GolfLogix (GL) is selling product and solution (product and service combined) to the courses.

The solution is creating entry barriers, increasing switching costs and creating network effect which in turn is creating brand equity. A win-win situation is created for GL and courses. But, in order to grow fast and earn revenues GLs want to move into B2C market. This move could create rivalry with the partners. So, now there is need to decide on the new marketing strategy and decide on the future business strategy. Many substitutes of the GL product are available in the market. But, none is so closely integrated as GL product or creating value as GL is creating. The complete system solution is creating monopoly in the market and it is the premium solution. Distance only market will be saturated in the future but the complete service device has long sale cycle. Now, other competitors who would try to copy GL service wont get critical golfers mass to take off as a service as the customers who are already bounded with us wont have any way to transfer their statistics to GL competitor database. However, if there is change in regulation and GL were made obliged to share the golfer data in shareable format then it would be difficult to retain GL competitive position. In this case GL have to compete by providing additional services, by selling golf products on its website and by continually advancing the GL products. . This would help GL to be one step ahead the competitor at every time. High service standards will create brand equity, which would enable GL to charge high premium and which can be invested in creating new services and hence viscous circle (Exhibit 3). But, GL should be prepared to invest in branding activity that promotes the link between the product and the service and enhances the companys credibility. Since golfers could look at the best scores for a particular course they would like to beat those best scores, which would also increase frequency of visits of golfers to the same course. So having complete system at course gives course a competitive advantage as now golfer would like to beat the best person locally before moving to other course till golfer become champion of the region. But, golfer will choose other Courses based on the prerequisite that other course is also on the GL complete system. GL ultimately have to move to B2C market in order to be successful locally and internationally. Additional services like data mining on these courses cross data could help golfer to improve the game to next level. In future GL can provide services of comparing a golfer statistics with the professional golfer on the same course or similar services like that which help to create stronger network effect. The website framework can be opened to be used by independent developers and they can make services which will further lock the golfers and Courses on GL complete system. Value for golfer will increase more than the sum of their parts. GL can use the golfer data for CRM which would further improve the relationship between the Golfer and course which would result in more visits to the same course and revenues for course would also increase. Mostly, Courses are owned by a large investor group, special services for group of course

could also be provided on the website which would further improve the relations between the course and GL. GL can act as link between golfers and Courses through its website. The current strategic choice by GL has helped to create a genuine solution i.e. Product and service are highly integrated, this add value greater than the sum of their parts, and as a result difficult for customers and competitors to disaggregate. GL is incurring no extra costs in packaging and pitching, which competitor may have to bear because they are providing bundled solution instead of integrated product and service as one solution. Moreover, new rivals will face the difficulty in selling solutions, which cost more to develop, have longer sales cycles, and demand a wide knowledge of customers businesses and as a result this will create more entry barriers for rivals. Product competitors will face huge challenge to shift old practices to new practices required to sell solutions as it require rethinking by sales teams, alternate performance metrics, and emphasis on customer relationships. Additionally all this requires willingness to take responsibility for partners who provide part of the solution will be vital for extended enterprises. So, one of GL competitive advantage is to keep good relation with Courses as part of GL strategy. They are providing training to the new users teaching them how to use the device, keeping the devices and kiosk in working condition ensuring that every golfer has a same experience with the device. Course and GL are reaping the rewards of higher margins by selling real solutions instead of merely bundles. To lower costs GL has given a minimal service at the kiosk (print and upload of data) and major part of the service is available over the internet. Moreover, in future GL can centralize the sales, maintenance and technical support service online which will further reduce other costs. The value proposition is scribed by following the framework of first understanding customers businesses and then substantiating value with claims. y Judging the distance to the green and choosing the right club for that distance are common challenges for many golfers, from beginner to experienced players. GL has helped in judging the distance with precision; as 50% people in a survey admitted that its the most beneficial feature of the device amongst other features. This will make golfer feel more relaxed and more willing to play the game and this would increase the no. of rounds played on the course and decrease the time spent per round. Golfers will easily pass over the steeper part of the learning curve in less time and enjoyment in game would increase. This will enhance the experience of golfer at a particular Course, which would help to attract more golfers through word of mouth to the same course. So, there will be a win-win situation for GL, golfer and course. y Affordable as compared to other substitutes available in the market. This means that course can get its ROI in lesser time and golfers wont have to pay double the amount for inferior service.

