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A new approach to segment strategy, distribution, and pricing can help companies win in the evolving cutting-tools market.

Although growth is slow, cutting-tool vendors can capture additional value if they anticipate the changes ahead and adjust their long-term strategies. To assist them, we examined recent market trends, combining research data with insights obtained from interviews with more than 50 executives of cutting-tools companies as well as their major distributors and customers. Our analysis revealed some important dynamics. Overall growth will remain stable, but the customer base will shift as demand for cutting tools rises in some industries and drops in others. All customers will consider a variety of factors when making a purchase, but distributor recommendations will be paramount. We also discovered that companies can unlock value if they revamp their distribution networks and pricing approach, two areas that have often remained unchanged for years out of habit or inertia.

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