ALTIUS GOLF & THE

FIGHTER BRAND

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Gunjan Verma – B19078

Kapil Sachar -B19082
Rohan Coelho – B19082
Sajal Garg – B190102
Shounak Ghosh – B19108

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 Why has Altius Golf lost Market Share? What if they maintain the Status Quo?
If we analyse the decline of Altius market share, a cursory reading of the case suggests a
fundamental shift in the market profile of the consumer and the way golf was being perceived,
played and marketed.
As per Altius ‘s consumer survey, there are three types of consumer segments which are
available:
The Loyalists (the purists), The Enthusiasts and the Agnostics. Because of many factors,
including the recession, we have seen 4% from enthusiasts, and 1% from the loyalists move into
the agnostic category. As per the case, these are not the target segments and less likely to
purchase the expensive Victor and Victor TX range.
We are purposefully not dwelling into the specifics of the contraction of the market by near 16%
from 2003 to the succeeding decade, as we expect this should have affected all the industry

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throughout. The essential consequence of this is a change in the fundamental structure of the

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market. Our focus remains on how the market structure changed the effective target group

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which did not exactly conform with the premium and mid-range offerings of Altius.

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Dwelling more and quoting some excerpts from Altius’s market research:
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 High price as a deterrent to buying was reported by about 35% of golfers ‘
 20% of Altius customers, 26% of all current golfers, and 48% of lapsed or non-golfers
would be willing to try a non-conforming ball for which Altius had no products (before
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the launch of the elevate range)

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Another factor is that sales shifted from one of its stronger distribution channels of on-course
pro shops to off-course retail shops which might not have been the aptest for sales of their
more premium Victor TX range. Marketing techniques and attractive pricing like the ones
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adopted by Primera like custom ball fitting sessions rapidly helped steer the new entrants into
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the sport of the golf away from Altius and toward Primera.
As has been illustrated above and as the case clearly outlines, golf as a sport was on the decline
and the major efforts at reviving the sport were aimed at nonprofessionals and to paint Golf
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more as fun than a serious sport. In such a scenario a company stuck producing only Rolex’s and
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Omega’s of Golf balls (Victor TX) would soon lose out to the Swatches of golf balls (Primera,
Meridian, Rogue, Outlaw and Rocketeer).
Maintaining a high brand recall and equity with their premium range would keep the loyalists
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happy but mean they are cutting themselves off from a rapidly growing segment and might lose
out to any competitor who can upset their position as the most premium Golf ball, incase the
market structure changes in the future, with people shifting towards premium products by
upgrading golf balls from the middle price segment.

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What should Altius's objectives be? What trade-offs must be managed?

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Altius objectives are simple:

a) Gain market share lost especially within the off-course retailer channel
b) Ensure relevance in the face of a changing Golf Landscape by:
i) Ensure it gets a piece of a pie for the new growing segment of non-conforming balls
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ii) Possible diversification from Non-Golf ball equipment (40% of their revenues) to
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counter the decline of the industry post the recession

c) Explore possible avenues like Primeira and USGA to revive general interest in golf as a
sport. This is to ensure the survival of the industry and perhaps convert low involvement
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consumers like Atheists and Enthusiasts to Loyalists.

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The trade-offs which must be managed while achieving these objectives are:
1. Ensuring that the introduction of the elevate range does not lead to brand equity
erosion especially among the Loyalists category of Golfers
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2. Effectively capturing back market share by providing discounts while handling profit
margins across products.

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 What is the economics of Altius's performance concerning the competitors? How would the
introduction of Elevate impact this?

Altius maintains a retailer’s gross margin of 15% compared to its competitors who maintain a
margin of 20%. Keeping the manufacturer’s margin 70% (higher than competitors), the absolute
margin of Altius is considerably higher than that of its competitors. This holds for both Premium
and Mid-range segments.

If they choose to release Elevate into the market, priced at $27 and keeping cost of production
at $7.75, there will be considerable challenge in establishing a stable position in the Value
market, because Arc and Pegasus are the top-selling balls of Premiera and Carlsbad respectively,
and can be assumed to command good shares respectively in that segment. Hence, disrupting
the market with Elevate will be considerably tough, along with providing suitable promotions.

Brands Ace and Pegasus are the top-selling balls of the companies Premiera and Carlsbad,

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respectively. So, it will be difficult to replace the shelf space with Elevate balls even with

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expensive advertising campaigns. As shown through the colour codes, this problem can be

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solved in two ways (keeping the COGS/dozen at $7.75): one, offer a trade promotion increase
the retailer's margin to 28% i.e. $7.63, more than two dollars more than the other brands offer.

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Two, offer a consumer promotion and keep the price at $24.22, which is the lowest among the
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competitors.
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Should Altius implement the Elevate Strategy?

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 a) If yes, then what the risks and how should they be managed? What sales results you
expect for each item in line with the introduction of Elevate?
b) If no, then how does Altius live up the expectation of The Board for increased profits
from the Golf ball line?

The dwindling sales of the premium segment of the golf ball market are evident. Also, the
consumer survey suggests that most people want to try lower-priced balls. The USGA (United
States Golf Association) is also promoting the game as a fun sport twisting the rules of the game
to get more people to play the game. They are promoting golf as a low-cost sport to bring
children and women to play the game. To adapt to the changing needs of the market, the
company must implement the Elevate Strategy.
The risks to be managed in implementing this strategy are:

1. Dilution of the brand value. The company has been known for selling professional,
premium segment products. They have been known to manufacture very high-quality

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golf balls conforming to the highest standards. The company owns a lot of patents
because of which it can manufacture and sell various kinds of premium golf balls. Now,

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with the Elevate program, the company is cutting down on the quality and the
conformance to standards to cater to the mass market. This might dilute the brand value

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for the loyalists and the professionals who associate the brand with prestige. As the
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dollar per market share numbers suggest, their brand equity is the highest in the market.
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This might reduce with the introduction of the new lower-priced product.
2. Restructuring of the sales and marketing division of the company: The company spends
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heavily on marketing to convey the message of credibility and prestige to its customers.
Also, the major sales of the company come through the On-course market channel. As
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the lower-priced balls would be sold more through the price-sensitive off-course market
channel, the entire strategy for marketing and sales of the company would need to be
restructured. This would involve hiring and firing a few people. The intended benefit for
this kind of restructuring takes time to manifest itself. This is the risk that the company
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faces on implementing this strategy.

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