Experts in this subject field are ready to write an original essay following your instructions to the dot!Hire a Writer
With increased globalization, companies continually uphold the importance of venturing into foreign markets and similarly, TOPGOLF Company that offers recreational amenities aims to set up their new facilities in Germany. The mode of entry into the market and strategies for marketing should be apt to beat competition from the established companies in the new market. Amongst the various modes of market entry, the most suitable method for the golf club is through licensing. To efficiently gain a wide client base, they should use chief marketing strategies such as distribution, product, and placement strategies. which are expounded further in the article. Moreover, this article further forecasts the future profits of TOPGOLF if they execute the mentioned strategies.
1 Current Situation Analysis
1.1 Company Background
Topgolf is a global sports entertainment community with major headquarters in Dallas in Texas wit major locations throughout UK and US. Topgolf technology was established in Watford, England between1996 and 2001 by Dave Jolliffe and Steve Jolliffe, twin brothers. The Jolliffe’s developed a firm known as World Golf Systems (WGS) and later applied the technology in a driving range in Watford, England in 2001 wo later sold it to a development company in UK. The West River Group was the leading investor which introduced Topgolf to the U.S. back in 2005 with the first opening in Topgolf Alexandria. The Executive Chairman of Topgolf International, Inc is Erik Anderson, who equally happens to be the founder, thereafter branded it Topgolf Entertainment Group (TEG).
Following the firm’s expansion, Callaway Golf Company (NYSE: ELY) became a major investor back in 2006 and thereafter Thomas Dundon in 2011 which led to the company’s incorporation as Topgolf International, Inc. In 2016, Topgolf International, Inc. established 3 different divisions; Topgolf (the venues in the U.S. and U.K.), TEG (a DBA for Topgolf International, Inc.), Topgolf International (the branch focusing on Topgolf’s international expansion) as well as Topgolf Media (enhancement of Topgolf experience through strategic partnerships, advanced digital media and sponsorships). Furthermore, Providence Equity Partners accomplished a sizable minority investment in TEG in 2016. Currently, Dundon, Providence Equity, Callaway and West River Group are the leading investors in TEG.
1.1.1 Vision and Mission
Vision: Topgolf is a global sports and entertainment community creating great times for all.
Mission: Actively engaged Associates and guests create unforgettable shared experiences.
Topgolf is an International Inc. and an innovative social entertainment experience combining golf-based fun with excitement of a high-end sports and quality dining. It works towards establishing diverse international licensing partners with an experience of developing and managing large-scale food & beverage hospitality operations to build a quality brand to the world at large. Progressively, the need to establish a global presence within the TOPGOLF industry is becoming more rampant. Successful global operations have been established in Tokyo, Hong Kong and Paris by competitor theme park industries specifically the Disneyland. Part of the companies within the industry still generate revenue from having global locations despite the high fragmentation of the industry. Increase in such global presence will specifically be more profitable in global locations lacking numerous companies under a competition to fill an industry niche.
The industry can be categorized as international following the idea that firms TOPGOLF have a potential to capitalize further on international visitors mainly because it contains successful marketing campaigns. An appropriate example to is that the industry could broadly benefit Egypt’s emerging middle class since the demand for entertainment will entirely be driven by the middle class’ newly found disposable income and increased spending patterns. The major products include outdoor recreational activities, golf range food and alcohol, golf driving ranges, recreational sports leagues, batting cages, family fun centers, as well as miniature golf centers. It, however, excludes gambling, excludes arcades, and themed amusement parks.
1.2 Organizational Structure
The entire board adopts a top-down hierarchical with the current overall CEO & Entertainment Group being Erick Anderson. The top director and the overall overseer is Troy Alstead. Richard Groga was the company’s Chief Executive and Chairman since its formation to 2012. David Main spearheaded the firm’s US development whereas Eric Wilkinson was the finance director.
1.2.1 Internal Analysis
The firm continually exhibits a robust revenue growth, regardless of a decline in available leisure time to consumers. The totality of entertainment purchases has increased over the five years following improved disposable income levels. The industry was founded on key success factors for business execution while adopting a top-down hierarchical management system. The major factors that drove TOPGOLF included the provision of appropriate facilities, easy accessibility to clients as well as good technical knowledge of their primary products.
