Altius Gold and the Fighting Brand Case Solution

The golf industry in USA has encountered a sharp drop in the revenue of gold balls. Altius realizes most of its revenue from the sale of golf balls to the premium segment; therefore, it is consistently losing the market share, both in ‘unit sales’ and ‘dollar revenue’ terms. Meantime, Primera, the leading competitor of Altius is constantly gaining market share on the principle of selling golf balls from its ‘value’ brand to ‘new and recreational golfers’. Therefore, from the initial background check, it is justified that in order to clinch its lost market share, Altius should change its market orientation for the time being. The decision of not incorporating ‘Elevate’ in its mid range value brand is reasonable, as in the long run the ‘premium perception’ of its mid range brand will suffer. However, Altius should revisit its marketing strategy as it is not wise to launch a cheap value line straightforwardly. Following recommendations should be taken into consideration before making any final decision.

1. Let’s assume that retailer’s margin is included in the sale price of $27. The proposed BECR comes out to be 73.28%, and the manufacturer’s gross margin is fairly low at 51%. As described below, Altius should play around with these numbers to boost the initial sales. However, the cannibalization rate should not exceed 73.28%.

2. Let’s make the assumption that some of the Altius consumers would cannibalize ‘Victor’ brand sales. The analysis shows that in order to maintain Victor’s current market share, Victor sales should go up by 36%. As 20% of Altius customers are willing to try the new line for sure; therefore, a 7.2% increase in Victor sales is a must.

3. The new product line should be distinguished from the leading competitor’s brands, which have already established their stature in market. Currently, all manufacturers are offering retailers a margin of 20%. For the starting months, Altius should tie the retailer’s margin with the level of Elevate sales. The default margin should be 20% while, in case, a retailer depicts sales above a desired level the margin should change a bit. The relevant sensitivity analysis is carried out in attached excel calculations. This step will make sure that the product has enough visibility and prestige at retail outlets in the period of its initial launch.