CALLAWAY GOLF

COMPANY

Presented by
DEEPAK S
S2 MBA
 Brief about the company

 Founded -1982
 Founder - Ely R. Callaway, Jr.

 Headquarters - Carlsbad,
California,USA
 Website - http://www.callawaygolf.com/
 manufacture a full range of golf
equipment, including woods, irons,
wedges, putters and golf balls, and
also license the Callaway brand
name for apparel, footwear,
timepieces and accessories.
 also market products under the
Odyssey putter brand as well as the
Top-Flite, Strata and Ben Hogan
golf brands picked up following the
bankruptcy of Spalding’s former
golf division in 2003.
Ely Callaway
 Was born at LaGrange, Georgia.
 was a graduate from
Emory University.
 very successful in the textile
industry and was very fond in
playing golf.
 Had a vineyard, which he sold
for $9 million profit.
 Passed away on July 5, 2001.
 Vision
 “if we make make a truly more satisfying
product for the average golfer, not the
professionals, and make it pleasingly
different from the competition, the company
would be successful.”
 Golf Course Features
 1 = teeing ground
2 = water hazard
3 = rough
4 = out of bounds
5 = sand bunker
6 = water hazard
7 = fairway
8 = putting green
9 = flagstick
10 = hole
 Different Golf Clubs
 The Driver : the longest
hitting wood club.
 The Fairaway Wood: used
to hit the ball from the
fairaway region (between
the Teeing area and putting
green)
 The Utility Woods: used
to hit the ball from
roughs.

 The Putter: used to hit

the ball from the greens
to the hole.
 History
 In 1982, he bought half of Hickory
Sticks and renamed to Callaway
Hickory Stick USA.
 In 1984, Callaway bought the rest
of the company for $400,000.
 In 1986, Callaway hired a billiard
cue designer, Richard C.
Helmstetter, as a consultant and
later as the Vice President of CGC.
 In 1988, CGC introduced a
unique club head model called
S2H2 (short , straight, hollow,
hosel).
 In 1990, S2H2 irons and
woods were available with
steel or graphite shafts and this
club was No.1 on the Senior
PGA Tour.
 In 1991, CGC introduced
the Big Bertha (190cc)
steel clubhead and priced
at $250.
 In 1995, Big Bertha was
replaced by Great Big
Bertha Titanium Drivers
and priced at $500.
 No. 1 in PGA Senior, Nike
and European PGA tours
 In 1996, Don Die became the CEO
and introduced products like Biggest
Big Bertha Titanium Driver and the
Great Big Bertha Tungsten Titanium
Irons.
 In 1997, purchased Odyssey Golf
for $130 million.
 In 1998, Ely Callaway reassumed
CEO leadership.
 By 1998, about 69% of all
professional golfers world wide
played with CGC Drivers.
 In 1998, CGC introduced Big
Bertha X 12 Irons
 In 1999, CGC introduced the
Great Big Bertha Hawk eye
Titanium Driver and Fairway
woods.
 In 2001, Ely Callaway passed
away and Ron Drapeau took
charge as CEO
 In 2003, Ron Drapeau,
announced the intended purchase
of Top-Flite Golf, as well as its
Ben Hogan Golf division, soon
after it filed for Chapter
11(Bankruptcy Code).
 Launched Callaway Golf Foot
wear and Callaway Golf Time
piece.
 In 2004 ,introduced the Worlds
longest driver Big Bertha
Titanium 454 Driver.
 In 2010, launched
Callaway Golf India,
golfer Jeev Milkha
Singh joins the
Callaway family.
 The Diablo Edge line
of clubs were
introduced including
Drivers, Fairway
woods, Irons and
Forged Irons.
 Product Development
 Sold good quality goods at premium price.
 Leading edge in technology and exceeded
customer expectations.
 Added the capacity from 5 lakh units in 1988
to 6 million units in 1998.
 Reason for the decline of sales.
 CGC’s biggest challenge was to have products that
were not only differentiated from the competitors
product but also from its own product.
 R & D spending had gone from $6million (1994) to
$37 million (1998).
 CGC introduced a new category with oversized metal
woods and many new competitors came to the market
seeing the success of CGC which initiated tough
competition.
 Reason for the decline of sales
(contd…)
 Most of the manufacturers are introduced there
products in a fast and furious pace and thus the
life cycle of the product was too short.
 In 1997-98 many manufacturing units
including CGC had to bear several millions of
dollars to get rid of excess inventory.
 Consumer Behavior
 Golf is a game which needs certain skills and
good clubs for making a better shot.
 Golfers usually complain their clubs for their
poor play and thus equipment also had a
significant role.
 Clubs also helped the beginners in making
contact with the ball sooner.
 Word of mouth recommendation was the
biggest marketing strategy used.
 Consumer Behavior (contd…)
 CGC’s main target market was the average golfer (15
rounds minimum/ year), usually changes their clubs
every 2 to 3 years.
 CGC’s other target market included the beginers (2-3
rounds/year)
 Beginers are price sensitive, reluctant to invest large
amount of money to purchase the club and usually
purchase starter sets ($100-$250) or they may
purchase second hand premium clubs or previous
years model at discounted rates.
 Consumer Behavior (contd…)
 Experienced players usually buy new clubs based on
the brand name as well as the latest technological
advancement.
 Golfers usually purchase the goods from off course
retailers (provides hitting bays and swing simulators).
 Avid golfers usually purchase clubs from on course
pro shop.
 Putters are the most inexpensive, most golfers tend to
update their putters frequently.
 Sales and Marketing
 Richard C. Helmstetter stated that CGC group
had to com up with products that consumers
did not know they wanted, even if it cost triple
the price, he believed that if the customer
knew what they wanted , then it is too late.
 Sales
 Sales both in US and abroad
(more than 50 countries)
 Sold both in on course and off
course golf retailers (65%).
 On course retailers mainly
indulged in activities like
running the course, giving
lessons, selling shirts and
renting golf clubs.
 CGC maintained “one price
policy” with all customers.
 Sales (contd…)
 Callaway Golf Sales Company sold products whole
sale to the customers via regional field
representatives, in house telephone sales people and
customer service representatives.
 Sales people divided customers into 3 groups, A, B
and C which representatives used to visit weekly,
once a month and 4 times per year respectively.
 Filed representative mainly look after the demo
sessions and inventory management.
 Marketing
 CGC used television, golf magazines, trade
publications and word of mouth as its primary
form of advertising.
 Product differentiation and usage of latest
technology gave an upper hand in the market.
 CGC also endorsed professional golfer in
PGA, LPGA, Senior PGA, European PGA and
Nike as a vehicle to promote its products.
 Marketing (contd…)
 In 1999, Tour player
Colin Montgomerie had
contracted with CGC for
$1 million, the highest
amount that the
company had ever paid
for a professional golfer
at that time.
CGC’s Total Advertising, Promootional
and Endorsement Related Expenses

