The analysis that follows is based upon the Harvard Business School Case Study “Callaway Golf Company” (9-501-019), revised September 26, 2005. Unless otherwise noted, all data referenced herein refers to HBS Case Number 9-501-019.
In the case of Callaway Golf Company (CGC), the corporation enjoyed years of success and popularity in the golfing community by understanding its consumer base: golfers believed that a more expensive golf club signified higher quality, better performance, and greater status. Although CGC targeted amateurs seeking to improve their game at nearly any cost, by 1998, 69% of professional golfers sought CGC clubs as the revolutionary tool of the trade. Despite an inevitable decline in sales as CGC neared the upper limits of its pricing range, CGC gleaned profound profits by entering a price-elastic market and offering avant-garde products. As shown in Exhibit 1, CGC can continue to increase profitability and brand awareness by adjusting production and marketing methods.
In terms of market mapping and subsequent positioning, CGC did not opt to sell technologically-advanced golf clubs to those already able to afford it. Similarly, the company did not price clubs so amateurs could afford them. In the words of CGC’s Ely Callaway, the company chose to make superior clubs for amateurs and sell them at premium prices. Essentially, less-skilled players would pay dearly to have a competitive edge, but they must be skilled enough to be savvy about golf, reliant upon the advice of retailers who could recommend forgiving clubs, and willing to compete with the lifestyle status of their golfing friends by investing in CGC clubs. CGC responded to this particular segment with various, revolutionary club designs. CGC market research noted that average golfers using irons would not be a good source for residual sales, as iron purchases occurred once every decade. On the other hand, if golfers were too new to the sport, they...
Please join StudyMode to read the full document