Performance Indicator

STRT 431

KPF Notes

Performance Indicator

1. What is PI selling, exactly? They are selling a color changing technology that indicates to golfers when the balls quality had been compromised by prolonged exposure to water

2. Who are the potential customers? Golf ball manufacturers like Acrushnet and Spalding

3. What determines PI’s potential customers’ willingness-to-pay? Dunlop Maxfil concerned with Titleists response, consumers perception of improvement to quality, or as limiting their access to cheap used balls and concerns to the brand once the ball turned gray. Titleist concerns around size of used ball market, portion of that market that would be recaptured, cost and performance impact on the manufacturing process, consumer reaction to the technology. Spalding concerned about premature color change. Nike concerned about impact to “free trial” effect of consumers using used balls they found.

4. Would all golfers be better off if PI’s technology were universally adopted? If not, which golfers would be made better off/worse off by universal adoption? Depends on how we interpret “better off.” From an unit pricing standpoint, the manufacturers cost of production would increase due to the licensing arrangement with PI as well as changes required to the manufacturing process, and we do not know if that would impact the price of balls to wholesalers and the ultimate retailers, but I would presume the manufacturers would try to pass on at least a fraction of that increased cost of production to the consumers. From this viewpoint, golfers purchasing new balls would not be better off as new balls would cost more than they did prior to the presumed universal adoption of PI technology. From a performance standpoint, golfers choosing to not play balls that were gray as a result of the exposure to water would be better off as the ball they chose to play instead would travel greater distances more accurately. Professional and high performing golfers would likely...