2002: Business - On the radar

With 10 victories on seven tours this year, Sonartec Inc. is developing a winning reputation among tour professionals. But if this tiny Carlsbad, Calif., company – which has only two executives and a minuscule budget – captures the eyes of golfing masses, it will have won an uphill battle.

Sonartec is trying to become a player in the equipment category at a time when the industry is undergoing intense consolidation, squeezing smaller brands out of business.

For a relative newcomer, Sonartec has accumulated a fairly significant support base. Tour professionals increasingly are playing its products – Fuzzy Zoeller used Sonartec 3- and 4-woods in his Senior PGA Championship victory last month – and their implied endorsements have fueled a grass-roots word-of-mouth campaign. Some retailers who stock Sonartec are unabashed fans, praising the clubs’ performance and calling them the best-looking fairway woods on the market. And the growing trend of swapping uncooperative long irons for easier-to-hit metalwoods works in Sonartec’s favor.

But the company’s biggest impediment also is the most common for many startups: limited financial resources. The lack of marketing brawn has limited brand recognition to a narrow audience of avid, in-the-know low-handicappers. To expand its customer base, retailers say Sonartec needs to increase advertising, demo days and sales representatives.

Company officials recognize these weak areas and insist they gradually are bolstering Sonartec’s infrastructure to serve a bigger market. For now, their focus remains on “seeding,” or getting the product into the hands of players by heavily targeting green-grass accounts.

“We are eager to have our clubs tested, as the results are unanimously positive,” said Kathy Godwin, vice president. Featuring a driving cavity in its sole, a Sonartec club’s center of gravity is higher and deeper in the clubhead, expanding the sweet spot and improving accuracy and distance, Godwin said.

The fairway wood line features clubs designed for players with high to low handicaps: the shallow-faced SS-01, mid-faced SS-02 and deep-faced SS-03 range from 13 to 24 degrees in stainless steel (suggested retail: $265). The company also offers a titanium driver, TI-01, in 9 to 11 degrees ($445) and driving irons. Left-handed models were added recently, as were shaft options from Fujikura, Graphite Design International and UST. Sonartec also plans a limited July sale of the new Super CV, a titanium driver with an added rear weight that officials said improves forgiveness ($395).

According to retailers, Sonartec’s best-selling club is the SS-03 14-degree 3-wood, designed for lower-handicap players with a quick swing tempo.

“It’s an excellent product for all levels of players, but those who are buying it now generally are better players,” said Phil Hawes, who owns East Coast Tennis & Golf in Bethesda, Md. “As soon as they pick it up and hit it, it has an incredible, solid feeling in the hand.”

Sven Kessler, who manages an Edwin Watts Golf superstore in Orlando, Fla., said: “I think it’s one of the best-looking fairway woods that’s ever been made. It’s not too square, too round, too open, too closed. You set it down, and it’s just beautiful.”

The clubs that are earning such auspicious praise were born of indefinite notions and chance meetings.

Godwin and president Toru Kamatari launched Sonartec in the United States at the end of 1999. The two worked out of their homes for a number of months before opening a small office/warehouse in San Marcos, Calif., in March 2001. But the first seeds were sown well before those early, modest developments. Kamatari, who ran a pro shop called Piece of Time in Waikiki, Hawaii, knew of a company in Japan that had made an impression on the Japanese PGA Tour with its fairway woods.

When he approached Royal Collection in 1995, he asked to sell its clubs in his shop, but two of the company’s executives proposed a different idea: They wanted someone to start a company in the United States to distribute clubs with the driving-cavity design outside of Asia.

Kamatari hesitated. It’s a big step from stocking clubs in a pro shop to founding a company that supplies retailers nationwide. But he believed in the product and took the plunge, signing a licensing agreement to use the patented technology. (He buys components from the United States and overseas foundries and assembles the clubs in Carlsbad.)

“I needed big help in marketing the product, and I remembered Kathy as one of my favorite salesmen,” said Kamatari, who recalled Godwin from her days as a representative for Ray Cook Golf Co. “I called her to see if she was interested in (joining me). That’s how we started.”

Sonartec launched its clubs – branded Excedo – at the 2000 PGA Merchandise Show and experienced modest growth in the first year.

“It was slow, but we were starting to get some recognition,” Godwin said. “Then the name Excedo was challenged – another manufacturer had used something similar – so we decided to drop Excedo and just use the corporation name, Sonartec.”

Now the company that relies on word of mouth to promote its product has established 1,000 retail accounts and hopes to double sales and reach 2000 accounts by year’s end. According to Godwin, Sonartec’s sales force includes 21 independent representatives and three inside salespeople, and she plans to hire another in-house staffer this year.

Thus far, the company has limited advertising expenditures.

“Our advertising budget is very, very little, and reaching the end consumer is really tough,” Godwin said.

While the company strategy is to promote its clubs via on-course golf professionals, it maintains a 50-50 split between on- and off-course accounts.

To compete against the major OEMs, Sonartec plans to continue seeding at pro shops and selling to retail stores that are at least 80 percent golf. Other promotional pushes include demo days, which have been successful and will be increased this year, said Godwin. Demo-day dates are posted on at www.sonartec.com.

“We have to spend time selling the product, educating people,” said Hawes. “Their potential would be huge if they learned how to market the product correctly. You’ve got to advertise. Right now, Tour exposure is key, but word of mouth will only take you so far.”

Sonartec’s paid Tour staffers include Nick Price (winner 2002 MasterCard Colonial) and Bill Glasson, both of whom hit the clubs and approached the company for endorsements. Godwin plans to add more paid professionals, preferably with players who, like Price and Glasson, use the clubs and want to represent the company. She should have a fair selection of potential candidates: Darrell Survey research for this year indicates more than 40 players had played 241 Sonartec woods on the PGA Tour through June 18.

“In a little more than a year, we’ve sold 600 of their clubs, and the percentage of people who love them is over 95 percent,” said Chip Usher, owner of Usher Golf in Savannah, Ga. “I’ve never found anyone who disliked it. Golfers are fickle, so who knows next year, but that’s a pretty amazing number.”

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