The Performance Indicator Dilemma

1109 words 5 pages
The Performance Indicator Dilemma
Discussing the inconsistency between the PI value proposition and the lack of adoption
There is a clear inconsistency in the claim that Performance Indicator (PI) offers significant profit uplift potential for golf ball manufacturers and the fact that no single manufacturer is yet to adopt the technology. This memo discusses the key arguments on why this is the case.
There are several key factors that explain this apparent inconsistency, including: customer preferences and buying behavior; manufacturers’ agendas, concerns and willingness-to-pay; and the reliability of financial forecasts proposed by PI.
Overview of Performance Indicator value proposition
PI offers an innovative, patented technology, aimed
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However, the licensing of the technology, at 6 cents per ball, was modest in comparison to current manufacturer gross profit on balls, especially premium brands.
Competitor reactions and implications
Assuming that the technology is not likely to be mandated as standard by the USGA, there are several key implications on the first mover, which cast significant doubt over the overall value proposition of the PI offering. In this case, the downsides of being first mover include aggressive counter-marketing by competitors, for example claiming that their balls are inferior quality because they turn grey. So significant was this threat that Dunlop, Bridgestone, Taylor Made, Wilson, Nike and Callaway all explicitly expressed that they were not interested in pioneering the technology. Furthermore, (as discussed above) in the absence of compelling data regarding customer perception of grey balls, these fears were not likely to be allayed.
The impact of likely competitor reactions and uncertainty of customer perception result in the high risk of brand equity damage the first mover, as well as increased (defensive / educational) marketing costs. Given the increasing tendency towards premium brands such as Pro V1 the impact of the brand damage is even more acute.
In addition to the aforementioned concerns, low mind share among manufacturers, timing and circumstance have also played a significant role in delaying adoption

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