Driver Economics 101

By Steve Divnick, President of Divnick Golf

  • How much more will people pay for new drivers each year?
  • Are the new tweaks really helpful, or just great marketing hype?

This two-part series examines the upward pressure on pricing, how the industry has created this self-inflicted stress, and a prediction about the future of drivers.

Major golf manufacturers are counting on you to shell out higher prices every year to get the latest technological innovations. Their investors expect them to continue to produce growth in an industry that appears to have peaked and is now settling. So they are fighting over the same dollars.

If you own stock in one of these major public companies, you should be very cautious and informed. Something has to give, and you don’t want it to be your investment portfolio.

If you are a consumer and want to get the most out of your game, there are some insider secrets that will definitely affect the way you buy clubs.

All industries develop over time. Innovation is a result of applying creativity to yesterday’s norm. Today’s designs are not the result of a 100-year plan. Design and marketing strategies, even elements like, “The Rules of Golf” are subject to the pressures of the time in which they exist. In all sports, there is an ever-present tension between maintaining tradition and welcoming innovation. That is as it should be.

That knowledge will help us understand how we evolved from wood to exotic metals and fibers, and price tags approaching $1,000.

A quick history...

Taylor Made was the first to build production “metal woods” back in 1980.

Callaway followed a few years later with a “no-hosel” design that allowed more mass behind the ball. They also started the trend toward new features and sizes, and a “designed obsolescence” that requires higher and higher prices. First there was the Big Bertha. Then the Great Big Bertha. Then the Biggest Big Bertha. Adjectives are becoming scarce!

Titleist, Nike, Cobra, Cleveland and others continue to compete for the next big breakthrough. There are even drivers out there that claim to produce sound waves to create more spring-effect.

This year, the hot ticket is combining graphite and titanium, or futuristic weight ports that control trajectory and accuracy.

Taking a lead from the automobile industry, the designed obsolescence has been a big money-maker for the entire industry. No one is hitting old-fashioned wood woods any more. It would be embarrassing. Hmmm. What would it take to get an entire industry to toss their current equipment and buy all new tools? If we can figure that out, we can pocket a few billion dollars.

As with all innovation, there is a combination of genuine improvement, and a lot of marketing hype that doesn’t really translate into better performance. But it ALWAYS costs more.

Endorsement Strategy

While there is considerable cost associated with design, prototyping, testing, and tooling, it can be argued that a large portion of the cost of new drivers is the marketing strategy. Millions of dollars are spent on professional endorsements with big name golfers. The theory is that if Tiger Woods, Ernie Els, Vijay Singh, or Phil Mickelson uses a particular brand of driver, then you should too. And against all common sense, that marketing strategy actually works!

In reference to the fact that Phil Mickelson recently left Titleist and joined Callaway, James Koppenhaver, President of Pellucid (www.pellucidcorp.com), a bright new voice of reason in the golf industry asks, “With a large portion of the consumer base citing the expense of golf as a barrier to play/play more, at what point do PGA Tour pro endorsements outrun their consumer economic value?”

Average golfers are nothing like pros. Our swings are different. We don’t practice as they do. We don’t have their coaches. We are nothing like them. What makes us think that we should swing the same clubs? We need out own tools!

Most golfers struggle to get the ball in the air on a productive trajectory. It is our premise at DivnickGolf that drivers should have higher loft—much higher. So we offer drivers with up to 15 degrees of loft. They hit with the ease and accuracy of a 3-wood, but still deliver the large sweet spot and shaft length of a driver.

With our tongue planted firmly in our cheek, we have published some press releases that proclaim how many drivers we had in play at a recent tour event. That is what the big brands do. But for us, it’s a big fat ZERO. Along the same lines, we can say that we missed signing Phil Mickelson when he became available. We were just a few million dollars below his radar!

We know that Mickelson isn’t going to use our driver. Not only because we can’t compete with those kinds of endorsements, but because we don’t design clubs for pros.

But if he did, and if his endorsement contract allowed him to speak freely, we think he would say, “This club doesn’t work well for me, but it is a lot better for the average golfer than the one I swing.” And that would be echoed by the other great players on the Tour.

So why do big companies continue to invest R&D in clubs for pros? Why do they spend millions of dollars seeking endorsements? Why do they continue to come out with innovative bells and whistles that claim to be better than anything heretofore known to man?

Because it works. There are plenty of golfers who buy into that marketing strategy. They want to carry the same name-brand driver as their idols. It’s silly, but it’s successful.

But how long will this continue? With the total number of golfers declining for the past few years, something has to change. How many drivers will people be willing to accumulate in their garage before they revolt? The recent boom of reselling used clubs on Ebay and through other venues has only exacerbated this pressure because many golfers are opting for last year’s hot club at a fraction of the cost. But the formula is still producing stacks of unused drivers.

It is difficult to predict human nature. Maybe people will revolt, maybe they won’t. But the data suggests that escalating prices, and the accompanying rise in endorsement costs will taper off, if not collapse.

We think there is a better way to develop clubs and market them to the average golfer.

Summary

There is just something special about hitting a pure drive. We all agree that driving isn’t as important as the short game, but it is much more rewarding...or frustrating depending on your level of success. It is our goal to introduce new players to the game with a driver that will produce long arcing shots that land softly and run another 20 yards. We also have had the privilege of bringing frustrated golfers back into the game, or putting drivers in the hands of those who had long-since given them up for a 3-wood or long iron.

Perhaps we can even claim to have a positive effect on the number of rounds sold because people are having fun again off the tee! But at the very least, I want to personally thank the big-name equipment makers for leaving a door open wide enough for us to drive a company through.

We will gladly let the big name-brand company’s focus on the pros. We just want to serve the average golfers in the marketplace! So we will continue to focus on what they need, and will not seek pro endorsements.

Part Two of this series will examine the technology of the driver, the effect of the limits imposed by the USGA maximum Coefficient of Restitution (COR), and an insider’s opinion of what really works, and what is hype.

If you would like to sign up to receive Part Two, please click here.

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