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Marketing 201-F
Final Project Phase #4
Callaway Golf Distribution Strategy
Callaway Golf’s current distribution strategy involves many different types of channels to
make sure that their target markets are covered throughout the world. Currently Callaway is
involved with: indirect, electronic, multichannel, and partnership channels. Callaway is
effectively using these channels to insure their products have the best possibilities of being sold.
Callaway recognizes the importance of distribution in a growing international market and
recently has received distribution rights in many international markets.
One of Callaway’s distribution channels that they are currently engaging in are indirect
channels which consist of intermediaries that are inserted between the producer and the
consumer. Callaway generally sells its products to golf retailers: (including pro shops on golf
courses or off courses), sporting goods retailers and mass merchants, directly and through its
wholly-owned subsidiaries and to third-party distributors.1 There are approximately 15,000 golf
retailers that sell Callaway products in the United States. (book). Callaway has twelve whollyowned subsidiaries worldwide. In the United States, Callaway sales shows no one customer that
distributes golf clubs or golf balls accounted for more than 5% of the company’s consolidated
revenues.2 This illustrates Callaway’s target segment market size is the same nationwide. There
is not that much growth expected due to the current economic conditions worldwide. Callaway is
not worried about their competitors, because they rely on consumers to be brand loyal every time
they buy new clubs. Recently they have new product introductions, price reductions, and
significant tour advertisement that have boosted their sales.
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"Form 10-K Callaway Golf Company 2008 Annual Report”
"Form 10-K Callaway Golf Company 2008 Annual Report”
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Callaway’s electronic marketing channel is increasingly growing with more Americans
shopping online. Electronic marketing channel employs the Internet to make goods available to
be bought by the consumer. Callaway owns two websites, www.callawaygolfpreowned.com and
www.callawaygolfoutlet.com, which enables the company to better manage the distribution of
their pre owned golf clubs. The company stimulates purchases of new clubs by growing its,
Trade In! Trade Up! program on the pre-owned website.3 Callaway uses UPS, United Parcel
Service, for substantially all ground shipments of products to its United States customers.
Callaway’s strategy of electronic marketing channels targets a very large market, all of the
United States and international counties such as: Canada, Japan, Australia, UK, Germany, Italy,
Spain, Ireland, New Zealand and South Korea.4 Callaway see’s the electronic marketing channel
as a great and inexpensive way to boost sales because they are not dealing with any intermediates.
Callaway is able to offer a cheaper price to consumers, which increases sales in the market. They
are targeting teenagers and regular players who have Callaway clubs; who constantly are
interested in upgrading to the newest technology advances that the company provides. The
electronic marketing channel is an easy affordable method for consumers to find good deals.
Another channel that Callaway is currently using is the multichannel marketing of
blending online shopping with buying in traditional retailers. Callaway has a website
Shop.CallawayGolf.com. This website is an alliance between Callaway Golf and its network of
authorized United States retailers that links consumers and golf retailers by allowing the
consumer to place an order online and a local participating retailer or Callaway itself will
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"Form 10-K Callaway Golf Company 2008 Annual Report”
“Callaway Golf Pre-Owned: Used Golf Clubs, Pre-Owned Drivers, Irons, Putters, Wedges.”
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complete the order.5 The multichannel channel allows Callaway to leverage the value added from
different channels. Callaway encourages the consumer to go into the stores for club sizes and
other specifications of clubs. After doing this, consumers can access the website and customize
their clubs to exactly what they want. When the consumer orders it online; the order will be
processed in a 24 hour period and the average time for delivery is two and a half days.6 This kind
of luxury for the consumer hits all target markets. Kids to adults can buy Callaway products in
the store or online. Many choose online for the mass customization of products. Callaway is not
losing any money by offering this service; they are generating more sales with being adverse to
all their consumers.
