Driver Economics 101
By Steve Divnick,
President of Divnick Golf
- How much more will people pay for new drivers each year?
- Are the new tweaks really helpful, or just great marketing hype?
This two-part series examines the upward pressure on pricing, how the industry has created this self-inflicted stress, and a prediction about the future of drivers.
Major golf manufacturers are counting on you to shell out higher prices every year to get the latest technological innovations. Their investors expect them to continue to produce growth in an industry that appears to have peaked and is now settling. So they are fighting over the same dollars.
If you own stock in one of these public golf equipment companies, you should be very cautious and informed. Something has to give, and you don’t want it to be your investment portfolio.
If you are a consumer and want to get the most out of your game, there are some insider secrets that will definitely affect the way you buy clubs.
All industries develop over time. Innovation is a result of applying creativity to yesterday’s norm. Today’s designs are not the result of a 100-year plan. Design and marketing strategies, even elements like, “The Rules of Golf” are subject to the pressures of the time in which they exist. In all sports, there is an ever-present tension between maintaining tradition and welcoming innovation.
That knowledge will help us understand how we evolved from wood to exotic metals and fibers, and price tags approaching $1,000.
The golf industry has successfully established a protocol that requires new features and escalating prices. Callaway's Big Bertha line is an example. It was followed by the Great Big Bertha. Then came the Biggest Big Bertha. Many experts agree that the original Big Bertha is still one of the best drivers on the market, but you don't create demand if you don't innovate.
Taylor Made, Titleist, Nike, Cobra, Cleveland and others continue to compete for the next big breakthrough. There are even drivers out there that claim to produce sound waves to create more spring-effect.
But creating a big success can be short-lived. At the 2004 PGA Show, Callaway introduced the Fusion which combines graphite and titanium. Four months later, Taylor Made launched it's R-7 with futuristic-looking weight ports that took over the media buzz.
Do these new features really help you hit the ball better? The jury is still out on that. But one thing for sure, they cost more, and next year they will be passé.
The designed obsolescence has been a big money-maker for the entire industry. No one is hitting old-fashioned wooden woods any more. It would be embarrassing and a distinct disadvantage.
As with all innovation, there is a combination of genuine improvement, and a lot of marketing hype that doesn’t necessarily translate into better performance. But it ALWAYS costs more.
While there is considerable cost associated with design, prototyping, testing, and tooling, it can be argued that a large portion of the cost of new drivers is the marketing strategy. Millions of dollars are spent on professional endorsements with big name golfers. The theory is that if Tiger Woods, Ernie Els, Vijay Singh, or Phil Mickelson use a particular brand of driver, then you should too. And against all common sense, that marketing strategy actually works!
In reference to the fact that Phil Mickelson recently left Titleist and joined Callaway, James Koppenhaver, President of Pellucid (www.pellucidcorp.com), a bright new voice of reason in the golf industry asks, “With a large portion of the consumer base citing the expense of golf as a barrier to play/play more, at what point do PGA Tour pro endorsements outrun their consumer economic value?”
Common Sense Approach
Average golfers are nothing like pros. Our swings are different. We don’t practice as they do. We don’t have their coaches. We are nothing like them. What makes us think that we should swing the same clubs? We need our own tools!
Most golfers struggle to get the ball in the air on a productive trajectory. It is our premise at DivnickGolf that drivers should have higher loft—much higher. So we offer drivers with up to 15 degrees of loft. They hit with the ease and accuracy of a 3-wood, but still deliver the large sweet spot and shaft length of a driver.
With our tongue planted firmly in our cheek, we have published some press releases that proclaim how many drivers we had in play at various tour events—the same kind of press releases the big brands publish. But for us, it’s a big fat ZERO. This gives us the opportunity to explain that we are not building clubs for pros. Along the same lines, we can say that we missed signing Phil Mickelson when he became available. We were just a few million dollars below his radar!
Why do big companies continue to invest the majority of their R&D in equipment for pros? Why do they spend millions of dollars on endorsements? Why do they continue to come out with innovative bells and whistles that claim to be better than anything heretofore known to man?
Because it works. There are plenty of golfers who accept that marketing strategy. They want to carry the same name-brand driver as their idols. It’s silly, but it’s successful.
But how long will this continue? With the total number of golfers declining for the past few years, something has to change. How many drivers will people be willing to accumulate in their garage before they revolt?
The recent boom of reselling used clubs on Ebay and through other venues has only exacerbated this pressure because many golfers are opting for last year’s hot club at a fraction of the cost. But the formula is still producing stacks of unused drivers.
It is difficult to predict human nature. Maybe people will revolt; maybe they won’t. But the data suggests that escalating prices, and the accompanying rise in endorsement costs will taper off, if not collapse.
We think there is a better way to develop clubs and market them to the average golfer. Simply stated, we design clubs for average players with average swings. We think it should be easier to hit long arcing shots that land softly and run another 20 yards.
Perhaps we can even claim to have a positive effect on the number of rounds sold because people are having fun again off the tee!
We will gladly let the big-brand companies focus on the pros. We just want to serve the average golfers in the marketplace! They outnumber pros by about a million to one. That is the market segment we want to supply.
Click here to read Part Two of this series which examines the technology of the driver, the effect of the limits imposed by the USGA maximum Coefficient of Restitution (COR), and an insider’s opinion of what really works, and what is hype. Part Two begins with a press release about the new 350-yard Sonic Launcher.
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