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Altius Golf Case Study Spreadsheet Program

 

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.

 

The current situation clearly dictates that Altius is losing its market share due to its competitors.

They’re

 are moving with the industry trends and are trying to offer balls and other golf equipments which are easy to use and helps new golf users to hit the shot as they require, while Altius Golf is still offering equipments which are for professionals, although golf professionals value the equipments of Altius but the industry trend shows that recent recession period has decreased the number of professional golf players and hence the revenue of Altius. The marketing positioning of Altius itself seems peculiar which was based on how many professional tournaments had been won with its balls.

Additionally, Altius Golf’s balls are expensive as compared to competitor’s golf balls and new

golf players are not willing to spend more on expensive golf equipments.

While it’s next generation

balls were picking up sales, the fact that it is shedding market share of its core product points towards alarming situation of status quo.

What should Altius’s objectives be? What trade

- offs it must manage?

With Altius staying just focussing with the manufacturing top of the line golf balls, their business would only continue to drop. Fortunately the brand value of Altuis was recognised and respected very much by many top notch golfers of the country, but this does not mean that they had a lot of profits. Focusing on the low price golf equipments, such as Elevate golf ball and changing the marketing strategy from targeting proficient golf equipments to low cost golf equipments and more fun oriented golf equipment for new golf players will enhance the profitability of Altius. This is because golf industry is vitalizing by the efforts of USGA, through the encouragement of new golf players to play golf with relaxed rules. Therefore, it is a good time to mark new players through widespread marketing of low cost and non-confirming golf balls, which enables new golf players to

hit the ball perfectly. The new golf ball “Elevate” being sold

 below the 40% of its premium Victor TX brand, enables Altius Golf to capture a new generation of golf players. Other competitors were becoming very competitive; they were providing the best service to elite players and also were reaching the casual players with cheaper products, hence reaching more golfers than Altius.

Maintaining the current strategy will make Atius obsolete pretty soon. In a business, trade off’s are

quite common. You tend to be having a core competency at one aspect but not all, this does not mean you stick to the former. Hence Altius must enter the not so costly markets. This might mean that the 70% profits have to reduce by at least 10% and utilised in trade offs. This 10 % has to be used to reach the broader recreational market. Altius can very well get back to producing and being

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