Golf Logix Case Analysis

Group 3 THE GAME OF GOLF †¢ †¢ †¢ Invented in Scotland in 15 th Century Brought to the United States in late 19 th Century Clubs used to hit small hard balls into a cup on each of the 18 different holes on the golf course The players use a club to drive the ball onto the fairway. Starting point on each hole is from tee box Players drive the ball with the use of a club onto the fairway, hit an approach shot onto the green, and putt the ball into the cup Holes: range in length from over 100 to 500 yards or more †¢ Par 3, par 4 or par 5 †¢ 18 holes par was 72Along way hazards – ponds, sand traps, and high grass Swing: called â€Å"stroke†, counted towards the players total score Lowest score wins TYPES OF CLUBS Woods Club Driver †¢ 200-300 yards Iron Club 3-iron 7-iron †¢ 120-150 yards Wedges Pitching wedge †¢ 120 yards or less Putter 5-wood 9-iron Sand wedge Typically 14 different types of clubs are used CRITICAL ELEMENTS TO ACHIEVI NG LOW SCORE ? Hit the ball straight so as to avoid the various hazards around the course ? Advance the ball in desired direction ? Distance to target ?How far player could hit the ball with each golf club? ? Ability to putt the ball well Golf market: †¢ 2000: 26. 7 million Americans played 586 million round of golf (on 17,000 courses) †¢ 200,000-400,000 new golfers a year. The prototypical golfer was still male over 40 years old with an income over 70,000. The golfer: segmented in 3 different ways 1. frequency of play: 25% considered â€Å"avid† played 25 rounds or more per year. 50% considered â€Å"core† played 8-24 rounds per years. The remainder were considered â€Å"occasional† golfers. 2. xpertise: typically measured by a golfer handicap (historical average of how many strokes a golfer took, relative to par, for an entire round) 3. type of courses â€Å"public vs. private: 80% of golfers played on public courses Expenses: 1999, golfers spent ov er 22 billion, 50% of this were by avid golfers. †¢ Golf clubs was the single largest expense aside from the courses fees, 1,000 for a high-quality set of clubs, 2,000 or more for some top of the line sets (depending on how many times golfer played, good set could last anywhere from 5-20 years) Golf courses: as of 2000, there was around 17,000 golf courses in the U.S. Golf courses Number of courses 7,000 4,000 2,000 4,000 Charging fees Average of rounds per course/year Municipal and lower-end public high-end public courses resort courses private courses charging 20-50 per round 40,000 50-100 per round 30,000 100-200 a range 20,00-100,000 and annual 20,000-25,000 membership fee of 5,000-10,000 ? May afternoon, 2002 – all 6 employees of GolfLogix held conference in Scotsdale, Arizona ? $2 million in investments ? Purpose of meeting – to discuss merits and demerits of direct-to-consumer version of the Distance Only xCaddie ?Thinking ? Outsource production ? Market di rectly to players under GolfLogix name ? Likely retail for $300 ? Diane DiCioccio, Chief Marketing Officer – disagreed ? Jeff Saltz, CEO – agreed COMPANY STARTUP ? The GolfLogix concept came about in 1998 ? During a round of Golf between Todd Kuta and Scott Lambrecht ? Basis of problem – judging the distance to the green and choosing the right club for that distance ? Solution to problem – GPS device ? Permission – USGA (United States Golf Association) ? Founded in May 1999 ? $2 million spending – executive alaries, facilities rental, development of xCaddie software, and GlofLogix website GOLFLOGIX Product Leasing: Difficult initially First 4 months of 2002, they had leased 15 systems Additional courses requested a 30-day trial Marketting TV infomercials Internet Mass merchandiser’s Consumer Electronic Firms Golf Outlet Stores Walmart Best Buy COMPANY STARTUP (CONTD. ) ? Future operating expenses – $50,000 to $75,000 per month for at least 3 years ? Selling xCaddie till date – Pete Charleston and Saltz ? Future selling to Distributors ? First – Steve Goodwin ? 