The last channel of distribution that Callaway is currently involved in is channel
partnership with Perry Ellis international. On March 29th, 2009 Callaway Golf agreed with Perry
Ellis International allowing them to design, manufacture and distribute Callaway golf and
sportswear apparel in the United States, Canada, Caribbean, and Latin America.7 Perry Ellis
International will service better department stores, specialty stores and corporate channels, while
Callaway will service the green grass, off course and sporting goods channels through its sales
force. Perry Ellis International will embroider, embellish and warehouse Callaway products. This
will be effective in spring 2010. Oscar Feldenkreis, President and COO, of Perry Ellis
International, “This relationship allows both companies to complement each other’s strength and
concentrate on their individual core capabilities. We see this as an incredible opportunity for us
to help expand Callaway’s presence in the apparel market.”8 Channel partnership will produce
"Form 10-K Callaway Golf Company 2008 Annual Report”
"Callaway Golf wins business through feedback, retail - DMNews."
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"Callaway Golf and Perry Ellis International will join forces | World Golf News."
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"Callaway Golf and Perry Ellis International will join forces | World Golf News."
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many additional sales for Callaway. Perry Ellis is a designer, distributor and licensor of a broad
line of high quality men’s, women’s, and children’s apparel, accessories and fragrances. This
will allow Callaway to enter into a market of high quality clothes and will expand into high end
retailers.9 The wealthier golf players will embrace the high quality of Callaway and continue to
purchase their apparel as long as their golf clubs.
As evident, Callaway is currently involved in many distributing strategies that will boost
sales in international and the United States market. Callaway is involved in using indirect,
electronic, multichannel, and partnership channels. Callaway is effectively using these channels
to insure their products have the best possibilities of being sold.
Callaway Golf has large market coverage for being a company specific to a single sport.
Callaway Golf products are found in Golf Pro Shops, retail stores, the internet and their own
magazine. Callaway products are easily accessible for consumers to purchase. Callaway has
recently expanded to the international markets. The company sells products in 100 countries
around the world. In 2008, approximately 56% of Callaway’s sales were in the United States.10
Callaway primarily sells to both on and off course golf retailers along with sporting
goods retailers who sell quality golf products and provides a level of customer service that is up
to standards for American consumers. There are approximately 15,000 retailers that sell
Callaway products.11 Callaway demands excellence for the stores that sell their products.
Callaway imprints logos on their products, thereby maintaining complete control of the final
product and makes sure there is no fraud. This makes sure that all Callaway products are sold
how they want it, and to insure quality to the consumer.
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"Callaway Golf and Perry Ellis International will join forces | World Golf News."
"Form 10-K Callaway Golf Company 2008 Annual Report”
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“Marketing”
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Callaway not only has market coverage in retail stores, but also great coverage online
with their own website dedicated to just online shopping. This website differs from their main
Callaway Golf website. In 2006 the company announced the website Shop.CallawayGolf.com an
alliance between Callaway Golf and its network of authorized U.S. retailers.12 This website
offers all product lines and apparel of Callaway. Callaway also has the two websites for their
pre-owned selection, where consumers can order products directly from Callaway. This is very
important in today’s society to establish a good online presence for their products.
Callaway makes their own magazine that shows all of their newest products. Callaway
Golf Magazine is a quarterly magazine with 910,000 magazines in circulation.13 This magazine
targets owners of Callaway golf equipment and golf enthusiasts. 92% of the readers believe the
magazine helps make better decisions about golf equipment.14 The consumers can view all the
latest clubs from the magazine and this has greatly enhanced sales.
Callaway certainly has a large presence in the market. Their golf clubs and apparel are
available to all consumers nation-wide and internationally, through: pro shops, retail stores and
online websites. Consumers are able to find Callaway products wherever they look, the products
are widely accessible.
The Callaway Golf Company realized the extreme importance of the internet as a channel
of distribution and in November 2006, Callaway announced Shop.CallawayGolf.com, a partner
between Callaway Golf and its network of authorized U.S. retailers that links consumer and golf
retailers by allowing the consumer to place an order through Callaway Golf’s website and have it
fulfilled by a local participating retailer or by Callaway itself. This gives the consumer the ability
"Form 10-K Callaway Golf Company 2008 Annual Report”
"Case Studies, Callaway Golf Magazine."
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"Case Studies, Callaway Golf Magazine."
