1. Will the Golf Industry continue to Decline ?AA

2. Questions What are the external factors affecting the industry?
What companies are in a strong position? Why?
What part of the industry is the ideal place to be?
Where have companies failed so far?
What companies bought out other companies and was it a good decision?
Where is the money made in the industry?
Who are the industry’s target market?
Who has the power in the industry? Suppliers? Retail channels? Manufacturer?

3. What are the external factors affecting the industry?
USGA regulations have caused a decrease in technological innovations
As a result, golf equipment manufacturers became stifled in their abilities to pursue innovation-based strategies directed at making golf easier to play for those of modest talent.
Decrease in the numbers of golfers playing the game
The number of rounds of golf being played has been steadily declining

4. What companies are in a strong position? Why?
Callaway- Before USGA regulations, Callaway was the industry leader in terms of technological innovations. Big Bertha Driver is the number one selling driver
Fortune Brand- Their Titelist Pro V1 golf ball captures 40% of the ball market. While their FootJoy brand led the industy in accessories
TaylorMade- Leading seller of hybrid clubs and second behind Callaway in drivers.
Ping- Industry leader in the iron segment fighting for the position with Callaway.
Nike- Signed Tiger Woods to an endorsement deal to help sell Nike apparel. Nike golf balls gained 10% of the market share.

5. What part of the industry is the ideal place to be?
Drivers
See Slide 16

6. Where have companies failed so far?

7. Pest Political Economical Sociological Technological
USGA Stifles innovation (drivers, balls, irons) -Threat
Weak anti-conterfeiting laws in China- Threat
Economical
Golf is very exposure - Threat
White dominated sport- Threat
Relationship between income ($100,000) and participation- Threat or Opportunity
China counterfeiting
Expensive sport to enter and remain competitive
Sociological
Restrictions are making sport less attractive to potential players
T.V. exposure and charismatic players increase interest- Opportunity
Asian Americans, African Americans, Hispanics- Opportunity
Technological
Online sales (legal and illegal)- Threat or Opportunity
Ceiling on technological applications- Threat

8. Porter’s 5 forces Core Golfer Non-Core Golfer Threat of substitutes
Low
High
Intensity of competition ?
Threat of new entrants
Bargaining power of buyer
Bargaining power of supplier
High/Low

9. Two Major U.S. Market Segments
Core Player
1/3 (7.57 million) of total golfers fit into this category.
Played at least 8 times per year,averaging 37 rounds per year.
91% of rounds are played by this category.
87% of industry equipment sold, membership fees, and green fees.
Non-Core Player
2/3 (15.13 million) account for this category

10. Major Barriers of Entry to the Sport
Issue:
Cost
Equipment cost is high
Green fees
Accessories (golf shoes, bags, balls)
Health
Retired golfers had time, but failing health.
Young golfers had health, but no time.
Time
Family and job responsibilities
Length of time to play a round
Difficulty
Disappointing that low scores do not come quickly.

11. Declining Market Male 20 million 2000 to 16.2 million in 2007
19% decrease
Female
5.8 million in 2002 to 5.1 million in 2007
12% decrease
Junior
2.4 million in 1998 to 1.4 million in 2007
42% decrease

12. Market Demographics Men account for 71.4% Women account for 22.4%
Juniors account for
6.2%
African Americans
1.3 Million people
Asian Americans
1.1 Million people
Hispanic American
1.0 Million people

13. Driver regulations Regulation Effect
1998 USGA Coefficient of restitution (COR) test
Rule would defend against any spring like effect that a high-tech driver clubface might deliver.
2006 USGA regulates driver performance Characteristic Time (CT) test
The CT test required that the golf ball remain in contact with the face of a driver for 239 microseconds, plus a tolerance of 18 microseconds was considered evidence of a spring like effect and would place a driver on the R&A’s nonconforming.
2006 USGA Movement of Inertia (MOI)
MOI would be limited.
2004 USGA club head size
Ruled that driving clubs were not allowed to be larger than 5 inches by 5 inches and could not have a volume of more than 460 cubic centimeters.

14. Ball and Iron/Wedge regulations
Effect:
2005 USGA ball regulation
Manufactures were asked to produce balls that would fly yards shorter than last year model balls.
2008 USGA Wedge regulation
Manufacturers must discontinue producing wedges with sharply squared groove edges on irons and wedges.