1500 per month for Distance Only ? $2000 per month for entire system ? Recent leases suggest 20-30% distributor markup GPS TECHNOLOGY Objective: GolfLogix use of GPS technology to aid golfers Use of customized handheld GPS receiver called â€Å"xCaddie† Manufactured by Garmin International †¢Provides the distance to the green to which the golfer was hitting †¢Accuracy designed to be within two yards and being sold by Garmin to GolfLogix for about $200 per unit Golfer will be able to determine which golf †¢Records golfer’s progress around the course. lub to use to reach the distance provided Recording the beginning and ending of every shot and club used to make that shot by the xCaddie Information can be downloaded Information forwarded to Website to retain the records so that golfer can track progress over time †¢Provide the golfer with statistics that will improve the accuracy of the shots GPS TECHNOLOGY GPS originally developed by the U. S. Department of Defense to help determine the position of military troops, ships, vehicles, and missiles Consisted of 24 satellites, the system could pinpoint a GPS receiver anywhere on the globe with an accuracy of several feet to several yardsLocation determined by â€Å"triangulation† which involved simultaneously measuring the distance and direction of the GPS receiver from four or more of the satellites GPS gradually became available to civilians free of charge in 1980 By 2000 estimated 1 million GPS receivers per year were being manufactured for commercial use in devices ranging from on-board map systems for cars (OnStar System) to marine navigation systems to handheld devices for hikers and campers GOLFLOGIX SYSTEMS GOLFLOGIX SYSTEMS COMPLETE SYSTEM ? ? More time consuming in terms of use.Involved the use of three key items; Xcad die device, GolfLogix touch screen kiosk connected to the internet and a high quality printer. The system needed to know the locations and dimensions of the tee boxes, fairways, greens and any hazards on the course. Involved a detailed aerial photograph of the course and 3 people taking 20-30 GPS location reading for each of the 18 holes. This took about 4 hours. Xcaddie unit ? ? ? A technician located at a GolfLogix office would then combine these data’s and produce a digital map with precise GPS coordinates for the entire course Lambrecht estimated time to map a complete system to be 20 man hours.The kiosk and printer had a combined cost of about $5000. The GolfLogix webiste maintenance cost was estimated to be $100,000 per annum. Kiosk connect ed to internet High quality printer ? ? ? DEVICE FEATURES AND OPERATION Complete System Distance Only System ? ? Xcaddie Kiosk High quality printer More explaining on the part of the pro shop employee, about 5 minutes. Golfer needed to register his name and email using the touch screen kiosk. ? Has a scrolling feature no more complex than that of a cellular phone. ? ?As the distance type, Xcaddie determined distance to the green Golfer would select the appropriate club on the Xcaddie device and press enter which would give a location reading for the golf ball. Golfer stows away Xcaddie device and proceeded to hit the ball as he normally would. Upon finishing his round, the golfer would connect his Xcaddie via a cable to the kiosk and received a three-page full color printout of his round. A golfer could track his progress overtime through the information forwarded to a dedicated website (golflogix. com). ? The player would scroll to the hole that he was laying and the device would give exact yardage to the green. ? ? ? A pro shop employee could adequately explain how the device worked in about 2 minutes to first time players. ? LOW TECH DISTANCE SOLUTIONS ? Yardage markers – were unreliable the farther a way the golfer was from the center of the fairway ? Sprinkler heads – golfers still needed to pace off distances between their ball and the nearest sprinkler ? Yardage booklets – limited availability to resort and high end public courses ? Range finders – illegal under the rules of USGA and not accepted by erious golfers. High Tech Distance Solutions Cart mounted systems ProShot, ProLink, UpLink. Systems were expensive to outfit. More than $250000 to outfit 80 golf carts. PDA based systems – SkyGolf GPS, Golf GPS. GPS adapters came in a form of attachments to PDA systems, at additional cost. PERFORMANCE TRACKING SOLUTIONS Booklets for manual recording and PDA software; both proved to be tedious, time consuming and distracting USGA handicap system was predominantly used to track scores, but provided no account for performance factors. THANK YOU†¦