Assignment on

Altius Golf and the Fighter Brand

By: Working Group A1

21F104 MS. ADIRA NAIR
21F105 MR. ADITYA SHETTY
21F118 MR. BITAN ROY
21F142 MR. ROHAN KORALHALLI
21F152 MS. SHTAKSHI GUPTA
1. Why has Altius Golf lost the market share? What will happen if Altius maintains the
status quo?
Ans – Altius Golf company has been a market leader in the due to its premium offering
Victor TX line of golf balls. But there was decline in their sales started alongside the
global recession of 2008 and in the year 2012 they are unable to get back to their Pre-
recession level of sales.

The following were the reasons for the decline in the market share of Altius Golf: -

 One of the major factors was the declining interest in golf over the years since
the peak of 2003 where there were nearly 31 million golfers and over the decade
it had fallen by 1/6th around 26 million.
 The global recession of 2008 had taken a toll on the golfing industry and thus the
USGA had reported a fall in interest in golfing activities among women & children
by 23% & 36% respectively and the overall investment in the Golfing Real Estate
had decreased by 40% which led to reduction in total golfers and their spending.
 Consumer studies had shown that one of the prime reasons for people not
playing golf was due to the High costs associated with it and among the available
products in the market Altius Golf’s product Altius Victor TX golf balls were
around 48$ per dozen which were higher than competitors and the other
product Victor which was more economical as compared to Victor TX was not
marketed as much as Altius Victor TX.
 Primiera and Meridian, two of the main competitors of Altius Golf had used
strategies to attract the new and the casual golfers through the help of
promotional campaigns such as “Play your way challenge” by Primiera and
Meridian’s introduction of non-confirming balls which were customised to suit
individual needs which led to skimming of Altius Golf’s Market share from 38% in
2008 to 35% in 2012.
 Shifting of sales from “On-Course” pro shops to “Off-Course” retailers who
offered more retail space and lower prices and included products targeted
towards the casual player.
 From 2008 to 2012 Altius saw a drop in dollar sales from the Off Course outlets
from 50.8% to 45.5% this could be due to the shifting interest of consumers
towards casual playing and consumers becoming price sensitive after the
recession.

Altius should not maintain the status quo if it wishes to survive in the current
market. The market challenger has gained significant ground in the market by
attacking the status quo, the attack was not an attack as such on Altius but more
of an attack that changed the way of thinking and introduced a product that met
some unmet customer demands which the previous product could not meet.
Meridian and Primeria employed a flanking attack strategy where they identified a shift in
the market where professional golfers started to drop in number and everyday people
wanted to pick up golf, but the existing product was not economically viable. Hence, the
Meridian and Primeria golf balls identified this growing demand and took the market by
storm which hurt Altius’s market share, and the answer here is to respond to this attack and
make product which will meet the current market demand.

Hence Altius should focus on the budget Golf ball segment to regain its lost customers.

2. Analyse the economics of Altius’s overall golf ball business compared to its competitors
and for the proposed Altius product lines. What are the implications of this for the
advisability of introducing Elevate?

We can observe from the above table that the cost of manufacturing of Altius is very similar
to those of its competitors and hence there is no cost cutting or any kind of operational
improvement that can be done while maintaining a gross margin of 70% which is higher
than that of competitors.

Altius is pricing its products higher because it wants to push its premium image and
maintain the price its brand name alone can pull in. They can negotiate with distributors and
retailers because they enjoy a higher control over market and can maintain higher prices
and still ensue their products are sold, and stock is cleared.

Economical Band

Altius Bantam Carlsbad Primiera

Product Elevate Riviera Pegasus Arc
Price p.u. 27 27 25 27
Gross Margin (%) 20% 20% 20% 20%
Retailer Price 22.5 22.5 20.83 22.5
Manufacturer Gross Margin 70% 55% 55% 55%
Cost to Manufacturer 13.24 14.52 14.52 14.52

Retailer Price = (Price

p.u./Gross Margin)

Cost to Manufacturer =
(Retailer
Price/Manufacturer Gross
Margin
Altius introducing Elevate would be part of a Defensive marketing strategy i.e Flanking
Defence where the organization is introducing a new product to tackle the products sold by
market challengers. Altius had already lost 3% of its market share to its market challengers
such as Primiera etc from 2008 to 2012 and introducing Elevate would help them regain the
market share as they would be offering similar product in the same price range as the
market challengers so that Price wouldn’t be a factor while consumers make the decision in
selecting the product as 35% of the consumers from the market survey had mentioned they
did not choose Altius due to high price. This move would also help the organization do a
downwards stretch of the product line to be able to reach the price sensitive target market
while still having the premium product for the Professionals. Altius was able to keep the cost
of manufacturing like that of the other competitors while keeping a 70% gross margin as it
can be seen from the above tables. Altius could also reduce prices of the Elevate product in
the future by reducing the Manufacturing Gross Margin or increasing the Gross margin for
retailers to gain the market share while keeping both Retailers & consumers happy.

3. Should Altius implement the Elevate strategy? Justify your response

Ans- Altius should go ahead with the Elevate strategy for the following reasons:

 As per the research analysis, the beginners and non-professionals are budget
sensitive and Altius’s competitors were successfully capture this market and been
able to increase their market share at the expense of Altius
 Hence Altius should introduce price sensitive, accessible products which will appeal
to a wider variety of golfers and once they start buying those Altius can then
gradually start introducing them to their relatively higher priced flagship products.
 To avoid cannibalization and to gain back the eroding market share in the off-course
retail outlets, these new lower priced products would be sold by off-course outlets
and not intrude on the premium products sold in on-course outlets.
 Since off-course outlets account for 60% of total units and 55% of dollar sales, it is
important to target them with the appropriate products.
 Altius only sold super-premium products that were of a professional standard but as the
composition of buyers in golf ball market is changing from a falling proportion of serious
“core” golfers to more casual golfers, they too need to change their products as those
having an appeal to lower-priced, recreational use. This effort would be aimed at making golf
more accessible
 In the premium ball segment, the closest competitors of Altius priced their balls at lower
price points. This is a clear indicator of the kind of market demand faced by the golf ball
segment i.e., demand is elastic in nature. One more reason to implement Elevate is that
Altius needs to broaden the scope of its products from beyond selling premium balls that
win professional tournament.
 Altius’s consumer research had also revealed a trend wherein 35% of those players who
didn’t buy Altius cited the reason being high price point and overall, 45% of lapsed golfers
and 53% of non-golfers said they didn’t play also because of high price point of golf. This
 research clearly shows an inclination of both players and non-players towards price
sensitivity in sports.
 With the increase of the retail gross margin from 15% to 20% for Elevate it would give
retailers incentive to push Elevate to consumers as well.
 Implementing of Elevate strategy would help increase the Off-course Retailer sales which
had reduced for Altius as Off Course Retailers used to cater to more of casual players and
had lower priced products.

Keeping this in mind the Elevate line could potentially bring in new customers to the fore. It would
also enjoy popularity among the manufacturers as the retail gross margin for Elevate is 5% higher
than what Altius usually offers.