Callaway Golf Company: Analysis

The driver of the Callaway Golf Company is a world-class institution designed to provide a clear advantage, and to please different golf products, including breakthrough technology the backup these products significantly superior customer service, and generate a return to shareholders the cost in excess of capital.

“CGC was led by Ely Callaway, a powerful motivator who defined the company’s culture.” It’s a world famous golf brand of club and product. CGC’s sales had increased from 1988 to 1998. However, CGC’s sales have decreased after 1999. What are the problems to stop that eagle? “In fall 1999, Callaway faced these questions; the answers would guide him in refocusing CGC’s retail channels, new-product development, and marketing strategies.” In my case study, I will focus on new-product development and described my plan. Logistic include products transport, warehouse, and information processing center. Callaway Golf Club is in expensive price, but popular amateurs and professionals alike. Through its website and golf sporting goods stores, sporting goods retailers, large shopping malls selling its products in over 100 countries and regions,.(Hoovers, Dec)

External Environment

CGC is in the Cash cow. It means high relative market share and low market growth rate. That’s because CGC is well known in the world and their products in a lots of retailer stores and the clubs are famous. When Callaway buy the company, his first initiative is to develop original products. Product of golf innovation and superior performance is very important, because the equipment is considered to have a significant impact the performance of the players. In addition, innovation is very important too, because the CGC technology leader in sales of its premium products continue to exceed our customers’ expectations. However, his competitors more focus on specific target market. The technical quality of the product, to enhance the CGC of high quality brands and keep customers to replace the brand. The impact of the external environment, customers are more likely to have special clubs and low cast. To pay the annual high. The CGC is located in Carlsbad, CA(CGC official website) which full of sunshine. It is usually a good place to travel and enjoy golf. People in there might feel more relax than other states. Also, in CA, the employees are enough to do the work.

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Analysis

For the external analysis, the company has a lot of opportunities. Many sports good manufacturers are expanding in the golf market. The aging of the world’s population, many old people play golf, they have flexible income to buy golf equipment. Also, in New England state, Mid- Atlantic state and parts of south west, there are many golf players and the number is increasing. (New York Times. Feb) In Figure 3,

CGC strengths are new-products development and well known in the world. The weaknesses are high prices and company relied more heavily on off-course shops. The opportunities are new-products on existing markets and marketing strategies. The threat is new-products sales decrease, low prices, cannot have good value. I will talk about products transport and warehouse in my first step, information processing center will be a follow page.

The catastrophic storm affects not only the golf round in the storm, but a significant period of time. The external analysis will change, because face different economic and compare the situation in the global market.

There are several reasons that will treats the external analysis. The high rate of unemployment rate and the increase in the level of consumer debt. Rejected consumer confidence and spending is increasing year by year. The most important reason is that the increase in the euro against the U.S. dollar, sales in euros had a negative impact. For internal analysis, small golf club manufacturers, new technologies and new production methods to become the world’s largest manufacturer of premium golf clubs and a dominant force in the industry. (ELY: NEW YORK)

The CGC sell more units, the highest price of more equipment than any other company in the business of golf. This is a successful marketing decisions and strategies. , And provide high quality at a high price sales. People will be willing to buy products and interest rates high.

Callaway consumers can trade allowances. From their club to the new Callaway clubs. This option is for consumers to upgrade their equipment.

However, the internal analysis is also have weaknesses. Callaway marketing is focused on promotion, by professional players. The company tracks imitate, resulting in higher administrative costs and loss of income, this is very difficult.

Global Manufactory and Warehouse

CGC need to set up manufactory in different countries for new-products’ transporting and saving. In figure 1,

