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GolfLogix:
Measuring the Game of Golf
By: Audra Ferguson Dave Gasvoda Brett Widner
March 8, 2004
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Introduction
A golfer 30 years ago would not be able to foresee a product that had the
capabilities to measure the exact distance to the green, tell you which club to use, and
digitally track your process. Today, such a product exists. In fact, there are many
different varieties of such products. Some golfers may view this as a hindrance to the
tradition of golf, while others welcome it as a progression in the game. Golflogix
believed that they were offering a product that golf courses would desire and that would
offer utility to the golfer’s experience. They introduced the idea of their product to the
golf courses, and three years later were contemplating the release of the device to
consumers. However, there are many things to consider with such a decision. Not only
must the company decide if there is a market for this product, but they also decide if this
idea will be profitable in the long-run. In our paper, we will look at the company,
industry, product(s), competition, affordability, price, target market, and advertising. We
will also do an analysis of our opposing group’s recommendations for GolfLogix.
Assumptions
While writing this paper, we assumed the following points:
• The readers of this case have a general knowledge of the game of golf
• We believed all of the information in this case to be true, even though some of the
information may have changed since the release of the product.
• Golf courses have a real interest in leasing this product from Golflogix, even
though there was not very much data to support this point.
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• Readers understand that this is a recreational product and not a professional
product used on the PGA Tour.
Company
The idea behind GolfLogix originated from a post-round discussion in a golf
clubhouse. Todd Kuta and Scott Lambrecht were contemplating their club selections and
distances to the green. They agreed that they both had a hard time determining this club
selection and distance. From this discussion, the two decided they were going to work on
producing a product that provided exact yardages to the center of the green. This idea
branched into a much more complex solution including more than just distance to the
green. Things like golfer statistics would be recorded on the device, and it would be able
to print out the results of the round (1, 3).
GolfLogix worked with Garmin International to develop Global Positioning
System (GPS) for golf courses. Garmin International is a leading producer of GPS
receivers in the United States. This technology is extremely accurate, but it also comes at
a high cost (1, 4). The idea was to help golfers eliminate the guessing of yardages
throughout the golf course.
GolfLogix did a very thorough job of testing the product. They combined user
feedback, golf course input, and professional knowledge into their distance finders. After
significant prototype testing, GolfLogix produced the first system for use in the market in
early 2001 (3).
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Industry
GolfLogix began the production of GPS in 1999 for golf courses that would allow
golfers to obtain exact yardages from anywhere on the course to the middle of the green
(1, 1). GPS technology originates from the United States Defense, who used this to assist
troops and vehicles by satellite. Once this technology became available for public use in
the 1980’s, it was used for many other things (i.e. cars) to assist in navigation (1, 4).
The idea of laser or satellite assistance for golfers can be traced back to the PGA
tour, which is where almost all golf products originate. The public notices PGA touring
professionals playing with this new technology and then they decided that they must have
it. Although this technology is illegal in tournament use, professionals use it in practice
rounds to get exact yardages marked down in their yardage books.
Many companies have put out different types of distance finders in recent years.
Products range from Distance Only finders to enhanced systems that include detailed
layouts of the golf course on a computer screen.
Product
GolfLogix has developed two different types of GPS golf technology. Both are in
the form of a handheld GPS receiver, called an “xCaddie,” which produce distance to the
center of the green (1, 1). First, they have the Distance Only System. This only provides
the yardage to the middle of the green. The second is the Complete System. This is the
enhanced version that stores more detailed information such as club selection and results
from your round. After the round, players can print off their results to take home and
study. This information can act as a teaching device because players can see what clubs
they hit, how far they hit them, and how they putted (1, 5).
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These systems are portable, simple to operate, and very accurate. GolfLogix also
feels that golf courses that try their product will see an increase in revenue because the
pace of play will increase. This will allow for an increase in the number of rounds played
on the courses. GolfLogix also boasts that they can adapt internationally by producing
their product in different languages. This will allow for global access to the world
market. The system also offers playing tips on the screen to aid golfers who are
unfamiliar with the course (3).
Distance Only System
The Distance Only System is their lower-end model that only produces yardage to
the middle of the green. A handheld GPS receiver produces accurate yardage to aid in
club selection. It is very easy to setup on a golf course—taking only about four hours to
setup 60 units. Those who setup the system have to map out the course and download the
yardage information into the xCaddie units (1, 5). Benefits of this particular product
include exact yardage to the center of the green, faster pace of play, affordability,
compact size, and ease of installation (1, 9).
The two main points emphasized by GolfLogix with this Distance Only System
are better golf resulting from exact yardages to the green and a faster pace of play. Even
though these two things seem like great advantages, there are potential problems with this
device. First, since this product takes the thinking or guessing out of the game, it may not
appeal to the more traditional golfers. Many golfers love the history of the game of golf
and do not want to change it. Golfers see the process of pacing off the yardage to the
green and pin an intricate part of the game. PGA Tour players are constantly viewed
stepping off their distance to the pin, and it is something that has been a part of the game
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since it originated. Conservative golfers may find it difficult to transition to this new
technology.
In addition, though the pace of play should speed up with these exact
measurements at your fingertips, it can also work the other way around. It first thought
this would speed up play, but we know from experience on the golf course that these
things can also slow down the round. People are too caught up and fascinated with these
devices and want to measure the distance from every bunker, tree, and blade of grass.
They can also forget their distance tracker in the cart, or leave it behind if they are not
careful. This new technology will most likely speed up the pace of play, but it should not
be taken for granted.
The Complete System
The Complete System goes a step beyond the Distance Only System. It provides
more information than just the yardage to the center of the green, and it is more
expensive. With this system, the pro shop can record the progress of the golfer as they
move around the golf course. It can also provide numerous advantages to the player
including a recap of the statistics such as driving accuracy, greens hit, and putts taken. In
addition, the golfer can also receive a post-round printout of their statistics to take home
with them. This characteristic really sets the Complete System apart from other systems.
This information is taken from the xCaddie and sent to a color printer through a touch-
screen kiosk. Players can keep track of their progress on their own website, which is a
link from the GolfLogix website (1, 5-9). These personalized websites offer members a
chance to follow their golf statistics throughout the year. It is a great way to get feedback
on one’s play.
