I am writing you for several reasons, one of which is to confirm the rumor that I am going into the business of manufacturing golf clubs. These clubs shall be as near perfect as modern day tools and instruments can perform . . .
Thanking you for your cooperation and support, and with all good wishes and kindest personal regards, I am
With this letter, dated Oct. 5, 1953, one of the game’s greatest players set the stage to become one of its most recognized brands as well.
Fueled by the perfectionism that made him dig dirt relentlessly in search of a flawless swing, Hogan created the Ben Hogan Co. to create jewels, not sticks. His decision to scrap the company’s first production run – $100,000 worth of clubs – because they failed to meet his exacting standards only perpetuated his legendary mystique, and it wasn’t long before golf professionals clamored to sell Hogans in their shops.
But that was then.
In the five decades since, the Hogan company has been bought and sold five times, enduring four ownership changes in a span of 13 years, and had its roots, if not its soul, ripped out of its home in Fort Worth, Texas. And with the death of its founder in 1997, the company’s continued pledge to make exceptional clubs has sometimes rung hollow. Hogan’s annual sales, which in its heyday once topped $80 million, have been nearly halved.
As Hogan approaches its 50th anniversary, however, current owner Spalding Sports Worldwide insists the brand’s fortunes will turn around – dramatically. Spalding has coddled and sheltered Hogan as a niche brand since acquiring it from investor Bill Goodwin six years ago. But no more. Company executives say they will spend 2003 transforming the revered name into a “megabrand” and talk of surpassing annual sales of $200 million in a few years.
“Where do we want to take Ben Hogan?” Mike Ferris, the division’s vice president, asks rhetorically. “You become a megabrand when you are one of those names that the consumer thinks of immediately when you’re defining a category. So, if someone says soda, you would say, Coke or Pepsi. We want to take Ben Hogan to that level, where if we say golf, you say, Ben Hogan.”
Beginning with this week’s PGA Merchandise Show, Hogan will unveil a host of new products including two irons (the blade Apex 50 and game-improvement CFT), two wedge lines (Carnoustie and Riviera), bags, gloves and accessories. Most recently, Spalding has formed an exclusive alliance with renowned craftsman Bob Bettinardi, who will debut putter models under the name Ben Hogan by Bettinardi. All this comes on the heels of a summer launch of the Hogan Apex Tour ball, which while not attaining “must-have” status, is selling respectably and notching wins on Tour. And if that’s not enough, a Hogan apparel collection – even Hogan watches – are now available.
To support these offerings, Spalding has tripled its Hogan advertising budget compared with a year ago and expanded its tour staff, most notably adding Colin Montgomerie late in 2002 to a roster that already included Len Mattiace, Luke Donald, Hal Sutton and Bernhard Langer.
But even if Spalding executes its game plan flawlessly, success is far from guaranteed. The reason? Resurrecting an icon from another era and making it a contemporary juggernaut is nothing short of a marketing miracle.
Spalding’s endeavor will be a classic brand revival case study with intriguing risk/reward scenarios. In chasing what some critics say is an unattainable goal, Spalding could end up diverting resources from its other golf brands – Top-Flite, Strata and Etonic – which already have been struggling in some distribution channels. But if Hogan succeeds, supporters say Spalding can catapult itself back among the industry’s elite.
In either case, Hogan will face serious challenges.
In a flat market, Hogan’s $200 million annual sales goal (more than four times its current level) will have to come at the expense not only of competitors, but from an emerging golf oligarchy – a handful of well-funded corporate goliaths that already rule or seem destined to dominate the market: Acushnet (Titleist), Callaway, TaylorMade-Adidas and Nike.
To put Spalding’s ambition in context, a comparison with Cleveland Golf’s recent growth is noteworthy. A $30 million, niche wedge company in 1997, Cleveland needed six years to diversify its product line enough just to reach the $100-million mark – a remarkable feat. Hogan’s plans call for more than doubling Cleveland’s figures in less time.
Not surprisingly, Hogan’s forecast has raised some eyebrows.
A case could be made that enough megabrands exist already for a game with 25 million participants (and only 8 million avid players most likely to buy such premium fare). The logic goes, if Titleist provides “serious equipment for serious golfers,” and Callaway caters to those seeking the “world’s friendliest clubs,” and TaylorMade and Nike tend to the passionate athlete-turned-golfer, are there really that many consumers left for Hogan to satisfy?
Not everyone, however, agrees with such a simplistic demographic dissection of the market.
Some retailers maintain that the Hogan mystique is still an intangible that gives Spalding a unique advantage. They say golf, more than any other sport, honors its traditions and past heroes, making even newcomers to the game familiar with legends from long ago. That means Hogan possesses cache that a new brand could only covet.
