‘s expensive campaign to put a swoosh in every golf bag has hit a snag.
On March 1, the Beaverton, Ore. based firm, which has become the dominant brand on America’s basketball courts, running tracks and Stairmasters, got some disappointing news from the fairway. According to Kissimme,
Fla. based golf market research company Golf Dataquest, Nike’s
golf ball, which was introduced in
1999 and quickly devoured market share, has seen sales stall in past months. The Nike ball had a market share of just 6.6% in January, a tiny notch above the 6.3% share it held in July 2001,
the report indicated.
Golf balls, which offer lucrative margins, bring in more than $500 million in annual sales for the sector, more than any golf related product expect woods. Just a few weeks after heralding its major raid on the golf industry the introduction of its first line of clubs Nike can’t be excited about flat lining ball sales.
Nike’s foray into the golf sector is still in the opening rounds, however, and the company has made a big commitment to becoming the king of the links. It
has plunked down an estimated $100 million over the next five years for an endorsement from the best player on the planet, .
To produce its clubs, Nike turned to golf guru Tom
Stites, who brings instant credibility. Combined with one of the most feared marketing teams and best known brands in the world, the firm is making other golf companies as nervous as Tiger Woods’ Grand Slam
opposition.
After rising steadily throughout the economic boom of the 1990s, golf industry sales are expected
to be flat this year because of a sluggish economy. This means that any business Nike picks up will be at the expense of other firms. But as the early return on golf ball
sales show, Nike rivals, which include
‘s Titleist, are great
at defending their turf.
"From a business perspective, this is probably a good extension of
the brand [for Nike]," says Bob Toomey, managing director at RBC Dain Rauscher. Still, while
Nike is a powerhouse in apparel and shoes, it does not have the same reputation for sports "hardware" equipment like golf clubs or hockey sticks.
"I’m a bit skeptical about [Nike’s] ability to really succeed in golf clubs, because of the already very strong
names that are there," Toomey says. "I’m not overly enthused about
this becoming a huge source of business for them." Indeed, even if Nike were to capture 10% of the entire golf market, it would constitute only a $500 million sliver of the company’s total $9.5 billion in revenue last year.
Donald Dye, the dean of the A. Gary Anderson Graduate School of Management at the University of
California in Riverside, and former chief executive of Callaway, sees the established firms playing through the Nike storm. Dye
points out that Woods is not the first great player to pitch a line of golf clubs: Past legends such as
also tried to
fight the status quo. In the end, Dye says, all failed without "making a dent in the business."
What’s been fatal to new golf companies with a superstar pitchman is the tendency to design
clubs
for the exceptional players with a low handicap, Dye says. What they forget is that 90% of the duffers on the course are mediocre. These players, Dye argues, have
different needs from the Tiger Woods
of the world.
It took Callaway years to cater to the average golfer’s needs, Dye says. Nike’s emphasis, meanwhile, is still off the ball, he contends. "Nike does not have that psychology yet. And I don’t think they know where to get it."
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