Performance Indicator

Topics: Golf, Golf ball, Ball Pages: 3 (913 words) Published: February 16, 2012
Performance Indicator Memo

Executive Summary
The aim of Performance Indicator is to increase golf ball manufacturers’ value by increasing revenue from new ball sales as a result of eliminating older, used balls through its color change coating technology.  Although there appears to be a possible financial benefit based on the future perceived demand for new golf balls, PI’s new technology does not appear to have any transparent benefit or value creation for the end consumer (golfer). Consequently, no manufacturer has yet to adopt this technology. Inconsistency Between Sales-Pitch and Willingness to Pay

Performance Indicator (PI) has developed a technology that will enable the golf industry to reduce the number of used golf balls in the market place by indicating which balls have had their performance degraded due to an extended duration in the water. Approximately 85 million used golf balls (approximately 50% of all used balls) are thought to be replaced through this technology, hence increasing the sales of brand new balls. They are also, in effect, attempting to create a quality assurance mechanism for used golf balls in circulation. Theoretically, golf ball manufacturers stand to benefit from filling the “gap” created in the market by removing the performance degraded used balls. Although PI is selling directly to the golf ball manufacturers, the golfer using the ball that is known to be in good condition determines the real value creation. The main inconsistency derives from not all golfers standing to benefit from the adoption of PI technology. The manufacturer must determine if this perceived benefit to the golfer is worth the additional manufacturing costs and market/brand implications. There is a segment of the market that will continue to buy new balls. Both professional and average golfers utilize used golf balls; however, neither group will derive enough consumer surplus to be willing to pay for this technology. We believe the additional value...
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