Performance statistics, game history and personalized website is creating value as if now golfer has a personal trainer who is taking notes of all activities and then doing analysis on the data and suggesting the areas to be improved.

Improved pace time, which means that now course can sell more no. of rounds using same resources as before; and golfer can play more games in the same time.

Perfect aid for pros. It evaluates a golfers ability and progress over time by analyzing his performance statistics. Trainers can help golfers to focus lessons on the areas most in need of improvement. The performance tracking capabilities provide useful data helping them to work on the parts of the game where they waste the most strokes.

Easy to install which means that course dont have to stop the course regular activities to set it up and start it running. The course can be mapped in a day which means that the device will start adding value in a day time.

Easy to operate. Functions with a scroll feature that is as simple as a cell phone to use. So, training cost both for the golfer and pro trainers would be less as will be trained in less time. Pro trainer could use his time in more productive activities. This would decrease the costs of course and in return increase its margins.

Help golfers become more familiar with the courses. A key element to improving ones golf game is familiarity with the course being played on. This will increase golfer motivation to play more frequently as steeper part of the learning curve is no more relevant to the golfer and he can enjoy the true spirit of golf.

Courses create value by using GL-enabled logo with their trademark

There are two possible channels to reach the market i.e. retail channel and courses channel. Avid and core golfer represents 75% of the market. About 80% of golfers played at public course and remaining 20% plays at private courses. These 80% dont have to pay any initial fee and subscription fee, and they pay on per round basis. They can easily move to other low end public courses without any switching cost. Low end public courses are already built to reduce the round time as they are less challenging. These courses are less maintained showing that they dont have high margins to maintain the facilities. The golfers coming to these public courses are beginners which would naturally move to high end public courses once they become avid and accomplished golfers. So, low end courses wont like to buy complete system. Cart mounted systems with similar features as GL complete system, but not the capacity for a golfer to track their progress over time. GL system has many competitive advantages over cart mounted system i.e. $5 is charged per transaction as compared to $2 charged by GL partners; and large initial capital outlay which requires more than ten years to get ROI. Courses are becoming more involved in player

development as this has become competitive advantage for the courses as compared to other courses of same type. Since, high-end public courses, resorts and private courses earns high margins and these course are interested in the value delivered by GL products, so these courses become the most relevant market for GL distance only product and complete system solution (Exhibit 5). This market sums up to 1000 courses or 252000000 rounds per year (Exhibit 2). Moreover, cart mounted system have paved the way to capturing the exponential growth of the early adoption phase in a technology life cycle. Its right time that GL start serving this market and jump over the chasm and get early adopters and be the market leader in the industry (Exhibit 1). Though, courses that were not using any system before now have to reduce additionally $24000 ($2000 per 60 units per year) from expenses but at the same time there revenues would also increase. If Courses charges $2 per transaction they can break even easily; however, since the supply of the courses is greater than the no. of golfers who are demanding these courses so few courses would shut down and in order to avoid the sunk cost of making the map, GL can increase the price tag a little high. It would have dual beneficial effect as now those courses that may not be able to meet the extra expenses of the GL solution/ product wont lease it in first place and secondary effect would be that GL can improve GL margins. If GL go direct to Retail market i.e. B2C; it would be unfeasible for GL to make the map of all 10000 Courses in a short time. However, new customers can create their own maps, which can be shared through the GL website. In this case GL will be competing directly with the PDA based solutions and that without any special competency. So, in order to compete, GL may also provide minimal service along with the distance only device to give additional value to the customers. Consumer will not be able use it for longer period of times as the battery would have to be recharged. Moreover, once cellular phones get the functionality of PC (Pocket PC/ smart phone) it will be more convenient for golfers to upload data directly to the GL database from Pocket PC then to use PC. But at the moment, however kiosks ensure smooth experience. The lease is for three years which would give enough time to GL to make its name in the market through advertising and marketing. Different point of contact would be required for upgrade, support and training. Customer may have to visit the retailer to update the software or upload a new service capability in the device. Moreover, whole new distribution, logistics and sales team will be hired to cater the needs of new channel. In case if GL tried to roll out GL to fast through the retail channel, too many people may buy it and in case they didnt find much use of it in short time then it may become a fad. A whole cultural change is required as Golf is a traditional game and values and norms dont change in short time. Moreover, Golf