And unlike those who believe industry consolidation will be an obstacle, some retailers say it might work in Hogan’s favor.
“The way I see it, there are fewer players to compete against,” says Kerry Kabase, sales director for Edwin Watts Golf Shops in Fort Walton Beach, Fla. “There may be some giants out there, but they don’t always have the right products. Look at Cobra in 2002. In one of the toughest years, they jumped in there and exceeded their wildest dreams by doing a lot of things right. I think the Hogan people are setting themselves up to be this year’s Cobra.”
Though he wouldn’t bet on Hogan achieving its aggressive sales target, Kabase says Hogan still is a vibrant brand with considerable growth potential.
“The game improvement CFT at $599 is a good price point, and it’ll help them grab a bigger piece of the pie. They’re entering new categories, and they’re doing it in a smart way. Instead of rushing and doing putters on their own, they went with Bettinardi, who’s already established. It makes a lot of sense.”
Spalding officials insist the Hogan brand can deliver an inviting message that will draw converts away from competitors.
Rather than focus solely on Hogan the legend – tacitly conceding that his exploits of the 1940s and ’50s may not resonate with today’s consumers – Spalding intends to broaden the brand’s appeal by selling what the Hogan name stood for: Perfection. Excellence. Dedication.
“Ben Hogan came into being as a company in 1953, and the value system that was created then is as relevant today as it was 50 years ago,” Ferris says. “In that regard, the type of individual who would gravitate to a Ben Hogan product is a conformist, and I don’t mean that as a negative term. What Ben Hogan represents is within their set of values; we’re a place where they feel is home. The other part about them is that they’re serious about the game. That doesn’t necessarily make them a better player, but they’re entrenched in the game of golf. They want to be better than they are now.
“That belief is what makes Ben Hogan timeless and inviting to so many.”
Last year, Spalding decided to accelerate Hogan’s development. Company officials say the interest generated by the Apex Tour ball awakened them to the brand’s untapped potential. Industry observers also speculate that Spalding, for the first time in years, has gotten an opportunity – and a mandate – from new owner Oaktree Capital Management LLC to grow its golf business. (Oaktree, a Wall Street venture fund, acquired Spalding from Kohlberg, Kravis, Roberts & Co. about a year ago, helping the Chicopee, Mass.-based sports equipment company lower its substantial interest payments.)
“The KKR situation really was a ball and chain around their ankle,” says Ken Morton Jr., director of retail for Haggin Oaks Golf Super Shop in Sacramento, Calif. “For the first time in years, Spalding seems to have a game plan for all their brands, but I’m pleased they’re focusing on Hogan. It’s the right choice. Strata had some Tour success, but it didn’t translate commercially, and Top-Flite can’t be Spalding’s bread-and-butter because of its price point.”
Though some industry observers and retailers quietly have raised concerns about whether Spalding is rushing Hogan’s development, company officials say a good portion of the growth surge has been in the works for some time.
“When Spalding bought the Ben Hogan Co. in ’97, people knew they had acquired a great brand name with tremendous history, but that the quality had gone awry,” Ferris says. “So, initially, we focused on putting the pieces back together, moving the plant back from Richmond, Va., to Fort Worth. And as we were slowly going through the process of rebuilding the foundation, everybody understood that at some point we should really grow it.”
The first step involved reviving Hogan’s core product, irons. That was done gradually with three models: a blade (Apex); a mid-handicappers model (Apex Pro); and a game improvement iron (Apex Edge). In 2001, Spalding struck a low-risk licensing deal with apparel maker Sport-Haley for a Ben Hogan line of clothing. And work began soon after for a second generation of irons and the new wedges.
But Spalding officials say the early success of the Hogan Apex ball is what spurred them to shift Hogan into another gear.
“Golf professionals wanting the product, consumers asking for the product . . . that validated the idea of moving forward,” Ferris says.
While many retailers acknowledge that the ball sparked excitement about the Hogan brand, for some, it also raised red flags. Though Spalding executives insist they’ll debut products “only when they’re ready and better than the competition,” the Hogan ball had to be tweaked just months after its introduction following complaints that its cover wasn’t durable enough. Such miscues, however minor, undermine Spalding’s credibility and fuel concerns that Spalding – in its quest to boost Hogan sales – might shortchange quality or forecast too aggressively, ultimately derailing its comeback.
“The people who plan for colossal growth are the people who often run into trouble in this business,” says one industry consultant. “If you plan to sell a big number and find you can’t sell it, you’ve got to start marking them down and selling them in places you don’t want to sell them.”
To help avoid such mismanagement, Spalding CEO Jim Craigie in August restructured his organization so it could more effectively cultivate individual brands, rather than product categories such as balls, shoes or clubs.