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Setup for the Complete System takes a little bit longer than for the Distance Only
System. More people will be involved taking more pictures from many additional
locations throughout the course. The time involved to set a course up for this is about
double the time it takes for the other system (1, 5).
This information will allow players to take something with them from the round.
It provides information that can serve as a teaching lesson with the feedback it offers. A
player can diagnose the reason they shot 102 or 71. The detailed information it provides,
such as where the drives missed, allows the player to notice trends and make changes
based on these results. Continuous recording and tracking on the website is a helpful tool
for serious golfers.
However, there are also potential problems with this Complete System. First, the
same argument that was made for the Distance Only System can be made with this one.
Many golfers believe in preserving the history of the game. Therefore, they do not
believe in taking the shortcuts to getting the exact yardage. These people believe golf is a
game of strategy and feel.
Another potential weakness is that this system is too complex. The golfer has to
take the time to check his or her distance to the green with the xCaddie. The player must
then enter the club he or she is using for the particular shot. Once the player reaches his
next shot, he or she must representative at the process of checking the distance and
entering the club selection. When the player finally reaches the green, he or she must
select the “putter” icon and enter the number of putts needed to hole out the putt. All of
these steps are necessary for each hole to provide accurate results after the round. The
player can then print off the results and even study them on the personalized Web page
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dedicated to the particular golfer (1, 6). These things can take away from the enjoyment
of the round by occupying significant time throughout the course. Relying on all of this
technology can also run into trouble if the technology were to malfunction.
We contacted a golf course that was listed in the case to inquire about the
GolfLogix system. We got in touch with Arizona Traditions Golf Club head pro Paul
Crow for a short discussion on the GPS system. The case says that the golf club in
Surprise, Arizona adopted the Distance Only System in February 2002 (1, 18). However,
the golf club no longer has the GolfLogix system at their course. Mr. Crow began by
telling us that they agreed to try the Distance Only System as a toy to experiment with for
the free trial of 30 days. He explained that it did not go over as well with his members as
he originally thought. Since the Distance Only System provides yardage to the center of
the green, and nothing more, he was not convinced that the members felt obligated to use
it. One reason for this is that the members are very familiar with the course, and they
know where other yardage markers to the center of the green are located throughout the
course (6).
However, Mr. Crow did say that GolfLogix worked fairly well with non-
members. He said that they added an additional $5 on the greens fee to use the Distance
Only System. He was pleased with the revenue created by this GPS technology, but did
not feel that this particular model was sophisticate enough to take on as a permanent part
of the course. He felt that the many sprinkler heads and yardage plates were sufficient in
presenting the golfer with accurate distance to the center of the green (6).
Another complaint that he had with GolfLogix was the life of the battery. He
explained that an xCaddie unit would sometimes not last the entire day on the golf
9
course. He said that if units were sent out in the morning and then again, in the
afternoon, some units would run out of charge. Therefore, the lengths of the batteries
were not long enough (6). This is an example of a malfunction that can cause problems
for both the golfer and the golf course.
We agree with Mr. Crow and the Arizona Traditions Golf Club staff that
GolfLogix should have produced a distance locator that was tailored to the exact pin
placement on the green. We will soon explain the many other distance markers that
almost every golf course has that can rival the GolfLogix technology that only measures
to the center of the green.
GolfLogix should have been more precise with their yardages. With this exact
distance to the pin in place, the golfer could get a more accurate reading of the actual
yardage they have into the hole. Pin positions are moved multiple times during the week
at almost every golf course, and the greens are large enough to make a difference on club
selection for a front pin compared to a back pin on a green. For example, if Tiger Woods
had his ball sitting next to a sprinkler head marked with 150 yards and the pin was in the
center, Tiger would go ahead and hit his 150-yard club. However, if he was lying in the
same position but the pin was in the front, he would have much less yardage to the actual
hole location. He could only have about 135 yards on an average sized green. Pin
position makes a huge difference in club selection. Many golf courses produce pin sheets
for golfers, or have color-coded pins, to provide more detail of the exact yardage to the
pin.
We do not think that measurement to the center of the green is accurate enough to
be producing GPS technology to read. We recommend that GolfLogix be more specific
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and produce distance finders that will provide exact yardages to the pin placements on the
greens. There are many forms of GPS that provide this type of technology. If GolfLogix
produced more specific yardage finders, they could have earned more business and
revenue. The non-specific technology that they produced may be one reason for their
limited sales in 2001.
Competition
We are now going to look at other forms of distance markers that are on the
market. The Distance Only System and the Complete System have many competitors.
We will first look at the low-tech competition to the Distance Only System. The first
type of competition includes sprinkler heads marked with distances to the center of the
green (1, 11). These heads are evenly distributed throughout the golf course to disperse
water properly. Almost every golf course has a sprinkler system and most contain
yardages on them. Another competitor are yardage markers that are placed on golf
courses (1, 11). Almost every golf course has some form of these also. For example,
they could have colored plates, poles, or shrubs that signify distances to the center of the
green.
Yardage books are another form of competition to the Distance Only System (1,
11). These books can be carried around in one’s pocket and contain numerous yardages
on every hole. For example, PGA Tour pros carry these around during their tournaments.
They can often be seen pulling them out of their pockets when they are contemplating
club selection. Yardage books are usually found at resort courses, high-end public
courses, and private clubs. There are also rangefinders that provide distances to the
green. They vary in quality and price, but they can be used to locate the yardage to
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almost any target. This type of assistance is illegal in United States Golf Association
tournament play (1, 11).
One of the most common rangefinders is the Bushnell Yardage Pro. The product
is a laser rangefinder that produces exact distances (2). This is different from GolfLogix
products because is uses a laser, and the golf course does not have to be specifically
adapted to it before usage. This product can be used anywhere because the laser can be
positioned to reflect off any target to produce an extremely accurate yardage reading.
Another type of competition to the basic Distance Only System is a laser gun.
These devices are very easy to use, because all one has to do is point it at the pin and
click the button. This provides exact distance to the pin. Since pin positions are
frequently moved around the green, the laser receiver on top of the stick also moves to
provide accurate distance to the pin. These handheld devices are gaining popularity
throughout the golf industry.
