What should Altius’s objectives be? What trade-offs must it manage?
Why has Altius lost market share? What will happen if they maintain the statu quo?
How do the unit contribution and gross margins of Altius product compare to one another?
How would you calculate cannibalization effect?
What is Altius’s and its competitors’ 2012 revenue and gross profits? Analyze the economics of Altius’s overall golf ball business compared to its competitors and for the three proposed Altius product lines. What are the implications of this for the advisability of introducing Elevate?
What is the value of a point of market share for Altius?
What are the implications for Elevate, considering its unit contribution and gross margins compared to Victor TX and Victor?
Should Altius implement the Elevate strategy? If so, what are the risks to the brand and how can they be managed? What sales results would you expect for each item in the line if Elevate is introduced? If not, what are the alternatives, assuming the board expects growth in the profit contribution from the golf ball line?
Hint: Here are some specific quantitative analysis to consider for this case.
- Compare revenue and gross profit for Altius and its competitors
- What is the value of one share point to the various competitors?
- How do the unit contribution and gross margins of Altius product compare to one another?
- How would you calculate cannibalization effect?
Sample Solution