1. Date: November 7, 2015
TO: VP of Marketing
CC: CFO, VP of Supply Chain Management
Subject: Commercial Innovations for Golfsmith Marketing Strategy
Simulations from Cognos Insight based software shows me that there are problems with the current
marketing approach in the company. Enclosed, I demonstrate detailed plans, insights and alternative
marketing solutions that provide improved revenue and reduced advertising costs.
During our simulations we found that Golfsmith’s products can be found across a number of large
regions including Americas, Asia Pacific and Europe. We found that Golfsmith is largely successful in the
Americas with over 740 million dollars in revenue. This is substantially larger than Asia Pacific and Europe
by over 200 million dollars. After, we calculated Golfsmith customer types which are Department Stores,
Sports Stores and Golf Shops. From our research we found that the most revenue generated was Sports
Stores but the most effective customer type, on a per store basis, were Department Stores. Department
Stores are the most efficient customer type generating almost double the revenue per store then Sports
Stores. Below, figure 1 displays these simulations.
Second, we analyzed advertising costs across product types, individual advertising channels and
individual products and their relationship to revenue. Below, is an in-depth look at our advertising costs

2. measures across Golfsmith’s four product types. As we can see, Sponsorship is consistently one of the
larger costs accumulating over 36 million dollars in cost.
What we have seen so far is a mutuality between revenue and advertising costs. From 2009 to 2011
we found that our costs increased consistently. Similarly, we see mutual movement and fluctuations in
revenue. As revenue increase for three years, we see the same dynamic happen with advertising cost.
Advertising cost from 2010 to 2011 explains why we see such a large jump in revenue during this time.
Interesting enough, we saw a big decrease in advertising cost in 2012 from over 55 million to 20 million,
we believe this is due to a change in advertising costs and lack of product introduction found in later
simulations. As we continued to analyze advertising costs we found that email advertising costs were not
used for Golf Accessories and Irons and television advertising costs were not used for Putters. We also
looked at some of the introduction years for products in 2010 and 2011. We found that three products were
introduced in 2010 are Course Pro Gold and Tee Set, Course Pro Umbrella, and Lady Hailstorm Titanium
Woods Set and none in 2011. We believe the lack of products introduced in later years contributed to our
economic success in 2012.
In contrast to this revenue vs. advertising relationship, research from the product level showed us
inconsistency in this mutuality. Hailstorm Titanium Irons and Lady Hailstorm Steel Woods Set spent zero
dollars on advertising costs yet they generated a substantial amount of revenue and for this they are a hybrid
product producing ideal economies of scale. Hailstorm Titanium Irons generated over 94 million dollars

3. and Lady Hailstorm Steel Woods Set generated over 49 million dollars. Both of these products are
producing amongst the top 50% of generated revenue all while spending nothing on advertising.
It because of these products that greatly influence revenue sustainability and increased brand
loyalty and recognition. In the relationship between revenue and advertising cost, we see revenue increase
and decrease depending on the fluctuation of advertising costs. Advertising cost dropped off in 2012 and
in relation so did revenue, but compared to Golfsmith’s inception we see more revenue generated. This
means we demonstrated economics of scale. We increased revenue by over 20 million since 2009 while
spending 5 million dollars less on advertising cost. Revenue sustained growth because our advertising
campaign showed growth, gaining recognition as a brand. It is because of Golfsmith’s ability to move away
from advertising that I make my point.
As we demonstrate economics of scale, research shows us that Lady Hailstorm Steel Woods Set
and Hailstorm Titanium Irons are the appropriate product for Golfsmith’s future. Below are the top five
products that show the largest contribution margins and should be highly invested in the near future. Invest
in these products and keep advertising costs low because they generate large profit per unit and have already
gained recognition in the market.
Connor Ruby
Director of Data Analytics