun complementing its direct sales distribution with retail and internet sales.

Even with its marketing strategy evolving, the high quality of knives and its commitment to direct sales has remained constant since Cutco began in 1949.46

Questions for Discussion

1. How has Cutco used quality to differentiate its products?
2. How does Cutco add value to its products through the “Forever Guarantee”?
3. Does the direct selling channel help position Cutco’s high-quality knives in the marketplace?