ALTIUS GOLF AND

THE FIGHTER BRAND

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CASE ANALYSIS

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 Introduction
Altius Golf, a market leader in the manufacturing of golf balls, is facing a decline in its financial
performance and has a risk of losing its position as a market leader. Altius had led the market in its super
premium golf balls like Victor TX line that were very popular among the professional players

The competitors have started offering customized products for less price and due to the changes in the
market demand, the CEO is planning to launch the new line: Elevate. Elevate would be a simpler ball with
ease of use with its cost 40% below the usual Altius balls. Elevate would be made available through
various channels. The top management have different opinions on the launch of the product.

Situational Analysis

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Swot Analysis of Altius:

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The current position of Altius in the market has several advantages and disadvantages associated with it.
They can be categorized into its Strength, Weakness, Opportunities and Threats.

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Strength Weakness
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1. Victor TX holds a Niche market and has a 1. No product in the value product category
loyal customer base 2. High price and association with the “pro”
2. The branding and positioning have put image have made new customer attraction
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Altius on the top impossible

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3. Low profit margin of retailers has led to

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the high gross profit for the company

Opportunities Threats
1. Expanding in the value-based category 1. Low priced products by competitors,
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through Elevate might help in gaining Primiera and Meridian, is gaining new
market share
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customers
2. Competitors are tapping into new
customer base
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Based on the above table a situational matrix can be drawn that can help in analyzing the situation and
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the correct path to follow.

Altius Position Strengths Weakness

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Opportunity SO: Exploit WO: Develop

Threat ST: Ward-off WT: Exit

 Before the recession hit the US Golf Market, Altius was in the SO zone, where it was dominating
the Golf ball market. It held the largest market share

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  Currently, it is in the ST zone, where the key strength of Altius is still its Premier and mid-range
products but a threat of non-conforming, low-priced balls gaining popularity in the market, is
looming on its head. The competitors are trying to cut down Altius’ market share
 Now, the two options available with Altius is either to launch Elevate and be in the WO,
developing zone or not to launch Elevate and stick to its brand image of Premier golf ball brand.
Here, in the former case, Altius will have the chance to grow and attract the customers shifting
to low-cost brands and, the new and novice golfers
 Whereas, if Altius choses to not launch Elevate, it will risk being in WT zone, where there might
be a chance that the changing demands and the changing customer preferences will further
reduce its market share and push Altius off the market completely

Reasons for declining market share

 35% of golfers, 45% of lapsed golfers and 53% of non-golfers did not choose Altius because of
their high prices as compared to their competitors.

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 Altius Golf suffered loss of sales due to recession from 2008 to 2010. Due to recession the entire

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golf market was in declining trend

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 In the recession of 2008, customers cut down their spending on golf kits and balls which affected

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whole golf industry badly. Professional golfers were the major part of customer base for Altius

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Golf but due to recession, number of professional golfers declined too
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 The non-professional players, enthusiasts, are not ready to spend huge amount on golf balls as
for them non-conforming, low priced balls are ideal. This change in customer preference
affected the market share drastically.
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In this situation of declining market share, although Loyalists and professional golf players (holding >60%
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Altius’ market share) will stick to Victor TX, their number will keep on declining in the coming years since
the newer players do not prefer intense involvement. Hence, Altius Golf does not have an option to
maintain status quo in the given situation.
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Primera and Meridian, the two rivals of Altius have gained market by implementing cost effective
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strategies. Altius has not tapped into low-cost market at all where they are missing out on a major part
of market share. With the current situation they will continue to decline in terms of market share.
Currently they are nowhere to be seen in recreational market which needs changing for sustainable
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future.
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Trade Offs:

 Altius is aiming at launching the Elevate golf ball by following a strategy of decreasing the price
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and producing easily usable golf equipment to attract the new golfers to increase the
profitability of the company. The new Elevate golf ball will be sold at a discount of 40% of its
premium brand, Victor TX that will help the company to attract the new customers. Thus,
contrary to the status quo where they target the professional golfers and famous players, Altius
is now targeting the beginners. In order to do so they have to change their marketing strategy.
This might be a trade-off for the premium image of Altius.

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  The second trade-off for launching a not so costly product would be a decrease in the profits.
Currently Victor TX gives a gross margin of 15% to retailers and 70% to the manufacturers.
However, with the launch of Elevate, they have to give a gross margin of 20% to the retailers and
55-60% to the manufacturers. Thus, this might lead to a decrease in the overall profit for Altius.

Revenue and Gross Profit of competitors for the year 2012

Particulars Altius Primiera Bantam Carlsbad

Market Share, retail dollar sales % 55.20% 15.00% 17.30% 9.30%
Retail Sales $266.60 $72.50 $83.60 $44.90
Retailer gross margin % 15.00% 20.00% 20.00% 20.00%
Manufacturer sales $226.60 $58.00 $66.80 $35.90
Manufacturer gross margin % 70% 57.50% 57.50% 57.50%
Gross profit $158.60 $33.30 $38.40 $20.70

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Market Share Unit Sales % 35.10% 17.10% 14.70% 8.30%

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Value of Market Share point in Unit Sales $4.50 $1.90 $2.60 $2.50

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Effects of Elevate Strategy, compared to Victor TX and Victor
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Product Victor TX Victor Elevate
Retail Price $48.00 $39.00 $27.00
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Retail gross margin % 15% 15% 20%

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Altius price $40.80 $33.15 $21.60

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Altius variable cost $12.24 $9.95 $7.75

Altius unit contribution $28.56 $23.21 $13.85
Altius gross margin % 70% 70% 64%
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The customers will not be estranged by a low-price product considering the reputation and brand image
of the company amongst professional golfers. Due to increase in demand of cheap golf balls, the unit
contribution and gross margin would increase.
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The Altius should go ahead to implement the Elevate golf ball strategy,
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 In the given case, it is mentioned that 35% of golfers don’t buy products from Altius due to high
price. Thus, if Altius can provide affordable golf balls, they would be able to increase market
share as well as revenue. Also, in Exhibit 4, there is a clear percentage increase in the number of
Agnostic casual golfers, who are price sensitive and will purchase the product based on
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promotions. Further, Meridian’s non-conforming ball was a success in the market since the
company gained 2 points in market share in just three years by launching the product on the off-
course channel. The case also highlights that 26% of Altius customers are willing to opt for non-
conforming ball, thus, there is an opportunity to regain their market share by offering non-
confirming balls.

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  It will increase the company’s market share, provide sustainability with a promising quality
product at a lower price.
 The Elevate strategy would increase the retailer margin by increasing the sales figures as more
customers would be willing to buy the cheap product keeping the premium brand image of
Altius in mind.
Hence, Elevate will benefit the position of Altius Golf in the marketplace.

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