Performance Indicators

2. The introduction of Performance Indicator (PI) technology introduces a new variable into the equation for consumers of used golf balls. Before the PI technology existed, consumers were operating under the assumption that the used balls they are buying are of similar quality to new golf balls and would not materially affect their golf game. Now, only used golf balls that have not turned grey will be viewed this way by the consumer. This splits the used golf ball market into two segments, balls that have turned grey and those that have not. I believe that for balls that have not turned grey, I believe that B and P will both increase, coming closer to the level of new golf balls. C is likely to stay the same, but Q will decrease as there are less “non-grey” golf balls on the market. For grey golf balls, both B and P will decrease drastically, C will stay the same and Q will be lower than the Q of the golf ball market before. It is possible that the grey balls could be positioned well to cater to the market segment of casual amateur bargain hunter golfers to whom the decreased golf ball performance does not matter because they can’t maximize the potential performance of a new golf ball as it is.

3. In the new ball market, I believe B would remain the same because consumers were expecting that the balls they used to buy were performing optimally. C would increase because of the licensing fees paid to Robb and Bob and the cost of the technology itself. P may increase to reflect this change in cost but I don’t expect it to. I expect Q to increase dramatically as many of the used ball buyers will seek to purchase new balls because the supply of non-grey used balls will be limited and the price gap between non-grey and new will not be as significant as the price gap between grey and new.