GolfLogix has developed a little. GPS-based device to assist golf players track their drama. With the fact that GolfLogix has two devices it is seeking to sell: a distance-only device and a complete device. presently the company meets a job that how best to administer their devices: under the current leasing relationship with golf classs. whether should the company still necessitate to market a direct-to-consumer version of the Distance Only xCaddie? Analysis: Retail channel: Advantages: 1 ) To increase acceptance by single consumers therefore seting force per unit area on the classs to purchase into the complete system. 2 ) To supply a complementary beginning of gross.
1 ) The personal xCaddies would be useless on classs which were non already mapped out. Newly mapped classs could non automatically be added to the library of classs on bing devices. 2 ) Angstrom lifting personal ownership of xCaddies may deter classs from renting their ain devices. This means that the continual gross from renting would vanish and merely an one clip gross for selling the xCaddie would stay. If the retail channel is pursued. clients would anticipate all classs they frequent to be mapped affecting a big incremental cost for each golf class. ( see exhibit 1 ) On the other manus. single xCaddie proprietors may demand that their ain favourite golf classs be mapped even if it does non do economic sense for GolfLogix to make so.
The xCaddie? chief rivals are Cart-mounted and PDA system aiming the same niche market. the PDA-based system has advantages in monetary value point and assorted characteristics. particularly the ability to upload and download user-calibrated class functions. The cart-mounted system has a competitory advantage in GPS-based picture. The demand for these merchandises can be considered a barrier to come in for xCaddie proprietors.
For golf classs. the chief benefit in renting the xCaddies is an improved gait of drama. For golf players. the xCaddie is peculiarly helpful to golf players on the high-end classs that are more ambitious. Golfers tend to play different classs as they progress. However golf players that play on private classs are more likely to play on the same class and may non happen the xCaddie valuable as they become familiar with the class. Avid and nucleus golf players will be more willing to pay for the xCaddie since they play more games per twelvemonth and are eager to better their game. Hence If GolfLogix decides to come in the retail market. it should aim the avid and nucleus golf players.
This is because avid golf players buy 50 % of all golf related points with nucleus golf players organizing the largest section. If retail distribution is executable. the most effectual agencies of distribution for the mark market of devouring and nucleus golf players would be golf class Pro stores. golf forte and golf price reduction shops. ( exhibit 9. in instance ) These three merchants cover about 70 % of the mark market Golf forte and may hold less credibleness than golf professionals in the pro stores and would ache the xCaddie? image of being a high-value. forte merchandise.
A personal xCaddie proprietor would be at a disadvantage if he on a regular basis plays on GolfLogix-enabled classs that already rent xCaddies. Courses normally charge between $ 0 to $ 3 to utilize the xCaddie. The golf player would hold needlessly paid the full monetary value of $ 300. In short. the consumer would be better in renting the xCaddie than purchasing his ain. ( exhibit 2 ) Consequently. even though the direct-to-user program sounds attractive. we feel that GolfLogix should non follow it. It should concentrate on the rental gross by promoting classs to be mapped under a riskless test offer.
Target market: Golflogix can concentrate on the B2B subdivision by renting its devices to golf classs. The high-end public and private classs will be the chief mark because they have higher grosss and would be more willing to put in the GolfLogix system.
GolfLogix may offer classs both the Distance Only and Complete System. This would do these classs more attractive to a broad scope of golf players from novitiates to pros. The more value GolfLogix provides for the client. the more we can bear down for it. Hence in the hereafter. the functionality of the xCaddie could be extended to being able to upload and download functions and course-specific tips from the Internet to do it a complete golfing comrade.
Golf classs will be offered a pick of renting sets of 40. 60 or 80 xCaddies. The more units a golf class rentals. the larger the price reduction. This construction is created to provide to both smaller and larger golf classs.
The best type of publicity for the GolfLogix system is a free test so the golf class can see the system at no hazard to them. When a golf class marks up for the system. the class is mapped and it marks a three twelvemonth contract which can be terminated at any clip in the 30 twenty-four hours test period.
Placement: Two distribution channels to the golf classs: The first is via distributers in every state/zone who use their web of contacts to run into with golf class proprietors and promote them to seek the system at no hazard. The 2nd is via the Internet where the golf class can happen out more about the benefits and advantages of being “GolfLogix-enabled” .
Exhibit 1: Sale monetary value: 300Cost monetary value from the maker: -200Distributor make-up ( 20-30 % ) : -75 ( 25 % ) Contribution: 25Because mapping cost of distance merely xcaddie is 500 for each class. the breakeven poiont will change with the figure of classs mapped.
Exhibit 2: Renting charge to golfer: $ 1. 5 ( $ 0? per roundFull monetary value: $ 300Times: 16 rounds/yr ( 8? rounds/yr ) Time: 12. 5 yearNormally a regular consumer demands 12. 5 twelvemonth of renting to cover the full monetary value. Hence. leasing will be better for a regular consumer than purchasing.
Gourville. John T. . and Youngme Moon. “Managing Price Expectations through Product Overlap. ” Journal of Retailing 80. no. 1 ( January 2004 ) : 23-34.
Gourville. John T. . and Professor Jerry N. Conover. “GolfLogix: Measuring the Game of Golf. ” Harvard Business School Case 503-004.
Gourville. John T. “GolfLogix: Measuring the Game of Golf ( TN ) . ” Harvard Business School Teaching Note 503-099.