“Before when we were broken out by categories, I was responsible for growing golf balls, not just Hogan, but all balls, Top-Flite, Strata,” Ferris says. “There really was no caretaker for the Hogan brand overall. Now, that’s my sole purpose.”
That mission requires expanding “contact points” where consumers can be exposed to the Hogan brand.
“In order to make it a megabrand, it has to be instantly top of mind,” Ferris says. “When you’re only in irons, as we had been, and the purchase cycle for that category is once every 3 to 5 years . . . no one considers you seriously until they’re ready to buy. Our competitors are multi-category companies so they have the ability to put their brand name in front of the consumer almost on a constant basis.”
Though some analysts are skeptical whether Hogan can meet Spalding’s expectations, they applaud the decisive move forward.
“Even if they don’t hit $250 million, if they hit $150 million, they’re still better off than where they’ve been,” says Casey Alexander, an analyst who closely follows the golf sector for Gilford Securities in New York. “The Hogan name still carries enough aura that it can expand marketshare and at margins that are attractive. It’s also the only brand Spalding has that can access all avenues of distribution.”
Perhaps the most daunting obstacle for Hogan will be what Alexander calls “product homogenization.”
“With the advanced technology that’s available to everyone, there are so many good products out there that it all starts to blur together,” Alexander says. “The (Titleist) Pro V1 is great ball, the (Callaway) HX ball is a great ball, the (Nike) Tour Accuracy is a great ball, and so is the Hogan ball. How do you stand out?”
Gaining significant product differentiation is particularly crucial for brands attempting comebacks, marketing experts say.
“You can’t just match the competition, you have to leapfrog it. If you produce something that’s only as good, there is no compelling motive for the consumer to switch,” says Mark Johnston, who specializes in brand management as chair of the marketing department at the Crummer Graduate School of Business at Rollins College in Winter Park, Fla.
And as much as Spalding officials insist Hogan’s values are timeless, Johnston says, younger consumers may have difficulty getting excited about a man whose greatest year in the game occurred half a century ago.
“To reach the levels they’re hoping for, they’re going to have to reach new (demographic) markets. If you’re two generations removed, that’s going to be a tough sell to Generation Y, and even tougher yet to get to Generation X.”
Though brand reincarnations are rare, they do occur. Citing a relevant example from the automobile industry, Johnston noted how Cadillac – another grand brand from an earlier time – appears to be reversing its steady decline with aggressive advertising and contemporary sport utility vehicles.
“The brand was tired, the core audience was getting older,” he said. “The jury is still out, but the initial results have been fairly positive.”
Spalding officials are determined to make Hogan another successful case study.
Step one is providing golfers, especially “dormant Ben Hogan-ites,” an opportunity to access the brand’s products.
“The one clear message we will deliver is, ‘You’ve never hit equipment like this,’ ” Ferris says. “We are trying to reach people who have had experience with Ben Hogan products before but just haven’t played them in a long time, as well as people who have never played our clubs.”
To accomplish this objective, Spalding is launching an initiative to supply 2,500 pro shops with Hogan demo sets so players can “grab and go.” The company also plans to organize 750 demo days this year.
In addition, Spalding expects to increase the number of authorized Ben Hogan dealers to 1,200 from 800 – an increase of 50 percent. Such status requires retailers to carry a wide array of Hogan products and display them according to stringent presentation standards.
Many retailers are hopeful that Hogan can gain momentum, but they say the brand is missing a vital piece of equipment to reach its lofty goals.
“To sniff those kind of numbers, they have to have a serious contender in the woods market,” says Fred Quandt, vice president and general merchandise manager for Golfsmith, the Austin, Texas-based superstore chain. “In the eight years that I’ve been with Golfsmith, the only driver Spalding’s produced that’s had some market penetration was the Top-Flite Intimidator, and that’s a concern. I think they have the R&D and the money, but those aren’t the biggest barriers to entry in the driver category. It’s the consumer perception barrier to entry that they’ll have to deal with.”
But other retailers say if there’s one name that can help Spalding get over that hump, it’s Hogan.
“His name has huge mindshare among golfers,” says Leigh Bader, a former PGA Merchandiser of the Year and co-owner of Joe & Leigh’s Discount Golf Pro Shop in South Easton, Mass. “Almost all of the customers who come into my store have at least heard of Ben Hogan, and even if they don’t know much about him, they think of him in a positive way.”
That appeal, clearly, still translates into sales.
“We sold what we got of the new Hogan Apex ball, and we’ve had repeat buys,” Bader says. “I think the success of the ball and the apparel line sheds new light on the brand’s potential. That’s very good news for Spalding.”