Golf Equipment

Topics: Golf, Golf ball, Golf club Pages: 12 (3836 words) Published: February 22, 2011
1. What are the defining characteristics of the golf equipment industry? What is the industry like? Even though golf had grown to be a sizable part of the U.S. economy, the golf equipment industry was faced with serious troubles in 2008. The convergence of a variety of serious hazards to the industry had caused the retail value of the golf equipment industry to decline from approximately $4 billion in 2000 to about $3 billion in 2003. Golf equipment sales had rebounded to an estimated $3.8 billion in 2007, but many threats to the industry continued to exist. The number of golfers in the United States had declined from 27.5 million in 1998 to 22.7 million in 2007. The number of rounds of golf played in the United States also had not grown since 2000 and had declined by 2.2 percent during the first six month of 2008. In addition, golf equipment manufacturers had become stifled in their abilities to pursue innovation-based strategies directed at making golf easier to play for those of modest talent.

2. What is competition like in the golf equipment industry? What competitive forces seem to have the greatest effect on industry attractiveness? What are the competitive weapons that rivals are using to try to outmaneuver one another in the marketplace? Is the pace of rivalry quickening and becoming more intense? Why or why not? What is competition like in the golf equipment industry?

a) Technology Innovation
Beginning in 1998, golf’s governing organizations, the United States Golf Association (USGA) and the Royal & Ancient Golf club (R&A), put a series of new rules in place that limited manufacturers' abilities to develop more forgiving golf equipment. Manufacturers struggle to differentiate their products when everyone has the same technological limitations. The competition between the top leaders in most golf equipment categories has become intense. Competitive rivalry in the golf equipment industry centered on technology innovations as allowed by the USGA and R&A. USGA rules allow less technologically advanced manufacturers to catch up with the industry leaders. With the major brands having met the regulated limits, innovation is focused on increased launch angles and adjustable features. Major brands are choosing to not go beyond the regulation specs. Technological innovation is included the research and development that companies require to reserve a large amount of budget to gain the competitive advantage.

Company| Innovation|
Callaway Golf | * Drivers: 4 lines incl. Big Bertha * Putters: Odyssey and premium black series * Irons: X series , Bertha, Hogan, Top Flite * Other: Fairway woods, hybrids, footwear, balls | TaylorMade-adidas Golf| * Drivers, hybrids, woods, Irons: r7 and Burner lines * Putters: 11 models| Titleist/Cobra Golf| * Drivers, Woods, Hybrids, Irons: Titleist and Cobra * Putters: Cameron and Cobra | Ping Golf| * Irons: 4 lines * Putters: Large line including premium offerings * Drivers, Hybrid Woods: G10 and Rapture| Nike Golf| * Clubs, balls, and apparel|

b) Brand Image and Endorsement

Product differentiation become more difficult to achieve in golf equipment industry makes marketing and endorsements become vital. Golf club manufacturers have to rely more on endorsements from touring professionals to enhance their image with customers. The endorsement fee of PGA tour’s top 10 golfer are between $250,000 to $400,000 in the late 1990’s and had been raised up to $4 million in 2007. The endorsement fee will directly lower the profitability of the company. However, the needs of brand enhancement force them to spend for this expense.

Company | Detail|
Callaway Golf | 12 endorsement contract with staff professional, 7 endorsement contract with professional.| TaylorMade-adidas Golf| 70 endorsement contract for driver, 11 endorsement contract for clubs and apparel, 40 limited contract|...
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