strategic-management

278 AMIT J. SHAH
Marketing
Rapid introduction of new golf clubs or golf balls could result in closeouts of existing
inventories at both wholesale and retail levels. Closeouts result in reduced margins on the
sale of older products as well as reduced sales of new products.
CGC announced a contract renewal with the number-two golfer in the world, Phil
Mickelson, in early 2009. Callaway also uses point-of-purchase displays for its products in
golf shops and retail stores worldwide.
Callaway has seen tremendous success under the Trade In! Trade Up! Program
(www.tradeintradeup.com). Under this agreement, Callaway consumers can receive trade-in
allowances on their previously owned Callaway golf clubs toward the purchase of new
Callaway clubs. This option has become popular for consumers looking to upgrade their
equipment. It also provides a convenient avenue for consumers looking to purchase cheaper
used clubs. This program certainly helps Callaway build and strengthen customer loyalty.
Callaway has long been known for its commitment to innovation in its technology.
CGC’s tradition is built on product leadership and “the proof is in the more than 1,100 United
States patents—more than any other golf manufacturer.” CGC has recently launched the
Callaway Golf FT Irons. According to CGC’s Web site, FT Irons are “the evolution of Fusion
Technology, delivering the utmost in performance and playability in Callaway Golf irons for
mid to low handicap players who demand the latest innovation with proven results.” Since
the introduction of the FT Irons, Callaway has introduced the FT i-brid irons. These irons are
CGC’s most technologically advanced game-improvement set. The FT i-brid irons provide
the ultimate in forgiveness and playability by incorporating three hybrid-like clubs designed
to replace hard-to-hit long irons and game-improvement short irons.
Callaway has introduced a men’s and women’s version of the FT-iQ—the smartest,
straightest driver the company has ever marketed and sold. The club is available with features
that are accommodating to all golfers, with available lofts of 9, 10, and 11 degrees, as
well as a High Trajectory [HT] model that offers 13 degrees. These higher degrees of loft
make getting the ball airborne easier on the player. The advanced head shape has a sleek
look and increases the moment of inertia (MOI) for extraordinary accuracy off the tee. For
feel and performance, the FT-iQ driver has an exclusive Fubuki shaft from Mitsubishi
Rayon.
In advertising, CGC relies mainly on a combination of printed and television advertisements.
Advertisements in print include national magazines, such as Golf Magazine,
Sports Illustrated, and Golf Digest, and television commercials included primarily on The
Golf Channel, ESPN, and on network television during golf telecasts. CGC also employs
Web-based advertising. Outside of the United States, advertising is generally handled by
CGC’s subsidiaries, and although it is based on its global brand principles, the local execution
is tailored by each region based on their unique consumer market and lifestyles.
External Factors
The current economic recession has decreased the level of demand for the company’s
products, which are recreational and therefore discretionary purchases for consumers. Any
decrease in consumer confidence, adverse economic conditions, or political unrest diverts
interest from playing golf and hurts Callaway’s business. Individuals are more willing to
make such purchases during favorable economic conditions and when they are feeling confident
and prosperous. Adverse economic conditions have caused consumers to forgo or to
postpone purchasing new golf products. The severe economic downturn may also affect
CGC’s bad debt, which has been historically low. Natural disasters, such as the hurricanes
in Florida and along the East Coast, can negatively affect golf rounds played not only
during the storms but also for a significant period of time afterward while golfers focus on
cleaning up rather than playing golf.
Golf is not a growth industry. There are approximately 26 million recreational players
in the United States, but on average 3 million customers enter and 3 million customers exit
the industry annually. The net effect is zero growth. According to the National Sporting
Goods Association’s 2008 survey, golf’s player pool shrank 7.3 percent from 2003 to
2007. The latest report from the National Golf Foundation shows rounds played are down