Underlying Drivers of Change in the Golfing Equipment Industry
Case Study question 3
The landscape of the golf equipment industry has changed dramatically over the last 20 years. The technological advancement of the equipment has brought about new regulations from the USGA which are aimed at limiting the effect of technologically advanced equipment on participant’s performance. The equipment manufactures disagreed with the decision. They felt that recreational golfers would be discouraged from participation as a result. The US recession has led to a drop in participation in golf as Exhibit 3 shows in 2008 of rounds played figures compared to the previous 3 years. This in turn has led to a drop in golfequipment sold in 2008 across the board compared to the previous 3 yearse.g. the drivers sales figures dropped from an average of 851.1 in the previous 3 years to 772.2 (Millions) in 2008. This is despite a drop in the average price per unit from $174 in 2007 to $167 in 2008.The increase of counterfeit equipment being produced and sold on the black market is a major concern for the 6 leading manufacturers. The rise in counterfeit golf equipment was attributable to golf executive’s decision to source club heads and sometimes contract out the assembly of golf clubs to manufacturers in china. It was estimated that the counterfeiters could produce a club for $3. In order to try and differentiate their products from competitors, companies have turned to PGA tour players for endorsements. These endorsements have grown in monetary terms over the last decade. Top 10 golfer’s endorsements have risen from an average of between $250,000 and $400,000 to $ 4 million annually. The highest earner isTiger Woods who revolutionised endorsements in 1996, when he signed a $40 million deal for 5 years, through to 2009 where he earned a massive $25 million through endorsements with Nike golf. Tiger Woods is worth nearly $1 billion today.
We have identified the underlying drivers of change as being technological change and product innovation, the US recession, change in societal concerns, attitudes and lifestyles, increasing globalisation, entrance