Alyssa Quast

MKT 4330
Professor Pullig

Individual Case-Write-up #4: Altius Golf

1) Why has Altius lost market share? What will happen if Altius maintains status quo?
Altius has lost market share because there has been a decrease of the number of
new golfers and those who do start playing are not as serious when playing. They are
also more price sensitive and Altius does not have a value brand of golf balls. A recent
recession period of golf equipment has cut-down Altius’s spending on golf ball and this
trend has negatively affected the golf industry. The recession has affected the number of
professional players to decrease.
If the company were to stick to the status quo, they would continue to struggle
against their competitors. Altius golf balls currently are the highest compared to its
competitors and the people who are mostly buying golf balls are becoming more price

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sensitive. Companies like Primiera and Meridian are able to distribute in many more
stores, not just golf retailers.

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2) What should Altius’s objectives be? What tradeoffs must it manage?

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The main objective should be to increase market share while maintaining brand
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equity. They should decrease the profit margin, change their marketing strategy, and
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segment to new golfers off the course. The golf equipment for new players should be
more oriented on fun and low cost.
Altius profit margin will be the trade-off. They should adopt low cost for high
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sell as a result, their profit will reduce, but market share will increase. Their promoting
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should mainly be off-course than on-course.

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3) Analyze the economics of Altius’s overall golf ball business compared to its
competitors and the three proposed Altius product lines (address the questions in a-c
below). What are the implications of this for the advisability of introducing Elevate?
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a. What is Altius’s and its competitors’ 2012 revenue and gross profit?
Economic/Market Share Analysis
Altius Primiera Bantam
Market Share, retail $ (%) 55.20% 15.00% 17.30%
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Retail Sales ($M) $ 266.62 $ 72.45 $ 83.56

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Retailer Gross Margin (%) 15% 20% 20%

Manufacturer Sales ($M) $ 226.62 $ 57.96 $ 66.85
Manufacturer Gross Margin (%) 70% 57.50% 57.50%
Gross Profit ($M) $ 158.64 $ 33.33 $ 38.44
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Market Share, unit sales (%) 35.10% 17.10% 14.70%

Value of Market Share Point, unit sales ($M) $ 4.52 $ 1.95 $ 2.61

b. What is the value of a point of market share for Altius?

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 17.6 million (industry unit sales) x 55.2% (Altius market share) = 1.7152 million.
$2,628 (US sales 2012) x 55.2% (Altius market share) = $1450.7 million

c. What are the implications for Elevate, considering its unit contribution and
gross margins compared to Victor TX and Victor?
The Elevate strategy will be implemented in off course retailers and displayed
next to the Victor and Victor TX. Customers would not be affected by a low-price
product from the company since the company has incredible reputation amongst
professor golfers. Customers are likely to react in a positive way to a non-
conforming ball. The unit contributions and gross margin would increase due to
demand increase of the cheap golf balls.
Victor TX Victor Elevate
Retail Price (per dozen $) $ 48.00 $ 39.00 $ 27.00
Retail Gross Profit ($) $ 40.80 $ 33.15 $ 21.60
Retail Gross Margin (%) 15% 15% 20%

Altius Selling Price ($) $ 40.80 $ 33.15 $ 21.60

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Altius Variable Cost ($) $ 12.24 $ 9.95 $ 7.75

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Altius Unit Contribution ($) $ 28.56 $ 23.21 $ 13.85

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Altius Gross Margin (%) 70% 70% 64.12%

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4) Should Altius implement the Elevate strategy?

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a. If so, what are the risks to the brand and how can they be managed? What
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sales results would you expect for each item in the line if Elevate is
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introduced?
Altius should implement the Elevate strategy. It will attract former golfers and
non-golfers due to lower prices. Custom made golf balls makes the sport easier,
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therefore lures more consumers into playing golf. It will be more affordable, medium
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priced golf balls, which can create a remarkable increase in market share and revenue
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for Altius. They should also increase the percentage profit margin to retailers, which
is a part of the elevate strategy. If the prices are competitive, consumes will prefer
Altius to other brands due to its brand name. They can also increase the product
placement in off-course retailers.
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The real company Srixon?

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