professionals help is required in order to reduce this cultural gap. But, these golf professional have strong ties with courses so they wont promote GL product at the cost of reduced revenues for courses. Moreover, once golfer bought the GL distance only, golfer would try to use their own device at the course instead of using the device owned by Course. This could reduce the profits of the course on one hand and increase the operational expenses at another hand and as a result they may cancel the lease contract. However, If GL is given as a essential complementary product at Course, then most of the golfers having the distance only xcadie owner may go to some other course where they are not charged for the device. But, in case if its optional for golfer to borrow the device, golfer may not use it at all and as a result course will cancel the lease. However, if the partial dollar amount of 2$ is included in each transaction as a fixed charge, weather Golfer uses service or not, and if the remaining partial amount is charged if a golfer borrow device, then it may be feasible for both GL and Course. Distance only solution (PDA Like Solution) in not viable to be sold through retail channel as GL would be directly competing with PDA like products, these PDA had extra convenience features than GL distance only solution because PDA can connect to the PC or it can perform analysis on the data without the requirement of PC. Some of the Pros of the Retail channel would be that GL can reach large no. of customers in short time, which can increase the revenue stream many fold. Products have short lifecycle as compared to the solutions. This means that GL have to reinvent the device after every short cycle and as a result they can earn even more revenue whenever they reinvent the device. Moreover, GL can be easily sold in other countries which will open up new revenue stream. Now, customer can use the device for other purposes, and this information can be used to produce new products for other markets. In the next cycle, GL can easily sell complete system/ solution devices; this would result in two fold increase in all previous revenues in short time. Moreover, then GL can also get additional revenue from the services GL are providing through the internet. In this case GL won' However, if GL wants to sell through both channels it should sell to avid and core customers in retail. They should follow scale the product and scope the service strategy (Exhibit 6). By continuously improving the service part they can create market for service. If an avid or core Golfer has purchased the device he can recoup the cost in approximately 150 rounds or in six year time approximately. Avid and core golfers would be most responsive to any promotional or advertisements by GL as they frequently buy new golf items to improve their game. Since, they shop 60%-75% of times at pro shop, specialty stores and golf discount scores GL should put GL product at