All of the things listed above are direct competition to the Distance Only System
because it only produces yardage to the center of the green. The competition is already in
place on many golf courses (i.e. sprinkler heads and yardage markers), and courses do not
feel that the new product will provide much more value than what they already have.
We will now move on to the competitors of the high-tech Complete System.
There are competitors such as cart-mounted systems and PDA-based systems. There are
many different types of cart-mounted systems available. However, not many PDA-based
systems are on the market to this point, and not a whole lot of information is available on
them. We do not consider them a strong competitor to the Complete System at this time.
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The cart-mounted systems have video units attached to the roofs of the carts and
provide things including a visual of the hole, pin placement, distance to the pin,
communication with the pro shop, electronic score keeping, food ordering capability, and
the pro shop can keep track of a cart’s progress throughout the golf course (1, 11). These
computer systems are very detailed.
We contacted a golf course that had a cart-mounted system produced by Parview.
Though this system is mounted on the cart, it is still very comparable to the Complete
System by GolfLogix. We discussed the Parview system with Todd Smith of Rock
Hollow Golf Club in Peru, Indiana. He said that the golf course leased the systems for
about two years. He said they did have many problems with malfunctions of the system.
For example, the computer would produce a yardage to a pin that was not accurate. He
elaborated by saying he felt the company did not fix all of the glitches before the release.
After spending frequent time attempting to fix these problems, he and Rock Hollow
decided to send them back to Parview (7). Though this may have been a one-time error
for Parview, we feel that the risk is out there for this computer technology. Rock Hollow
Golf Club has since moved to laser guns that can get an exact reading to a pin location.
GolfLogix has the potential to separate themselves from these competitors.
Making more specific yardage finders will set them apart from things like sprinkler
heads, and it will provide more satisfaction to the golfer wanting exact yardages.
Affordability
Affordability is a main issue to look at when assessing whether this product will
sell. One must analyze if a golf course is able to put forth the expense to acquire
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GolfLogix. To do this we will examine the operating and expense statements, the cost of
the setup and the product, and an analysis of each type of course.
Operating and Expense Statements for a Typical High-End Public Golf Course (in thousands) Operating Revenues (1, 22): Greens Fees $1,500 Golf Cart Rental $300 Driving Range Fees $200 Pro Shop Merchandise $200 Food and Beverage $300 Total $2500 Operating Expenses: Course operations/Maintenance $700 Golf Operations $400 Food and Beverage $300 General and Administrative $400 Total $1800 Net Operating Income $700 From this income statement, it is very clear that high-end golf courses are only
making a net income of about $700,000 per year. This is not very much when you
consider the other businesses that are making millions in net income a year. Therefore,
this leaves little room to be able to spend on other things. It is clear that the operation of
a golf course is very expensive and that product rental (i.e. golf cart rental) makes up only
a small portion of the revenues of a golf course. Now we will look at what happens to the
income statement when we add in the expense of GolfLogix. To do this, we are going to
consider the worst-case scenario. That is if they cannot rent any of the GolfLogix out to
golfers. We will consider that they have a Distance Only unit. It is renting at $1500 per
month.
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Operating Revenues (1): Greens Fees $1,500 Golf Cart Rental $300 Driving Range Fees $200 Pro Shop Merchandise $200 Food and Beverage $300 Total $2500 Operating Expenses: Course operations/Maintenance $700 GolfLogix $180 Golf Operations $400 Food and Beverage $300 General and Administrative $400 Total $1980 Net Operating Income $520 The implementation of GolfLogix brought down the Net Operating Income by
$180,000. With a Complete System, the Net Operating Income would be decreased to
$460. However, this is the worst-case scenario. It is unlikely that a golf course would
not be able to rent out any of the units. However, this does show a concern that is in the
mind of the golf courses’. “What if we cannot rent them?” To ease this concern,
GolfLogix must be sure that they target the golf courses that feel that they will be able to
recover the cost of the product. This will be discussed in further detail when we discuss
the target market.
Cost of Setup
The cost of the setup should be a concern for the company. The cost of the setup
for the Distance Only unit is only about $500 per golf course and it takes one employee a
total of six hours (1, 5). However, the Complete System costs about $7,000 per golf
course and it takes a team of employees about twelve hours. It also costs about $100,000
per year to maintain the Web site that is necessary for the Complete System (1, 5). With
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this in mind, GolfLogix must be sure that the consumer is satisfied with the Complete
System so that they will keep the system for a long period. If consumer keeps the
Complete System for only a trial period, GolfLogix just lost $7,000 not including the cost
of the Web site. Therefore when selling these systems, it is GolfLogix’s responsibility to
help ensure that the golf course will be satisfied with the product that they choose and
that they will be able to rent it out to their golfers. If they are not able to rent this product
out to their golfers, GolfLogix will lose out in the money already invested into that golf
course if they want to send the product back.
Analysis of Each Type of Course
As we could see from the net operating income of a high-end public golf course,
they could afford it. They will, however, lose money if it was implemented but could not
rent it out. Now we will look at the net operating income of a municipal course and
private course. A municipal course has a net operating income of $660,000 (10). They,
too, can afford it. However as mentioned earlier, it is more that just being able to afford
this product. GolfLogix must be sure that the golf course will be able to rent it out; if not,
they will cancel the product during the trial period and GolfLogix will be out the original
outlay cost.
A private course, on average, has a net operating income of less than that of a
municipal course. It has a net operating income of $440,000 (10). However, you must
also consider if a private course will be able to rent out the product more than a municipal
course. The target market will be discussed later in further detail.
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Price
The price that is offered is a key component in decision making by a company.
When we analyze the price, we will analyze the type of payment form offered to the golf
courses, type of payment form suggested rent for the consumer, and any discounts and
allowances that will be offered.
However prior to investigating the type of price that is offered, we must look at
the price sensitivity of golf courses. There are a number of things that influence price
sensitivity. The first is substitute ways. In the golf industry, there are substitute ways to
measure distance. There are yardage markers, sprinkler headers, and yardage books (1,
11). Therefore, for this factor, they would be fairly price sensitive. The second
consideration is the ease of the golf courses to compare prices. It is easier for the golf
courses to compare prices for the substitutes listed, but it is difficult to compare prices of
a product exactly like GolfLogix because there is not a product exactly like it. The
greater the total expenditure is the greater the price sensitivity. This will be evaluated in
Price
Golf Course Payment Form
Consumer Payment Form
Discounts and Allowance
17
the lease versus buy discussion. Customers will also be less price sensitive if they
already have a sunk investment that is related to the purchase (11).
