ALTIUS GOLF AND THE FIGHTER BRAND

Introduction

Altius Golf's revenue was on the decline and had not recovered from the global recession that hit the company in the year 2008-2010. Evelyn Gracie, CEO of Altius Golf introduced a new strategy to tackle the current situation company found itself. For generations Altius had focused on the super-premium offerings. But with new strategy Evelyn proposed a new line of product named Elevate that will be priced 40% below the company's flagship VictorTX line and will be targeted towards recreational golfers. In fact one of the product in the Elevate line was proposed to be non-conforming with United States Golf Association(USGA) standards.

About Altius

Altius Golf has been the market leader in Golf Balls through its product named Victor TX. Inspite of the price of Victor TX being $50 per unit, it captured 40% of the total sales. Apart from the selling golf balls, the company also manufactures other golf equipment but then the 60 percent and 85 percent of the revenue and the profit of the company comes from selling the balls respectively. Further, 60 percent of the industry revenue was earned by Altius Golf only. The size of the golf industry in the US was $483 million from a total units sold of 17.6 million.

Plan for the Introduction of ‘Elevate’

Inspite of tough competition from the competitors, the company was at a good position merely because of its top quality balls. However, the heat was being felt by the company and therefore it decided to introduce golf ball that is smoother and better to drive for long distance. On this occasion it also decided to keep the price of its 40% below the cost of business’s flagship product. Elevate was priced at $27 – 44% lower than Victor TX. Further company also decided to give a margin of 20 percent to the retailers in comparisons to its other products where the retailers earned a margin of 15% only. It also decided to market the product off the course instead of marketing on the course as Altius Golf have been losing presence in it going from 50.8% in 2008 to 45.5% in 2012.

Reasons for Considering a New Product Line

Altius’ flagship product, Victor TX was preferred by the professionals on the PGA, LPGA and European tours and the company also promoted it on the same lines. The company earned its most of the revenue from this product as it was a preferred choice when it came to the serious golfers. But, interest in the golf was declining and the participation was falling since 2003 due to high cost, less time, etc. Thus the number of serious golfers had declined which led to the decrease in the sales from the on-course retailers where the concentration was more on selling Victor TX. This was identified by its competitor and capitalized resulting in the declining market share of Altius (-7.68% in 2008-13) but alarming because of the pace Primiera (+20.42%) was outperforming each year due to products they came up for the new market segment. Below are some data analysis on the market share and its implications.

Brand Change in Market Share from 2008-12AltiusPrimieraBantamCarlsbad

-7.68%+20.42%-9.81%-10.75%

2008 2010 20120

5

10

15

20

25

30

35

40

US Retail Unit Sales Market Share

Altius PrimieraBantam Carlsbad

Year

Perc

enta

ge s

hare

2008 2010 20120

10

20

30

40

50

60

70

US Retail Dollar Sales Share

Altius PrimieraBantam Carlsbad

Year

Perc

enta

ge sh

are

O n C o u r s e O ff C o u r s e

29.9025 25.389

44.3 55.8

Overall v s Altiu s Channelwise Market Share

Altius Overall

Year

Perc

enta

ge s

hare

We can find it from the graphs above that even though the market share of on-course channel was reducing, the market share of off-course channel was increasing. Off-course channel focused on selling the products which were in the mid-range. The rivals focus was also on this line by promoting non-conforming product. The reason for this was that the non-conforming golf ball didn't unintentionally veered sharply right or left which caused less frustration and embarrassment for recreational golfers. Thus, recreational golfers started preferring this ball because of which competitor like Meredian had

gained 2 points of market share in the off-course product. As shown in the graph a large chunk of off course market was untouched by Altius.

Also, due to the decline in the serious golfers, the number of closures of the golf course reduced which led to the decrease in the sales of on-course channel. Altius also provided the least margin to the retailer viz. 15% when compared with the competitors. The prices and the margins have been depicted in the graphs below which show how the nearest competitor was posing a threat through competitive pricing, diverse product line and sharing extra margin.

P r e m i u m M i d R a n g e V a l u e E c o n o m y

$48.

00

$39.

00

Not present

$44.

00

$35.

00

$27.

00

$18.

00

Pricing Analysis

Altius Primiera

R e t a i l G r o s s M a r g i n M a n u f a c t u r e r G r o s s m a r g i n

15%

70%

20.0

0%

57.5

0%Margins

Altius Other Competitiors

Also, we can see from the Exhibit 4, the percentage of 'Agnostics' has increased and the reasons cited by them are high price and the desire to try non-conforming ball. Thus, all the reasons mentioned above suggest that there is a need for Elevate which according to Evelyn is fun, affordable and will help recreational golfers coming back to the game.

Recommendation:Based on the above data analysis, we suggest that the company should go ahead with Elevate marketing strategy focusing on low cost and user friendly designed golf balls for gaining higher share in growing market keeping in view the changing consumer profiles and preferences. One option can be by decreasing the retail sale price and increasing the number of units sold. A venture into new product line also needs a different kind of promotion strategy altogether as it cannot be endorsed by the premium players in US but the general public from which the people can relate the product more easily. The awareness about low price products among customers is needed without any image degradation of its premium product which should be ensured to be at the same market position as it is now.

Submitted ByTeam AC2