Callaway Case

Questions for Callaway Case

1) From the facts in the case, what were the trends and changes taking place in the market and environment that the Callaway Golf Company operates in? In undertaking this analysis, consider trends and changes in the areas of competition, market demand and product life cycle, consumer behaviour, and distribution channels.

Competition

New companies with trendy products

By 1999, manufacturers were more willing to introduce unique designs unlike the early 1990s where manufacturers were not well financed and were unwilling to gamble on new, radically designed clubs. (more competition by 1999 with innovative designs and leading edge technology such as foreign manufacturers entering the US market)

Taylor made golf discontinued selling to eTailers as of 1999 as management felt it was too difficult to maintain its standards of price and image via that distribution channel.

The company makes consistent efforts to support retailers through a variety of programs such as rebates on sales targets and cooperative marketing programs.

New products are released every year, retail finds it hard to promote product as something that the buyer will stay with for a long time.

Fortune brands: Titleist/cobra golf marketed itself as the professional or very good players' product. Titleist spent twice as money on endorsements as CGC.

Cobra targeted average golfers especially ladies and seniors.

Ping Golf (main competition) keen on R&D, famous for custom fitting innovations. Began to sell to off-course retailers for more accessibility. Ping did not participate in any endorsement programs with pro golfers.

Market demand

Largest increase was among golfers who played between 8-24 rounds per year from 5.4mil to 8.4mil. Avid golfers declined from 5.6million to 5.4million and occasional golfers remained steady at 10million.

Worldwide premium equipment market has been declining. Golfers began to have difficulty justifying the advantage of the clubs in the store and clubs in their bags. Or they "traded up" earlier than their buying cycle dictated, making it difficult to warrant a new purchase.

Product life cycle

Shortened product life cycle (too short)

Consumer behaviour

Golfers are always looking for an edge that would help them play better.

In making purchases, most golfers adopted word-of-mouth recommendations.

Average golfers (min 10 rounds per year) are the target for CGC

Beginners are forced