Golf Course Payment Form
When offering this product to a golf course, we must analyze the type of payment
form that will be offered. Currently, golf courses are allowed to lease the product only
(1, 1). However, there are more options than just to lease. We will look at all of the
options that could be available. These include continuing to offer a lease, having the golf
courses buy the system, or offering a lease with the option to buy.
Currently, golf courses are offered a standard lease. The golf courses pay to use
the system on a three-year lease, and when they are done with the system, they have no
further obligation. This has its pros and cons. This is good because it is easier for both
the golf course and GolfLogix. The golf course is obligated to only a set period, three
years. Therefore, there is not a big, long-term obligation. This is also bad because some
golf courses may be worried about obligating themselves to three years on a product that
they have not used before. However, it makes it better because if a golf course continues
to renew the lease then they have the potential to make more of their money back.
However, this is bad because it does not lock the golf course in. If the golf course is not
satisfied, then they can send the product back and GolfLogix is back to where they
started.
There is also the option to just sell the product. Instead of offering a lease,
GolfLogix would offer a set price and try to sell the system to the golf courses. This is
good because it locks in the golf course. They must buy the product. GolfLogix will not
have to worry about the golf course wanting to get out of buying the product. However,
18
this is bad because the product is new. Therefore, golf courses might be unsure if they
want to spend the money on a product that might not be successful. There is a definite
risk in investing your money into a product that has not proven its self to be successful.
There would also be a high cost involved in purchasing the product and golf courses
might not be able to forth that much money.
The payment form we suggest offering is a lease with the option to buy. This
would give the consumer and the golf course a medium between a lease and a purchase.
This would give the consumer the comfort of knowing that they have the ability to try the
product out before committing themselves. However, this also gives them the option to
purchase the product. If the golf course feels that this product is something that their
golfers really enjoy, then they can purchase the system. It does give the golf course a
time to try the product out with little risk. The risk is less than the lease and the purchase.
That is because they still have the ability to try it with only a set time commitment, but
they also have the ability to purchase it if they like it. If a golf course decides that they
do not want to purchase it when the option to buy comes up, then they can continue to
lease it. This is also good for the company because if the golf course does purchase the
product then they have committed themselves. This also helps to alleviate the price
sensitivity of the consumer, because as mentioned earlier, consumers will be les price
sensitive if they already have a sunken investment related to the purchase. Therefore, if
they have already been leasing they product, then they will be less price sensitive if they
choose to purchase the product.
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Consumer Payment Form
To ensure that the golf courses continue to use GolfLogix, it is the responsibility
of the sales personnel to offer suggestions to the golf course as to how to rent the system
to their golfers. There are three options here. The golf course could include the cost in
the greens fees, charge individually, or do a combination of both.
If a golf course included the cost in the greens fees, they could be assured that
they would be able to make their money back because every customer would be paying
for the system whether or not they use it. However, a problem with this would be that the
golf course would offer the product “complimentary” to each golfer so they would have
to be sure that they have enough of the devices to give to each golfer that plays. They
would also be charging a higher price than other golf courses because the cost of the
GolfLogix system would be included in the fees. Therefore, some consumers who may
not want to pay the higher cost might go to another golf course. There would also be the
golfers who do not want to use the system but would still end up having to pay for it in
their greens fees. By charging it into the greens fees, this will also increase the overall
revenue of the golf course.
The golf course could charge each golfer individually. This would keep the
greens fees lower. It would also ensure that the golfers that are being charged are only
the ones that are using the system. The problem with this is that if not enough golfers try
the product then the golf course will be losing money on it. Many golfers would not be
willing to pay the extra amount on top of the greens fees either. This causes the problem
that some golfers might not even try the system because of the cost.
20
The payment that we suggest golf courses offer is a combination of the two. A
golf course should include half of the price in the greens fees and the other half should be
charged individually. This would help cover some of the costs and alleviate the problem
of charging everyone for use of the system. This would also keep the costs of renting the
system down so that golfers might be more inclined to try the system if it does not cost
very much. Then the golfers do not feel like they are out anything if they do not like the
system. If only half of the price of the system is charged into the greens fees, then
consumers will not notice the price difference as much because it will be minimal.
Overall revenues would be increased as well.
Actual Price
We would suggest that GolfLogix continue to charge a price of $1500 for the
Distance Only System. However, we feel that they should raise the cost of the Complete
System to $2500. This would help to cover the expense involved in setting up this
system and ensure that only serious customers get this system. This would mean that
they would be less likely to cancel the system after the first month.
For the consumer, GolfLogix was suggesting that the golf courses only charge
about $1 or $2. We feel this is not enough. With a price of $2 on a Distance Only
System, they would have to rent out 750 units a month to break even. This seems a little
unreasonable, especially in the beginning. We suggest that the golf courses charge an
average price of $2 per unit and increase the greens fees by $2 for a Distance Only
System and $5 per unit with an increase in the greens fees by $5 for a Complete System.
These would vary depending on the course type. A course, such as a private course,
would probably charge more. We would also suggest that the golf courses implement the
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greens fee increase at the beginning of the year because golfers will be less likely to
notice a big change.
Discounts and Allowances
In order to help promote the product, GolfLogix would offer a discount to golf
courses. This would help to get golf courses to adopt the GolfLogix system more readily.
In order to do this, we suggest GolfLogix offer a quantity discount, a referral discount,
and a discount for trying the system.
By offering a quantity discount, they would be offering a price reduction to golf
courses that buy in large volumes (12, 310). The discount would be “[b] uy 6 months, get
the 7th month half off.” This would encourage commitment on the part of the golf course.
This would create an incentive for golf courses to commit to a lease further into the
future. This would help to relieve the problem of price sensitivity.
With a referral discount, a golf course would receive a discount if they refer
another golf course to the GolfLogix system and that golf course implements the system.
