Callaway Business Case Study

Assignment 2
Marketing Management & Mature Consumers

by

Nihat Canak

07/16/2006

Index of contents

1 Golf Equipment Industry  1

2 Competition  1

3 Industry Changes  2

4 Callaway Golf’s strategy  3

5 Calloway Golf’s financial performance  4

6 Strengths and Weaknesses  4

7 Opportunities and Threats  5

Bibliography  8

1 Golf Equipment Industry

According to the National Golf Foundation ("NGF"), there are approximately 49 million golfers worldwide, including approximately 25 million in the U.S. In 2005, golfers in the U.S. played an estimated 547 million rounds of golf and are estimated to have spent $5.8 billion on golf equipment, which includes clubs, balls, bags, carts and accessories, including apparel, footwear, gloves, tees, and training devices for putting and driving. While this is positive growth over 2004, the NGF report foresees potential sand traps. The decreasing number of core golfers is hurting the industry, seen specifically in decreases in the number of rounds played, the slowdown in new golf course openings and a stagnant market for golf clubs. Of the 25 million U.S. golfers, about 5.2 million, characterized by the NGF as "avid golfers," play over 25 rounds of golf per year. Avid golfers are the first to seek out performance-oriented golf equipment and generally drive golf club product trends. The leaders in the market consist of: Callaway Golf Company, Fortune Brands Inc., TaylorMade-adidas Golf, Bridgestone Sports (USA), Adams Golf, Inc., Table 3-1 Karsten Manufacturing Corporation Product Line, Mizuno USA Inc., Nike Inc., Roger Cleveland Golf Company, Inc., Carbite Inc., Graphite Design International Inc., Aldila Inc., Royal Precision Inc. . In the golf equipment industry, sales to retailers are generally seasonal due to lower demand in the retail market in the cold weather months covered by the fourth and first quarters.

2 Competition

In general, the golf equipment market can be divided in the golf club market and the golf ball market. Both markets are highly competitive and are served by a number of well-established and well-financed companies with recognized brand names, as well as new companies with popular products. With respect to drivers, fairway woods and irons, the competitors are Callaway, TaylorMade, Titleist, Cobra, Cleveland, Ping, Mizuno and Nike. For putters, the competitors are Callaway, Ping, Titleist and TaylorMade. In addition, the companies also compete with Dunlop, Bridgestone and PRGR among others in Japan and throughout Asia.

The golf ball business competitors include Callaway, Acushnet (Titleist and Pinnacle), Sumitomo Rubber Industries (Dunlop and Srixon), Bridgestone (Bridgestone and Precept), Nike, TaylorMade (MaxFli) and others. These competitors have established market share in the golf ball business, with Acushnet having a market share of over 50% of the golf ball business in the United States.

For both golf clubs and golf balls, the companies generally compete on the basis of technology, quality, performance, customer service and price. Additionally, in competition for a share of the market, various manufacturers have developed golf clubs using various materials, differing types of construction and the latest engineering technology. In order to gauge the effectiveness of companies’ response to such factors, management receives and evaluates company-generated market research for U.S. and foreign markets, as well as periodic public, as well as customized, market research for U.S. markets.

3 Industry Changes

Industry specialists believe that golf equipment sales will continue to grow in the future due to a number of factors including:

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