ALTIUS GOLF AND THE FIGHTER BRAND
Contents
External Environment 2
Opportunities 2
Threats 2
Internal Environment 3
Strengths 3
Weaknesses 3
Key Marketing Issue 4
Statement of Objectives 4
Generation and Evaluation of Alternatives 5
Recommendation 5
APPENDIX 6
External Environment
Opportunities
Threats
Internal Environment
Strengths
Weaknesses
Key Marketing Issue
Statement of Objectives
Generation and Evaluation of Alternatives
Recommendation
APPENDIX
Contents
External Environment 2
Opportunities 2
Threats 2
Internal Environment 3
Strengths 3
Weaknesses 3
Key Marketing Issue 4
Statement of Objectives 4
Generation and Evaluation of Alternatives 5
Recommendation 5
APPENDIX 6
External Environment
The
external environment of Altius Golf consists of: the golf industry, its
competitors, regulatory bodies such as United States Golf Association (USGA)
and the golf players. External environment includes some opportunities as well
as threats for Altius Golf which is discussed below:
Opportunities
Growth in
industry has just restarted after a period of recession; hence this is an
opportunity for Altius Golf to acquire the market share of reviving golf
industry.
Moreover, recent
consumer study carried out by the United States Golf Association (USGA), has
revealed that high cost of golf equipment is one of the reasons for the lack of
interest in golf sport, however; Altius Golf can capture the market growth by
offering low-cost golf balls to its consumers through off-course outlets.
Additionally,
the USGA has introduced “Tee it forward” movement, to make the golf game easy,
moreover; USGA has introduced “Golf 2.0” program, which allow the new golfers
to play 12-hole tournament instead of 18-hole and use larger holes, therefore; this
step of USGA will induce more new golf players that is an opportunity for
Altius Golf to gain increased market share of new players.
Threats
Because of the recent
recession period, consumers of golf equipments have cut-down their spending on
golf balls and this trend has badly affected the golf industry.
Additionally, USGA regulatory
requirements are very strict in terms of size, shape and material of the golf
balls, which may affect Altius Golf’s goodwill for not adhering with the USGA
regulations.
Moreover, since golf equipment
sales is linked to the number of golf rounds being played in the U.S., which
ultimately depends on the investment being made in golf fields but investment
in development of golf field is falling, consequently, the number of golf
rounds are decreasing which is affecting Altius Golf’s sales. However, it has
been noted that investment in development of golf field has decreased by around
40% after the recession period.
The public interest in playing
golf is falling in the U.S, consequently; sales of golf equipments are falling
and this is clearly a threat to Altius Golf for its future sales in the U.S. One
of the major competitors of Altius Golf, Primiera, has introduced a campaign for
marketing of golf equipment which is specially designed for new learners of
golf to help them play the sport and learn it easily. This strategy has been
successful as it has captured the market share of Altius Golf and some other
sellers in the golf market. Primerra’s strategy is a potential threat for
Altius as it can gain a major market share from Altius Golf and may become a
market leader in near future.
Internal Environment
Internal
environment of Altius Golf includes the process, culture, differentiating point
and strategies of the Altius Golf, which affect its performance.
Strengths
Altius Golf has competitive
advantage over its competitors through its sales of Victor TX and Altius Golf has
become the market leader in providing golf balls under Victor TX line;
additionally, this advantage has given Altius Golf the benefit of economies of
scale.
Moreover, Altius Golf has an
already established chain of “off-course” and “on-course” outlets for selling
its different range of products, which has given its customer easy access to
its golf equipments.
As per calculations made in
spread sheet, market share of Altius Golf is higher than other competitors in
the golf industry, which gives it a competitive advantage over other companies
to control prices by affecting the demand and supply forces.
Weaknesses
Altius Golf’s competitors are
moving with the industry trends and are trying to offer balls and other golf
equipments which are easy to use and helps new golf users to hit the shot as
they require, while Altius Golf is still offering equipments which are for professionals,
although golf professionals value the equipments of Altius but the industry
trend shows that recent recession period has decreased the number of
professional golf players and new golf players are being encouraged to play
golf.
Additionally, Altius Golf’s balls
are expensive as compared to competitor’s golf balls and new golf players are
not willing to spend more on expensive golf equipments.
Key Marketing Issue
Altius Golf
marketing focus is on Victor TX line golf equipments, which are designed for professional
golf players because in the past professional golf players have won their
matches using Victor TX equipments. Altius Golf has heavily spent on marketing
their success of Victor TX line, however; the golf industry trends have changed
and the new trend is towards low cost as well as non-confirming golf
equipments. Elevate is a new line of golf equipments being considered by the
Altius Golf.
Gross
margin from the Elevate will be around
64% which is 6% lower than the Victor TX and in terms of retail price; Elevate will
be priced at $27 per unit which is 44% lower than the premiere price of Victor
TX. This low price equipment should be highlighted in marketing to gain higher
share of growing golf industry.
