Case Study on Golf Equipment Industry Essay

3143 Words Jan 30th, 2012 13 Pages
The industry overview

The retail sales of golf equipment industry, which includes golf clubs, bags, balls, gloves and footwear, declined from approximately $4 billion to about $3 billion in 2003 and then rebounded to around $3.8 billion in 2007 with many threats remaining. The changes in the retail value of golf equipment industry are closely related to the total number of golf players and total rounds of golf played in the country. The participation rate of golf has dropped approximately 21% from 27.5 million in 1998 to 22.7 million in 2007, being the largest decrease rate during the same period among selected sports and recreational activities including bicycle riding, fishing, hunting, running, swimming, tennis and workout at fitness
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There is growing reliance on price competitions.

The competitive weapons used by companies to outmaneuver one another include:
a. Most brands started the battle of price cutting. The average unit selling price of most golf equipments dropped. For example:

a. Drivers and woods dropped from $231 in 1997 to $174 in 2007.
b. Irons dropped from $75 in 1997 to $71 in 2007.
c. Footwear dropped from $86 in 1997 to $81 in 2007.
d. Golf bags dropped from $126 in 1997 to $116 in 2007.
(Source: Golf Datatech in Gamble 2008, C79,)

b. All brands are spending huge amount on R&D for technological advancement to give a better and easier swing, they also providing a boarder range of equipments to suit golfer with different needs (Rynecki 2001). In addition, some had added adjustable features such as the TaylorMade r7 drivers, which allow golfers to move tungsten weight plugs among a series of slots located in the rear of the driver to adjust launch angle and left/right dispersion.
c. Manufacturers were relying on winning endorsements contracts with touring professionals to enhance their image. For example, Nike paid Tiger Wood nearly $100 million endorsement contract in 2007.
d. Custom fitting was offered by most manufacturers and pro shops. It became important to gain market share as most manufacturers introduced shaft flex options in early 2000s.

2. The competitive pressures associated with the threat of new entrants were weak mainly due to:
a. The market demand

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