Callaway Golf Case Study
Questions for Callaway Case
1) From the facts in the case, what were the trends and changes taking place in the market and environment that the Callaway Golf Company operates in? In undertaking this analysis, consider trends and changes in the areas of competition, market demand and product life cycle, consumer behaviour, and distribution channels.
2) Given these changes, does the Callaway Golf Company need a new strategy? If your answer is YES, then make recommendations for its overall strategy and accompanying marketing mix tactics. If your answer is NO, then highlight why its existing strategy has been successful and offer some refinements or improvements (if any).
Ely Callaway – Founder, Chairman, Chief Executive officer
1988=$5million 1997=$800million 1998=A loss of $27million – (17% drop in sales)
Advertising/Promotional Expenditure:
1996=$45million 1997=$62million 1998=$79million ($17million dollar increases each year)
R&D expenditure:
1994-$6million 1998-$37million
The market was becoming increasingly competitive.
CGC’s biggest challenge was to have its product differentiated not only from competitor’s products, but from its own as well. Sales will start to decline if a product has been in the pipeline too long, therefore newer versions were constantly necessary.
The new product needed to be an improvement from its predecessor and often came along with a higher market price. This price increase needed to reflect the increase in quality of the driver, but in 1996, the introduction of the Biggest Big Bertha was overpriced at $600 (verses $500 for the great big bertha).
Perhaps they relied too much on word-of-mouth. Even though it is said to be the most accepted form of advertising by golfers, competitors may have had a large scale advertising/sponsoring campaign which could drown out the advertising of CGC.
With the decline in avid golfers and a rise in active golfers, demand for expensive clubs may have decreased, as
1) From the facts in the case, what were the trends and changes taking place in the market and environment that the Callaway Golf Company operates in? In undertaking this analysis, consider trends and changes in the areas of competition, market demand and product life cycle, consumer behaviour, and distribution channels.
2) Given these changes, does the Callaway Golf Company need a new strategy? If your answer is YES, then make recommendations for its overall strategy and accompanying marketing mix tactics. If your answer is NO, then highlight why its existing strategy has been successful and offer some refinements or improvements (if any).
Ely Callaway – Founder, Chairman, Chief Executive officer
1988=$5million 1997=$800million 1998=A loss of $27million – (17% drop in sales)
Advertising/Promotional Expenditure:
1996=$45million 1997=$62million 1998=$79million ($17million dollar increases each year)
R&D expenditure:
1994-$6million 1998-$37million
The market was becoming increasingly competitive.
CGC’s biggest challenge was to have its product differentiated not only from competitor’s products, but from its own as well. Sales will start to decline if a product has been in the pipeline too long, therefore newer versions were constantly necessary.
The new product needed to be an improvement from its predecessor and often came along with a higher market price. This price increase needed to reflect the increase in quality of the driver, but in 1996, the introduction of the Biggest Big Bertha was overpriced at $600 (verses $500 for the great big bertha).
Perhaps they relied too much on word-of-mouth. Even though it is said to be the most accepted form of advertising by golfers, competitors may have had a large scale advertising/sponsoring campaign which could drown out the advertising of CGC.
With the decline in avid golfers and a rise in active golfers, demand for expensive clubs may have decreased, as