1.2.2 Marketing Performance
Following the past five years till 2017, TOPGOLF has exponentially grown following increased consumer spending. Expansion of per capita disposable income and decline in unemployment rate, expenditures on leisure based activities were boosted by improved consumer confidence. Despite consumers have increased their rate of spending, the firm is contented with an increased rate of competition exhibited from other entertainment options. Its operators have collectively responded to this by introducing new concepts for customer attractions as well as updating their facilities to their most modernized forms.
The above-mentioned investment directly differentiated operators’ product portfolios from the rest of consumer-based leisure activities, for example, at-home digital entertainment. Most industry-based companies contain the capacity to appeal budget-conscious consumers following discounts and coupons tat entirely generate worldwide awareness of family fun centers and golf driving ranges as a direct local entertainment option. Moreover, the firm-based operators put more focus on the provision of quality experience to maximumly cater for both children and adults.
1.2.3 Financial Analysis
As an outcome of these trends, the industry’s revenue will rise at an annualized rate of 6.0% to $12.9 billion in five years, with a revenue increase of 4.2% in 2017. Collective disposable income is expected to continually increase over the same fiscal year with a direct acceleration in consumer confidence. All the variables mentioned above will facilitate an increase in expenditures made on discretionary items. It is a stouter working environment that as overall freed consumers to spending much on entertainment-based items following the persistently low unemployment levels.
1.2.4 Customer and Target Markets
As indicated above, the target markets comprise of consumers in diverse age brackets. Consumers aged 24 and younger account for almost 2.2% of total revenue. Activities like batting cages, carousels, miniature golf and waterslides are primarily more appealing to adolescents and children. Consumers aged 25 to 44-year-old demographic is expected to make up the second largest industrial share revenue, at a rate of 38.3% of total revenue. Characteristically, the demographic comprises the largest share of revenue totality since the above market segment contains a higher disposable income following more leisure time.
Consumers aged 65 and older are anticipated to account for more than 18.1% of the total revenue. Back in 2017, populations in the age bracket of 45 to 64 and older generated up-to generate 41.4% of total revenue. Precisely, there was a great demand for industry services in this demographic. Despite not having same income stream as the younger generations, their age segment is characterized with a greater leisure time. TOPGOLF appeals to this bracket because it requires less physical exertion and is relatively inexpensive.
1.3 Industry Analysis
1.4 Porter’s Five Forces
The industry exhibits robust revenue growth, even after the estimated time to consumers has declined. The US consumers diversified and increased a total number of entertainment purchases. Major competition factors are derived from alternative leisure activities like video games that entirely drive operators to put much focus on customer experiences and convenience. For instance, most industry consumers have diversified their recently provided offerings with the need to appeal to several consumers whereas targeting their increasingly limited free time.
Threat of new entrants
Although TOPGOLF comprises some varying chains for providing amusement and recreational services via diverse establishments like miniature golf centers, golf driving ranges, go-kart racetracks and batting cages, new ones are slowly entering the market. They are primarily low-price providers with specialized services. The threat of new entrants must be considered medium.
Bargaining power of buyers
Following the previously outlined services and products chains in the new market segment, as well as an increasing market substitute, it is easy for TOPGOLF to adopt to more marketable products. The reason behind this is that the bargaining power of buyers needs to be highly evaluated. It might, therefore, affect the customers’ willingness and capacity to substitute a particular membership in this industry that is likely to lower their bargaining power.
Bargaining power of suppliers:
Following the high rate of competition within the industry, the bargaining power of suppliers can, therefore, be deemed high. However, TOPGOLF is an established brand wit diverse product hence grants a high bargaining power among suppliers. Following their specialty in service provision as well as the introduction of quality equipment, the firm’s bargaining power of suppliers is considered medium.
The threat of substitutes:
Considering the fun industry, it is quite obvious that consumers contain diverse opportunities for substituting membership in the TOPGOLF industry. Whereas home based fun and clubbing joints have for a long time been main substitutes, technology based operations are slowly entering the market.
1.5 SWOT Analysis
Industry value added (IVA) estimates the firm’s contribution to the economy at large. It is currently forecast to raise at an annualized rate of 3.5% over the 10 years to 2022. Relatively, the Gross Domestic Product is anticipated to boost at an annualized rate of 2.1% in the entire 10-year period, which collectively means that the industry is developing at a faster rate as opposed to the overall economy. Throughout the entire period, the total IVA is anticipated to grow faster that the overall economy is basing on the fact that a larger number of households’ value family fun centers and associated golf driving ranges, a good number will be expected to spending quality time with family units. Whereas the industry as a whole contends with consumers picking more options for their leisure activities, and in turn limiting the consumers' purchases of industry services, most industry-based revenue expansion is directly prompted by the industry’s location and proximity.
