Altius Golf and the Fighter Brand Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Altius Golf and the Fighter Brand Case Study Solution

Elevate Strategy:

Evelyn Gracie got hired as the CEO to stabilize the company’s profits and sales. She formulated a strategy along with her chief marketing officer, Austin Kai. They named this strategy as Elevate Strategy. According to this strategy, they needed to focus on the market of off shore market, as they have lost their sales in that market the most. Altius had three types of golf balls:

Victor TX: There were 2 types of golf balls in this category. They had a quality of covering long distances, and the other had a quality of feel of the grass. It would be priced at $48 per dozen.
Victor: This would be a mid-ranged golf ball, this range will also have 2 types; one will be good at covering the distances while the other will be good at being controlled. It would be valued at $39 per dozen.
Elevated: This is going to be a new introduction in the market, valued at $27 per dozen with 4 different types:
- Fast swing.
- Medium swing.
- Slow swing.
- Non-conforming offering.

This was a way of penetrating the market and standing up to the company’s competitors as the competitors had somewhat the same offerings and Altius was offering all of these qualities in different versions and types. The Elevated version will be showcased in off-course markets only,as this is going to be low-priced product. Secondly the retailers who were getting 15% margin on displaying and selling Altius products will get 20% margin for selling Elevate, which will motivate the sellers to sell it, and they will whole-heartedly do their job. In order to maintain the status and significance of the company, Elevate will be displayed with Victor TX and Victor, which are highly recognized and liked by the players.

Financial Perspective:

As we have seen the sales of the company has been drastically effected by the recession, and later on the competitors took the market share. In order to understand how the elevate strategy will help the company, we have calculated the profit of a dozen golf balls earned by the company on selling elevate golf balls.

According to the calculations (Appendix 1), the company will have a retail price of $27 for Elevate Golf Balls, and the company issues a retail percentage of 20% to the retailers. After deducting the manufacturing margin that the company will earn, the production cost (inclusive of direct and indirect costs) will be $10.8 as per our calculations. The price stated by Gracie is $7.75 for manufacturing, if the manufacturing costs is lower than that, the company will enjoy a higher margin of profit. Secondly, we evaluated the overall sales of the company as compared to the industry’s sales (Appendix 2). Altius owns 55% of the industry’s market share and according to it the sales of the company is $265.65 million higher than any other competitor. The profit is also higher compared to any other company. The closest competitor as per this analysis is Bantum .

Advantages Of Elevate Strategy:

The people who stopped buying Altius products due to high prices, will switch back to Altius products, and this will increase the company’s sales.
The low priced golf balls can be a reason for revival for the company in the industry.
The retailers will become more loyal to the brand and will try to make more sales to get a higher percentage of sales.
The brand has a name in the market prior to this strategy, people would want to buy it for its brand name with a satisfying price.
The company will get an opportunity to target off-course store retailers more and increase the sales in that distribution channel.

Disadvantages of Elevate Strategy:

The new Elevate golf balls might decrease and effect the sales of Victor TX and Victor, resulting in cannibalization. This will affect the profits of the company.
The profits generated by using this strategy is low as compared to what company was previously earning.
The competitors have introduced the same products with these attributes before, and this can increase the chances of failure for the company.
It might take a longer period of time to penetrate the market than expected,which can increase the initial cost incurred to launch the product.
Competitors have been catering the low-end customers and they might know the market more efficiently as they have the potentials toleave Altius behind in pricing strategies or marketing strategies.

Conclusion:

The recession has affected the industry, but it is reviving and this gives the companies working in this industries a great chance to grab the market share. Altius is the market leader, but it is losing its market position as people are losing interest in the game, and are shifting towards different sports. They are also faced by strong competitors who are taking over their market share with pricing strategies and variety of products. The competitors are giving Altius a challenge by using useful tactics and targeting the recreational or new players in the market. The USGA is trying to revive the game in the Baby Boomers minds and trying to instill it in the minds of Millennial. They are introducing different types of games in golf to increase the number of players and attract new generation, this gives the companies an opportunity to establish their grounds in the new market. The new group of players is not willing to invest a lot in the equipment and this is a negative point for Altius because it caters the high end market. In order to deal with this situation the CEO and CMO of the company have thought of elevate strategy, this is going to be a golf ball, which is going to cater the new generation and help get the lost market share. This strategy has its own advantages and disadvantages, there is a success and failure chances, because the company is going to cater a low end market, which it has never experienced before. This can also result in success and people might start using Atlius brand’s products to play golf again.