Marketing: Strategy (Callaway Golf)
Brian Siegel
Case Analysis
Callaway Golf
Calloway’s strategy from 1988 to 1997 was to provide quality golf equipment and accessories to the average consumer/golfer, at a premium price, have product different from competitors, and stay ahead of the game with response time in providing up to date technologically advanced golf clubs. Callaway wanted to provide an experience rather than a drab club. A club that looked good, performed better, and was more advanced than it’s competitors.
Ely Callaway had a vision to take the Hickory Stick USA, Inc. manufacturer, and turn it into a more innovative and industry changing company through original products. By utilizing personal drive and teaming up with Richard Helmstetter (pool stick manufacturer expert), they created a better way to utilize R&D to market their brand of clubs. By attempting to understand the market, utilizing a great R&D attack by formulating, documenting, and relaying errors, the Callaway team was able to produce and market innovative club technology. Linking golf players errors to how clubs can counter act the mistakes in ones game, Callaway marketed their innovative technology successfully. Their S2H2 (short, straight, hollow, hosel), larger club heads, better design, weight displacement, shafts, and material (titanium) allowed for a superior club. For example, the “Big Bertha” driver was a revolutionary design lead by Callaway, by basically having a larger club face, which extended the sweet spot, and allowed a once dreaded club to be manageable by golfers. This lead to a better experience while playing, and lead to future brand loyalty. The pricing didn’t seem to matter due to the “priceless” quality of improving ones golf game!
The technology and brand became representative of superior status, and allowed for their premium pricing to be accepted. Callaway focused primarily on the average golfer rather than the new or experienced golfer. This allowed their market to be very broad. If a middle of the road golfer were to play and bring a person that was new, they would more than likely give the advice to purchase the Callaway brand. It was thought that the more experienced golfers usually stuck with the brand they already were used to playing with, and felt that clubs don’t make the player, the player does. This word of mouth marketing proved to be successful, showing tremendous growth and sales of $843 million in 1997. That’s a great number for starting out with a $435K (and later 2M) investment in 1982!
As golf became more and more popular among the masses throughout the 1980’s and 1990’s, the smaller golf stores started disappearing, and retail stores became popular. Callaway focused on selling their product through these retail stores, and kept their partners educated and knowledgeable by visiting the stores, checking inventory, and demonstrations with internal/external focus. Changes in the golf industry arose once other manufacturers and competitors caught up to the technology and ideas that Callaway based their principal strategies/products on. Taylor Made, Ping, and Titleist emerged with similar equipment, products, and technology. Callaway remained consistent, kept to their game plan of R&D, and marketing to the average golfer through primarily off course stores rather than on course. This allowed for a larger flow of customers and also availability due to only 70% of courses across the US being public. This didn’t sway them from doing business with on course shops, but maintaining their focus on the off course/retail side to reach the masses and distribute their product/brand. Helmstetter believed that by producing an innovative and technologically superior club and releasing it into the market with good timing, “consumers don’t know they want it, even if it is triple the price, and if they knew what they wanted, it is too late”. If they stuck with the central idea that they have a great product that worked, they will want it, no matter the price. Times during the 80’s and 90’s were all right politically and economically, and more and more golf courses were being built. Retail chains were emerging, and more people had money and became part of the middle class. Focusing on the average golfer meant focusing on the middle class businessman. Since money and business was growing, so was golf. Since Callaway focused on this group, the word of mouth in this population created a strong market for Callaway.
Due to emerging competition, Callaway realized that they had to strive to stay ahead of the game. Clubs, competitors, markets, and technology were changing so rapidly, and Callaway had to respond to this change to stay successful in the market. To stay ahead of the game, Callaway did a few things to differentiate the company as well as its technology. They offered specials and discounts when inventory with them and their retailers were rising. For example, they may send a store a free club to aid in reducing their inventory cost, and aid in financial statement reporting. Callaway would send reps to stores for cooperative marketing, to check inventory and educate sales staff about their new promotions and clubs. Most of the time this worked, but some retailers felt this took too much time from their employees, and the marketing material were a bit too much. Overall, the cooperative marketing strategy proved successful, and allowed a better connection of the company to the stores. Callaway was consistently in the top three with retail surveys for advertising, quality, and customer service. Callaway’s main focus for advertising is with “word of mouth”, endorsing professional golfers (to show it has quality), and a smaller amount of focus with television ads. Also, to leverage competition, Callaway, as most of their competitors, diversify their market into putters Odyssey), irons, women, and kids equipment and accessories.
Callaway has become a leader in the golf industry. Their focus on the average golfer and word of mouth has proven successful. They realize that in order to stay ahead of the game, their company must stay ahead technologically, respond faster with their release of these new technologies, and keep in touch not only with golfers, but with the retail side of business as well. I feel Callaway may focus too much on their competitors, and less on what their founding principles were of “just making a better club”. With so many analyst, stock, and pressure to make money, I feel that the brand has become so mainstream and available to the masses, that the market is now saturated with their clubs. They may be quality, but people generally want the latest and greatest, not whatever Mr. or Mrs. Smith have! If they focus again on differentiating themselves from their competitors by merely sticking to their roots in the future, then I believe they can have a long lasting brand. They entered the market at a great time, and are an industry leader. With the CEO/founder being 80+ years old, it’s time to think of keeping the old ideals with new faces. As long as they focus on being a quality leader and not their competitors, financials, and releasing new clubs to launch new clubs, and understand the consumer/retail relationships, I feel they will be here to stay. By supporting the consumers with up to date, flashy, technologically advanced clubs and supporting the retailers, Callaway will be successful.
