Golf Logix Case Analysis

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THE GAME OF GOLF
• •


Invented in Scotland in 15 th Century Brought to the United States in late 19 th Century Clubs used to hit small hard balls into a cup on each of the 18 different holes on the golf course

The players use a club to drive the ball onto the fairway. Starting point on each hole is from tee box Players drive the ball with the use of a club onto the fairway, hit an approach shot onto the green, and putt the ball into the cup

Holes: range in length from over 100 to 500 yards or more
• Par 3, par 4 or par 5 • 18 holes par was 72

Along way hazards - ponds, sand traps, and high grass Swing: called “stroke”, counted towards the players total score

Lowest score wins

TYPES OF CLUBS

Woods Club
Driver
• 200-300 yards

Iron Club
3-iron 7-iron
• 120-150 yards

Wedges
Pitching wedge
• 120 yards or less

Putter

5-wood

9-iron

Sand wedge

Typically 14 different types of clubs are used

CRITICAL ELEMENTS TO ACHIEVING LOW SCORE
 Hit the ball straight so as to avoid the various hazards around the course  Advance the ball in desired direction  Distance to target  How far player could hit the ball with each golf club?

 Ability to putt the ball well

Golf market:
• 2000: 26.7 million Americans played 586 million round of golf (on 17,000 courses) • 200,000-400,000 new golfers a year.The prototypical golfer was still male over 40 years old with an income over 70,000.

The golfer: segmented in 3 different ways
1. frequency of play: 25% considered “avid” played 25 rounds or more per year. 50% considered “core” played 8-24 rounds per years.The remainder were considered “occasional” golfers. 2. expertise: typically measured by a golfer handicap (historical average of how many strokes a golfer took, relative to par, for an entire round) 3. type of courses “public vs. private: 80% of golfers played on public courses

Expenses: 1999, golfers spent over 22 billion, 50% of this were by avid golfers. • Golf clubs was the single largest expense aside from the courses fees,

1,000 for a high-quality set of clubs, 2,000 or more for some top of the line sets (depending on how many times golfer played, good set could last anywhere from 5-20 years)

Golf courses: as of 2000, there was around 17,000 golf courses in the U.S. Golf courses Number of courses 7,000 4,000 2,000 4,000 Charging fees Average of rounds per course/year

Municipal and lower-end public high-end public courses resort courses private courses

charging 20-50 per round 40,000 50-100 per round 30,000

100-200 a range 20,00-100,000 and annual 20,000-25,000 membership fee of 5,000-10,000

 May afternoon, 2002 – all 6 employees of GolfLogix held conference in

Scotsdale, Arizona  $2 million in investments  Purpose of meeting – to discuss merits and demerits of direct-to-consumer version of the Distance Only xCaddie  Thinking  Outsource production  Market directly to players under GolfLogix name  Likely retail for $300

 Diane DiCioccio, Chief Marketing Officer – disagreed  Jeff Saltz, CEO – agreed

COMPANY STARTUP
 The GolfLogix concept came about in 1998  During a round of Golf between Todd Kuta and Scott Lambrecht  Basis of problem – judging the distance to the green and choosing the

right club for that distance
 Solution to problem – GPS device  Permission – USGA (United States Golf Association)  Founded in May 1999  $2 million spending – executive salaries, facilities rental, development of

xCaddie software, and GlofLogix website

GOLFLOGIX
Product Leasing: Difficult initially First 4 months of 2002, they had leased 15 systems Additional courses requested a 30-day trial

Marketting

TV infomercials

Internet

Mass merchandiser’s

Consumer Electronic Firms

Golf Outlet Stores

Walmart

Best Buy

COMPANY STARTUP (CONTD.)
 Future operating expenses - $50,000 to $75,000 per month for at least

3 years
 Selling xCaddie till date –...
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