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Will the Golf Industry continue to Decline ?

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Questions What are the external factors ... USGA regulations have caused a decrease in technological ... Pest Porter s 5 forces Two Major U.S ... – PowerPoint PPT presentation

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Date added: 18 June 2020
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Title: Will the Golf Industry continue to Decline ?


1
Will the Golf Industry continue to Decline ?
  • AA

2
Questions
  • What are the external factors affecting the
    industry?
  • What companies are in a strong position? Why?
  • What part of the industry is the ideal place to
    be?
  • Where have companies failed so far?
  • What companies bought out other companies and was
    it a good decision?
  • Where is the money made in the industry?
  • Who are the industrys target market?
  • Who has the power in the industry? Suppliers?
    Retail channels? Manufacturer?

3
What are the external factors affecting the
industry?
  • USGA regulations have caused a decrease in
    technological innovations
  • As a result, golf equipment manufacturers became
    stifled in their abilities to pursue
    innovation-based strategies directed at making
    golf easier to play for those of modest talent.
  • Decrease in the numbers of golfers playing the
    game
  • The number of rounds of golf being played has
    been steadily declining

4
What companies are in a strong position? Why?
  • Callaway- Before USGA regulations, Callaway was
    the industry leader in terms of technological
    innovations. Big Bertha Driver is the number one
    selling driver
  • Fortune Brand- Their Titelist Pro V1 golf ball
    captures 40 of the ball market. While their
    FootJoy brand led the industy in accessories
  • TaylorMade- Leading seller of hybrid clubs and
    second behind Callaway in drivers.
  • Ping- Industry leader in the iron segment
    fighting for the position with Callaway.
  • Nike- Signed Tiger Woods to an endorsement deal
    to help sell Nike apparel. Nike golf balls gained
    10 of the market share.

5
What part of the industry is the ideal place to
be?
  • Drivers
  • See Slide 16

6
Where have companies failed so far?
7
Pest
Political USGA Stifles innovation (drivers, balls, irons) -Threat Weak anti-conterfeiting laws in China- Threat
Economical Golf is very exposure - Threat White dominated sport- Threat Relationship between income (100,000) and participation- Threat or Opportunity China counterfeiting Expensive sport to enter and remain competitive
Sociological Restrictions are making sport less attractive to potential players T.V. exposure and charismatic players increase interest- Opportunity Asian Americans, African Americans, Hispanics- Opportunity
Technological Online sales (legal and illegal)- Threat or Opportunity Ceiling on technological applications- Threat
8
Porters 5 forces
Core Golfer Non-Core Golfer
Threat of substitutes Low High
Intensity of competition High ?
Threat of new entrants Low High
Bargaining power of buyer High High
Bargaining power of supplier High High/Low
9
Two Major U.S. Market Segments
Core Player 1/3 (7.57 million) of total golfers fit into this category. Played at least 8 times per year,averaging 37 rounds per year. 91 of rounds are played by this category. 87 of industry equipment sold, membership fees, and green fees.
Non-Core Player 2/3 (15.13 million) account for this category
10
Major Barriers of Entry to the Sport
Barrier Issue
Cost Equipment cost is high Green fees Accessories (golf shoes, bags, balls)
Health Retired golfers had time, but failing health. Young golfers had health, but no time.
Time Family and job responsibilities Length of time to play a round
Difficulty Disappointing that low scores do not come quickly.
11
Declining Market
Male 20 million 2000 to 16.2 million in 2007 19 decrease
Female 5.8 million in 2002 to 5.1 million in 2007 12 decrease
Junior 2.4 million in 1998 to 1.4 million in 2007 42 decrease
12
Market Demographics
Men account for 71.4
Women account for 22.4
Juniors account for 6.2
African Americans 1.3 Million people
Asian Americans 1.1 Million people
Hispanic American 1.0 Million people
13
Driver regulations
Regulation Effect
1998 USGA Coefficient of restitution (COR) test Rule would defend against any spring like effect that a high-tech driver clubface might deliver.
2006 USGA regulates driver performance Characteristic Time (CT) test The CT test required that the golf ball remain in contact with the face of a driver for 239 microseconds, plus a tolerance of 18 microseconds was considered evidence of a spring like effect and would place a driver on the RAs nonconforming.
2006 USGA Movement of Inertia (MOI) MOI would be limited.
2004 USGA club head size Ruled that driving clubs were not allowed to be larger than 5 inches by 5 inches and could not have a volume of more than 460 cubic centimeters.
14
Ball and Iron/Wedge regulations
Regulation Effect
2005 USGA ball regulation Manufactures were asked to produce balls that would fly 15-25 yards shorter than last year model balls.
2008 USGA Wedge regulation Manufacturers must discontinue producing wedges with sharply squared groove edges on irons and wedges.
15
Effects of Counterfeiting
  • The rise of counterfeiting in the golf equipment
    industry was attributable to the decisions by
    golf executives to source club heads and
    sometimes contract out assembly of golf clubs to
    manufacturers in China.
  • Reverse engineering played a major part in the
    ability of other companies to produce
    counterfeits.
  • In 2003 the six major manufacturers created an
    alliance to identify and pursue both of those who
    made and those who sold counterfeit clubs. In
    2005 a Nike official said that it is increasingly
    hard to prosecute the counterfeit companies
    because they just pack up and move their
    operations somewhere else.
  • In 2008, a set of clubs from a major manufacturer
    cost roughly 2,000. A counterfeit set of clubs
    could cost as little as 150-400.

