Competition in the Golf Industry

At one point of time 27.5 million Americans played golf at least once a year and the U.S. golf economy accounted for approximately $62 billion worth of goods and services. However, industry conditions have declined recently because of competitive forces. Competitive forces are never the same from one industry to another. The most powerful and widely used tool for systematically diagnosing the principal competitive pressures in a market is the five-forces model of competition.

1. The first of the five competitive forces is the market maneuvering for buyer patronage that goes on among rival sellers of a product or service. The competitive pressures stemming from the efforts of rivals to gain better market positions, higher sales and market shares, and competitive advantages are great in the golf equipment industry. Competitive rivalry in the golf equipment industry is centered on technological innovations, product performance, brand image, tour exposure, and price.

The second of the five competitive forces is with the threats of new entrants. The competitive pressures associated with the threats of new entrants are low in the golf equipment industry. This is because for a company to enter into this market would require significant amounts of investment. One could assume that other sporting goods companies could diversify into golf similar to Adidas and Nike, but there are no large manufactures that are not in the market already. Also, Brand preferences are very important to consumers. Lastly, there are many USGA restrictions that make entrance into this industry difficult.

The third of the five forces is pressures coming from the attempts of companies in other industries to win buyers over to their own substitute products. There are no substitutes to golf equipment however there are other selected sports and recreational activities that are also popular with adults such as swimming, fishing, and bicycle riding.

The fourth of the five forces is...