Should Altius at all implement the Elevate strategy?

Substantiate your stand with

relevant reasons

Yes. Altius should implement the Elevate strategy.

The rationale behind the strategy is to make the brand ‘more fun, affordable and accessible’.
The main idea is to attract casual golfers into the brand and slowly migrate them to its flagship
products.

From Exhibit 2, it is clear that in 2012, being priced in the premium range of $48 above its
competitors (Primera, Bantam, Carlsbad), Altius enjoys 55.2% of the retail dollar sales and
35.1% of the retail unit sales. It is the market leader in the case of the premium golf balls.
Value golf balls from Primiera, Bantam are equally priced at $27 while, Carlsbad offers it for
$25 (from Exhibit 3). In fact, with this attractive pricing, Primera became best sellers at this
range, gaining market share at the expense of Altius. Given that at the value price point, retails
are competing on price, Altius should consider coming in below the $27 price point to gain
market share quickly. At the lower pricing point, it will b able to compete with the competitors
namely, Primiera, Bantam and Carlsbad.

The consumer research had revealed that 35% of the golfers didn’t buy Altius due to high
prices. The lower price range will help attract this portion of the golfers. By introducing a non-
conforming ball, Altius would be able to attract the 20% of Altius customers, 26% of all current
golfers and 48% of non-golfers who are willing to try a non-conforming balls.

Some Advantages of Implementing the Elevate Strategy are as follows:

 As of 2011,68% of the customers of Altius say that they are loyal customers and it
won’t affect them as they are not sensitive to price changes as they are serious golfers.
 Custom made golf balls will make the sport easier to play golf and because of its lower
price will attract a greater number of customers into playing golf.
 It will also lead to increase in their market share and will lead to increase in their
revenue also.
 It should also consider increasing the profit margin for retailers so that more number of
retailers are attracted in keeping their product.
Some Disadvantages are as follows:

 There might be a chance of loosing out customers for Altius due to the introduction of
new brand.
 There can also be a decrease in the brand reputation and image that the customers carry
about the brand.
 Their Flagship product i.e Victor TX needs to be terminated by the introduction of new
product.
 It may lead to cannibalization.
 It may time to capture the market share and hence can also lead to decrease in their
revenue.
 It involves higher investment cost.

Victor TX Victor Elevate

Retail Price 48 39 27
Retail Margin% 15% 15% 20%
Retail $ 7.2 5.85 5.4
Altius Price 40.8 33.15 21.6
Altius Gross Margin % 70% 70% 64.12%
Altius Unit contribution 28.56 23.21 13.85
Altius Unit Cost 12.24 9.95 7.75

Gross margin for Elevate is 64.12 % which is about 6% lower than the Victor TX and the
regular Victor. Its unit contribution is about $13.85 which is 51.51% less than the Victor TX
and 40.33% less than the Victor. In term of retail price, Elevate will be priced at $27 per unit
which is 44% lower than the price of Victor TX and 30% lower than the Victor.

So, elevate to be profitable needs to it needs to generate more number of sales to earn more
revenue and high margin brand.