This would provide an incentive for golf courses to spread, by word of mouth, the
benefits of the GolfLogix system. If a golf course did refer the system to another golf
course, the original golf course and the golf course that was referred would receive a
certain percentage off one their monthly payment. We suggest a 10% off for one month.
The discount would create an incentive for golf courses to refer the system to their
competitors, other golf courses. We do not feel that golf courses would probably do this;
however, this would be available if golf courses chose to make a referral. Golf courses
would not want to recommend a successful product to their competitors, for fear of the
competitors stealing customers away.
22
GolfLogix was offering a one-month free trial to golf courses that tried out their
system (1, 1). This has many faults however. The system is very costly to setup.
Therefore, if they setup the free trial and at 30 days the golf course does not want the
system, then GolfLogix is out thousands of dollars. It also does not create an incentive
for the golf courses to keep it because they do not have any costs sunk into the product.
GolfLogix should offer 50% off for the first three months. This would be more costly to
GolfLogix if the golf course kept the product for three month. For a Distance Only
System, if would be equivalent to a discount of $2250. This is opposed to the one month
free where the discount is $1500. However, we feel this discount is better because it
forces the golf course to put some money into the product so they are less likely to send it
back.
Target Market The correct target market is the key to long-term success of any product.
GolfLogix must be able to determine who their customer is in order to develop an
advertising plan that will sell the customer on the benefits of their product. Currently,
GolfLogix is torn between targeting consumers or golf courses. If they target consumers,
the golf courses that they have secured may get upset and drop their product. If
GolfLogix decides to just target golf courses, there is a good possibility that they may
miss a significant amount of revenue that stems from consumers (1, 13).
To make the correct decision, it would be smart of GolfLogix to breakdown each
option and weigh the pros and cons. If GolfLogix decided to go straight to consumers
and bypass golf courses, a number of things would happen. First, GolfLogix would have
a good chance of making quick money. Consumers would purchase the product quickly,
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thus exposing the product to everyone. There are obviously more consumers than golf
courses, meaning that sales growth is almost infinite if the company is able to continue
selling consumers on the idea and benefits of the product.
However, there are significant “cons” as well. GolfLogix may not want to roll
their product out this quick. A quick release could mean a “fad.” Fads go fast and hard.
They make a considerable amount of money very fast and then consumers get sick of the
product and move on. By releasing a product slowly, you “massage” the idea of the
product into the consumer’s life (or golf game). They begin to accept it as part of the
game and the product life cycle becomes significantly longer than if it were released
quickly. In addition, consumers are unable to use this product on courses that have not
been set up for it. GolfLogix does not want to get in a situation where consumers are
purchasing their product and getting upset because they are unable to use it.
Consumers Only Pros Cons
Make quick money Could be considered a fad More consumers than golf courses Short product life cycle Near infinite amount of revenue stream Golf course not set up
There are pros and cons to the idea of only selling the product to only golf courses
as well. If GolfLogix sold their product to just golf courses, they would take advantage
of rolling their product out slowly. Consumers would then only be able to use the
product at specific times in specific places. The golfing community would have the
ability to slowly adapt the product into their golf games and allow it to become
commonplace in their sport. GolfLogix would also be securing guaranteed revenue based
on rental contracts from golf courses. If GolfLogix were able to secure a number of
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courses nationwide, they would not necessarily have to worry all that much about the
number of consumer rentals. The golf courses would be the ones having to always worry
if they are meeting their GolfLogix product breakeven point. GolfLogix would already
have their guaranteed cash flow.
However, it is a given that GolfLogix would not make the amount of revenue
through golf courses that they could potentially make with consumers. Selling to
consumers is a significant amount of revenue to look away from, and it is always a tough
decision to not sell to your potential.
Golf Courses Only
Pros Cons Consumers slowly adapt to product Loss of more potential revenue Secure guaranteed revenue stream Can only use product at course
Because GolfLogix is in a difficult position, we offer the following proposal of
who GolfLogix should sell to:
GolfLogix is torn between marketing their product to either golf courses or
consumers. We believe they should put almost all focus on upscale courses and a small
focus on consumers. This mixture is not in a general sense. It is very specific and must
be executed that way in order for this proposal to be as effective as possible.
We propose that GolfLogix should focus their products on these markets: the
high-end municipal courses, private courses, and resort courses (upscale) and consumers.
The main target market that GolfLogix should focus on is the upscale courses.
These courses are able to afford GolfLogix products because of high membership fees or
greens fees. Members to these courses pay a lot of money to play golf and expect only
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the best. GolfLogix has a real opportunity to exploit this niche market if they are able to
convince the golf professionals who head-up these courses that their product is top of the
line. GolfLogix will have to focus their attention on each course’s golf pros. The head
professional typically makes golf course decisions. Whether it is player turnover, labor
decisions, or budget matters, the golf pro is always on top of it. GolfLogix will have to
be willing to spend time selling to these professionals on a personal basis. We suggest
that the personal sales representatives show the golf pros how the product works, the
benefits of its use, and the positive effect it can have on the attitudes of the members.
You must remember: membership fees pay for the course! Golf pros are open to any
ideas that will keep membership fees pouring in and members satisfied.
We believe that the top revenue generator should be the Complete System. The
Complete System offers the same features as the Distance Only product, but includes a
number of extra features as well (as explained in our section on the product). With
features that include distance to various landmarks on the course, a kiosk to keep track of
your specific shots, and a printout to further investigate your game strategy, this system
was built for high-end public courses, resort courses, and private courses. These three
types of courses are being built at a higher rate than any other type of course (1, 8). It is
imperative that GolfLogix exploit this market if they plan to have future success with this
product.
Consumers are a very small secondary market. These consumers are frequent,
avid golfers. They have low handicaps, are members at private courses, and are major
subscribers to both golf magazines and the Golf Channel. This consumer sect would be
considered the “innovators” of the game of golf. We believe GolfLogix could be
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successful in this market for a number of reasons. First, these types of players have the
money and the curiosity to purchase this product. They spend a significant amount of
time on the course and are always looking to improve their game. These golfers also
travel to play famous and difficult courses. Having their own product will allow them to
play courses that have been set up for the GolfLogix distance product and save money
while doing it. They play so many rounds, that in the long run, these golfers will save
money. This consumer sect includes professionals as well. Golf pros run courses and
would be a solid revenue generator if GolfLogix were able to secure them as consumers.
