Reference no: EM132055535

The maker of one of the best-known brand names in golf balls is teed off over Costco's cut-rate rival, setting off a dispute over the discount warehouse chain's design and advertising claims. Costco is firing back, filing a preemptive lawsuit last week arguing that it's not violating any of the patents of Acushnet Holdings, maker of Titleist golf balls. Costco's emergence as a threat to the Titleist brand doesn't arrive at good times for the golf industry, which is already grappling with a litany of challenges that include declining interest in the sport and the demise of sporting goods stores. As golf product makers scramble to avoid new hazards, Costco is not conceding anything. In fact, the dispute raises the question of whether publicity about Costco's ball will only send more golfers on a long, straight drive to its warehouse stores. Costco's Kirkland Signature ball was so popular that it temporarily sold out in 2016. It goes back on sale in early April "while supplies last," the company said in a statement. At a price of about $15 per dozen, the ball undercuts leading competitors, including the balls from Titleist, Callaway, Bridgestone and TaylorMade, which are typically about three times as expensive. The ball, made by Nassau Golf, has generated feverish interest for its multi-layered interior, urethane cover and low price, according to fan site GolfWRX.com. If Costco, which also sells certain Callaway golf products, hooks deeper into golf sales, it could mark a seismic shift for an industry that's already in the rough following the liquidation of big-box chain Sports Authority and the struggles of department stores like Sears and Target. Warehouse clubs, including Costco, Sam's Club and BJ's Wholesale Club, will reap about 12.5% of sporting goods sales in 2017, according to IBISWorld. Indeed, Acushnet CFO William Burke, speaking to investors in December, blamed the Titleist golf ball sales decline primarily on "retail disruptions" such as the bankruptcies of Sports Authority and Golfsmith and the fact that the Pro V1 ball was in the second year of a two-year product cycle. An Acushnet spokesperson declined to comment, and Nassau could not be reached for comment. Titleist golf ball sales for the first nine months of 2016 fell 3.6% to $415 million, compared to a year earlier. Sales of Titleist golf clubs, on the other hand, rose 9.3% to $315 million. Acushnet will report full-year sales Wednesday. The decline comes against the backdrop of fewer golfers. The number of Americans who play golf at least once a year was 24.1 million in 2015, down 5% from 2012, according to the National Golf Foundation. As interest declines, the number of companies operating U.S. golf course and country clubs is falling at an annual rate of 0.4%, according to research firm IBISWorld.

Based on the short reading answer following questions:

1. How does Costco's target market compare to that of Titleist?

2. How does the company's planning situation (ie SWOT) for golf balls differ? (Briefly is fine)

3. How is Costco's product strategy different from Titelist?

4. How are promotional and distribution programs different?  

5. What type of pricing strategy is Costco using? Why doesn't Costco charge more (even a little bit) for its golf balls? Wouldn't it take in more revenue?