Monday, January 25, 2010

Innovation Key to Callaway Golf's Growth Prospects

Callaway Golf (ELY-$8.25) is the U.S. market leader (as either the No. 1 or No. 2 brand) in almost every equipment category. Management acknowledges that celebrity golfers carrying the Callaway banner — from Arnold Palmer and Gary Player to Phil Mikelson and Annika Sörenstam — help to build brand recognition. However, the company was early to recognize, too, that lots of top golfers walking the fairway with a plethora of labels also dilute the message. In contrast to Nike Golf, the company’s marketing strategy has long been built around loyalty to brand, not star.

The company’s core competitiveness has been the timely introduction of innovative and game-changing technologies, said Callaway spokesman Tim Buckman. The performance-enhancing Big Bertha driver (of then) and the shot-shaping control of its Fusion Technology fairway woods (now), illustrate how the company has strategically captured and grown its share of market.

In today’s marketplace, where consumers worldwide are more sensitive to price tags, is Callaway’s sales strategy obsolete?
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Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

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