Nike Golf Assignment

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Nike Golf Assignment
Nike VR Pro Combo
Ravi Sran : 100184371
Aj Brown: 100179771
10/14/2011
Marketing 4201: Richard Simon

Table of Contents

Introduction 2

Competition: 2

Positioning: 2

Major Golf Market Segments: 3

Key Purchase Influencers: 3

Golf Club Marketing: 4

Distribution: 4

Promotion/Advertising: 4

Bibiliography: 5

Appendix: 6

Exhibit 1 6

Exhibit 2 7

Exhibit 3 7

Introduction

The following paper provides an insight to the competitive landscape of golf hardware (specifically drivers, hybrids and irons) as well as information about the major golf segments and key purchase influences.

Competition:

· Callaway: Callaway is one of Nike’s main competitors in the golf club industry, the company had Net sales of $968M in 2010. The company posted a Net income loss of -18.8M dollars, the company’s shares are valued at $5.54 (WikiInvest,2011). Callaway is a domestic brand and was cited by Golf.com as the best top-selling brand for irons in 2010 (Gordon 2010).

· TaylorMade: TaylorMade is a brand that was acquired by Adidas and is also one of Nikes main competitors. The company is operated from Carlsbad, California and is a subsidiary of Adidas golf. In 2009, TaylorMade controlled 19% of the irons market which was a 30% increase from their pervious year (Rotham,2009).

· Mizuno: Mizuno is a brand that was developed in Tokyo and is a company that has been in operation for over a 100 years, which makes it an import brand.. Mizuno clubs are consistently rated high and are known for their innovative designs and feel.

· Titleist: Titleist was recently acquired by Fila Korea making it an import brand. Titleist is known for their golf balls and superior clubs.

Positioning:

Positioning Statement: Nike is seen as a professional quality golf club at an affordable price.

Currently Nike is seen by the majority of consumers as lower quality when compared to their competitors and are also priced lower than them (with the exception of the Titleist brand). However, as mentioned in the Mygolfspy.com review of the new Nike clubs, the exceeded every expectation of quality and performance.

All the brands listed above strive to be industry leaders in golf club industry. These large companies have equally large research and development budgets that ensure they are up to date the latest in golf technology and design. Based on the pricing levels found It is evident that TaylorMade, Mizuna and Callaway clubs are priced at premium. The Nike Pro VR Series Iron set was priced at $899.99 compared to a Callaway set that was priced at $1299.99 (Golf.com, 2011). See exhibit 1 for a perceptual map of Nike and the competition.

An assumption based on varied reviews and by comparing pricing is that consumers are associating a higher price with higher performance when shopping for golf clubs. A way to offset this may be to raise the price, which may cause a drop off in the current client base, or to sponsor more professional golfers who can be seen using Nike clubs at the professional level.

Major Golf Market Segments:

Based on information from a Statistics Canada study (2008), “Golf replaced ice hockey as the most popular sport in Canada in 1998. Almost 1.5 million adult Canadians were golfers in 2005, three-quarters of them men.”

According to a study conducted by the Royal Canadian Golf Association (2006), the average Canadian golfer is:

· Male (71%)

· 44 years old

· Has a household income over $50,000 (64%)

· Holds a white collar job (46%)

· Play an average of 8 rounds of golf per year

· Prefer to play in groups of 2 – 4 golfers.

The major barrier to entry for playing golf is the cost associated with the game. This helps to explain why the average golfer is over 40 years old and has a white collar job earning over $50,000 per year. This may also explain why golf clubs with a higher price are perceived as having higher quality, due to the larger amount of disposable income possessed by this demographic group.

Key Purchase Influencers:

When purchasing a new set of clubs people like to turn to online reviews and product demonstration before making a purchase. Individuals have different preferences when it comes to golf clubs and most users prefer to try the set of clubs before making a purchase decision. Most of the industry leaders provide demonstration sites where users can come test their golf club of choice. Users often turn to specialized golf stores to make their purchases. Stores such as Nevada Bobs Golf have golfing simulators and putting greens setup so a user can test the product before making a purchase. After making a trip down Nevada Bobs Golf the salesman told me that it comes down to my personal preference and skill level; he also pointed out that the most expensive club isn’t always the one that will give you the best performance.

Sponsorships influence golfers purchasing preferences, hence why Nike has remained a key sponsor of Tiger Woods. When professionals use a certain brand, the brand gains exposure on National television and also authenticates the professionalism and professional performance of the brand. For example; when you see Tiger woods perform exceptionally well with a set of Nike golf clubs, you are drawn to the Nike brand in order to improve your game and performance.

A large influencer for users is the online reviews a customer reads. In previous years Nike’s iron clubs were rated poorly, which presents a barrio as people aren’t inclined to try out their clubs. This year, Nike’s pro series clubs received a high rating which sparked interest on golfspy.com’s reviews. Users are more likely to try out Nike’s clubs based on the clubs high rating.

Golf Club Marketing:

Distribution:

· Retail stores (Nevada Bobs, Golf Town etc.)

· Online websites (golf.com, golfspy.com etc)

· Direct from Manufacturer (Nike, Callaway, Taylormade etc)

Promotion/Advertising:

Golf clubs are largely marketed through professional sponsorships and endorsements. Professional golfers are sponsored and provided with clubs which are then seen on national television. Professional athletes use the company’s products which authenticates the products performance and superiority. Companies such as Nike have deals in place with Tiger Woods, Woods made an estimated 90.5 Million during 2010 from endorsements and winnings.

Most promotions advertise the new designs and improved performance and the overall feel of the club. Performance is the main driver that influences the buying process. Examples in the Appendix show that companies are constantly trying to improve their clubs performance, ads are highly focused on the use of endorsements and statements such as “More distance, Better performance”(Exhibit 2, 3).

Bibiliography:

Golf. (2011, January 01). Iron golf club pricing. Retrieved from http://shop.golf.com/clubs/ironset/g_ptid-7.aspx?sot=1

Gordon, J. (2011, February 10). Top 10 golf club brands. Retrieved from http://www.livestrong.com/article/380883-top-10-golf-club-brands/

Rotham, E. (2009, June 19). Taylormade golf delivers steady wins. Retrieved from http://www.livestrong.com/article/380883-top-10-golf-club-brands/

Royal Canadian Golf Association. (2006). Retrieved October 17, 2011, from http://www.rcga.org/_uploads/documents/Membership/EN-Quick%20Facts-Ipsos%20Reid.pdf

Statistics Canada. (2008, Febuary 7). Study: Participation in sports. Retrieved October 17, 2011, from Statistics Canada: http://www.statcan.gc.ca/daily-quotidien/080207/dq080207b-eng.htm

Wikiinvest. (2011, October 17). Callaway golf company. Retrieved from http://www.wikinvest.com/stock/Callaway_Golf_Company_(ELY)/Data/Income_Statement