Alternative 1 proposes launching a new "Elevate Series" golf ball at $27 retail price. Manufacturing and advertising costs would be $82.3 million, with projected profits of $144.04 million and payback period of 0.57 years. Alternative 2 considers starting a "price war" by lowering prices on existing balls. Market shares, retail sales, profits at different price points are modeled for the Altius, Primiera and Bantam balls. Alternative 3 examines increasing retailers' margins from 15% to 18%, 21% or 25% and the resulting lower prices to manufacturers and margins. Models are shown for the Victor TX ball at different retail margin scenarios.

6. Alternative 1 – To launch Elevate Series

7. Figures in USD $
Particular Victor TX Victor Elevate
Retail Price 48 39 27
Retailer Margin 15% (7.20) 15% (5.85) 20% (5.4)
After retailer Margin 40.80 33.15 21.60
Manufacturer Margin 70% 70% 60%
Margin 22.56 23.21 13.85
Total cost 12.24 9.95 7.75
Elevate
Particular (26 Million *40=10400000) Amount (USD)
Cost ( Manufacturing + Advertisement (.16/ball)) 10.4M(Dozen)*7.75+1.7M
Cost and Profit 82.3 M and 144.04M
BEA 0.57 years
Alternative 1 – To launch Elevate Series

8. Alternative 2 – To Start Price war

9. Particular Altius Primiera Bantam
Market Share Retail Dollar 55% 15% 11.4%
Retail Sale ($483 M) 265.6 72.45 53.13
Retail % 15 20 20%
(SP-Retail) $225M $61.6M $42.50
Manufacturer Margin 70% 57.5% 57.55%
Gross Profit $158.6M $33.3M $18.27M

10. Victor TX
Particular $48 $45.5 $43 $40.50
Retail margin 15% 15% 15% 15%
Price 40.80 38.68 36.55 34.43
Cost 12.24 12.24 12.24 12.24
Margin 28.56 26.44 24.31 22.19
% 70% 68% 67% 64%
Particular $39 $38 $37 $36
Retail margin 15% 15% 15% 15%
Price 33.15 32.3 31.45 30.6
Cost 9.95 9.95 9.95 9.95
Margin 23.2 22.35 21.5 20.65
% 70% 69% 68% 67.5%
Victor

11. Alternative 3 – To increase retailers margin

12. Type/Retail margin 15% 18% 21% 25%
Price $48 $48 $48 $48
After retailer margin $40.8 $39.36 $37.92 $36
Manufacturer margin 70% 68.9% 67.7% 66%
Manufacturer margin $28.56 $27.12 $25.68 $23.76
Cost $12.24 $12.24 $12.24 $12.24
Victor TX
Type/Retail margin 15% 18% 21% 25%
Price $39 $39 $39 $39
After retailer margin $33.15 $31.98 $30.81 $29.25
Manufacturer margin 70% 68.9% 67.7% 66%
Manufacturer margin $23.2 $22.03 $20.86 $19.3
Cost $9.95 $9.95 $9.95 $9.95
Victor