Year Dollar Amount

1998 $79 Million (Advertising =$33 million)

1997 $ 62 million ((Advertising =$20 million)

1996 $45 million ((Advertising =$18 million)

Pricing of the Product
 The pricing policy followed by Ely
Callaway is based on the existing
product in the market as well as the
impact the product is going to make on
the consumer, how rare is the product,
how much money did it take to make
and how long did it take it and also the
labor cost as well as the R & D cost.
 Was not based on any set formula.
Golf Industry/ Competitive Analysis
 In 1986, there were 20 million golfers in
13353 course in USA and by 1998, there
were 26 million golfers in 16365 courses.
 According to National Golf Foundation, the
main reason for having less number of
golfers was because
1. Time consuming nature of the game.
2. Unavailability of courses.
3. Increasing cost to play.
Competition
 In late 1980’s and early
1990’s , manufacturers were
not well financed and were
unwilling gamble on new
radically designed products.
 The main competitors of
CGC were Taylor Made,
Titleist, Cobra and Ping.
Taylor Made Golf
 Acquired by German
multinational Adidas-Salomon
in 1997
 Produced the revolutionary
Bubble shaft in 1994.
 Sold their goods both through
off course and on course shops.
Titleist and Cobra Golf
 Were both owned by Fortune
brands.
 Titleist marketed itself as the
professional or very good players
product.
 Spend twice the amount for
endorsement as compared to CGS.
 They also had the NO. 1 shoe (Foot
Joy)
 Tiger Woods also used the Titleist
clubs.
 Cobra Golf

 Was founded in 1973.

 They also focused on highly skilled golfers.
 Was dedicated also to average golfers, especially ladies
and seniors.
Ping Golf
 Privately owned golf
company.
 Management was very
keen on R&D and Ping
was famous for heel-toe
and perimeter weighting
as well as custom fitting
innovations
 Regulatory Pressure
 In 1998, the United States Golf Association
(USGA) announced the adoption of test
protocol to measure the so called spring like
effect in driver club heads.
 Its protocols are only followed in USA,
concerned both recreational as well as
professional golfers.
Retail Channels
 It existed on both off and on
course sites.
 On course, usually small and
with limited selection, were
located at golf courses.
 Off course, located outside
green grass, larger, offered
greater selection.
 Off course stores actively
used advertising as part of
their marketing strategy.
 Retail staff
 Beginner golfers needed a high level of service and personal
care.
 Average golfers exactly know which club hey have to
purchase.
 Higher skilled golfers spend their time most in the hitting bays
along with the sales people.
 To aid the point of sale product knowledge, CGC supplied
retailers with brochures, information CD, pocket size product
guides and training by its sales people.
 CGC also provided other supports like product advertising,
endorsements, demo days, warranty programs, close outs etc.
 As a result of all these efforts, retailers had ranked CGC as the
top three in advertising, quality of product and customer
service.
 Inventory
 Retailers displayed as well as sold CGC clubs
in order to validate their stores as legitimate
golf equipment shop.
 Inventory cycle was for a period of 2 to 3
months.
 On course shops sold mainly the soft goods
like shirts, caps and balls whereas off course
shops sols soft goods as well as clubs and
other accessories.
Retail Challenges

 In 1970, golf clubs were mainly sold through

on course shops and only 50 off course shops
were there.
 But now many shops have opened and it had
created tough competition.
 Another challenge CGC was its future role in
the internet, only 1 % of sale was done through
internet.
 Once a tv reporter asked Ely Callaway
whether CGC could stay ahead of the
competition, Ely Callaway replied by citing
Newton’s First Law of Motion “ No problem.
Bodies in motion tend to remain in motion”
 Questions
 What led to the decline of sales in 1998 ?
 What are the strategies used by CGC inorder
to face the tough competition in the market?