Rounds For Sale - The Discount Dilemma - Part 2

Updated: Mar 9

“Nowadays people know the price of everything, but the value of nothing.” - Oscar Wilde

Oscar should have been a golf marketer!......but in reality, what exactly are the values that we are trying to sell in the business of golf when it comes to membership and rounds of golf?

Most cars are bought, not because of their price, but because of how they meet the needs of the buyer and, for many, the cachet of the brand and how it presents itself to its target markets.

People will purchase supermarket chain’s ‘own brand’ labels solely on the basis of price and the brand value with this type of purchase is simply not a consideration.

Most of the golf facilities that I have worked at or dealt with would prefer to reference their product against a top brand car, rather than a can of no-name baked beans. This attitude suggests that discounting should not be something that is the norm…..but still too many clubs see this as the route to take.

If there are actually no real differences in terms of quality, facilities, etc. between two adjacent golf clubs, then price might well be the only differentiator. However, the first step should be to creatively package up the rounds rather than engaging in a price war and there are very good reasons for this.

An excellent example of companies that engaged in a price war, without circumstances really requiring them to lower prices, would probably be that between Wal-Mart and Amazon at the end of the first decade of this century.

The first salvo in the conflict was Wal-Mart reducing the prices of its top ten best-selling books to $10.00 following which Amazon, in a tit for tat reduction in price to match Wal-Mart, dropped its price to better this. With Target’s entry into the fray, the price then went down to reach an eventual low of $8.98.

Retailers can buy books from publishers for about 50% of the retail price, so at this price level, all of these retailers were losing money on every book sold.

The strategic motivation could have been that “If we are losing money on each sale, let’s lower the price even more to increase sales volumes and steal business from our competitors.”

This makes no conventional business sense, unless you have massive inventories and underlines the point that in a price war, almost always, everyone will actually lose, especially the smaller scale retailer.

The facts are that for giant retail operations, sales leading to direct losses on the discounted items will, in the medium term, not hurt their overall business. This is true even with these types of ‘suicidal’ discounts, especially when the real goal is to expose customers to other items in store and on line, which they might not otherwise have seen.

This books’ war did in fact help Wal-Mart, Amazon and Target in this respect, but anyone with shallower pockets can only lose out in this type of retail pricing conflict.

When we are being exhorted by marketers to:

· Sell the brand and not a product.

· Accentuate the value and not just the price.

· Package up the unique features.

· Protect the brand integrity.

· Think like a customer.

What do they mean and are these just more marketing and promotional buzzwords and hackneyed phrases like ‘picking low hanging fruit’? The last to ripen and all we need at this point is another load of sour apples!

If we take a step back and look at the golf product objectively, then parallels with standard retail environments will begin to emerge:

1. Growing the participant (customer) base:

Golf estates for example should actively promote the game to its own non-golfing residents (irrespective of whether they are homeowners or not) and to surrounding communities which do not have a golf course.

2. Sustainability:

Every golf facility, especially in Africa, will need to find groups and communities who have the income levels to sustain an interest in a game which will never be a mass participation street game like football.

3. Business partnerships:

Form associations with businesses, such as hotels, through which the partners can then promote themselves as being golf destinations or as having golf packages.

Create new levels of reciprocity by partnering with ‘like’ facilities in order to offer something that cannot be found anywhere else. Amplify this by having special events, joint memberships and then reinforce the unique value of the proposition with actual value and support activities which reinforce the expectations.

4. Membership retention:

Give the membership what it wants. Price is a sensitive area at the moment, but in many cases golfers leaving the game are in effect voting with their wallets, especially when it comes to the continued growth of virtual clubs and golf societies. In many cases the player’s departure is motivated as much by lifestyle needs as it is by price considerations.

5. Attitudes and management methodologies:

Perhaps in this area an analysis of what attitudes have not changed might be productive. It is still very discouraging to see how many golf clubs have pettifogging rules about ‘attire’, which just do not fit in a world where dress has become noticeably more casual in most walks of life. Management methodologies and committee attitudes are also still depressingly ‘custodial’, when the situation demands innovation and calculated risk taking. If your management team doesn’t have these attributes, then up-skill them, or use consultancy services to fill the gaps.

6. Creative rounds’ and brand packaging:

Find ways to dispose of potentially distressed rounds’ inventory and or use these down times creatively to leverage better value packages into the market place.

Offer interactive branding packages to potential sponsors, advertisers and brand partners. In doing this assess and understand exactly how your club’s channel functions in terms of the player and guest flows through it and what activities and areas will suit each target brand partner the most effectively.

The Discount Dilemma – part 2 by John Cockayne; Mobile - +27 (0) 73 896 7931. Email; The contents of this document are confidential, may not be copied or activated without the express written permission of John Cockayne and remain the sole IP of the author.

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