Callaway Golf Company’s (CGC) had seven key success factors to include: the founder’s vision; product design; pricing; product development; sales; marketing and the media. The founder, Ely Callaway’s vision is: “If we make a truly more satisfying product for the average golfer, not the professionals, and make it pleasingly different form the competition, the company would be successful. ” However, this vision is change from other company’s visions; the difference being that the price is not mention.
Product design: CGC introduced three new designs in golf clubs in 1988, the first, short, straight, hollow, hosel (S2H2). This club distributed the weight of the hosel, nearly eliminating it to free up precious weight to be used elsewhere in the club, and push the shaft straight through the club head. In 1991, Big Bertha, named after a World War I canon, is an oversized metal wood that provided a larger “sweet spot”, which provided better accuracy for the average golfer. It was one year after Big Bertha was sold before competitors had an oversized metal wood.
By 1995, Titanium was the company’s third primary technological breakthrough. Because the total weight of the clubhead is fixed, titanium aided in moving the material away for the clubhead center. Pricing: CGC introduced the Big Bertha in 1991 for $400. “Which was probably twice as much as anybody had ever paid for a driver” the company knew that it had a great product and that it would bring internal benefits to the golfer, and it sold very well. Calloway Golf pricing strategy infrequently adjusted their price.
The price was “typically maintained over the life cycle of the product,” the product was only reduced after the end of the life cycle of the product, which was typically two or three years (seasons). CGC pricing could be considered perceived-value pricing. Supplier reputation and product performance as just a few elements that make up PVP. CGC sold more units of more equipment at a premium price than any other company in the golf business. Product Development: CGC sold more units of more equipment at the highest prices than any other company in the golf business.
To achieve this, CGC had to consistently be on the leading edge of technology and to continually exceed customer expectations. Research and Development spending went from $6 million in 1984 to $37 million in 1988. Sales: CGC sold to on-course and off-course golf retailers who sold professional-quality equipment. The number of on-course retail sales had increased from 5,000 to 7,000 over a five-year period, whereas off-course retail stores increased from 1,500 to 2,000 over the same period. Marketing: CGC’s marketing program was critical for two reasons.
The first was the product. It was a product that that was superior and different from its competitors, that CGC could ultimately charge a premium. Second, CGC achieved product differentiation by updating its technology regularly via research & development. Media: When Big Berthas launched in 1991, CGC ran three consumer print ads and three trade ads in trade magazines. Ely Callaway said, “Not a minute of television-all word of mouth based on the performance of the product. Television was later used, airing commercials primarily during golf tournaments and also CNN and ESPN.
Callaway Golf Company (CGC) has been providing top tier golfing equipment for years to the golf community. Their target market is what is called an average golfer. This person is defined as playing ten rounds minimum per year and who generally have an eighteen or above handicap and purchases new equipment every two to three years. With changes in the marketplace, CGC has to make its own change so that it can compete and be successful. The first change for CGC came in the product development realm. CGC sold more units of more equipment and the highest prices that any other company n the golf business. CGC had to be on the leading edge of the latest technology and also exceed the customer’s expectations. Research and development was a critical part of its success and future success that CGC had to place major focus on. They had to maintain their market edge plus solidify their hold as the market leader by consistently releasing new models that differentiated it from competitor’s products and CGC’s own products as well. If a product stayed in the market too long, the sales would eventually peak and then start a downward trend, so getting out at the peak is the key.
With the product differentiation being one key to Callaway’s success, the next focused on the consumer knowledge of the piece of equipment. New technology is good for the golfing community, but if no golfer is aware of the product or how to use it to its fullest potential, the customer will quickly become dissatisfied. The CGC used television, golf magazines, trade publications, and word of mouth as its primary forms of advertising. The company also endorsed professional golfers on all five major tours (PGA, LPGA, Senior PGA, European PGA, and NIKE) as a vehicle to promote its products.
CGC used these professional endorsements more as a validation of the effectiveness of the product in its marketing campaign. With the professional endorsement by these golfers, the target market was able to see the product in action and also learn how to properly use them. With practice, these average golfers would practice and see improvements in their own game thus leading to product loyalty and happiness when playing golf. As this writer knows all too well, golfing is fun but at the same time, it is very frustrating.