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to interact with retailers and receive exactly what they want. David Schofman, CEO of Callaway
Golf Interactive, understands that each consumer wants something a little different to fit their
sizes and swing. Mr. Schofman insures, “Once an order comes in, all of the retailers in our
network view the order and compare them against their inventory. Within a 24 hour period of the
consumer purchasing, a retailer processes the order making the average time for delivery only
two and a half days.”15 This online strategy promotes customer service and consumer loyalty to
Callaway products. According to Schofman, “This arrangement allows us to satisfy the consumer
but to do so in a way that didn’t violate our relationship with our loyal trade partners- those
15,000 outlets that sell Callaway products.”16 The internet is important because it is a place
where consumers can go for all their needs and can find the product when they want it.
Callaway online allows customization potential for all their golf clubs online at
shop.callawaygolf.com. The website is dedicated to custom fits for the consumers’ ability to
purchase their very own modified clubs. Callaway Golf offers a custom fitting experience
unsurpassed by anyone in the industry. Whether you are skilled player or a beginner, picking the
right club is challenging, but with assistance you can pick best Callaway Golf equipment options
for your game. Callaway wants to give each consumer the confidence that the clubs they
purchase will match their swing profile.
When accessing the website you can click on what type of club(s) you want to purchase.
For example you can choose the Big Bertha Diablo Drive and there is a standard club or you can
build your own. Clicking build will give you five customization options: Gender/hand, Optifit,
Loft, Shaft Origin, Shaft Material. Once you complete these options you can customize: the
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"Callaway Golf wins business through feedback, retail - DMNews."
“Marketing”
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length, lie, grip, or wrap of the club. Most consumers are not sure on the best options for them,
which is why Callaway has set up a trained club specialist who can direct the consumers into
making the right decision. These specialists can be found at various locations.17 Club fitting is
essential in performing on the golf course and Callaway has developed a fitting system that is
quick, easy and accurate. It requires the consumer to be cross-channel shopper. Callaway has a
separate team of club fitting specialist who focus on the company’s custom club sales. These
sales are generated from high speed cameras at performance centers which use the cameras to
capture the relevant swing data.18
Research shows that 51 percent of U.S. online consumers are cross-channel shoppers.
These shoppers are males and females, tend to have a higher education, earn significantly more
money and are more likely to embrace technology.19 Majority of golfers would normally fall into
this category, go into the retail stores which are equipped to determine the best specifications for
your swing, and then they will purchase it online.
The Callaway online site is very valuable to the ecommerce of their golf equipment.
Internet sales have increased due to lower prices compared to retail stores and the customization
that fits the player to the clubs they bought. Callaway is experiencing more sales by selling their
products online. Many consumers shop online for: convenience, choice, customization,
communication, cost and control. Consumers are seeing all of their options before potential bias
“Callaway Golf Clubs, Big Bertha Drivers, Irons, Golf Balls, Fairway Woods, Odyssey Putters,
Accessories, Apparel.”
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"Form 10-K Callaway Golf Company 2008 Annual Report”
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“Marketing”
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from retailers. The company believes that offering golf consumers the opportunity to increase
performance with custom club specifications increases sales and promotes brand loyalty.20
Callaway is a company that distributes its products based on pulling a creation of demand.
Pull marketing largely requires the active development of a highly visible brand, which Callaway
is. Callaway encourages consumers to actively seek out their products, because they believe
Callaway products will fulfill their needs.21 Callaway’s distributions strategies that they use are
through word of mouth, advertisement with professional golf players and advertisement in golf
magazines.22
Callaway mainly focuses on average golfers rather than the new or experienced golfers,
which produces a broad market. Callaway hopes that these average players will usually play with
a new golfer, and believes that the average golfer with Callaway clubs will suggest their clubs to
the new player. This word of mouth marketing strategy proved to be successful and had sales
totaling of $843 million in 1997.23 Sales were constantly increasing and Callaway stuck with
focusing on average players which were generally middle class businessmen. The average golf
player believes the club makes the player. Experience players are hard to reach because they
know that clubs don’t influence their game as much as skill. Business was booming in the new
millennium and middle class families had more money to spend on a new set of golf clubs.24
These businessmen are credited by provided a good source of word of mouth for Callaway. They
also were the ones going into retail stores and asking about Callaway products creating a pull
from the consumer perspective.
