Altius comprised the total retail golf ball sales the

FE205: Fantas5ic 5
Alex Moen, Aneesh Nirand, Carissa Hernandez, Kasey Nguyen, Khoi Pham
Altius Golf and the Fighter Brand
1. Why has Altius Golf lost market share? What will happen if Altius maintains the status quo?

Altius Golf has always been a leader in the golf ball industry and golf balls have accounted for “approximately 60% of revenues and 85% profit” (hbr.org) in the past. After the recession from 2008-2013, the popularity in golf has drastically changed. Altius maintaining the status quo would likely lead to a bad result for to two reasons: industry trends and its competitors.

2. What should Altius’s objectives be? What trade-offs must it manage?

Altius’s objective should aim to maintain (if not improve) their market share
while simultaneously expanding their customer base and raising their revenue. In order to do so, they will need to focus on expanding their product line to one that appeals to casual golfers, with the idea in mind that eventually, they will move away from Elevate and become loyalists who prefer the Victor TX line. This will hopefully improve profit margins.

Altius and its competitors combined for a total revenue of $483,000,000 in 2012 in terms of US golf ball sales. This accounts for golf ball sales only and does not include other golf related equipment that these retailers also sell. Altius comprised 55.2% of the total retail golf ball sales in the US. The revenue and gross profit breakdown of Altius and its three main competitors is shown in Table 1 below. Altius alone accounts for 62.7% of the market’s total gross profits, which is larger than the market share of revenue. This shows that Altius is more effective in maximizing profits. Altius caters to the largest segment in the customer base which is the loyalist golfer who doesn’t mind paying more for a better ball.

Table 1. Total Industry Golf Ball Market Breakdown

In order to increase their hold of the market share by 1 percentage point, they must increase additional revenues of $4,830,000. This would in turn increase their gross profit by $2,873,850 after factoring in the 15% retail margin and 70% gross profit percentage for Victor TX balls. Altius can find more value in increasing their total US golf balls sales compared to any of their competitors based on their higher profit margin (70% compared to 55-60% for their

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It is also possible that the different margins going to retailers will have an adverse effect on the sales of one brand versus another. Even though the margins are better on the Elevate balls, the overall profit per dozen sold works out to less than that of one dozen Victor TX balls. 4. Should Altius implement the Elevate strategy?

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The Victor line consists of older generations of Victor TX balls that have been replaced by newer Victor TX designs. This line is geared towards enthusiasts, moderately frequent golfers who are both interested in the premium golf balls but are also somewhat price sensitive. This line may not actually perform well with the introduction of the value line Elevate. Enthusiasts can be attracted to the cheaper prices that Elevate offers. Also, we note that historically, the premium Victor TX line has led the company’s sales, so it is unlikely that there would be a significant swing in Victor’s relative performance.

3. Elevate: New Value line, for four versions for $27 per dozen.

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