Callaway Golf Co.

Contents [hide] 1 Basic Information of Callaway Golf Co. 2 Case Summary of Callaway Golf Co. 3 Case Analysis of Callaway Golf Co. 4 External Link of Callaway Golf Co. 5 Relevent File Cabinet of Callaway Golf Co. 6 Article Purchase Link of Callaway Golf Co.

Basic Information of Callaway Golf Co.

Author:  Rajiv Lal, Edith D. Prescott
Publisher: HBR
Case Number: 501019
Publication Date: Aug 11, 2000
Revision Date: Sep 26, 2005
Course Category: Marketing

Case Summary of Callaway Golf Co.

Sales
1/3 of off-course shop sold 2/3 products
2/3 of on-course shop sold 1/3 products
One price policy to all customers
CGC->Callaway Golf Sales Company:
1. regional field representative(outside)
2. in-house telephone salespeople(inside)
3. customer service representative
Customers:
A: visit weekly
B: visit monthly
C: 4 times per year
Sales people spend 1~2 hours in one store.
Sales responsibility:
1. Demo Day (on weekends, on course)
2. maintain inventory (inventory management)
3. straighten up display
4. taking order
5. product seminar
6. to know store sales people and educate them
Sales outside US account for 37% of sales. Foreign sales receive a export-discount price to cover oversea sales expense.
Marketing
Focus on average golfer, so don’t spend much money on only super star. Invest endorsement on leader group.
Media
Based more on word of mouth. Emphasize R&D and technology in a lighthearted way. Don’t buy prime time because cost is too high.
Pricing
Every product has different situation. Thus, there is no set formula for pricing. CGC adjust wholesale price infrequently. They may change the price 2 or 3 seasons before new product launches.
Competition
Iron and woods: Taylor Made, Cobra, Ping
Putter: Titleist and Ping
Most companies can’t come up with a better new product when the old one is in the end of its life cycle.
Taylor Made:
Acquired by Adidas in 1997. Focus on average golfer. Known to have discount and promotion programs such as rebate and cooperative marketing. Have new product every year, because the management didn’t know the direction of the company.
Titleist:
Focus on professional or very good golfer. Spend twice as much money as CGC on endorsement. #1 in shoes (Foot Joy) and balls.
Cobra:
Dedicated to ladies and seniors.
Ping:
Head to head competitor with CGC in irons. Focus on R&D. Known for custom-fitting innovation. Heel-toe and perimeter weighting.

• Spiringlike effect or spring effect: the change of club face that makes the ball fly farther.

Retail Staff
Retail sales people don’t have enough product knowledge due to 1. high turnover 2. low salaries 3. noncareer status of salespeople.
CGC aid to educate end customers by putting brochures, CD ROMs, TV set with video, pocket-sized product guide, and product training by CGC sales representatives.
Retail sales people complained CGC representatives don’t stay long enough. Thus, they are not well-educated about the value of Callaway products.
Before a new product come out, CGC help retailer by giving one more club free for 8 existing inventory to lower average inventory cost for retailer.
CGC is last in margin, because of “no volume discount” and “2% 30 net 60”(very tight schedule compared with some 120 days terms in this industry)
Inventory
Stores use CGC product to create price image because customers compare CGC product price store by store.
Retailers carry 2~3 months inventory.
Retail challenge
Online sale is not so important in this industry because people want to try and feel and get satisfied right away.
Manufacturers still need retailers.