Not only would the professionals purchase the product, but they might be more apt to
purchase the Complete System for their course as well.
It should be noted that consumer markets should not be GolfLogix focus. We are
suggesting this as a small option for those who are curious and/or hardcore golfers. The
product is very limited because courses must already be setup before they are able to use
it and we suggest that GolfLogix only sell this product through the golf courses that
have been set up for the product. In the end, if GolfLogix is able to introduce its product
onto a number of courses around the nation, there is a chance that the consumer market
for this product may grow. Until this happens, GolfLogix’s focus should be on selling to
the golf course.
Advertising Plan
One of the keys for growing marketing and sales numbers is a successful
advertising plan. A successful advertising plan carries out the manufacturers message to
the consumer and tells them why and how to purchase their product. GolfLogix finds
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itself in this current situation. They must find a way to let the golf world know about
their latest product and advertising is the most effective way to do it.
Regional Marketing Because golf is an outside sport, the weather is always a factor. Some courses
may not be able to afford GolfLogix’s products because they are not open long enough to
sustain enough revenue to pay for it. We recommend that GolfLogix begin by focusing
on courses that are at least open for nine months out of the year. Resort and prestigious
courses are typically found in the south/ southwest regions of the United States. Since
these are GolfLogix’s focus, we recommend that GolfLogix send their initial sales
representatives to this region. In time, hopefully product awareness will allow GolfLogix
to move further north, but in the mean time, we suggest they start south.
Short and Long Term Advertising Plans
Since GolfLogix is introducing a relatively new product, we recommend a short-
term advertising plan, along with a long-term advertising plan. We suggest that
GolfLogix focus on the following categories: Budget, Market Focus, Media, and Goal.
Short Term (1 – 3 years) Budget
The first step that GolfLogix needs to take is creating an advertising budget. An
advertising budget is a good way to keep track of how much money is being spent on
advertising and keeps the company on track for future sales. GolfLogix should start by
determining a certain amount of money to spend on each specific category. The amounts
should be based on how much can they afford, how effective each specific outlet is going
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to be at getting the company’s message out, and how effective each outlet is going to be
at securing on-going sales figures.
Market Focus Targeting the correct market during the short-term period is very important.
GolfLogix has a limited number of resources and must use them efficiently if they plan to
get high revenues. We recommend that GolfLogix target the golf professionals at high-
end municipal courses, private courses, and resort courses and there is a chance that the
hardcore golfer may fall into this category as well. The three types of courses should be
the focus, while the hardcore golfers would be considered a bonus. Expensive courses
have the money and interest in purchasing accessories. They will be much more willing
to spend their money on GolfLogix’s product, versus the small public courses that are
very attached to their budgets.
Media GolfLogix short term advertising plan should utilize the following outlets to
reveal their product message to the golf world: trade magazines, the Golf Channel and
TV commercials during golf tournaments, trade shows, a spokesperson, and personal
sales representatives.
Trade magazines are very specific in their consumer targets. We suggest that
GolfLogix purchase advertising space in golf magazines, like Golf Digest. A high
percentage of hardcore golfers and golf professionals are subscribers to this magazine and
magazines like this.
Our next suggestion would be to purchase advertising space on the Golf Channel.
This television channel is dedicated to hardcore golfers and would be a great place to get
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GolfLogix’s product seen. Many times, you may find this channel on in the Pro Shops of
many courses, and it would be a very specific way to target the markets that GolfLogix
would be aiming for. This is a great way to increase the golfer’s demand for the
GolfLogix’s products. An increase in demand by consumers may put some pressure on
golf courses to implement the GolfLogix distance technology. Although expensive,
GolfLogix should try to purchase advertising space during televised golf tournaments.
This would target both the hardcore golfers, as well as the golf professionals. Building
product awareness is important, and there is no better way than to introduce your product
to the thousands and thousands who are watching these televised golf tournaments.
The third suggestion we would make would be to introduce this product at
specific golf trade shows going on across America. For example, the nation’s largest golf
show is in Orlando, Florida each winter. This is where new products are revealed for the
first time. GolfLogix could introduce their product and purchase an area to show all of
the professionals in attendance the benefits of their product. Trade shows are just one
more way to specifically target certain market segments.
Our next suggestion is that GolfLogix think about a professional spokesperson.
Utilizing professional spokespeople is great, in that consumers develop a connection
between the product and spokesperson. Spokespeople can be very expensive, we suggest
that GolfLogix try to get an old golfer or up and coming rookie for their product.
Our final and most important suggestion would be using personal sales
representatives to do a lot of selling. This product almost requires a representative to be
there to show the consumer certain benefits and qualities of the product. The
representative would then also be there to answer any questions or help the golf pro fit
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GolfLogix’s product into their budget. There is no better advertising than personal
advertising. If GolfLogix is able to hire a number of quality sales representatives, we
believe they will be very successful with this product.
Goal
All advertising plans have a goal and GolfLogix should be no different. We
recommend that GolfLogix’s plan for the short-term advertising plan is to raise product
awareness. This product is new for the company, and if the company expects long-term
success, they must get their name and product information out to their respective target
markets. Golf professionals and hardcore golfers across the United States should be able
to recognize this product by the time the short-term advertising plan has been completed.
Assumptions Taken From Short Term
We are going to assume at this point that the short term advertising plan was
successful in creating awareness about GolfLogix products. We are also going to assume
that golf courses have now started to implement GolfLogix’s products into their courses
and many hardcore golfers have had a chance to use the products.
Long Term (3 – 10 years) The long term advertising plan is a little different than the short-term advertising
plan. Now that golf courses are beginning to implement the products into their courses
and many golfers have had a chance to try the product, it is time to alter the advertising
plan in order to stay efficient towards the company’s sales goals.
Budget Once GolfLogix is able to achieve product awareness with the distance only and
Complete Systems, it is time to change the advertising budget. More money is going to
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be needed to continue funding commercials, magazine advertisements, sponsorships, a
spokesperson’s fee, and for personal sales representative. Continual funding to
advertising is important in almost every business. Advertising is what speaks to the
consumer, and over the long run, GolfLogix does not want to lose the edge that they have
gained in the last three years.
