Will the Golf Industry continue to Decline ?

1. Will the Golf Industry continue to Decline ? AA

2. Questions • What are the external factors affecting the industry? • What companies are in a strong position? Why? • What part of the industry is the ideal place to be? • Where have companies failed so far? • What companies bought out other companies and was it a good decision? • Where is the money made in the industry? • Who are the industry’s target market? • Who has the power in the industry? Suppliers? Retail channels? Manufacturer?

3. What are the external factors affecting the industry? • USGA regulations have caused a decrease in technological innovations • As a result, golf equipment manufacturers became stifled in their abilities to pursue innovation-based strategies directed at making golf easier to play for those of modest talent. • Decrease in the numbers of golfers playing the game • The number of rounds of golf being played has been steadily declining

4. What companies are in a strong position? Why? • Callaway- Before USGA regulations, Callaway was the industry leader in terms of technological innovations. Big Bertha Driver is the number one selling driver • Fortune Brand- Their Titelist Pro V1 golf ball captures 40% of the ball market. While their FootJoy brand led the industy in accessories • TaylorMade- Leading seller of hybrid clubs and second behind Callaway in drivers. • Ping- Industry leader in the iron segment fighting for the position with Callaway. • Nike- Signed Tiger Woods to an endorsement deal to help sell Nike apparel. Nike golf balls gained 10% of the market share.

5. What part of the industry is the ideal place to be? • Drivers • See Slide 16

6. Where have companies failed so far?

7. Pest

8. Porter’s 5 forces

9. Two Major U.S. Market Segments

10. Major Barriers of Entry to the Sport

11. Declining Market

12. Market Demographics

13. Driver regulations

14. Ball and Iron/Wedge regulations

15. Effects of Counterfeiting • The rise of counterfeiting in the golf equipment industry was attributable to the decisions by golf executives to source club heads and sometimes contract out assembly of golf clubs to manufacturers in China. • Reverse engineering played a major part in the ability of other companies to produce counterfeits. • In 2003 the six major manufacturers created an alliance to identify and pursue both of those who made and those who sold counterfeit clubs. In 2005 a Nike official said that it is increasingly hard to prosecute the counterfeit companies because they just pack up and move their operations somewhere else. • In 2008, a set of clubs from a major manufacturer cost roughly $2,000. A counterfeit set of clubs could cost as little as $150-$400.

16. Three phases of the sport

17. Equipment change from 1997-2007

18. Percent of Market Share Market size: 1997 $2,421,400,000 2007 $2,911,300,000 20.23% increase

19. Company Strong Points

20. Competitor Analysis • Perceptual map • Competitive Rivarly

21. Perceptual Map Callaway TaylorMade Technology Intensity Titleist/Cobra PING NIKE Price

22. Competitive Rivalry

23. Evaluation of each Company

24. Callaway • Strength- Big Bertha driver was the best golf product of the century • Strength- Good company image- President named the most influential golf person • Strength- Industry leader in technological innovation • Strength- Acquisition (Odyssey-good, Top Flite-bad) • Weakness- Lack of leadership after the CEO’s passing • Weakness- Late to market in regard to new products • Weakness- Apparel • Weakness- Competition in low market share categories (putters)

25. TaylorMade/ Adidas • Strength- Leader in drivers • Strength- Apparel is growing at an increasing rate • Strength- Leader and first to market hybrid clubs • Strength- Heavily endorsed by PGA Tour • Strength- Adidas’ acquisition of TaylorMade • Weakness- Competition in Low market share categories • Weakness- Low market share and respect for their golf ball

26. Titleist/ Cobra • Strength- FootJoy has 60% market share • Strength- Titleist Pro V1 golf balls 40% market share • Strength- Titleist Vokey forged Wedges 22.5% market share • Strength- Titleist Scotty Cameron Putter 10% market share • Weakness- Titleist’s iron line of clubs • Weakness- Cobra line extension

27. Ping • Strength- Pioneer in custom club fitting • Strength- Ping was the leader along with Callaway in irons 2008 • Strength- Putter market share • Weakness- Were very late to market with a hybrid club-2005 • Weakness- Did not produce a golf ball in 2008

28. Nike • Strength- Enormously successful in apparel and footwear • Strength- Golf ball- 10% market share • Strength- Tiger Woods endorsement • Weakness- Poor image quality when they entered the market • Weakness- Golfers didn’t like the sound of the club striking the ball • Weakness- Products sell below retail price

29. What are the strengths and weaknesses for the industry as a whole.(Critical Success Factors) • Past, present, future CSF of the industry

30. Strengths and Weaknesses for the industry • Weakness- Technological innovations limited by USGA regulations • Weakness- Product differentiation became more difficult so manufacturers depended on endorsement deals • Weakness- Manufacturers had to be careful when selecting third-party suppliers for parts over seas • Weakness- Counterfeiting • Strength- The ability for companies to acquire other companies • Strength- Shaft performance, interchangeable shafts

31. Recommendations for Each Company