Performance Indicator Case Analysis

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PGP-1 Term-II AY 2010-11


Case – “Performance Indicator”

Submitted By:

Inderpreet Singh

Identification of Protagonist

Robb Osinski and Bob Winskowicz are business partners in Performance Indicator, LLC. Robb started as an entrepreneur as an undergraduate at Harvard by setting up a landscaping company. Bob started his career in sales in consumer health care. He eventually became the vice president of sales for Arnold Golf Company. Both had quit their respective jobs to pursue Performance Indicator (PI) venture full time. PI was a technology pioneered by them and developed by Batelle Memorial Institute (BMI), which indicated the condition of a used golf ball for further use after being submerged in water for an extended period of time. The concept enabled the color of a golf ball to turn gray if it was not fit for reuse. They truly believed PI was a cracker of a concept and saw huge market for their product.

Situational Analysis

Performance Indicator concept and development process

• PI started as a concept when both Robb and Bob, golfers themselves, came up with the idea of the ball itself telling whether it is fit for reuse or not. • This basic idea made them work on the dual path of building the concept to a full-fledged product and patenting the same. • They were issued first patent for PI in 1998, where PI had the exclusive right to employ the technology on golf balls. • In 2000 May, Batelle Memorial Institute (BMI) delivered the prototype. BMI retained the patent for the chemical technology itself and PI retailed to utilization of the technology on golf balls through patents. • PI converted the color of the ball into gray after significant period of submersion into water. The color change was irreversible. • The technology could easily be incorporated by golf ball manufacturers by simply mixing the chemical technology into resins contained in one of its hoppers • Cost of adopting this new technology was also low for the manufacturers (0.1 cents/ball).

Market of new/used balls

• The market was dominated by brands like Titleist ,Percept etc. (Exhibit 1) • Reused golf balls were largely sold by Nitro Leisure Products which faced many law suits against it. • The market for resale balls took off largely as the prices of new balls rose. • Resale balls are available from multiple channels, despite of the same the balls found by the golfers themselves during the game contributed to two-third portion of the reused balls. • The reused ball goes through different processes, and accordingly they are termed as refurbished, retreated, refinished etc. • The retailer-margin for resale balls matched that of a brand new ball, 30%. However the price was significantly lower to $10 to 15 per dozen as compared to new ball ranging from $20 to $50. • Market for resale balls is expected to be of a ratio of 4 to 1 for every new ball being sold.

End Consumer usage behavior

• The end customer rarely considered the condition of the ball to have an impact on their games performance. • The end consumers believed they would be able to judge the condition of the ball by looking at a ball closely. However, the same was not true with the advancement of technology. • Golfers were quite habitual of picking used balls on the course and playing with them. • As per the market research conducted, a water-effected ball lost 6 to 24 yards. This revelation made golfers concerned and 60% claimed to buy new balls in that case.

Performance Indicator selling strategy

• PI, since 2000, has been trying to sell the concept to top golf ball manufacturers. • They have contemplated three plans for the same:
o Licensing to the new golf ball manufacturers
o Exclusive licensing to one strategic licensee
o Outright sale to a...
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