Case Study Analysis Callaway Golf
The key issues concerning Callaway Golf Company are:
* Relationship with its retail partners
* New product development
* Marketing strategy
Problem:
Callaway has experienced its first loss of $ 27 million after 10 years of growth. Competitors had finally caught up to Callaway's superior R & D capabilities and are flooding the market with new products and promotions, raising the bar for consumers on when to replace their equipment.
Callaway's strategic success in 1988 to 1997 is highly credited to its R & D facilities. Their approach toward innovation and technology provided a cutting edge against the other competitors in the market. The way Callaway was able to continue their differentiation features was through their highly skilled R & D. This was expensive which is why many companies choose not to compete in the area of differentiation. Over a five year period it spent $36.3 million on R & D alone.
Revolutionary "unanswered question" approach produced true market drivers in S2H2, Big Bertha, and titanium. Competitors could not catch up to the technology, enabling premium pricing and superior brand image.
They understood their customer well. They had the ability to identify and solve latent needs (e.g., a driver with accuracy) created a "pull" demand pattern. Pull demand made collaboration of retailers' easy and even enhanced promotion through voluntary celebrity usage. This took design expertise, in addition to understanding the addictive/obsessive/emotional relationship golfers have with their equipment. Selection of the average golfer as target customers tapped into the market most influenced by and likely to discuss golf technology. This is also one of the fastest growing segment, 27 %( 5.4m) of 20m US golfers in 1986, 32% (8.4m) of 26m US golfers in 1998.
Thus the factors that contributed to its success were as follows:
* Performance and quality of its club
* Product innovation
* Sales at of-course retailers
* Premium pricing
*
* Relationship with its retail partners
* New product development
* Marketing strategy
Problem:
Callaway has experienced its first loss of $ 27 million after 10 years of growth. Competitors had finally caught up to Callaway's superior R & D capabilities and are flooding the market with new products and promotions, raising the bar for consumers on when to replace their equipment.
Callaway's strategic success in 1988 to 1997 is highly credited to its R & D facilities. Their approach toward innovation and technology provided a cutting edge against the other competitors in the market. The way Callaway was able to continue their differentiation features was through their highly skilled R & D. This was expensive which is why many companies choose not to compete in the area of differentiation. Over a five year period it spent $36.3 million on R & D alone.
Revolutionary "unanswered question" approach produced true market drivers in S2H2, Big Bertha, and titanium. Competitors could not catch up to the technology, enabling premium pricing and superior brand image.
They understood their customer well. They had the ability to identify and solve latent needs (e.g., a driver with accuracy) created a "pull" demand pattern. Pull demand made collaboration of retailers' easy and even enhanced promotion through voluntary celebrity usage. This took design expertise, in addition to understanding the addictive/obsessive/emotional relationship golfers have with their equipment. Selection of the average golfer as target customers tapped into the market most influenced by and likely to discuss golf technology. This is also one of the fastest growing segment, 27 %( 5.4m) of 20m US golfers in 1986, 32% (8.4m) of 26m US golfers in 1998.
Thus the factors that contributed to its success were as follows:
* Performance and quality of its club
* Product innovation
* Sales at of-course retailers
* Premium pricing
*