16
Three phases of the sport
Phase 1 Rich Sport Phase 2 Television induced growth Phase 3Decline


17
Equipment change from 1997-2007

change in Avg. Selling Price change in Units sold change of Retail Value
Drivers -24.68 71.67 29.68
Putters 56.63 -14.12 33.71
Irons -5.33 15.45 4.89
Golf Bags -7.94 4.38 -3.49
Golf Balls 14.54 5.11 20.41
Footwear -5.81 37.90 28.55
Wedges 4.65 37.18 41.42
Gloves 1.88 -8.59 11.61
18
Percent of Market Share
1997 2007 Change
Drivers 28 30 Up 2
Irons 22 20 Down 2
Putters 6 6.5 Up 0.5
Wedges 2.8 3.3 Up 0.5
Golf Balls 19 19 N/A
Footwear 9 9.5 Up 0.5
Gloves 6.5 6 Down 0.5
Bags 7 5.7 Down 1.3
Market size 1997 2,421,400,000 2007
2,911,300,000 20.23 increase
19
Company Strong Points
Calloway TaylorMade Titleist Ping Nike
Drivers X X X X
Putters X
Iron X
Wedges
Golf Balls X
Shoes
Apparel X
20
Competitor Analysis
  • Perceptual map
  • Competitive Rivarly

21
Perceptual Map
Callaway
TaylorMade
Technology Intensity
Titleist/Cobra
PING
NIKE
Price
22
Competitive Rivalry
Product Performance Brand Image Tour Exposure Price Innovations
Callaway High High Moderate High High
TaylorMade/ Adidas High High High Moderate High
Titleist/ Cobra High High High Moderate Moderate
Ping Low Low Moderate Low Low
Nike Low High High Low Low
23
Evaluation of each Company
24
Callaway
  • Strength- Big Bertha driver was the best golf
    product of the century
  • Strength- Good company image- President named the
    most influential golf person
  • Strength- Industry leader in technological
    innovation
  • Strength- Acquisition (Odyssey-good, Top
    Flite-bad)
  • Weakness- Lack of leadership after the CEOs
    passing
  • Weakness- Late to market in regard to new
    products
  • Weakness- Apparel
  • Weakness- Competition in low market share
    categories (putters)

25
TaylorMade/ Adidas
  • Strength- Leader in drivers
  • Strength- Apparel is growing at an increasing
    rate
  • Strength- Leader and first to market hybrid clubs
  • Strength- Heavily endorsed by PGA Tour
  • Strength- Adidas acquisition of TaylorMade
  • Weakness- Competition in Low market share
    categories
  • Weakness- Low market share and respect for their
    golf ball

26
Titleist/ Cobra
  • Strength- FootJoy has 60 market share
  • Strength- Titleist Pro V1 golf balls 40 market
    share
  • Strength- Titleist Vokey forged Wedges 22.5
    market share
  • Strength- Titleist Scotty Cameron Putter 10
    market share
  • Weakness- Titleists iron line of clubs
  • Weakness- Cobra line extension

27
Ping
  • Strength- Pioneer in custom club fitting
  • Strength- Ping was the leader along with Callaway
    in irons 2008
  • Strength- Putter market share
  • Weakness- Were very late to market with a hybrid
    club-2005
  • Weakness- Did not produce a golf ball in 2008

28
Nike
  • Strength- Enormously successful in apparel and
    footwear
  • Strength- Golf ball- 10 market share
  • Strength- Tiger Woods endorsement
  • Weakness- Poor image quality when they entered
    the market
  • Weakness- Golfers didnt like the sound of the
    club striking the ball
  • Weakness- Products sell below retail price

29
  • What are the strengths and weaknesses for the
    industry as a whole.(Critical Success Factors)
  • Past, present, future CSF of the industry

30
Strengths and Weaknesses for the industry
  • Weakness- Technological innovations limited by
    USGA regulations
  • Weakness- Product differentiation became more
    difficult so manufacturers depended on
    endorsement deals
  • Weakness- Manufacturers had to be careful when
    selecting third-party suppliers for parts over
    seas
  • Weakness- Counterfeiting
  • Strength- The ability for companies to acquire
    other companies
  • Strength- Shaft performance, interchangeable
    shafts

31
Recommendations for Each Company
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