Marketing: Sustaining Competitive Advantage

The major problem which prevented Callaway Golf Company from achieving its goals is lack of application of change management principles by the management. CGC was very successful in the environment of 80s but the management of the company did not realize that the situation changed in the 90s, and failed to react to the changes appropriately.

Situation Analysis

When CGC started operating in the market, the environment was very favorable for the company. There were very many people willing to play golf and the management of the company was efficient in targeting its customers. The company established very high prices in comparison with prices of competitors, but customers were willing to pay extra for a better product. Competitors in the market were not able to offer products of the same high quality with CGC. Besides, the number of competitors was very low.

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CGC constantly came up with innovations which attracted the attention of consumers while competitors were still too weak to compete with CGC’s innovations. The industry had only a few companies which did not create great danger for CGC. CGC’s sales were constantly increasing due to the increased number of new and retained customers. Consumers preferred their brand because it was much better known than any of the competitors. CGC spent large amounts of money on advertising budget in order to attract even more consumers. All of the factors of external environment were very favorable for CGC in the 80s.

Even though CGC was very successful during 10 years of its activity in the market and remained in the top of the industry during all that time, it did not guarantee that the company would always get large profits. The situation in the market changed rapidly in the following years, and CGC’s management failed to react to the changes. First, the interest in golf started fading. It became more difficult for CGC to acquire new consumers. Second, the number of competitors also changed, and CGC was one of the reasons of that.

Capital always flows in the direction of profitable industries. If in the past companies did not seek to enter the industry of golf equipment, after CGC started making large profits in it, many investors decided to start the companies produce golf equipment. In the beginning, these companies did not have large sales but eventually they started getting more and more powerful. Third, the nature of consumers changed a lot and the same strategy of high pricing was not always efficient.

Fourth, CGC’s relationships with retailers were not very successful. CGC did not pay enough attention to establishing warm contacts with its retailers (for example one of the retailers mentioned that CGC’s terms of payment were not as favorable as the ones of other companies). CGC did not consider it necessary to provide special training for salespeople. Fifth, internet shops became very popular among customers but CGC did not want to increase its online sales, and thus was left far behind in e-commerce.

CGC’s had to keep track of the changes which occurred in the market, but it failed to. In order to be successful, the company needed to establish a change management team as soon as the environment started changing. The change management team would be responsible for establishing a new structure of the company, training of employees and constantly fine-tuning the marketing mix of the company according to the changes of the environment.

Alternatives

Other alternatives to the establishment of change management team include: making minor changes in the marketing policy of the company in order to meet short-term goals; coming up with radical innovations in order to attract new customers. The first alternative could be useful for the company in the short run because it would allow it to temporarily increase sales and stop having losses. However, changes only in the marketing policy of the company would not be enough to keep the sales at a high level in a long run. Eventually, sales would start dropping again.

The second alternative could be perfect in case if the industry was characterized by radical innovations, like computer industry. However, it is simply impossible to come up with some golf product which competitors would never be able to make in the industry of golf equipment production. Even if CGC achieved the increase in sales due to the innovations, competitors would soon start producing a similar product. Golf equipment industry is simply unable to come up with a product similar to Microsoft Windows which dominates the market in the computer industry.

Recommendation

The creation of change management team in CGC is therefore the most suitable solution for the company. It will enable CGC to achieve not only short-term but also long-term goals. The company needs to be restructured so that its structure better answers the requirements of the new environment. The new vision of the company also needs to be established.

The change management team in the project needs to consist of eight people, five of which belong to senior-level management and three to top management. The main factors which the change managers need to weight to implement the change strategy successfully include: the size of the target market which the company will work on after the changes come into force; addressing immediate concerns which are important for the realization of the company’s goals; choosing priorities concerning centralized and de-centralized structure; the possibility of resistance to changes of certain employees; possible complications in adjusting of employees to the new structure.

The program includes a deep analysis of factors which prevent the organization from growing, both internal and external. It requires the identification of the main internal and external factors driving change in the organizations.

The change management team needs to achieve the following goals: restructure the company; provide balanced training for employees; improve the marketing mix of the company; increase the percentage of online sales of the company from 1% up to at least 40%. The company will be able to acquire new customers with the help of online shopping. It is also very important for CGC to pay attention to the relationships with retailers because in the competitive environment, the retailers determine the success of the producer in many ways. By providing adequate training of salespeople, CGC will also be able to increase its sales.

Implementation Plan.

The implementation of change management plan in CGC is recommended to be done on the following steps:

• Creation of change management team;
• Identification of the major issues and guidelines which have to be addressed during the change process and establishment of management goals;
• Encouragement of employees to participate in the research of issues subject to change;
• Applications of various tools to reduce the resistance of employees to changes;
• Creation of a new vision in the company;
• Introduction of a new organization structure;
• Empowerment of employees and their involvement in the decision-making process in the company.

References.

1. Kotter, J.P. "Leading Change: Why Transformation Efforts Fall." Harvard Business Review, 73(2): 59.67. 1995.
2. Mercer D. Marketing. Blackwell Business. 1992.

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