GolfLogix Case of Study free essay sample

To start with I am going to talk briefly about GolfLogix and its different products. GolfLogix is a quite recent company which was founded in 1999 in Arizona (US). It was based on a simple concept, using the GPS to aid golfers to improve their game or to make it easier. For this reason, GolfLogix developed the xCaddie, a handheld GPS receiver. Nowadays, the company offers two different systems. The first one is the â€Å"Distance Only System†, which can calculate the distance from where the golfer is hitting to the green; and the second one, which is called the â€Å"Complete System† and makes even more for the golfer, such as recording the progress of the golfer’s round in order to download this data and print a detailed mapping of his progress, (showing him statistics, how far he had hit the ball with every club, how many times he had putted and how many shots he had taken, etc). Creating superior customer value is a necessary condition for a company securing a niche in a competitive environment, not to mention a leadership position in the market. According to Porter, a company can follow two generic routes to compete in a market: differentiation and low-cost. GolfLogix focuses on differentiation, because it tries to satisfy the necessity of improving the pace of the game in a non-complex way, due to it is able to judge the distance to the green and choose the right club for that distance, what has been a common challenge for many golfers (beginners and experienced players) since much time ago. But moreover, the xCaddie, in the two versions, offers a long list of benefits which create value for the consumers, such as the portability (its size is convenient and the golfers can hang it without being uncomfortable), the affordability for every type of courses, its easy use and installation, etc. In addition, the Complete system has more benefits, it provides the player his game history and his own statistics, the golfer can visit his own personalized web site and improve his game by learning through the teaching pros; this way, they can work on those parts of their game where they waste the most strokes (the real necessity of the players, which wasn’t clear before this device). To sum up this point, GolfLogix offers a compelling product to golfers and courses satisfying a latent necessity for all the players. The company had some feedback about its products and it seems to that the â€Å"Distance Only System† would be used again by the 80% of golfers if it is available on the courses they usually play, and the â€Å"Complete System† would be used by all of the players, stressing they like the most the post-game printout, because they find it fairly useful. Taking into account the competitor analysis, it has to be emphasized the fact of there are some companies which offer similar or comparable systems to the xCaddie. The difference is that these systems are mounted to the cart, which drives up prices considerably. The $250,000 to outfit 80 golf carts is often an initial cost that most golf courses cannot handle. That makes GolfLogix devices even more competitive. Beside this information, as we see in the text, in 2002 dozens of courses had adopted either the Distance Only System or Complete system, and moreover, quite often one or two more courses signed lease agreements after tasting these systems with a 30 day free trial. So, as a conclusion we can say that this product is being quite compelling, it seems lease agreements are going to continue growing. What is the market potential for the GolfLogix devices? According to the consumers of Golflogix devices we can match these two types of systems with the different groups of consumers. On the one hand, we have the â€Å"Distance only system†, which is supposed to be used in order to golfers to have a more accurate game with less number of shots. It means that this system will help to increase the pace of the play, making it easier and more efficient. So, because of its simple and easy operating it can be aimed at every kind golfer of all experience levels. On the other hand, the â€Å"Complete System† is aimed at avid or quite experienced golfers due to it offers the opportunity of accumulate game history and seeing personal improvement at any particular course. Because of that, this type of device will be only interesting for professional golfers. Moreover, experienced golfers are in relation with one type of course, it is the group of â€Å"Private courses†. Experienced players always attend to the same course because they pay their initiation fee and their yearly membership fee. They are not going to waste their money paying for a daily greens fee at a public course if they are already paying dues at their private course. Due to these several reasons, GolfLogix should target the private courses, in order to make its both systems successful in the market. On the contrary, if the company target public courses, it is possible that the â€Å"complete system† to fail, because it is used by avid golfers with more intrinsic necessities, who play always in private courses. In the year 2000, there were over 17,000 golf courses in the country, including 7,000 municipal or lower-end public courses, 4,000 high-end public courses, 2,000 resort courses, and 2,000 private courses. In theory, this means that GolfLogix had 17,000 potential courses on which to use its products. As if that number was not large enough, new courses were being built at a rate of 300 to 400 per year. What are the advantages of going through the golf courses? Through retail channels? ADVANTAGES GOLF COURSES 1. This option is less risky. Looking at the point that golfers form a quite traditional market, GolfLogix would risk more if the company goes through retail channels, its products would have a long introduction stage into the market, because players (above all the avid golfers) are a bit resistant to new technologies if they are in relation with the game of golf, because, as we see in the text, they might think â€Å"What’s next? Do they also provide a robot to hit the ball for you? †. However, many golfers who have tried either of the systems said they would use them again if they are available in the courses they usually play. 2. The number of golfers grows by about 200,000 to 400,000 each year. For this reason, we feel it would be hard for GolfLogix to target the individual consumer because there are so many of them and not all are avid golfers, what means that the â€Å"Complete System† will fail in their majority. 3. Both systems need so many of labor hours in mapping the courses. If a golfer doesn’t play golf as a routine, he or she would not take the time to map out the course and download all of his or her personal information into his or her own personal xCaddie. On the other hand, if the courses offer these systems already ready, golfers would use the xCaddie without any problem. 4. By targeting the golf courses, GolfLogix would also be indirectly targeting the consumers. If the consumers like the systems and they realize that the use of this product helps to improve their game, doing it more accurate and also that it can correct their mistakes, they may choose to buy the product. 5. Ensuring the value created by attending the necessities of the courses since the company was established. This option may not put at risk the perfect relation between the company and the courses, main source of incomes of GolfLogix. 6. The number of courses is much less than the number of direct consumers. That means that the company can face with their principal consumers’ necessities in an efficient way and developing new products according the new necessities the courses can have. (Fast reaction in the presence of new market opportunities, coming earlier than competitors and main source to create superior value of its products) ADVANTAGES RETAIL CHANNELS 1. The market share would might be higher than the one focusing on the courses, due to there are quite more golfers and new golfers each new year than new courses. That has as a consequence that the revenue can also be higher. 2. The expert golfers can pay a quite high amount of money for the â€Å"Complete System† due to they are price – insensitive. All they want is to improve their game, correct their unknown mistakes and become the best in their own course. They would want to but it because they always go and practice golf in the same course. If you could choose one of the two channels, which would you choose – courses or retail? Courses. One reason is that Golflogix has built a strong relationship with gold courses across the country, and changing the strategy to go through retail channels might these relations get worse, having as a consequence a loss in the company’s revenue, due to the courses can feel disappointed and move to other competitors. As we see in the case â€Å"targeting consumers directly might jeopardize relationships with golf courses that the firm had worked hard to establish†. Golflogix systems (Distance Only and Complete System), through the xCaddies provide golf courses an additional revenue because they help to improve the overall golfing experience at its courses, what is exactly what players want to satisfy. Golf courses would not receive these additional streams of revenue if golfers brought their own GPS systems . Besides all, I think it is more difficult to reach the success through the retail channels, because most golfers aren’t willing to pay between $200 and $1,000 for a personal GPS system when they can simply play a golf course offering a GPS system for little or no additional charge. Moreover, we have to take into account that GolfLogix is a four-year-old company, so in case that the product fails when it is introduced directly to the final consumers, the company won’t might be able to handle this big loss because it is unlikely it has a larga cash reserve due to its age and maybe its initial investment (what means that probably the company still has a financial debt). Given the option of selling through both channels, what would you do? Taking into account that nowadays we don’t have a really good developed technology and it’s very expensive at the same time, I would only sell the devices to the courses and I would wait for the decreasing of the technology and production costs, as we can see the success of our product and the progress of the demand.