Altius Golf and the Fighter Brand

Case Study Analysis

Altius Golf is a company that creates and markets premium golf gear and accessories. The business recently debuted a new golf ball called the "Javelin," which it hopes would revolutionize the sport. However, they are encountering a hurdle in terms of pricing and selling their goods successfully.

The Fighter brand, on the other hand, is a relative newcomer to the golf market. They have a successful marketing strategy and have positioned themselves as a market disruptor. They offer golf equipment at a lower price point, and their products are perceived as being of similar quality to those of established brands.

Altius Golf must decide whether to price the Javelin golf ball higher and maintain their premium brand image. However, selling the Javelin ball lower would enable Altius Golf to take on Fighter and expand its market share. Long-term profitability may rise as a result of greater brand recognition and the opportunity to upsell clients on further Altius Golf items.

Another consideration is the impact on brand perception. Altius Golf has built a reputation for quality and innovation and pricing the Javelin ball too low could damage their brand image. Customers may perceive the product as being of lower quality and, as a result, may not be willing to pay a premium for other Altius Golf products in the future. However, not responding to the competitive threat of Fighter could also be damaging to Altius Golf's brand image. If Fighter gains a significant market share, it could be difficult for Altius Golf to regain lost ground. Therefore, it may be necessary to lower the price of the Javelin ball to remain competitive. To preserve their luxury brand image while also remaining competitive in the market, Altius Golf must carefully examine pricing and marketing methods for the Javelin ball. When making this choice, they should take into account the effects on the perception of the brand, consumer demographics, profit margins, and potential for long-term growth. Ultimately, the key to success will be finding the right balance between pricing and marketing strategies that best meet their goals and objectives.

USING THE PrOACT model

THE PROBLEM

The Main problem or dilemma is how Altius Golf should address the challenge posed by its competitor, which has introduced a private-label golf ball called "Fighter" at a significantly lower price point. This has led to a decline in Altius Golf's market share and sales revenue.

Altius Golf must choose between matching the competitor's price and running the risk of damaging the perception of its premium brand or sticking with its present pricing and maybe losing market share to the rival's private-label brand. In order to compete with the Fighter brand, Altius Golf must also decide whether to launch its own less expensive golf ball or concentrate on its premium goods and marketing initiatives.

The dilemma is further complicated by the fact that Altius Golf has established a reputation as a premium golf equipment manufacturer with a loyal customer base and lowering prices could potentially damage this reputation. On the other hand, failing to respond to the market demand for more affordable golf balls could result in further declines in market share and revenue.

OBJECTIVE:

To increase market share and profitability in the US golf ball market while maintaining the reputation and sales of the Altius brand.

ALTERNATIVES:

1 The introduction of a new brand named "Fighter" that will be sold for less money than the Altius brand. The intention is to appeal to consumers on a tight budget who are looking for a less expensive option to the high-end golf balls currently on the market. This could potentially expand Altius' customer base and increase market share in the lower-priced segment of the market.

Advantages:

• Possibility of gaining access to a new consumer base that Altius is not currently serving, and increased market share in the more affordable price range.

Disadvantages:

• Risk of diluting the premium brand image of Altius
• Uncertainty of whether the new brand will be successful in the market

2. Maintaining the status quo

Advantages:

• Maintaining the premium brand image of Altius
• Lower risk of cannibalization of Altius sales

Disadvantages:

• Potential loss of market share in the lower-priced segment of the market
• Limited potential for growth in the premium segment of the market

3. Launch a mid-range product under the Altius name. The launch of a mid-range Altius brand product, priced halfway between the premium Altius brand and the more affordable Fighter brand. The objective is to draw in clients who are looking for a fair trade-off between cost and quality.

Advantages:

• Possibility of gaining access to a new consumer base that Altius is not currently serving
• Gained market share in the mid-range category of the market Chance to stand out from rivals and possibly boost brand recognition

Disadvantages:

• Risk of Altius's premium brand reputation being compromised
• Uncertainty regarding the new mid-range option's market viability.

CONSEQUENCES:

1. The launch of the fighter brand might cause Altius brand sales to be cannibalized, but it might also draw in new, price-conscious consumers and boost market share overall.
2. Lowering Altius' costs might make it more competitive, but it might also harm the brand's reputation and perceived worth.
3. Altius' premium position might be maintained, and its perceived value increased by investing in marketing and promotion, although doing so might be expensive and may not yield large market share increases.