these stores. Mass merchants and sporting goods stores should be avoided because they are strong channels and they would get high margins and GL have to keep large sales force to provide them satisfactory service which would further increase the expenses. In this case GL should sell full system to the courses because this gives an additional value to the golfers visiting the course in case they already own the distance only device and golfer may choose to play with a full system service than distance only device. In case course dont have GL complete system device then course will be persuaded to lease complete system device once course see distance only solution effectiveness as being used by golfer. Moreover, courses can charge high premium for the complete solution as compared to distance only product. So, GL should focus on selling solution to courses and product to the golfers. Moreover, the market for the distance only device is huge and there are large no. of competitors in this market so low margins will be charged on distance only device. Once distance only device is sold with minimum service, new services for the device could be introduced and then as the product cycle is near its end GL can start providing high end services, which will lead golfer to buy new devices. Then in three year time when the both product and service become stable, one single solution could be launched for all the retailers and courses. Manufacturers and other product-centered companies are attracted to service strategies due to commoditization in product markets, increased willingness of business customers to outsource nonstrategic processes, and saturation of an installed base. But, GL want to do it other way round so that it can get quick revenues. Running a solution company and a product company would result in change of the resources, processes, priorities and culture. In making the transition successfully, the first step is to recognize that GL should provide some minimal service with the distance only product to distinguish it from other competitors. Its best to put a senior executive in charge of looking at practices in other business lines to uncover hidden services that can be provided with the product. The second step is to industrialize the back office by building flexible platforms that meet customers diverse demands while relying on common delivery processes; closely monitoring process costs; and exploiting new technologies that enable process innovations. the third step is to create a product-savvy sales force, GL must acknowledge that services require longer sales cycles and the sales process is often more complex and strategic as compared to the product sale. Its also crucial to recognize that service salespeople may be resistant to change. So, GL need to make distinction between product and service salespeople and implement appropriate financial incentives. GL will also need to develop tools to document and communicate the value the product creates for customers. The final step is to focus on customers processes and the opportunities they create for product offerings. This step may require the acquisition of new capabilities.

Appendix

Exhibit 1: Showing the chasm to be jumped after 5% capture of market by the cart mounted system.

Courses 4000 2000 4000 10000 high end courses Ressort courses Private courses Total courses

Rounds 30000 20000 23000 rounds per year rounds per year rounds per year

Total Round in a year 120000000 40000000 92000000 252000000 Total Rounds per course per year Total Rounds per course per year Total Rounds per course per year Total Rounds per year all courses

Exhibit 2: Shows market size for the high end courses, resort courses and private courses combined

improve liquidity at low risk

hybrid offerings

increaserevenue and profi t streams

superior value

improve demand among existing products

Exhibit 3: Show the viscous circle emphasizing the need to pay more attention to hybrid offerings if they want to increase their top and bottom lines. Hybrid offerings attract new customers and improve demand among existing ones by providing superior value. They enable firms to boost their revenue and profit streams and improve liquidity at low risk. The rules above can help you identify successful hybrid offerings.

Exhibit 4: Showing PDA like system is following modular architecture as compared to GL following independent architecture.

Now (when product is new) Option 1 Option 2 Option 3 Option 4 Courses Retail Courses Courses+ Retail

3 year later (when product is established) Retail + courses Retail Courses Courses+ Retail

Remarks

Channel conflict and switching cost

Channel conflict

Exhibit 5: Shows the current possible/ feasible options with future possible/ feasible options
Options Demand Generation cost (sales time, marketing and advertising) force Technical (Distributio n , Training and Maintenanc e Cost) Admin istrative (Distributio n , Training and Maintenanc e Cost) Sales support cost (inventory carrying, customer credit) Logistic Costs (order processing, transportat ion and Distributive margin Opportunit y cost (sales force time Total Cost

taken away from selling existing product)

warehousin g)

Option 1 Option 2 Option 3 Option 4

medium High Low Very High

medium high low Very high

medium high low Very high

medium high low Very high

medium high low Very high

medium high low Very high

medium high low Very low

medium high low Very high

Exhibit 6: Option 3 is the most feasible for now and option 1 will second best feasible. GL can at the moment opt for option 3 and in future GL can opt for the second best option that is option 1 if all the assumption of GL business plan fulfills.

Market/ Technology Existing Market

Existing Technology Distance only system/ PDA system

Emerging Technology

New Technology

Emerging Market New Market

Cart mounted system Complete system

Exhibit 7: shows the market and technology map for different products available in the market

Component change Linkage change

Component Same Complete system (Architecture change)

Linkage same

Distance (incremental)

only

system

Exhibit 8: shows the components and linkages between component relation of different products

Exhibit 9: Product strategy determines the business strategy and technology strategy of GL