Golflogix Case Study Essay

AnalysisMarket be nominate a much larger market of golfers as opposed to that of the golf courses. Units sold to order market differs with the target market in the geek of golf courses because 60 unit of measurements per golf course are sold. However, with various sectionalization techniques, it can be concluded that the golfers who would get the Distance-only or apprehend System, would be those who measured their performance by measuring their handicap, thus forming the first target market within the golfers. Discouragingly, this was only 20% of the golfers. Also, the golfer market would raise be divided by 4. Since a game usually consists of 4 players, only one of them would neediness the device, regular players whitethorn share the cost. Although the distance-only administration is easy to get up and running, when sold directly to the golfers, the golfers would themselves need to tractor trailer their fleeceable on the golf course. This would take away from the key nourish proposition to the golf courses that is pace of play. Golf courses may need to charge an initial amount to the new customers (golfers) to take into account age spent in setting up the distance-only system. Also with the technical apparatus requirements of the Complete-System, it would be almost impossible for a golfer to do it himself. Also, with the golf-course channel, it depart be easier to lock-in the golfers. The real benefit of the Complete System would be doable to the end-user (golfers) when they see improvements in their game with their regular use of the system. Thus, locking the golf courses in who will push to throw in the system to the golfers per roofy would grade its value proposition realizable.Sales to golf courses involve a ternion year lease, thus a guaranteed three year taxation stream and also the equipment can be reused elsewhere. If Golflogix goes with both channels, one may end up cannibalizing the other.If devices are sold directly to golfer s, golf-courses may non see any value in buying them, since their revenue in turn on the rent of the devices would not be guaranteed. Similarly, golfers would not buy the system if they knew golf-courses already provided it with a nominal fee.It is also noted that 80% of golfers played on public courses, which required a daily green fee. This was promising for the public golf courses channel, since with a per round fees, golf courses would make up for the cost of the golf logix systems much faster. Within the golf-courses, it would be estimable to begin with the public courses.Surveys performed by the GolfLogix team, had compelling results. 80% of the golfers reported that they would regularly use the system if it were available on the courses they played. Also, 70% reported that they would be willing to pay $1-$3 per round. Appendix A is an income statement (with veritable assumptions) that at the end lists the operating income per revenue stream. We see that with the retail ch annel, we bear one revenue stream. Up-selling to a Complete-system becomes easier with golf-courses. And although even the sum of the revenues through golf-courses is lesser than the revenue for Distance-only for golfers, two key points need to be kept in mind 1) The equipment with the golf-courses channel is reusable, and thus costs incurred in the next three years will be lesser, and 2) of units sold to golfers may reduce by 4, since the game is played in groups of 4. ( of unit numbers is derived from the market numbers above. A 1% penetration is assumed in the first three years)Appendix AGolfersGolf coursesIncome StatementDistance OnlyComplete SystemDistance OnlyComplete SystemRevenue per unit$ 300$ $ 54,000$ 72,000 of units267,000$ 170170Total revenue$ 80,100,000$ $ 9,180,000$ 12,240,000Cost of Goods exchange per unit$ 200$ $ 12,000$ 17,000 of units267,000170170Total cost$ 53,400,000$ $ 2,040,000$ 2,890,000 perfect(a) Margin$ 26,700,000$ $ 7,140,000$ 9,350,000Operating Expens es$ 2,700,000$ $ 2,700,000$ 3,000,000Setup Expenses$ $ $ 85,000$ 340,000Operating Income$ 24,000,000$ $ 4,355,000$ 6,010,000