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21
"Form 10-K Callaway Golf Company 2008 Annual Report
"Callaway Golf - Hit it Pure."
"Marketing: Strategy (Callaway Golf)."
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"Marketing: Strategy (Callaway Golf)."
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"Marketing: Strategy (Callaway Golf)."
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Callaway’s golf brand is highly visible in today’s society through the advertisement with
professional golf players. Callaway’s top players are household names, Phil Mickelson, Annika
Sorenstam and more. These pros are featured in Callaway Golf Magazine. Of the subscribers
76% would recommend Callaway Golf equipment based on what they read in the magazine. This
magazine created subscribers that provide product feedback and flood the market with word of
mouth endorsements.25 Potential consumers are watching these top players using Callaway golf
clubs, which will encourage them to buy Callaway clubs when they are in the need of new clubs.
People like to use the same products that these athletes use because they believe that Callaway
clubs will improve their golf game. By having these famous players endorse Callaway; promotes
their products for having great quality.
Callaway is constantly doing research and development to make sure they have the best
technology for their products. At Callaway they believe in keeping their customers by consumers
being brand loyal. Callaway is pulling the majority of their target market based on word of
mouth and professional endorsement. Currently Callaway is printing advertisement in national
magazines such as, Golf Magazine, Sports Illustrated, and Golf Digest.26 Consumers want the
best products, and Callaway is dedicated to give it to the consumers. Consumers will go into
retail stores and ask for these high quality clubs that they see in the mainstream media during
golf telecast. Consumers want the best and Callaway offers it.
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"Case Studies, Callaway Golf Magazine."
“Form 10-K Callaway Golf Company 2008 Annual Report”
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Works Cited
(1-3,5,10,12,18,20,26) "Form 10-K Callaway Golf Company 2008 Annual Report For the fiscal
year ended December 31, 2008." Callaway Golf Company Annual Report 2008. Web. 29 Nov.
2009. http://phx.corporateir.net/External.File?item=UGFyZW50SUQ9MzMxMzU0fENoaWxkSUQ9MzEzNDM0fFR5cG
U9MQ==&t=1.
(4) Callaway Golf Pre-Owned: Used Golf Clubs, Pre-Owned Drivers, Irons, Putters, Wedges.
Web. 03 Dec. 2009. <http://www.callawaygolfpreowned.com/on/demandware.store/SitesCGPO-Site/default/Home-Show>.
(6,15) "Callaway Golf wins business through feedback, retail - DMNews." Direct Marketing
News - DMNews. Web. 29 Nov. 2009. <http://www.dmnews.com/callaway-golf-wins-businessthrough-feedback-retail/article/95809/>.
(7-9) "Callaway Golf and Perry Ellis International will join forces | World Golf News."
WorldGolf.com: golf course reviews, golf & travel features, golf news, golf blogs, more... Web.
29 Nov. 2009. <http://www.worldgolf.com/newswire/browse/57886-Callaway-Golf-and-PerryEllis-International-will-join-forces>.
(11,16,19) KERIN, ROGER A., HARTLEY, STEVEN W., and RUDELIUS, WILLIAM.
Marketing. New York: McGraw-Hill Irwin, 2009.
(13,14,25) "Case Studies, Callaway Golf Magazine." Custom Publishing Council. Web. 29 Nov.
2009. <http://www.custompublishingcouncil.com/resources-case-studies_info.asp?CS_ID=71>.
(17) Callaway Golf Clubs, Big Bertha Drivers, Irons, Golf Balls, Fairway Woods, Odyssey
Putters, Accessories, Apparel. Web. 02 Dec. 2009. <http://shop.callawaygolf.com/>.
(21) "Callaway Golf - Hit it Pure." Callaway Golf Company - Language Selector. Web. 03 Dec.
2009. <http://www.callawaygolf.com/Global/en-US.html>.
(22-24). "Marketing: Strategy (Callaway Golf)." Everything but the weather" Web. 29 Nov.
2009. <http://siegelinnovations.blogspot.com/2007/10/marketing-strategy-callaway-golf.html>.