Media As the product evolves, the advertising does as well. GolfLogix is in a situation
where they have the opportunity to use a number of different media outlets and still stay
market specific. However, it is now time to put more of an advertising focus on the
consumer. GolfLogix should go back to traditional media outlets. For example,
magazine advertisements, Golf Channel commercials, a spokesperson, and sponsorships
are GolfLogix’s best chance at continuing to attract new consumers, yet stay specific to
the market they have chosen.
Market We recommend that GolfLogix slightly alter the markets that they had been
advertising to the first few years. Since we have assumed that golf courses are now
implementing the product into their courses, now would be a good time to put more of a
focus on selling to the consumer. If GolfLogix is able to capture just a small percentage
of hardcore golfers, there is a very good chance that they will make a lot of money.
It should be noted that we want to still focus on the golf courses. Golfers cannot
use the GolfLogix products if the golf course is not set up for it. Therefore, it is still very
important that the golf course remain a very strong focus for GolfLogix in the end.
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Goal
The goal of the long-term plan should be that GolfLogix products will become
commonplace in the world of golf. GolfLogix should want golf pros to begin to feel
pressure from their consumers to either start implementing GolfLogix’s designs or
continue using them. A potential 80/20 situation, 80% sales coming from course rentals
and 20% of sales coming from consumer purchases, is a good situation for GolfLogix to
be in. As long as consumer sales do not severely rise, GolfLogix is in position up to be
successful in the end.
Analysis of Opposing Group’s Paper
Pg. 5 – “The distance only system allows golfers to collect the data from their games by standing in the middle of the green. After recording the data, the xCaddie will allow the golfer to look up information during the next time of play on that particular hole.” This statement is inaccurate. The Distance Only system does NOT work like that.
The only purpose of the Distance Only System is to provide distance to the center of the
green for golfers playing the particular hole. GolfLogix is responsible for mapping out
the course and recording the distances to the center of each green (1, 5). We think that
the presenting group misinterpreted these facts. They think that the golfer has to collect
and record the distance to the center of the green before the round.
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Pg. 6 – “If the golfer does not have a computer at home and cannot download their information, the system is useless. Also, if a golf course does not happen to have a kiosk available, it would cause golfers to stray away from purchasing the device independently because it would require a lot of extra effort to find an Internet connection to allow them to save their data.”
The Complete System is not useless if the golfer does not have a computer at
home. They can get the printout from the golf course before the leave. This is the same
information that is available on the Internet, but it is just an additional way of viewing it.
The case states that: “[a] Complete System required a touch-screen kiosk
(connected to the Internet) and a high-quality printer” (1, 5). This being said, there
should not be an instance where a golf course does not have a kiosk available. It comes
with the package of the Complete System; therefore, we feel this statement is irrelevant.
Pg. 8 – “At the end of a round during which the Complete System was used, the golfer will go to the GolfLogix kiosk in the course’s clubhouse and be able to print off, in full color, three pages detailing and outlining his or her performance throughout the game.”
This contradicts the previous point they made because they said the golf course
might not have a kiosk available to print out the round statistics. The point is that the
same information is available through the kiosk and the personalized Web page. We do
not think they understand that the kiosk is required, and it comes with the Complete
System.
Pg. 8– “They (GolfLogix products) could be new unsought products, because they offer a new idea that some potential customers might not even know about yet.”
We do not necessarily believe that this is a new, unsought product because most
golfers should be very familiar with this idea. GPS became public a long time ago and
has been used in golf courses, and with other technology, in recent years. Almost every
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golfer should be familiar with this product. This has been a major topic in the golf
industry, and it is gaining popularity and coverage among all golfers. We feel it is an
established product because golfers throughout the world recognize it.
Pg 17 – They say that yardage markers and sprinkler heads do not provide competition to
GolfLogix. However, things like yardage markers, sprinkler heads, and yardage books
are direct competitors to the Distance Only system, while the GPS, PDA, and portable
GPS are competitors to the Complete System. The Distance Only System, along with
yardage markers and sprinkler heads, provide yardages to the center of the green.
This is why we suggested that GolfLogix be more specific with yardages. They
should make the yardages accurate to the pin location. If they only measure distance to
the center of the green, many golf courses do not see the advantages that this provides.
They already have yardages to the center with yardage markers and sprinkler heads
dispersed throughout the golf course. Golf professionals may not feel that any value
would be added with the GolfLogix products.
Pg 27 –“… it would be hard for an individual to obtain the necessary information needed to map out each individual course on which he or she chooses to golf.”
The presenting group does not understand the product or how it works. The
individual golfer does not collect the distance information before they play. All if this
information is programmed in to the xCaddie is by GolfLogix employees when they set
up the course. The statement they made may refer to the PDA devices. With these
systems, the golfer needs to map out the course (1, 12).
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This being said, there are no labor hours necessary by the golfer to prepare for
using the GolfLogix technology. They also mentioned that the above quotation
concludes that golfers will not take the time to prepare their xCaddie for each golf course.
However, it does not matter how often a golfer visits a particular course. Since he or she
does not do any pre-round preparation, the golfer can walk into the pro shop, obtain an
xCaddie, and step on the course and find the distance to the center of the green.
Pg -19 “…if growth occurred in municipal and lower-end sectors, that it could hurt GPS systems.
While this could be true, the case states that newer courses are being built, but
most of these courses are “higher-ended pubic, resort, or private courses” (1, 8).
Therefore, it is highly unlikely that we are going to see growth, of municipal and lower-
ended sectors, that is substantial enough to hurt the GPS systems. The growth in higher-
ended sectors will over compensate for growth that occurs in the lower-ended sectors.
Price p.10
Price is also a major consideration when evaluating a product. We feel that the
presenting group did not sufficiently do this. They examined the price by simply
breaking down the price of each individual unit. While this can be useful, it is only
useful when used along with another type of analysis. The group did not suggest if this
price was adequate, too high, or too low. They also did not make use of the financials
that are given in the case (1, 22). This can be useful in estimating if a golf course would
be able to afford to lease this product. When considering price, it also must thought
about the method of payment that golf courses will use. Currently golf courses are using
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a lease, but once again, they did not address whether or not this is adequate for the golf
courses.
