Golf Equipment Industry

Topics: Golf, Golf ball, Golf club Pages: 5 (1768 words) Published: October 11, 2012
Case: Competition in the golf equipment Industry

1.What are the defining characteristics of the golf equipment industry? What is the industry like?

The golf industry in total contains 62 Billion Dollars of goods and services. The golf equipment industry in particular contains 4 Billion Dollars. It contains golf clubs, balls, gloves, footwear, weges, bags, irons, putters, etc. There has been a decline in the industry from 200-2003 and an increase from 2003-2007 especially in drivers and woods. Moreover the number of golfers declined from 1998 (27.5 Mio) – 2007 (22.7 Mio). Reasons are the difficulty to play, expensiveness and time to spend in order to improve. The industry consists on few competitors. (there are 5 big manufacturers). Retail values of the industry declined (1997-2000) and rise from (2000-2007). Characterizations of the industry is its high price pressure and the invention of new technologies and product innovatiosn (e.g Big Bertha). Men, women, junior golfers are the protagonist of this type of sport. They can be divided in Professionals and recreational. This sport depends on household income (over $ 100.000). Especially white people spend their time performing this sport. Important to mention is the fact that 1/3 of golfers are core golfers, which means they play frequently during one year. These are making 87% of industry equipment sales. Product differentiation in this industry is low in wedges whereas it is high in shaft performance. Custom fitting becomes very important. The industry has to suffer from Counterfeits by Chinese products which are hard to figth against.

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?

Competition consists in the technology and the limitation of USGA (such as golf club size, balls etc.), the Outsorcing of manufacturing (especially to Asian countries). Marketing is vital in this industry and will be practiced by endorsements. Although there is a decline of golfers, there is a high development of brands and new stuff during this competition. Others suffered more (Taylor Golf) others less (Adams Golf niche seller) from the legislation of the USGA. Moreover product performance, brand image, tour exposure, price are important facts which influence the competition and rivalry of this industry. Competitive forces: There is a high pressure of substitutes through other sport and leisure activities which are easier to learn and cheaper such as Basketball. Suppliers: Third party suppliers and suppliers from Asia are part of this industry. The manufacturers are selective in establishing contracts and securities that it will not be copied by the black market. Third party suppliers are available for all brands so there is a low pressure. Buyer power is relatively high because core golfers (1/3) are responsible for 87% of the retail sales and that is why the top brands have to focuse on their needs. There is a relatively low group of people which influence the retail sales. (round about 7 Mio.) The threat of new entrants is low due to high costs, huge learning curve, established competitors. It is difficult to enter in new areas of the golf industry because there are many established competitors. Competitive rivalry consists in high pressure between rivals of the golf industry, image, product innovation. Competitive weapons are product innovation, endorsement with famous golfers which wear their brands, custom fit of special brands, high quality and different distribution channels (on course and off course shops). Quickening pace: Through the new legislation of USGA there have to be made new innovations and improvements which insists in a higher competition, that is why the pace of rivalry is...
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