2004: Business - Srixon aspirations more than meet the eye

We’re No. 2!

It is not a rallying cry often heard in corporate headquarters, where finishing first typically is trumpeted – regardless whether it’s realistic.

Nor is that the rally cry of ball manufacturer Srixon. But company officials have begun a quest to gain second place in the market’s highest price tier as they attempt to make one of Japan’s top brands popular on U.S. soil. What at first glance seems like an unambitious goal is being regarded by many retailers as a sound and focused strategy.

Srixon’s first step: Find a way to breakaway from a pack of competitors trailing Titleist, which dominates the category where prices hover around $40-per-dozen.

“There is no clear No. 2 now,” says Mike Pai, Srixon’s vice president of marketing. “In terms of volume, Callaway might be No. 2 at that price point. But are they a clear No. 2? And do people clearly recognize them as No. 2? No, they don’t . . . and we see opportunity here.”

Though it offers balls at various price points, Srixon is mainly pushing its HR-X 333 and Pro UR-X models designed for accomplished golfers who sit atop the “pyramid of influence.” If Srixon can persuade better players its brand is the “aspirational alternative to Titleist,” getting other golfers to fall in line will become much easier, officials say. To help spread this message, the company beefed up its marketing budget by 40 percent this year, and is aggressively courting club professionals because they control shelf space at pro shops and influence golfers’ buying decisions.

“Without green-grass, you might have some short-term success,” Pai says. “But you can’t build your brand without it.”

Having a solid game plan, and actually executing it, however, are altogether different.

Moving into “solo second” at this premium plateau may be attainable, but pushing aside two brand icons such as Callaway and Nike – who are vying for the same spot – will be no easy task. And even if Srixon managed to pass both, it couldn’t secure a firm grip on No. 2 without grabbing a chunk of market share from Titleist, too.

With so many Titleist loyalists entrenched in the green-grass channel, this latter scenario might as well be dubbed Mission Impossible.

“When customers ask what ball we recommend, we say Titleist, across the board,” says Kevin Taylor, general manager at The Member’s Club at Four Streams in Beallsville, Md. “And when that same question is asked at other golf shops, is anyone saying Srixon? I don’t think so. So that’s going to be their battle.”

Srixon officials say they understand the challenge and insist they will patiently and doggedly recruit allies to support their cause. Already, they’re reporting some success.

The company’s on-course distribution base has doubled in the last two years, “and the number of staff professionals we have on contract from 2003 to 2004 went from about 220 to 1,100,” according to Marty Olinger, Srixon’s executive vice president of sales.

In June, Srixon’s unit share in the ball category for combined on- and off-course sales increased to 1.4 percent from 0.8 percent in June 2003, according to research firm Golf Datatech LLC.

Such gains are attributable largely to key partnerships recently stuck with the PGA of America.

After months of “calling and pounding on them,” as Pai puts it, Srixon in January became a sponsor of the PGA’s Golf Retirement Plus, a supplemental annuity program for PGA members. Srixon is one of a handful of equipment companies among the program’s 40 sponsors.

In addition, the Norcross, Ga.-based subsidiary of Sumitomo Rubber Industries signed a three-year agreement as title sponsor of the Srixon PGA Tournament Series, staged in December in south Florida for club pros. Srixon also inked a deal with the National Golf Course Owners Association, gaining access to its 6,000 green-grass members, who receive preferred pricing on Srixon’s premium balls and range balls.

To top off its efforts, Srixon is offering its staff professionals performance bonuses when they compete successfully in PGA Section events.

“I get $250 if I win a section event,” says Skip Holton, head pro at Gates Park Golf Course, who began carrying Srixon products in 2003. Srixon sales at his Waterloo, Iowa, club now represent about 20 percent of his shop’s golf ball business. That figure is half of Gates Park’s Titleist ball sales, but it represents a significant increase from Srixon’s 8 percent share in 2003.

The result of all this, Olinger says, is evident in the company’s account growth and retention rate. Srixon anticipates its total account base – 70 percent of which is green-grass – will reach 5,000 by the end of the year, up from 3,500 in 2003. More important, Srixon’s sales force, which no longer is comprised solely of independents, is retaining 70 percent of those accounts – up from 30 percent two years ago.

The green-grass offensive may yield significant sales gains for Srixon, but some retailers say the company’s quest to become No. 2 ultimately will be determined by its marketing budget.

Bob Boldt, director of golf at Boundry Oak Golf Course in Walnut Creek, Calif., says performance distinction among today’s premium balls is negligible. As a result, consumer preference is dictated by brand familiarity and “how deep (manufacturers’) pockets are.”

“If you pay the guys on the Tour to use your ball, you’ll probably get to No. 2,” Boldt says. “If you don’t, you won’t.”

Keith Schneider, director of golf at Castle Pines Golf Club in Castle Rock, Colo., cites Callaway’s recent signing of Phil Mickelson – who is using an HX Tour prototype – as an example of marketing firepower Srixon will need to withstand and match.

“You’ve got some big boys there with Nike and Callaway,” Schneider says.

Though lacking a marquee endorser, Srixon has added notable players such as Robert Allenby, Tom Lehman, Fuzzy Zoeller and Karrie Webb to its tour staff of more than 80 players. And compared with past years, Srixon aggressively has touted its staff’s victories – for example, applauding Miguel Angel Jimenez’s four PGA European Tour triumphs this year in so-called “win ads.”

The company’s efforts are clearly gaining it more recognition, Pai says. His proof? At the PGA Championship at Whistling Straits, Pai and his colleagues spotted a fair number of Srixon hats atop heads in the gallery.

“There were so many more than in the past,” he says. “I think it speaks to the growth of the brand.”

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