Pg 10 – “There are little to no immediate substitutes for the products”
The group argues their opinion on whether or not the product is price sensitive or
price insensitive. Their argument for the product being price sensitive is that consumers
who are unaware of the product will continue to stay unaware because of high prices. In
other words, they would be unwilling to try a product that is so expensive. This point is
valid. However, they also suggest that the product is price insensitive. They say that the
product has “little to no immediate substitutes,” therefore consumers are willing to pay
any price for it. This completely contradicts the bulk of their paper, which is both
industry and competitor analysis. The group lists numerous competitors that GolfLogix
is directly and indirectly competing with.
Consider the following three statements: Pg – 10 “The company does not sell directly to the consumer, but rather to a golf store or even to the golf courses, who will in turn offer the product to their customers at a slightly marked-up price.” (It should be noted that this statement is contradicted later at the bottom of pg 28:
“Golf courses would not receive these additional streams of revenue if golfers brought
their own GPS systems. This may strain relationships with golf courses if the courses
lose out on additional revenue. This is especially true with courses that charge an
additional fee for golfers to use the GPS systems.”)
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Pg – 28 “GolfLogix is not leaving out the consumers as a target because they are being indirectly targeted through the advertising at the golf courses.” Pg – 28 “After analyzing GolfLogix and its competitors, we feel that GolfLogix should not develop a direct-to-consumer version of its xCaddie.” After reading these three examples, it is impossible to decide how the group
decided to handle the issue of consumers. First, they say that GolfLogix should offer the
product to the golf courses or golf stores and let them sell to the consumer. Then, they
say that it is not a big deal if the consumers are left out of the mix because they are being
indirectly targeted. Finally, they say that GolfLogix should leave consumers out
altogether. This example of gross indecision and vague statements prove our inability to
draw specific conclusions from their paper. The group never says how the issue of
targeting consumers should be handled and how GolfLogix should go about dealing with
the issue.
Pg 18 – “The first threat is the legality of using a GPS system during a round of golf.”
The group’s main industry threat is the legality of using a GPS system during
tournament play (USGA Rule 14-3b). They suggest that the product and its industry will
suffer based on the USGA rule. What they do not understand is whom they are targeting
with this product. First, they have not really stated who their specific market is, and
second, because GolfLogix would not be targeting professional golfers anyway.
Professional golfers would be the only ones affected by this rule, and they still may want
to purchase this product for their own personal practice. The game of golf is more
recreational than competitive. Golfers are more interested in improving their own game
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and enjoying the scenery, than worrying whether or not this product is going to keep
them out of the USGA.
Pg 27 – “The number of golfers grows by about 200,000 to 400,000 each year. For this reason, we feel it would be hard for GolfLogix to target the individual consumer because there are so many of them and not all are avid golfers.” (Gourville 7).
To start, the group cited this statement in their paper and it is not on page 7. The
statement also does not make any sense. Companies do not purposely stay away from
targeting certain markets because there are too many consumers. GolfLogix should not
advertise to consumers because they are not able to use the product on golf courses that
are not set up for it. It just makes more sense to have courses lease from GolfLogix. It
has absolutely nothing to do with the size of the golf market. If anything, that is a good
problem to have.
Pg 27 – “We feel that GolfLogix should target the private courses rather than targeting directly to the consumers or public courses. Although a large percentage of golfers golf… paying dues at their private course.” (Ends at top of 28).
The above statement is true, but is has absolutely no bearing on why GolfLogix
should market to private, upscale, golf courses. GolfLogix should market their products
to upscale courses, because they have both the budget and the type of golfers who would
use this product. GolfLogix should not market their product to low-end municipal
courses because they do not have the money to lease it, but because there is a high golfer
turnover.
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Conclusion
We feel that the presenting group did not make the adequate recommendations for
GolfLogix. It is very difficult to do this without understanding the product. The
presenting group did not fully understand the workings of the product, so it made it
difficult for them to analyze it correctly. They did, however, do a very thorough job of
laying out all the competitors. However, their final decisions were not adequately
supported as to why GolfLogix should do (or not do) this.
After making the necessary changes, we believe that GolfLogix could have a very
solid product. They must be sure that their product continues to offer the functionality
that golfers want. In addition, we feel that GolfLogix should target the higher-end public
golf courses, resorts, and private golf courses. This provides the most opportunity for
GolfLogix to capture the golf courses that would be more willing to lease the device. We
also feel that to sell to these golf courses, GolfLogix should use personal representatives.
The method of payment offered to golf courses would be a lease with the option to buy.
This would give golf courses the range of options to satisfy the different net incomes and
demand. We feel that GolfLogix has room to grow before they move out of the golf
course sector, because golf courses have to be mapped out for the system to work.
Therefore, GolfLogix should continue to sell their product to golf courses.
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Works Cited
1. “GolfLogix: Measuring the Game of Golf.” Harvard Business School. 7 Oct 2002.
2. http://www.bushnell.com
3. http://www.golflogix.com
4. http://www.parview.com
5. http://www.greenf.com/golf.htm
6. Telephone Interview on March 4, 2004 at 2:00 pm with Paul Crow-PGA
Professional at Arizona Traditions Golf Club, 17225 North Citrus Road, Surprise, AZ 85374. Phone Number: (623) 584-4000.
7. Telephone Interview on March 5, 2004 at 11:00 am with Todd Smith-PGA
Professional at Rock Hollow Golf Club, P.O. Box 187, County Road 250 West, Peru, IN 46970. Phone Number: (765) 473-6100.
8. http://www.laserlinkgolf.com/golfweek.pdf
9. http://www.garmin.co.uk/pressroom/corporate/020101.html
10. http://econres.com/documents/issue_papers/pencil_out_your_golf.html
11. Perreault, William D, Jr., and E Jerome McCarthy. Basic Marketing- A Global-Managerial Approach. 14th ed. New York, NY: McGraw Hill, 2002.
12. Armstrong, Gary, and Philip Kothe. Marketing: An Introduction. 5th ed. Upper
Saddle River, NJ: Prentice Hall, 1999.