ALTIUS GOLF AND THE

FIGHTER BRAND
Marketing Management – II Submission

Submitted by:
Group 7, Section C
Akshat Khandelwal (B19122)
Ashok George (B19129)
Pranav Bhatt (B19152)
Shshank Pandey (B19169)
Virag Shah (B19179)
1. Why has Altius Golf lost Market Share? What if they maintain Status Quo?

 The beginning of the fall in Altius’ market share coincided with the decline in overall golf
equipment industry that began with the 2008 economic crisis. The consumers reduced
discretionary spending and that got reflected in sale of golf balls as well.
 Another major factor was the declining interest in golf over the years after reaching its peak in
2003. Apart from a large number of women and children quitting golf over the last few years,
proportion of serious golfers, the largest customer segment for Altius, has also declined.
 The share of sales from off-course retailers has increased and these retailers have higher
incentive to sell competing products due to the higher margin of 20%, which is significantly
above the 15% that Altius offers to them.
 Also, consumer studies have shown that high costs associated with playing golf were a major
deterrent for many potential new players.
 Two of Altius’ competitors, Primiera and Meridian, had also adopted a strategy where they
placed their products to target the new and casual golfers. They ran promotional campaigns to
target the recreational segment by helping them choose balls that suit their
individual needs and by making non-conforming balls that prevented slices and hooks.
From the above graph we can see that there is a crossover in % change in total equipment sales in
dollars vs % change in golf ball dollar sale in the year 2010. This reflects the growing consumer
sentiment of moving towards more affordable golf balls.

If Altius maintain the status quo and continue with their current strategy, then it is likely that they will
lose further market share to their competitors as price sensitive consumers shift to cheaper alternatives
and the newer generation of recreational golfers embrace non-conforming and economical alternatives
to Altius’ traditional and high-priced offerings. Their current product line restricts accessibility which is a
major aspect of golf that the USGA is trying to change. As USGA campaigns and consumer preferences
shift towards golf balls that are more accessible and enhanced ease of play, Altius will find it increasingly
difficult to defend its turf against the competition.

2. What should Altius's objectives be? What trade-offs must be managed?

In the short term, Altius’ objective should be to effectively implement the Elevate strategy to defend its
market share and retain its leadership position. This can be done by better positioning of its lineup of
products to effectively target different customer segments of serious and casual golfers. At the same
time, the company needs to ensure that the introduction of an economical line of products does not
lead to dilution of the premium image that is currently associated with the brand. Altius also needs to
address the declining dollar sales share from off-course channels as they are becoming the primary
channel for sale of golf equipment.
In the long term, Altius needs to ensure that they not only promote recreational golf playing but are also
able to migrate some of these casual golfers who have started using its value product to its more
premium and professional offerings such as the Victor TX line of golf balls. This migration would not only
increase the margins for the company but also increase customer loyalty as they convert the super
slippery segment of casual golfers to the super traction of serious golfers.
Some trade-offs that the company would need to manage are below:

1. Market share vs Profit Margin: If the company intends to defend its market share against
competitors who are selling innovative and economical products to the consumers, Altius needs
to compromise on its profit margins. In order to provide incentive to big-box retailers to sell the
Altius line of products, it would have to increase the retailer margins to match those of its
competitors and this would lead to its own margins getting squeezed. Also, the sale of cheaper
product would reduce the profit earned per unit as compared to the current strategy of selling
only premium and medium range offerings.
2. Premium Image vs Value Image: If the company decides to sell the Elevate line of golf balls they
will be venturing into the value territory. Use of Altius golf balls by players in professional tours
such as PGA and LPGA and their Victor TX line of balls that focused on maximizing distance and
feel have made the players associate Alitus’ name with premiumness. The rubbing off of this
premium brand image on the value offering would be beneficial but the company needs to take
steps to make sure that the premium image does not get diluted and the company can retain its
current professional customers as well.
3. Professional vs Casual brand: The current positioning of the Victor TX and Victor line of golf
balls as well as the current promotion strategy highlight the fact that Altius’ golf balls are used
by professional golfers. This might be intimidating for a casual golfer and may lead to him/her
perceiving the game as tough. If a new line of value oriented golf balls are introduced that
highlight the ease of use of the product, then it is more likely to grab their attention. But as both
the professional and casual offerings are marketed simultaneously, Altius needs to ensure that
corresponding segment of consumers are targeted without changing the perception of the other
segment towards the company’s brand.

3. What is the economics of Altius's performance with respect to the competitors? How would the
introduction of Elevate impact this?
Based on the data provided in the case, it is evident that from a cost standpoint, Altius and its
competitors are on a level footing when it comes to cost of manufacture. This indicates that further
margin for improvement from an operational perspective is not available.

The reason that Altius is priced higher is 2 fold.

1. Altius wishes to promote a premium brand image and is pulling the pricing lever to maintain
this.
2. Altius enjoys a much higher margin and is able to negotiate better with retailers due to their
brand push

From the above we can see that Altius can afford to increase its attractiveness to retailers by reducing
the gross margin of its premium category of balls to push retailers to sell more premium balls further
aiding in premiumization as intended by the company

Introduction of Elevate

From above it is evident that with the Elevate line of products, Altius will not be able to maintain similar
gross margins as compared to the premium line of products. Altius would need to bring down its gross
margins to compete in this space from a price perspective since the consumers here are much more
price conscious.

4. Should Altius implement the Elevate Strategy?

a) if yes, then what the risks and how should they be managed? What sales results you expect for
each item in the line with the introduction of Elevate?

Based on the answers to the above three questions, we suggest that Altius should implement the
Elevate strategy primarily because the rising number of casual, price conscious golfers who can be
upsold to the high margin premium offerings in the future

Our suggestion is to undercut the competitors price in the value market while offering retailers a
compelling gross margin (20%). This can be done only by reducing Altius’s gross margin on this line

Risks:

1. Altius risks diluting its premium brand image and hurting the sentiments of its current crop of
loyal customers. This can be managed by continuing to push Altius’s premium brand image
 through investing more into promoting the Victor TX line. Altius could also tie up with leading
golfers to further build its image as the choice for professionals. Further, Altius must continue
innovating to maintain the appeal for its premium line
2. Cross cannibalization: The Elevate line of products would not be a major cross cannibalization
concern for the top range Victor TX line of products since they are targeted at 2 opposite ends
of the market. However, for the mid range line of products i.e. Victor, it could be an issue since
Altius’s Loyalists and Agnostic consumers (31% of total) would prefer buying the value range
instead of the mid range option since they are medium to very highly price sensitive. This is not
necessarily bad for Altius since with a lower entry price, Altius can work on creating more
Loyalist consumers and upsell them to the premium offering in the future

As the company already has a great brand image, if the above mentioned strategy of undercutting the
price is followed, Altius can become the market leader in the value category also.