Proximity to direct consumers
High brand awareness
Specialized interest fitness chain
The unique and proven training concept
Limited control over resources
Stable industrial growth
Largest company within the region
Largest fitness and recreational sports center services
An Amateur sports teams and club services
Major supplier of meals and beverages
· Increased substitutes number
Fights within the pricing values
Rapid changes and developments
Market entries of low-price product chains
As portrayed above, one of the significant strengths regarding TOPGOLF entails its proximity to direct consumers. Moreover, it is a renowned firm with high brand awareness, which increases their market share. In other words, the brand image, as well as closeness to the readily available consumers, is advantageous. TOPGOLF also boasts of specialized interest fitness chain and distinctive training concepts that make it more attractive.
The organization suffers when it comes to resource control and offerings, which are quite limited. The firm has little to no control over resources involved in this industry, which is also compounded by insufficient offerings.
TOPGOLF has a tremendous opportunity when it comes to growth, which is quite stable. As the largest company in the region, the firm has the potential to draw and retain more customers. The company can dwell on meals and beverages that are popular in the modern culture. It is an ever-growing industry; hence, can attract even more consumers to widen the market share.
The competitive nature of this field makes it a threat to TOPGOLF. In other words, there are several companies offering similar products and services at affordable prices; thus, attracting customers. Moreover, the rapid technological changes mandate the company to adopt an ever-changing system that might be expensive to maintain.
1.6 Conclusions and recommendations
Producing more eco-friendly products, introduction of better customer centric inventions and services, higher fresh ideas for improving system performance as well as increasing production capacity in worldwide plants to favorably compete in the global market. Following the case study above, there is need for its operators to focus more on consumer expectations, market needs and cost related issues in the case of design and development as well as existing forces within the political and global competition environment. The company further needs to reduce unnecessary performance uncertainties through global configuration of value adding procedures for they are the most crucial strategies towards industrial globalization.
2 Global Market Research
2.1 Country Selection
Germany is among the largest golfing nations within Europe with over 600,000 golfers and about 700 golf clubs. Golf constitutes a part of the rapidly growing sports in Germany because of the organizations that offer support to golf by relentlessly working towards improving the golf business. On that account, the vast golf industry poses great competition both locally and internationally with their positioning map and the market share. The established industry of golf is likely to pose great competition to TOPGOLF because they have a wider market share and occupy the top positions in popularity. Before the company settles for a mode of entry into the new market, it is vital to choose a method that is able to give the company a competitive advantage.
3 Market Entry
3.1 Mode of Market Entry
There are varied ways through which a company can enter a foreign market and different market entry strategies work for different global markets. As in the case of TOPGOLF setting up a golf entertainment facility in Germany, the most suitable mode of entry is through licensing whereby a firm transfers the rights to use a service to another firm. This strategy is effective mostly in cases where the purchaser of the license has a large market share in the target market. This is the most effective for TOPGOLF, considering the nature of their company that includes categories for hitting bays, food and beverage services, tournaments, as well as events hosting. Besides, licensing is the most appropriate strategy when compared to other strategies such as joint ventures, partnering, buying a company or Greenfield investments which is extremely costly. TOPGOLF had used this strategy initially when they established the first U.S location and it worked out successfully for the company.
3.2 Marketing Strategies
In developing marketing strategies and action plan, the primary consideration is developing strategies that will most successfully penetrate the target market country. Besides, they should target the specific audience, have a focus on major benefits based on the interests of the audience, and get delivered at the most opportune time to reach a wider audience.
3.2.1 Market Segment
The first marketing strategy that TOPGOLF should incorporate that targets their audience is identifying the target market segment in Germany using the fundamental segmentation variables. In their case, the variables that are most applicable include age, gender, and segment. After identifying the segmentation criteria, TOPGOLF should then modify their services and products to match the preferences of the particular segment in the new market and target the specific consumers. On top of that, the company should extend its current products and services because they have been effective and increased sales plus altering products in terms of labeling and packaging may greatly affect the company and lead to loss of customers.