TRADE-OFFS

The trade-offs entail weighing the advantages and disadvantages of each possibility. In this case, the launch of the fighting brand could boost market share but could reduce Altius brand sales. Lowering costs could make a company more competitive, but it might also harm the brand's reputation. Maintaining the brand's premium position through marketing and promotion spending could be expensive. Losing the market would mean losing chances for the present and the future

UNCERTAINTY

There is uncertainty surrounding each alternative's likelihood of success, as well as the actions of competitors and consumer behavior. It is unknown how the launch of the fighter brand would impact Altius brand sales or how rivals will react to any suggested strategies.

RISK TOLERANCE:

Prior to choosing a course of action, Altius must take into account its risk appetite and assess the prospective advantages and hazards against it. Introducing the fighting brand and making marketing and promotion investments are both rather risky moves, whereas cutting prices and leaving the market are safer choices.

LINKED DECISION

The choice of how to market and price the Altius brand is related to the decision to launch a fighter brand. The positioning of the competing brand in the market may determine whether either method is successful. The choice of how to price and position the Fighter brand in the market is strongly related to the choice of whether to launch it. If Altius chooses to undercut Fighter's price, it might hurt the company's overall profit margins and cannibalize sales from its own premium Altius brand. On the other hand, if Fighter is overpriced, it might not succeed in the market and fall short of its sales goals.

The selection of distribution channels for Fighter is another related consideration. Altius must choose whether to market Fighter to customers on-course, off-course, or through both. Each channel has benefits and drawbacks of its own. For instance, on-course stores frequently have greater margins but may only have a small audience, whereas off-course retailers may have a larger audience but lower profits.

The choice of which target market to concentrate on with Fighter is also influenced by decisions made about pricing and distribution. Altius must choose between going after serious players who are willing to spend more for premium golf balls and going after more casual golfers who are searching for the best deals. The pricing approach, distribution options, and marketing messages for Fighter will all be impacted by this choice.

ANANLYSIS ON EACH EXHIBIT:

A draft from Exhibit 1: U.S. Sales of Total Golf Equipment and Golf Balls

Year	Total Equipment, incl. Balls (millions, USD)	% Change vs. Prior Year	Golf Balls (millions, USD)	% Change vs. Prior Year
2007	2911	-	552	-
2008	2752	-5.5%	536	-2.9%
2009	2433	-11.6%	495	-7.6%
2010	2384	-2.0%	479	-3.2%
2011	2414	1.3%	464	-3.1%
2012	2628	8.9%	483	4.1%

Insights:

• From exhibit 1, overall sales of golf equipment fell in 2008 and 2009, most likely as a result of the recession.
• In 2010, sales of golfing accessories began to increase, but those of golf balls remained in decline till 2012.
• Golf balls and equipment sales both saw considerable increases in 2012, probably as a result of the strengthening economy.

According to Exhibit 1, it appears that since 2008, sales of golf balls and other related equipment have been declining. However, there has been a minor comeback in recent years, with golf ball sales rising by 4.1 percent in 2012 and by 1.3 percent in 2011. Given the available options, it would be wise for Altius to introduce a mid-range product under the Altius brand. They would be able to do this and still preserve their luxury image while tapping into a new consumer segment. Introducing a lower-priced option (Fighter brand) may cannibalize their premium product sales, and maintaining the status quo may not be sufficient to drive growth in a market that has been declining. Launching a mid-range product would allow Altius to cater to price-sensitive customers while still offering a quality product.

Exhibit 3:

Average Retail Price and Gross Margin Percentage for Golf Ball Manufacturers

Manufacturer	Avergae retail price per dozen	Retailer gross margin %	Manufacturer gross margin %
Altius	$48	15%	70%
Primiera	$44	20%	55-60%
Bantam	$45	20%	55-60%
Carsbad	$45	20%	55-60%

The table shows the average retail price per dozen for each manufacturer, along with the estimated retailer and manufacturer gross margin percentages.

The estimated retailer gross margins range from 15% to 20%, while the estimated manufacturer gross margins range from 55-60% for three manufacturers (Primiera, Bantam, and Carlsbad) and 70% for Altius. This suggests that Altius has a higher profit margin compared to other manufacturers, likely due to its focus on the premium segment of the market. Additionally, the table shows that Altius does not offer golf balls in the economy segment, while other manufacturers do, indicating that Altius is not targeting budget-conscious customers.

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