OPINION | 19
Over Pay And Under Deliver, Golf’s New Motto? By Terry McAndrew
Golf has enjoyed a strong run largely influenced by the high tide raises all boats theory. In the US, it was able to overcharge for greens fees, private memberships and equipment when money was loose and fast. Since the tide has disappeared thanks to a recession, very few are still interested in overpaying, let alone when it comes to golf.
Even the absolute peak of the pyramid, the PGA Tour has been challenged to find new or replacement sponsors for its tournaments. When it comes to making a choice between cutting marketing budgets or payroll, the decision has been a simply one for corporate America.
It’s been a long time since there was a game-changing product introduced, which hasn’t helped. The gold standard for balls in the US, the ProV1, is coming up on its 10-year anniversary since making its debut. Oversized titanium drivers are commonplace and no longer carry the same sex appeal as they did when they first became the norm. The infamous 15-20 more yards in distance that came with each new model no longer seems to be the battle cry, in part since the ruling bodies have drawn a line in the sand. Finding a game changer is nearly impossible these days despite all the hyperbole
about technology in golf equipment. That isn’t intended to shortchange the efforts of equipment companies or their research and development arms. Simply put, recreational players are bad for a reason and nothing exists in a plug and play application that can transform their game into finding fairways and greens that falls within the rules. With the global recession and the arms race for equipment performance appearing to have reached its limit, it could be classified as the perfect storm.
Meanwhile, the show ponies on the PGA Tour continue to parade the latest and greatest gadgets but does it matter anymore? Equipment companies in particular pay a lot of money to associate with these players and in turn expect validation with their efforts. In order for this strategy to potentially work, there must be a quantum leap product such as the original Big Bertha driver, 2-Ball putter or ProV1 golf ball to excite consumers to purchase and demand the product. Spending $500,000 for Tim Clark (no offense) to wear a Srixon hat, as some believe the deal to be, represents zero fiscal responsibility even when times are considered good. The competition between manufacturers became a money-spending contest in
the late 90s early 2000s, when it could be argued that sales allowed for it at the time. The cost of doing business has gone up in part due to this behavior. With all of the main players having essentially full lines of equipment, footwear, and apparel its become a head to toe to full bag deal that played mightily to the player’s wallet. Limited supply of extraordinary players to endorse your product + high demand by manufacturers = exorbitant payouts.
The strategy of validating a product by tour player usage remains useful but less important in the advertising/ marketing mix today compared to 10 years ago. The effect on the average consumer buying decision is debatable in part since a compelling new product isn’t as tempting as before. The obscene expenses associated with it ultimately drive up the cost of the product to consumers, which in the current economy isn’t acceptable. It also can be stated that effectively all of the major available products (past and present) are very good and indistinguishable in comparison to each other. Equipment manufacturers are essentially trapped in their own viscous circle with respect to this over priced strategy of paying for high prized beef that one day may or may not
move the sales needle. More often than not, there isn’t any correlation to revenues simply because Phil or Tiger are playing the product.
So the world is indeed a different place today and business has to find a way to emphasis value in order to have a fighting chance to succeed. Golf will need to modify its ways in order to remain relevant with the masses. Is it necessary for Tiger Woods and company to play for million of dollars each and every week to maintain an audience? Can public courses survive continuing to charge similar rates as in years past? How long can equipment companies afford to overpay for the services of the big boys without a reasonable expected return on the investment? The longer the tide stays out the harder it is to justify these costs as it stands today. In the meantime, consumers have readjusted their spending levels based on the new economy. Golf would be wise to do the same or else run the risk of pricing itself out of business in some cases.
By Terry McAndrew, Editor of Web Street Golf Report and Web Street Golf Daily Pulse.
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