Altius Golfand the Fighter Brand

CASE ANALYSIS

Group O1Akshay Jain 14F304Deepta Guha 14F315Jangveer Singh 14F320Priya Nair 14F334Ravikeerthi Somayaji 14F336

Altius Golf is a private firm in US which manufactures high quality Golf balls. It is the market leader in the premium golf ball segment which professional golfers use. After the recession in 2008, Altius and the golf industry in general experienced a negative growth. Even several years after recession Altius could not regain its original revenue and started losing its market share.In 2012, the golf ball market in the US was $483 million in retail sales from 17.6 million units. The sales in 2011 was $464 million in retail sales. So overall there was growth in the industry. However, these figures were still far below the pre-recession levels. After the economic slowdown consumers had reduced discretionary purchases. This led to a dip in the overall golf playing population as golf is an expensive sport (equipment, apparel, bags, shoes are quite expensive).LOSS OF MARKET SHAREThere are plethora of reasons why Altius lost its market share. The primary reason is the US recession. After the economic slowdown many professional golfers quit golf. According to USGA 23% women and 36% of children had quit golf over the last five years. Altius was the market leader in golf balls due to the popularity of its flagship Victor TX line. The company marketed it aggressively as the premium ball for professionals. Most of the professionals in the PGA, LPGA and European tours played with Victor TX only. Since Altius caters to premium segment its pricing is little higher than its competitors. Mid-range quality of Altius costs $39 per dozen balls, whereas its competitor charges $35 per dozen balls. Majority of its revenues came from professional golfers. After the recession, golf industry slowed down and Altius revenues declined owing to decreased frequency of the tournaments and lack of enthusiasm by casual players. Many golfers quit because of the high cost involved in this sport. In order to attract children and non-professional golfers, Primiera and Meridian (two closest competitors of Altius) introduced cheap golf balls of lower price which does not confirm to USGA parameters. Beginners preferred these golf balls over Altius which further declined their revenue. Non professional golfers will not spend huge amount of money for golf balls. Retail gross margin was 15% from Altius whereas its competitors offered 20%. This gave their competitors more shelf space of the off-course stores. Altius however continued to rule the shelves of the on-course stores as it was the favourite of professional golfers. But because of the economic conditions that segment was diminishing.So if they dont reduce their price, casual golfers will not prefer Altius. If Altius maintains its status quo it will lose its market share, which in turn will result in revenue loss.OBJECTIVES OF ALTIUS:The last few years had been challenging for the golf industry with the total sales falling by 18% from 2007 to 2010; investments in golf course real estate and development fell by40%; and retail outlets too closed at an alarming pace of 25%. The main reasons for declining interest in the sport, according to a survey, were high costs, lack of time and difficulty of the sport. The USGA tried to revive the declining golf industry through initiatives like Tee It Forward and Golf 2.0 which made the game easier and more fun and thus encouraged recreational and new golfers to play the sport with relaxed rules. This opportunity was well utilised by the Primiera, which initiated the Play Your Way Challenge which allowed the customers to choose the ball that best suits them with the help of a ball-fitting expert. Owing to these initiatives the golf industry had shown modest recovery since 2012, though far below the pre-recession levels.The enthusiasm shown by USGA also led to the popularisation of non-confirmed golf balls. Meridian, another competitor of Altius and the market leader in non-confirming golf balls introduced a variety of non-confirming balls which made the sport much easier for the recreational golfer. The objective of Altius should be to increase the revenues and profitability of the company and restore the market share to strengthen Altius leadership position. This could be achieved by a change in the marketing strategy from targeting professional golf players to low cost golf balls which are aimed to attract recreational and new golf players as this is an emerging segment. Focus should be to make the brand more fun, affordable and accessible through introduction of low priced golf balls like the Elevate ball. This low cost, non-conforming golf ball would encourage participation of new golf players and thus capture the new generation of golf players.TRADE OFFS FOR ALTIUSAltius had previously maintained its leading share in the golf ball market by introducing advanced, super-premium golf balls like the Victor TX line which was mainly targeted to the professional golf players. The new low cost, non-conforming Elevate golf ball would be priced at $27 per dozen, which is more than 40% below the companys flagship Victor TX line and would mainly be targeted to recreational and new golf players. It would tarnish the brand image of Altius. Moreover, the retailer gross margin would be 20% for the Elevate golf ball, compared to the 15% that Altius offered earlier. Unlike Victor TX line, Elevate would be promoted mainly in off-course retailers as the on-course would be less willing to accept the low cost, non-conforming ball.THE ELEVATE STRATEGYAltius is known for its golf balls that have been designed especially for professional players. Their marketing strategy was to inspire consumers play golf like professionals. Almost all the professional and famous golf players used Altius golf balls. Altius had become the market leader with a market share (retail dollar sales) of 55.2%. It had almost 100% penetration in on-course golf stores.Post-recession there has been a declining interest in golf. Participation in golf declined from 31 mn golfers in 2003 to 26 mn golfers in 2013. Meanwhile competitors came up with low prices non-conforming custom made golf balls that attracted recreational and casual players. Competitor brands like Primiera and Meridian introduced campaigns that encouraged golfers to play according to their skills and not mimic the professional golf players. Their marketing strategy was a clear counter to Altius positioning. This campaign gained tremendous positive response and their market share increased at the expense of that of Altius. Golf is more of a recreational sport than a professional sport and consumers would not prefer spending a lot for a recreational sport. In view of all this, it is recommended that Altius implement Elevate strategy. Elevate strategy will involve 3 tiers:1) Victor TX priced at 48$ per dozen2) Victor priced at 39$ per dozen3) Elevate priced at 27$ per dozenThe company segmented the current Altius consumers into 3 categories: Loyalists Enthusiasts Brand agnosticsThe segmentation clearly shows that before Elevate strategy, the company primarily targeted on Golf balls for professional players whereas after Elevate strategy being introduced, its main focus was on non-golfers, less skilled players and price sensitive lapsed golfers. Pros of Elevate strategy1) Attracts lapsed golfers and non-golfers due to lower prices2) Custom made golf balls makes the sport easier and hence lures more consumers into playing golf3) Increased profit margin for retailers -20%4) Even if the prices are competitive, consumers will prefer Altius to other brands due to its brand name5) Increase product placement in off course retailers.Cons of Elevate Strategy1) Can tarnish brand image.As pros outweigh cons it will be better to launch Elevate strategy. In the long run more number of customers will develop an interest for golf and foster Altius profitability.