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MANUFACTURER / SUPPLIER WORKSHOP

MANUFACTURER / SUPPLIER WORKSHOP. Dave Branon Former Chairman and CEO Slazenger. Manufacturers Immersed in Virulently Oversupplied, Flat Market.

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MANUFACTURER / SUPPLIER WORKSHOP

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  1. MANUFACTURER / SUPPLIER WORKSHOP Dave Branon Former Chairman and CEO Slazenger

  2. Manufacturers Immersed in Virulently Oversupplied, Flat Market • Awesome margin pressures – volume generation with sharp decreases in average-selling prices (10-15% reductions 2002 vs. 2001 clubs/balls) and aggressive but low-margin expansion into new distribution channels (mass-merchants, etc.) • Publicly traded companies under vicious growth mandates to sustain capital-stream

  3. Manufacturers Immersed in Virulently Oversupplied, Flat Market • Marketing costs have spiraled out of control - media expense, endorsement contracts, high-cost maintenance of dedicated sales forces, mark-down provisions, point-of-sale demands, etc. • New 1999 brand entries forced 58% surge in golf ball television / print spending to $70-million vicinity • 2001 endorsement budgets topped $400-million • PGA trade show costs in $3-4,000,000 range for manufacturers

  4. Manufacturers Immersed in Virulently Oversupplied, Flat Market • Product life-cycles almost ridiculously narrowed which exerts enormous (and desperate) acceleration of new product introductions with concomitant consumer confusion and cynicism, profit-eroding trade make-goods and / or returns, and production retro-fit and upgrade expenditures • Titleist spent $75-million – urethane capacity

  5. Manufacturers Immersed in Virulently Oversupplied, Flat Market • Consolidations dictating future portfolio impact: Titleist / FootJoy / Cobra…Spalding / Etonic / Hogan…Taylor / Maxfli / Adidas…Callaway / Odyessey / Ashworth license, etc. • Tightening retail market compelling customer-service demands which force bloated working-capital reserves to comply with quick-turnaround and order-fulfillment requirements • Contracted-and-paid retail-chain alliances exclude small and mid-tier suppliers and lessen consumer exposure incidence

  6. For Consideration: • How to raise funds down and across the value-chain. In effect, all who benefit from growth must contribute to growth • All parties required and/or requested to contribute must have a seat-at-the-table…such as retailers, broadcast media, etc. • Moving 20/20 from altruistic facilitation to funded activation implies structure and accountability…how and what? • Absorption of and/or coordination with other initiatives and organizations…efficiency of funds utilization and avoidance of duplication

  7. Discussion: • Research…is enough known to productively proceed or do we risk paralysis by analysis? • Prospect-targets (and defined objectives…what gets measured gets done) • Scope…national / regional / local • Programs / Promotions…growth-templates • Communication parameters and channels • Special Issues…political, legal, tax, environmental, educational, etc.

  8. Source of Funds Cents Per Sale and/or Service $.01 $.02 $.03 • Course Owners/ Clubs (rds.) 570 million 5,700 11,400 17,100 • Manufacturers: Golf Balls (dz.) 59 million 590 1,180 1,770 Golf Clubs (pcs.) 20 million 200 400 600 Footwear (prs.) 4.5 million 45 90 135 Gloves (dz.) 1.5 million 15 30 45 Apparel (ea.) 35 million 3507001,050 1,200 2,400 3,600 Contributions (000)

  9. Source of Funds Cents Per Sale and/or Service $.01 $.02 $.03 3. Suppliers to Mfgs. (various units) 200 million 2,000 4,000 6,000 4. Media: Broadcast (viewers) 96 million 960 1,920 2,880 Print (subscribers) 5 million 50 100 150 • Professional Tours (tickets sold) 7.6 million 76 152 228 • PGA (paid lessons) 6.9 million 69 138 207 • USGA (members/dues) .8 million 8 16 24 • Retailers: On-Course (units sold) 25 million 250 500 750 Off-Course (units sold) 60 million 600 1,200 1,800 Sporting Goods / Mass 35 million 3507001,050 1,200 2,400 3,600 Contributions (000)

  10. Source of Funds Cents Per Sale and/or Service Total Funds Raised @ $0.1 $11,263,00 @ $0.2 $22,526,000 @ $0.3 $33,789,00 PLUS Contributions from Alternative Facilities (5000+) Rounds and Buckets!

  11. Consumer Focus-Group Research Slazenger Golf-USA “I used to patronize the shop but now it’s just a bunch of kids who don’t know their ass from a hole in the ground.” “The one thing it always had was friendly service but they are so understaffed now I guess they don’t have the time.” “The place is sorta like a factory…move ‘em in out.” “The pro shop used to be a good place to buy stuff but they don’t have the merchandise or the service anymore so I go to Edwin Watts which is like a big, adult toy store.” High Frequency Player…Comments Referring to On-Course Pro Shops

  12. Consumer Focus-Group Research Slazenger Golf-USA “When the pro owned the place (shop) he’d give you a free lesson or like a 10-minute checkup…but he’s kinda lost his interest it seems like.” “What the hell is some 18-year old kid working part-time gonna do for my game?” “They used to serve coffee and donuts and we’d hang around and shoot the….but now it’s grab the scorecard and go.” “To me it’s a game. To them it’s a business…which, I know, it is but I miss the old atmosphere.” High Frequency Player…Comments Referring to On-Course Pro Shops

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