The other night on Saturday Night Live, the host Sarah Silverman did a sketch where she played the recently departed Joan Rivers, standing at the dais roasting other famous dead people seated to her left and right. There was one joke Silverman/Rivers told that made me laugh out loud because it really struck home. In the sketch, she turns to Steve Jobs and says, “Steve, I hope you’re forced to buy a newer and better casket every six months so you can see how we feel!”
Seems every consumer category deals with varying magnitudes of the questioning of product launch frequency. (There’s even a joke about it in History of the World, Part I, which is funny because Mel Brooks never followed up Part I with a Part II, 2.0, or Phase 2.) It’s one of the top two or three questions people ask me whenever we or a competitor launches a product.
Can We Talk?
The truth is, we (Callaway) are not necessarily launching more products than we have historically, but we are certainly doing it differently and in different cadences than we have in the past. And we definitely have been creating more product news more often than we have historically. You combine that with the fact that some products live on 2-year cycles and some live on 1-year cycles, and it creates an opportunity to launch a lot of cool products throughout the year.
And now we’re doing something entirely different again— launching a series of woods in the fall for the first time in recent memory. This will no doubt be met with some of the same questions from the balconies since we of course had a big product launch in January of this same year.
Why? Why would we launch new drivers just 10 months after launching a bunch of drivers in January? Isn’t this flooding the market? Isn’t this the same model a well known golf company adopted years ago and ultimately led in part to their fall from grace? Isn’t this bad for retailers?
Well…no! None of those apply!
Some things to consider:
I’ll set aside the argument about product utility and depreciating value of the “asset.” That’s probably a 300 page web column in the future…
Business Model Reengineering and Other Awesome Party Conversation Topics
First and foremost, we want to make sure that any launch we have is differentiated, has technologies that have clear benefits to the golfer, and is also clearly positioned as to who the product is for. One size does not fit all. So each of our products should have a clear reason for being. We want to excite golfers with new innovations and new performance and showcase the talents and efforts of the largest golf club R&D department in golf. This is what we live for and the reason most of us here work in this industry.
Second, we have invested a lot of organizational energy and effort in managing our inventories tightly. This was a key component of our business reengineering several years ago. We want to have the cleanest inventory levels in the industry. That’s important because if you’re going to launch new products, you obviously need to do so without the previous generation product sitting there in large quantities at the golf shop.
Our business model is not a “cascading product model” that people may have experienced from other companies in the past, and one that we ourselves employed years ago. This means that you would not see a new product sitting right next to a discounted previous generation product for any meaningful time period. Of course there will be a brief overlap as the previous generation is closed out. This is fairly similar to what you’d get in the car industry; 2015 models are on the lot at the same time as 2014 models, but only for a brief period of time. This requires world class inventory management and forecasting.
The above two areas, working in concert, is one of the main reasons we have been one of the only companies to actually increase our average selling prices at retail two years in a row in both irons and woods. At the same time, our sell through to inventory level rate has been the healthiest its been in almost a decade and one of the best in golf. In other words, retailers are significantly more profitable with Callaway than ever. Our model is very different, and we believe it’s leading.
Back to the Lecture at Hand…
Ok, back to the question of a Fall woods launch….
1. We believe we have a new performance optimization protocol that will help all golfers gain yardage with their drivers. It transitions Big Bertha from a product story to a fitting and performance story. There are now THREE “Pathways to Distance,” each complete with its own recipe to help a specific target group gain yardage. Each of the three Big Bertha drivers has distinctly different performance attributes and technologies. In other words, what helps your dad or neighbor hit the ball farther isn’t necessarily the same thing that will help you hit the ball farther. That seems so obvious but it certainly hasn’t been addressed in OEM driver strategies. The centerpiece to this strategy is a driver we believe creates a brand new class of driver: low spin WITH forgiveness. A driver like this has never existed before, so we are excited to launch this.
2. We have two of the biggest and most powerful woods sub brands in golf; Big Bertha and our X-Series. To tell the story and educate the golfer about what these products do, we had to make the change to separate the launch timing. This is typical of other industries too, spreading out their launches to help gain mindshare and spread the news throughout the year. A lot of options were considered, but the fall launch timing made the most sense for a few key reasons:
a. In many places in the Southern Hemisphere and in the Sun Belt states of the U.S., golf is just starting to hit the new season again. This is an ideal time to launch a product in those markets. A few of our competitors use this period as their main launch window.
b. The new PGA Tour season schedule now starts in October versus January. A change in our launch strategy now allows us to have brand new product to launch on Tour in October rather than waiting until January. As our Tour staff grows, it’s an easier and more natural transition for our new players to play new products in October rather than us wanting them to switch again in January as done in the past.
3. Golfers now get information from a variety of different places and crave new news and new content. A few years ago we made a strategic change to be more about creating multimedia content for the golfer and engaging directly with the consumer. As we’ve done that, we have discovered, along with most everyone else, that golfers want even more content and information. There is no down cycle and there is no natural peak and valley. In other words, the historical launch windows and timing for the connected, engaged golfer is very much a thing of the past. And because of this, it allows for more innovation and flexibility in how we launch products. A company even decided to launch a new driver at the Ryder Cup, which historically would have been considered a bad time and place to launch a new product. And when you consider that most people only buy a new driver every three years or so, the opportunity to talk about new products continues to be rich.
As always, one of the great things about this debate is that it is a ongoing and evolving. I’m sure the Jetsons complained they were only hitting their Callaway Big Bertha 6250 drivers 200 yards longer than the 6249’s.
As always, happy to answer any and all questions and comments on twitter at @harryarnettcg. Would love to know your thoughts.