Case Analysis
Callaway Golf
Calloway’s strategy from 1988 to 1997 was to provide quality golf equipment and accessories to the average consumer/golfer, at a premium price, have product different from competitors, and stay ahead of the game with response time in providing up to date technologically advanced golf clubs. Callaway wanted to provide an experience rather than a drab club. A club that looked good, performed better, and was more advanced than it’s competitors.
Ely Callaway had a vision to take the Hickory Stick USA, Inc. manufacturer, and turn it into a more innovative and industry changing company through original products. By utilizing personal drive and teaming up with Richard Helmstetter (pool stick manufacturer expert), they created a better way to utilize R&D to market their brand of clubs. By attempting to understand the market, utilizing a great R&D attack by formulating, documenting, and relaying errors, the Callaway team was able to produce and market innovative club technology. Linking golf players errors to how clubs can counter act the mistakes in ones game, Callaway marketed their innovative technology successfully. Their S2H2 (short, straight, hollow, hosel), larger club heads, better design, weight displacement, shafts, and material (titanium) allowed for a superior club. For example, the “Big Bertha” driver was a revolutionary design lead by Callaway, by basically having a larger club face, which extended the sweet spot, and allowed a once dreaded club to be manageable by golfers. This lead to a better experience while playing, and lead to future brand loyalty. The pricing didn’t seem to matter due to the “priceless” quality of improving ones golf game!
The technology and brand became representative of superior status, and allowed for their premium pricing to be accepted. Callaway focused primarily on the average golfer rather than the new or experienced golfer. This allowed their market to be very broad. If a middle of the road golfer were to play and bring a person that was new, they would more than likely give the advice to purchase the Callaway brand. It was thought that the more experienced golfers usually stuck with the brand they already were used to playing with, and felt that clubs don’t make the player, the player does. This word of mouth marketing proved to be successful, showing tremendous growth and sales of $843 million in 1997. That’s a great number for starting out with a $435K (and later 2M) investment in 1982!
As golf became more and more popular among the masses throughout the 1980’s and 1990’s, the smaller golf stores started disappearing, and retail stores became popular. Callaway focused on selling their product through these retail stores, and kept their partners educated and knowledgeable by visiting the stores, checking inventory, and demonstrations with internal/external focus. Changes in the golf industry arose once other manufacturers and competitors caught up to the technology and ideas that Callaway based their principal strategies/products on. Taylor Made, Ping, and Titleist emerged with similar equipment, products, and technology. Callaway remained consistent, kept to their game plan of R&D, and marketing to the average golfer through primarily off course stores rather than on course. This allowed for a larger flow of customers and also availability due to only 70% of courses across the US being public. This didn’t sway them from doing business with on course shops, but maintaining their focus on the off course/retail side to reach the masses and distribute their product/brand. Helmstetter believed that by producing an innovative and technologically superior club and releasing it into the market with good timing, “consumers don’t know they want it, even if it is triple the price, and if they knew what they wanted, it is too late”. If they stuck with the central idea that they have a great product that worked, they will want it, no matter the price. Times during the 80’s and 90’s were all right politically and economically, and more and more golf courses were being built. Retail chains were emerging, and more people had money and became part of the middle class. Focusing on the average golfer meant focusing on the middle class businessman. Since money and business was growing, so was golf. Since Callaway focused on this group, the word of mouth in this population created a strong market for Callaway.
Due to emerging competition, Callaway realized that they had to strive to stay ahead of the game. Clubs, competitors, markets, and technology were changing so rapidly, and Callaway had to respond to this change to stay successful in the market. To stay ahead of the game, Callaway did a few things to differentiate the company as well as its technology. They offered specials and discounts when inventory with them and their retailers were rising. For example, they may send a store a free club to aid in reducing their inventory cost, and aid in financial statement reporting. Callaway would send reps to stores for cooperative marketing, to check inventory and educate sales staff about their new promotions and clubs. Most of the time this worked, but some retailers felt this took too much time from their employees, and the marketing material were a bit too much. Overall, the cooperative marketing strategy proved successful, and allowed a better connection of the company to the stores. Callaway was consistently in the top three with retail surveys for advertising, quality, and customer service. Callaway’s main focus for advertising is with “word of mouth”, endorsing professional golfers (to show it has quality), and a smaller amount of focus with television ads. Also, to leverage competition, Callaway, as most of their competitors, diversify their market into putters Odyssey), irons, women, and kids equipment and accessories.
Callaway has become a leader in the golf industry. Their focus on the average golfer and word of mouth has proven successful. They realize that in order to stay ahead of the game, their company must stay ahead technologically, respond faster with their release of these new technologies, and keep in touch not only with golfers, but with the retail side of business as well. I feel Callaway may focus too much on their competitors, and less on what their founding principles were of “just making a better club”. With so many analyst, stock, and pressure to make money, I feel that the brand has become so mainstream and available to the masses, that the market is now saturated with their clubs. They may be quality, but people generally want the latest and greatest, not whatever Mr. or Mrs. Smith have! If they focus again on differentiating themselves from their competitors by merely sticking to their roots in the future, then I believe they can have a long lasting brand. They entered the market at a great time, and are an industry leader. With the CEO/founder being 80+ years old, it’s time to think of keeping the old ideals with new faces. As long as they focus on being a quality leader and not their competitors, financials, and releasing new clubs to launch new clubs, and understand the consumer/retail relationships, I feel they will be here to stay. By supporting the consumers with up to date, flashy, technologically advanced clubs and supporting the retailers, Callaway will be successful.
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