Statement of Objectives
Focusing on
the low price golf equipments, such as Elevate golf ball and changing the
marketing strategy from targeting professional golf equipments to low cost golf
equipments and more fun oriented golf equipment for new golf players will
enhance the profitability of Altius. This is because golf industry is reviving
by the efforts of USGA, through encouragement of new golf players to play golf
with relaxed rules. Therefore, it is a good time to target new players through
extensive marketing of low cost and non-confirming golf balls, which has
enabled new golf players to hit the ball perfectly. The new golf ball “Elevate”
will be sold below the 40% of its premium Victor TX brand, which will enable
Altius Golf to capture new generation of golf players.
Generation and Evaluation of Alternatives
Alternate options
that are available to the Altius Golf include lowering the price of its
existing Victor TX line of products and spending on marketing with focus on low
price of its golf equipments. Moreover, opting into this alternate will require
Altius Golf to increase the number of sales units, which can be done through
extensive marketing. Altius Golf has to increase the number of units sold by 8%
if it needs to decrease the retail sales price by $2.5 per unit.
Another
alternate available to Altius Golf is that it can decrease gross profit margins
of its retailers by 5% in order to decrease the retail price by $2.67, however;
its seems unlikely that retailers will be willing to accept the lower gross
profit margin. Therefore, this alternate option is not practicable for Altius Golf
to increase its profits by forcing the retailers to achieve more sales and compensate
for lower gross profit margins.
Recommendation
Based on
the analysis of golf industry and marketing strategy of Altius Golf, it is
recommended that the company should continue the Elevate marketing strategy. In
addition, it has to focus on low cost and user friendly designed golf balls in
marketing to gain the higher share of growing market. The analysis of
alternative reveals that Altius Golf can achieve high market share of the growing
golf industry by decreasing its retail price and then focusing on increasing
the number of units sold in order to maintain its profitability. However, an increase
in the number of low price golf balls sold will depend on marketing and
awareness of the low price as well as quality of equipments among new golf
players.
APPENDIX
Appendix-A
- Altius progress of gold and other equipment sales
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Appendix-A
Profitability analysis of leading brands
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Million USD
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Competitors
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Altius
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Primiera
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Bantam
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Carlsbad
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Market share, retail dollar sales (%)
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55.2%
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15.0%
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17.3%
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9.3%
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Retail sales
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$266.6
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$72.5
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$83.6
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$44.9
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Retailer gross margin (%)
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15.0%
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20.0%
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20.0%
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20.0%
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Manufacturer sales
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$226.6
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$58.0
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$66.8
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$35.9
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Manufacturer gross margin (%)
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70.0%
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57.5%
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57.5%
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57.5%
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Gross profit
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$158.6
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$33.3
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$38.4
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$20.7
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Market share, unit sales (%)
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35.1%
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17.1%
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14.7%
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8.3%
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Value of market share point in unit sales
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$4.5
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$1.9
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$2.6
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$2.5
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Appendix-C
- Product wise margins analysis
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USD per Unit
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Product
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Victor TX
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Victor
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Elevate
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Retail price
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$ 48.00
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$ 39.00
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$ 27.00
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Retailer gross margin %
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15%
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15%
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20%
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Altius price
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$ 40.80
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$ 33.15
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$ 21.60
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Altius variable cost
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$ 12.24
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$ 9.95
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$ 7.75
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Altius unit contribution
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$ 28.56
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$ 23.21
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$ 13.85
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Altius gross margin %
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70%
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70%
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64%
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Appendix-D
- Alternatives
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Alternate 01
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Effect of Decrease in
Retail Price
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Victor TX (USD)
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Retail price
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48.00
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45.50
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43.00
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40.50
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38.00
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35.50
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33.00
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Retailer gross margin %
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15%
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15%
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15%
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15%
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15%
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15%
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15%
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Altius price
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40.80
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38.68
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36.55
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34.43
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32.30
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30.18
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28.05
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Altius variable cost
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12.24
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12.24
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12.24
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12.24
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12.24
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12.24
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12.24
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Altius unit contribution
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28.56
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26.44
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24.31
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22.19
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20.06
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17.94
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15.81
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Altius gross margin %
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70%
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68%
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67%
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64%
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62%
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59%
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56%
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Percentage increase in Units required to
maintain profit margins
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8.0%
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17.5%
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28.7%
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42.4%
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59.2%
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80.6%
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Revised Contribution
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28.56
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28.56
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28.56
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28.56
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28.56
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28.56
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Alternate 02
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Effect of Decrease in
Gross Margins
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Victor TX (USD)
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Retail price
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48.00
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47.44
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46.90
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46.36
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45.84
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45.33
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44.84
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Retailer gross margin %
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15%
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14%
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13%
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12%
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11%
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10%
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9%
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Altius price
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40.80
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40.80
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40.80
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40.80
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40.80
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40.80
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40.80
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Altius variable cost
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12.24
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12.24
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12.24
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12.24
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12.24
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12.24
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12.24
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Altius unit contribution
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28.56
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28.56
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28.56
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28.56
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28.56
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28.56
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28.56
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Altius gross margin %
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70%
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70%
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70%
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70%
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70%
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70%
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70%
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