I can clearly find that CGC is in the Product development’ square, the top right side. It means new-products for the existing markets. “To achieve that, CGC had to consistently be on the leading edge of technology and to continually exceed customers’ expectations” (CGC’s case page 505). CGC need to make new-products to continually exceed customers’ expectations. But that “CGC’s biggest challenge, therefore, was to have products differentiated not only from competitors’ products but also from its own. If a product stayed in the pipeline too long, even if it was the best product, its sales would begin declining. This decline occurred because the people who really wanted the product would buy it within the first two years of its introduction” (CGC. 4). The key word is “pipeline”. What is that? It’s “a conduit of pipe, especially one used for the conveyance of water, gas, or petroleum products”( http://www.thefreedictionary.com/pipeline). Yes, products transport. CGC’s wasted time in new-products transportation. For instant, main manufactory transports new-products to global market need a month. If CGC has global manufactory, they just need a week or least in the transportation. That is the reason why manufactory set in foreign countries is very important stratagem. For instant, Apple Co. set his manufactory in China, cheap labor and costing, and than area manager saved those products in their warehouse in location and reported main logistic manager how many products they reserved. Marketing research, area manager build profitable relationships and create customer delight and reported main company about their area’s demand. And they made every month’s demand figure for data copy. Manufactories know how much product they need to make and warehouse will has enough room for new-product and old one. Aside from that, global warehouse good at fix that demand exceeds supply and supply exceeds demand problems. In CGC’s case, manufactory made new-product and transport to off-cause retailers have at least two problems. One is transport slowly, wasting time and declining value of “new”. Another problem is retailer hasn’t enough room for new-products. The second question CGC tried to use other way to fix. “Closeouts generally occurred when existing equipment was discontinued to make room for new products or when CGC had too much inventory itself and wanted to get rid of it. At the time of a new-product introduction, for example, if a retailer had eight of the previous clubs left in inventory, CGC would supply the store with one more new club for free, which brought down the average cost of the remaining inventory. Once a new product was introduced, the retailer had the discretion to mark down the remaining inventory to a price at which it would sell” (CGC’s case page 514). It’s helpful to make room for new-products and low price to sell closeout. “In 1999, CGC held its own closeout and sold $40 million of excess inventory of Great Big Bertha, Biggest Big Bertha, and Great Big Bertha irons to the market at a lower price” (CGC’s case page 514). If they have global warehouse, that would be saving resource and decreasing supply exceed demand risk rate.

Information Processing Center

Information processing center is the place that customers’ require report department. Their have information collect and transmit system to support manufactory, warehouse, and logistic manager or decision center. In case, CGC’s customers are from True friends shift to Butterflies.

Customers are no longer loyalty and they just need the products to play golf that’s it. New-products are the way to continually exceed customers’ expectations, that’s a reason why CGC need to know what customers needs and wants. “Golf was a difficult game whose participants’ emotions ranged from frustration to addiction, with passion and fun mixed in. Even when played in teams, golfers were very competitive with themselves. Golfers often blamed their equipment for their poor play and thus often wanted to update their clubs” (page 506). Those are all different level’s golfers’ wants and needs, high-level golfers doesn’t matter what type of club they used. Average golfers want to play golf and win the game in golf clubs, so they will keep the clubs. “Although one’s mental state and skill level had much to do with on-course achievement, in golf, unlike almost any other sport, the equipment also had a significant effect on a user’s performance. Even though highly skilled golfers would play well no matter what type of club they used, average golfers were able to see noticeable improvements in their game when they used premium equipment. Beginning golfers also benefited because the more forgiving clubs allowed them to make ball contact sooner, frustrating them less so they would not quit the sport prematurely”(case page 506). Beginning golfers would more advice of salespeople. “For a beginning golfer, buying new clubs was a daunting task. Retail shops offered a wealth of options that forced beginners to rely on the advice of salespeople”(page 507). CGC need to have those require from information processing center and make marketing strategies, refocusing on retailer. For example, focus on salespeople training for new-products promotion. For a beginner, salespeople can promote new-products or some old-model with 30%-50% discount. Old-model with discount would easier for people needs. It would not cast a lot of money and good for closeout from warehouse. And CGC gives those salespeople who are selling master 10% of $500 units sold encourage and 20% maximum. Those encourages also be used to information processing center to collect information from customers’ demand. And transmit this information to decision center.

Summarize

CGC has a premium pricing strategy. It provides a high-quality product premium average players who want the performance benefits of the product.

Callaway’s strategy is successful, mainly because of its innovative edge. In addition, the average golfer that their products provide performance advantages.

The country has contributed to the success of the industry. During this time the public interest in golf increased a lot. In addition, the market is not over saturated, the Internet is not in selling products an important factor.

Establish a global manufacturer and warehouse sales will add new products and maintain profitability. And information processing center is useful to study the market and customer feedback and requirements. This will help from the external environment and threat reduction rate.

Cities

“Callaway Golf Company”. New York Times, 8 Feb 2013. Web

http://topics.nytimes.com/topics/news/business/companies/callaway-golf-company/index.html

“Callaway Golf Company Company Information”. Hoovers, 31 Dec 2012. Web

http://www.hoovers.com/company-information/cs/company-profile.Callaway_Golf_Company.fd42e2e0f3140749.html

“Callaway Golf Company (ELY: NEW YORK)”. Bloomberg BusinessWeek, 2 Feb 2013. Web

http://investing.businessweek.com/research/stocks/financials/financials.asp?ticker=ELY