Callaway Golf Company

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Callaway Golf Company (CGC) Harvard Business School Case Study Ely Callaway had a vision, “If we make a truly more satisfying product for the average golfer, not the professionals, and make it pleasingly different from the competition, the company would be successful” (Lal & Prescott, 2011, p. 1). Key factors that led to Callaway’s success included his vision, his understanding of consumer behavior, his product variety, and his ability to build a premium brand. Furthermore, the company’s relationship with its retail partners, the company’s new product development, and the company’s marketing strategy were key contributors to Callaway Golf Company’s success between 1988 and 1997. Callaway understood the competitive nature of the game and the competitive nature of the consumers. Golfers were consumers driven by social factors such as reference groups. According to Kotler and Keller (2009), “Reference groups consist of all groups that have a direct (face-to-face) or indirect influence on a person’s attitude or behavior” (p.78). Reference groups expose people to new behaviors and lifestyles, influence attitudes and self-concepts, and create pressures for conformity that affect product and brand choices. Because Callaway understood the behaviors of his target market, he was able to strategically introduce new products that offered more satisfaction than the former products. With product modification, managers try to stimulate sales by improving quality, features, and style (p.185). Callaway understood each product’s life cycle and introduced new products every two years. He discovered that after two years, the sales and prices typically declined (Lal and Prescott, 2000, p.4), causing him to continually make his own products obsolete. However, this business process solidified the consumer’s expectation that Callaway Golf Company would always deliver a high quality product, a value-delivery system successfully established by the company. The...
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