Challenges, problems, and triumphs
-- from a manufacturer's perspective.
Provo Responds to Cricut Critics
Unexpected demand caused problems.
by Mike Hartnett (December 18, 2006)
(Note: CLN has received numerous emails from irate
independent retailers regarding the way Provo Craft has marketed the
Cricut. To hear Provo's side of the story, CLN emailed
questions to Cathy Davis, Provo's Director of Corporate
Communication and Training. Her answers are below. CLN sent
this column to independents who had contacted CLN previously.
Their responses to Provo's answers can be found by clicking on
"Benny Da Buyer" in the left-hand column or click HERE.)
CLN: Is it true you cannot legally prevent a retailer –
chain or independent – from discounting the Cricut or Cuttlebug?
If so, what's the point in having retailers sign a contract
promising not to advertise the discounted price? Have you stopped
selling to any retailers who violated the signed contract?
DAVIS: Provo Craft has unilaterally established a minimum
advertised price policy on specific skus within the Cricut
product line to protect the integrity and image of the brand. To
meet our ongoing intention of protecting the brand, Provo Craft has
put consequences in place for retailers who violate this policy and
enforces those processes unilaterally.
The paperwork that a retailer signs is not a contract nor an
agreement. As our Minimum Advertised Pricing policy is a unilateral
policy and does not allow for an agreement of any kind. However, the
signed paperwork does serve as an acknowledgment that the new Cricut
retailer has read and understood that.
Provo Craft has established this unilateral MAP policy and will
CLN: Some independents claim they have had to wait for their
orders while QVC was selling them. Do you fill orders on a
first-come, first-serve basis or fill the largest orders first? If
there's a delay in filling an order, is the retailer notified?
DAVIS: The demands for the Cricut product line far
exceeded Provo Craft’s initial launching expectations. In many
businesses, when this happens there has to be a determination of how
to best disperse the allotment coming in so that the business is
able to ensure both the stability of the new product line and the
"future" demand for it, while balancing the needs of our
customers as much as possible.
This is a tough balance; but one that Provo Craft takes to heart
and has done so weighing all the considerations of the business
needs during the time demand was exceeding the product availability.
CLN: Are Michaels' stores still allowing consumers to use the
40%-off coupon to buy the Cricut?
DAVIS: Provo Craft does not get involved with the price any
of our retailers choose to sell their products for. Any retailer can
sell the Cricut Personal Electronic Cutter for any price they
deem in their individual business.
Provo Craft does not wish to participate in discussions around
pricing Or have any impact on what a retailer chooses to sell a
The MAP policy is a policy around advertising minimums, not
CLN: I noticed on the Creative Xpress website that the mail
order company is prominently displaying the Cricut for
$249.99, plus 2,000 bonus points. Is that a violation of the
DAVIS: Provo Craft does not issue nor do they sign
"contracts" regarding their Minimum Advertised Price
Policy. The MAP is a policy that has been unilaterally implemented
and enforced. The paperwork that is signed is only an acknowledgment
that the retailer has read our unilateral policy and understands it.
CLN: When Provo agreed to sell to Wal-Mart, did the company
warn independents and explain why?
DAVIS: Provo Craft, like many craft manufacturers, made a
decision to sell product in the mass market. For each mass merchant
the timing of implementation varies. We would want our independent
customers to know that the timing of this was much quicker than we
anticipated. Provo Craft would never wish to cause concern or issue
to any of our customers and appreciates the partnerships we have
CLN: An independent told CLN that at the 2005 Summer
Show, he was told Provo was showing something new – possibly the Cricut?
– in a private area of the booth, but when he walked in, he was
told to leave because the A.C. Moore buyer was coming. Then he
returned three additional times and was told the appointment
schedule was filled. Was that true? Why not show it to everyone?
DAVIS: It would be hard to address any conversation that
may/may not have happened between two unidentified people from 1 1/2
CLN: Like all vendors, Provo sells to the chains for less
than they do for independents because of the chains' buying volume.
What do you suggest independents do to compete?
DAVIS: In many industries, the LSM (Local Store Marketing)
strategy is used and is very effective. It is particularly
successful in the independently owned businesses within those
industries as they are far more equipped to execute the process
within their business format.
We feel strongly about the potential of this process and will be
rolling it out at the CHA Winter show and invite any independent
retailer who would like to learn about it to come by our booth,
CLN: One independent told CLN that she called Provo
and was told that Provo referred consumers who called about
education and tech support to local shops. She wanted to know why
she should help customers with a product with which she's at a
serious price disadvantage. What do you suggest she do?
DAVIS: Provo Craft appreciates and values each and every one
of our customers. We strive to deliver high quality products at
affordable prices to all. Retail is a competitive environment. With
that being said, if a customer walks through the door of a retailer
with any question, that is a great opportunity to win them over as a
future and ongoing customer. A suggestion we would offer, that many
businesses use in other industries, is the process of L.S.M. (Local
Store Marketing) or grass-roots marketing. This is a process of
meeting and exceeding the potential customers’ needs so that they
gain a loyalty to your business and by so doing, turn the curious
into an ongoing customer of your business.
CLN: If Provo could go back in time, would you change
anything about the way the Cricut
was marketed, sold to independents, and sold to chain accounts?
DAVIS: We have learned much from the launch of Cricut
and have already taken many of these learnings into other product
line launch plans of the future.
Provo Craft will continue to look for ways to improve our
processes and enhance our ability to be the vendor
"partner" of choice for each of our retailers.
CLN: Back in May, the Cricut price was raised $15, yet
the suggested retail remained the same. What prompted this decision
DAVIS: As with any product that has the technical nuances and
complexities that the wonderful Cricut product has, it takes
much development and troubleshooting. Many companies find when
developing such products that the cost burdens end up being more
than anticipated while the perceived value of the item, by the
consumer, remains the same. In such cases, it is not uncommon to see
a price adjustment at the wholesale level and not see that same
increase to the MSRP.
CLN: Do you have any specific plans to improve relations with
DAVIS: Provo Craft values each of our independents and
understands the barriers and obstacles they face when looking for
ways to grow both their top and bottom lines. With this being said,
we would like to be partners with each of our customers in assisting
them with tools and ideas
to drive both. Provo Craft is currently working on a LSM program
that will be introduced at the CHA winter show. We feel strongly
about this program as it has been used in other industries for years
and is a great tool for driving year over year sales growth in
independently owned businesses.
We are excited to share this with our independent customers and
know that this will be a wonderful aid to them.
CLN: As a major player in scrapbooking, how does Provo see
the category performing and changing in 2007? What can/should
retailers, vendors, and the industry as a whole do to increase
DAVIS: The first BIG thing we all must do is to look for ways
to bring in "new" curious customers to the industry.
(These can be children, students, working parents – helping a
student with their school project, someone who has never scrapbooked
or paper-crafted before, but is curious.)
Once we have them in our doors (for whatever brought them there),
we must look for each and every opportunity to provide them with an
exciting and memorable experience. We have to learn what they are
looking for and look for ways to exceed their expectations. As we do
this we will turn them from curious to crafter, from crafter to core
crafter, and build the category even further as they begin paper
crafting and then scrapbooking.
(Note: To read retailers' responses to the Davis'
comments, click on "Benny Da Buyer" in the left-hand
column, or click HERE.
To read previous Business-Wise columns, click on the titles in the
right-hand column. To comment on this or any other industry issue,
email CLN at email@example.com.)