15. Effects of Counterfeiting
The rise of counterfeiting in the golf equipment industry was attributable to the decisions by golf executives to source club heads and sometimes contract out assembly of golf clubs to manufacturers in China.
Reverse engineering played a major part in the ability of other companies to produce counterfeits.
In 2003 the six major manufacturers created an alliance to identify and pursue both of those who made and those who sold counterfeit clubs. In 2005 a Nike official said that it is increasingly hard to prosecute the counterfeit companies because they just pack up and move their operations somewhere else.
In 2008, a set of clubs from a major manufacturer cost roughly $2,000. A counterfeit set of clubs could cost as little as $150-$400.

16. Three phases of the sport
Rich Sport
Phase 2:
Television induced growth
Phase 3: Decline

17. Equipment change from 1997-2007
% change in Avg. Selling Price
% change in Units sold
% change of Retail Value
Drivers
-24.68%
71.67%
29.68%
Putters
56.63%
-14.12%
33.71%
Irons
-5.33%
15.45%
4.89%
Golf Bags
-7.94%
4.38%
-3.49%
Golf Balls
14.54%
5.11%
20.41%
Footwear
-5.81%
37.90%
28.55%
Wedges
4.65%
37.18%
41.42%
Gloves
1.88%
-8.59%
11.61%

18. Percent of Market Share
1997
2007
% Change
Drivers
28%
30%
Up 2%
Irons
22%
20%
Down 2%
Putters 6%
6.5%
Up 0.5%
Wedges
2.8%
3.3%
Golf Balls
19%
N/A
Footwear 9%
9.5%
Gloves
Down 0.5%
Bags 7%
5.7%
Down 1.3%
Market size:
1997 $2,421,400, $2,911,300, % increase

19. Company Strong Points Calloway TaylorMade Titleist Ping Nike Drivers X
Putters
Iron
Wedges
Golf Balls
Shoes
Apparel

20. Competitor Analysis
Perceptual map
Competitive Rivarly

21. Perceptual Map Technology Intensity Price Callaway TaylorMade
Titleist/Cobra
PING
NIKE
Price

22. Competitive Rivalry Product Performance Brand Image Tour Exposure
Price
Innovations
Callaway
High
Moderate
TaylorMade/ Adidas
Titleist/ Cobra
Ping
Low
Nike

23. Evaluation of each Company

24. Callaway
Strength- Big Bertha driver was the best golf product of the century
Strength- Good company image- President named the most influential golf person
Strength- Industry leader in technological innovation
Strength- Acquisition (Odyssey-good, Top Flite-bad)
Weakness- Lack of leadership after the CEO’s passing
Weakness- Late to market in regard to new products
Weakness- Apparel
Weakness- Competition in low market share categories (putters)

25. TaylorMade/ Adidas Strength- Leader in drivers
Strength- Apparel is growing at an increasing rate
Strength- Leader and first to market hybrid clubs
Strength- Heavily endorsed by PGA Tour
Strength- Adidas’ acquisition of TaylorMade
Weakness- Competition in Low market share categories
Weakness- Low market share and respect for their golf ball

26. Titleist/ Cobra Strength- FootJoy has 60% market share
Strength- Titleist Pro V1 golf balls 40% market share
Strength- Titleist Vokey forged Wedges 22.5% market share
Strength- Titleist Scotty Cameron Putter 10% market share
Weakness- Titleist’s iron line of clubs
Weakness- Cobra line extension

27. Ping Strength- Pioneer in custom club fitting
Strength- Ping was the leader along with Callaway in irons 2008
Strength- Putter market share
Weakness- Were very late to market with a hybrid club-2005
Weakness- Did not produce a golf ball in 2008

28. Nike Strength- Enormously successful in apparel and footwear
Strength- Golf ball- 10% market share
Strength- Tiger Woods endorsement
Weakness- Poor image quality when they entered the market
Weakness- Golfers didn’t like the sound of the club striking the ball
Weakness- Products sell below retail price

29. What are the strengths and weaknesses for the industry as a whole
What are the strengths and weaknesses for the industry as a whole. (Critical Success Factors)
Past, present, future CSF of the industry

30. Strengths and Weaknesses for the industry
Weakness- Technological innovations limited by USGA regulations
Weakness- Product differentiation became more difficult so manufacturers depended on endorsement deals
Weakness- Manufacturers had to be careful when selecting third-party suppliers for parts over seas
Weakness- Counterfeiting
Strength- The ability for companies to acquire other companies
Strength- Shaft performance, interchangeable shafts

31. Recommendations for Each Company