Performance Indicator

Question #2

Based on my observation, the following diagrams illustrate the change in value creation and capture in the used balls market if Performance Indicator’s technology is universally adopted in golf balls.

Assumption:

• Customers will not play with golf balls that have turned gray

Observations:

• With the adoption of the new technology, the number of used balls in the market is most likely to be reduced by about 50% (as per document, about 50% of the used balls are recovered from water hazards and it’s these balls that are removed from circulation by the Performance Indicator technology).

• This reduces the Q in the value creation and capture framework, resulting in the reduction of value created (provided the reduction in Q is greater than increase in B)

• The cost to acquire [C] used balls can increase due to the reduction in the number of used balls – with supply of used balls decreasing, resellers will be willing to pay more to acquire used balls

• To compensate for increased costs, the price of the end product [P] will increase

• The willingness to pay (B) by the customers will increase with the introduction of this technology. Prior to Performance Indicator’s technology, customers purchasing used balls may end up with water damaged balls which do not show visually discernible damage but nonetheless suffer significantly in performance. With Performance Indicator’s technology, such balls will not be in circulation and as a result, customer confidence will increase with the used balls which further results in their willingness to pay for used balls.

Question #3

The following diagrams illustrate the change in value creation and capture in the new ball market with the widespread adoption of the Performance Indicator’s technology.

Observations:

• With the reduction in the number of used balls in the market (based on question 2 observations), the demand for new balls in the market will increase. In the terms of value capture...