Professor Peter D Simonson
February 6, 2013
Callaway Golf Company Analysis
Callaway Golf Company is a global sporting company which designs, manufactures and markets golf equipments, their product were sold to over 70 countries during the past 30 years. Callaway Golf began it history in 1982, when a 60-year-old recreational golfer by the name of Ely Callaway, who in earlier incarnations had served as president of Burlington Industries and founder of a world-class winery in Southern California, purchased a financially troubled company that manufactured one of his favorite golf clubs. And from that time, this company made a remarkable story in the business area.
In the case of Callaway, the company really enjoyed years of success in the golfing community in terms of customers’ understandings needs. For example, golfers believe that a more expensive golf club signified higher quality, better performance, and greater status, which people think you are rich. Callaway Golf Company has led the way in the innovation of equipments for ten years. By focusing on research and development, they revolutionized club design and material. CGC was ahead of the
Ruan2 curve with technological advances and marketing to the average player, making golfers feel more forgiving and satisfied with performance results. In 1998 they experienced their first loss in sales of 17% (Lal and Prescott, 2005). However, CGC quickly realized that if they would have to revise the way it approached retailer relationships to make them more mutually beneficial. By 1998 competitors within the industry caught up with technology, many golf clubs were built during this year, which increases people’s demand, and the Internet as well as economic turmoil affected sales across the world. Revolutionizing the long irons for use of all golfers would differentiate CGC from other sporting companies.
Research and development of clubs has been the lifeblood for CGC (Lal and Prescott, 2005). This lifeblood has lead to a history of leading innovation, introducing five revolutionary new drivers in ten years, differentiating themselves from the competition using advanced technology and materials with performance advantages sufficient enough to justify the premium price. Helmstetter, with his knowledge of woodworking, became the target of a concerted recruitment campaign by Callaway. In 1988, CGC introduced the three revolution new club designs: S2H2; Big Bertha and Titanium. From fiscal year 1996 to fiscal year 1998, the percentage of sales from woods decreased from 71% to 56% while iron sales increased slightly from 25% to 33% (Lal and Prescott, 2005). Irons are generally used for medium distance shots; long
Ruan3 irons in particular are associated with high level players (Lal and Prescott, 2005). To continue keeping ahead of marketing area, CGC tends to continue their revolutionary innovations by designing long irons for the average golfer that have the distance of an iron and land like a wood. To achieve this CGC have to reduce research and development focused on drivers and woods. Increasing retail communication and advertisement in both on- and off-course locations along with obtaining more professional endorsements will increase sales worldwide.
For the consumer behavior, golf was a hard one compared to other games. For the reason that its participants’ emotions could change from addiction to frustration, therefore, it is very hard for golfers to control. Golfers usually complain about their equipments when they just had a poor play games. However, in golf, the equipment had a crucial effect on user’s performance. Based on different people have different level, CGC set up different irons for different users.
For sales and marketing, Helmstetter stated that his group had to invent new products that consumers didn’t know what they interested in, even the price was extremely high. Because he believed that