Callaway Golf Company Case Study Analysis Outline

Case | HBS Case Collection | August 2000 (Revised September 2005)

Callaway Golf Company

by Rajiv Lal and Edie Prescott

Abstract

Describes a situation faced by Mr. Ely Callaway, the 80-year-old founder, chairman, and CEO of Callaway Golf Co., in the fall of 1999. After a decade of stunning success with the marketing concept, Callaway suffered a significant loss and witnessed a steep decline in sales in 1998. Mr. Callaway had built a $800 million business by making a truly more satisfying product for the average golfer, making it pleasingly different from the competition and communicating the benefits to the consumer. The results in 1998 forced Mr. Callaway to reconsider the marketing program that had successfully supported the product until now.

Keywords: Marketing Strategy; Crisis Management; Communication Strategy; Product; Business Strategy; Change Management; Competitive Advantage;

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The key issues concerning Callaway Golf Company are:

* Relationship with its retail partners
* New product development
* Marketing strategy

Problem:

Callaway has experienced its first loss of $ 27 million after 10 years of growth. Competitors had finally caught up to Callaway's superior R & D capabilities and are flooding the market with new products and promotions, raising the bar for consumers on when to replace their equipment.

Callaway's strategic success in 1988 to 1997 is highly credited to its R & D facilities. Their approach toward innovation and technology provided a cutting edge against the other competitors in the market. The way Callaway was able to continue their differentiation features was through their highly…show more content…

Helmstetter Testing Centre. Every pro and amateur can get in there to work on their skills, one can use them as an expert panel and use their ideas and experience to expand the product line and to test new products. The other area main area of core competencies is their expansion in golf balls. Thus in a way their pushing their brand and offering the convenience of buying the needed products under one brand umbrella.

Superior designs create a pull demand. Stabilize growth of R & D budget. Continue to strive for unanswered question, but work on improving the process to decrease costs and maximize value of each new offer.

They should also, put more money in their marketing campaign and like their rival Titleist, get popular golfers to endorse their products, put emphasis on their on-course sales.

Come up with a promotion message of differentiation to justify price premium. Media: TV, trade magazines, as validation: celebrity endorsements and voluntary rewards. Use integrated sales approach to retailers and focus on point of sales marketing. Initiate demo days at off-course locations too. Sustain value release upgrades every two years to prevent customers from switching. Reinforce product development with increased brand equity and greater push at point of sale.

Callaway in the past had taken quick action against companies that tried to knock off any of their products. This has got to continue if they wish to stay

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