3.2.2 Product Strategy
The framework of great products and services is a concise strategy that is market-driven and customer-oriented. The chosen product strategy should work towards bringing into line executives about how the product will attain the sophisticated business goals. A product strategy is the basis for the whole product life span. As in the case of TOPGOLF, their product strategy should be founded on vision, goals, and plans. The strategy should have the vision of being the best company offering golfing facilities and the goal should be to offer exceptional services to clients and maintain the position through uniqueness. The standardization factor implies that the company should focus more on what people actually like instead of dwelling on what everyone thinks the people may like. Adaptation factor on the other hand, argues that when entering a new market, a company should consider multiple facets and environmental factors before deciding on which products can suit the people better.
3.2.3 Pricing Strategy
Price adjustment strategy is an ideal plan of action and a commendable pricing strategy apart from being one of the best marketing penetration tactics. One implication is lowering the price of food and beverages in the restaurant department or reducing the hourly charges of golf games to increase sales. The alteration of price should be done after evaluating the competitors' services and products and it is another example of how price adjustment can be effective as a marketing strategy. Furthermore, the strategy should be undertaken after assessing terms of sale and value-added costs in the target market. When done judiciously without overdoing it such as by setting too low or too high prices, the strategy is sure to guarantee penetration into the target market.
3.2.4 Promotional Strategy
Product and service promotion is best achieved through determination of a suitable promotional strategy by aligning the company's resources with service and product benefits and consumer behavior in the market. Promotion can be done through well-planned and thought-out advertising which is an excellent tool for increasing brand and company awareness. Advertisements can be done via social media, print media, the internet, or even through televisions. By using a unique and hard to counter promotional program, the company has an upper hand in standing out from the competitors. Furthermore, promotion can be done through giveaways, exclusive offers in meals and games, as well as occasional free trials for games. In the event that product and service promotion is delivered successfully in a given region through the best promotional strategies, it paves way for an upsurge in the use of the company's services and products which consequently, leads to better increase in sales.
3.2.5 Distribution Strategy
The most fitting distribution strategy for TOPGOLF services in Germany is through the use of distribution channels. The outstanding reason that classifies this strategy to be effective in penetrating the new market and ensuring service distribution to consumers is that it opens up the way for other new channels hence increasing market space and general profitability for the company. The strategy involves opening new channels of distribution by focusing on a specific distribution channel. It can be effective in the food and beverages department which brings the most income for TOPGOLF. The company can open more outlets for products distribution through a single channel so that they expand the overall profitability of the company and create uniqueness from the competitors. Cultural differences consideration strategy and calculation of cultural diversity is also a vital strategy in product distribution. The company should conduct its businesses in a strategy of diversity marketing in a bid to reach out extensively to divergent social, cultural, and ethnic groups. This strategy helps in elevating the brand name and ensuring superiority amongst the rival companies.
3.2.6 Tax Optimization Strategy
Another important plan of action for TOPGOLF is using the tax optimization strategy that involves identifying the organizational and lawful frameworks that offer the lowest rate of taxation for a company. This strategy is of great help because the sales will not be affected immensely due to high taxation and this would help the company to maintain high rankings. Hedging strategy and exchange rate management is another recommended marketing strategy to propel TOPGOLF towards market penetration. The strategy entails using an investment that cushions a company's finances from risky situations which may threaten the business. The risk management policy is imperative to a firm as it helps in minimizing risks and can ensure the great prosperity of the company, especially in a new market.
3.3 Forecast of Future Sales
Based on the market entry strategy proposed for TOPGOLF in Germany that is licensing, and the international marketing mix, a forecast of future sales profits is likely to be high because the company will pay less tax, have the finances cushioned from risks, have increased sales because of a wide customer base and referrals due to the excellent services accorded to the customers. The projected income statement is also expected to maintain a high value because once penetration into a new market is successful; the company can build a brand name and stand out from the competitors due to the efficient plan of action. Once a solid fan base and consumer base are established, the target market will be dominated by the company and there will be fewer threats of competition from other rival companies.
Expanding beyond the local market to enter a global market is the goal of most companies but it is an achievable objective if there are well set-out marketing strategies and a plan of action that makes the company unique from its rivals. When the two are considered, besides conducting a study of what the new market needs precisely, the company can be guaranteed to penetrate much easily into the new market and create a solid consumer base. The sole recommendation for TOPGOLF Company is to execute the plan of action to the latter and once the customer base is established, they should revamp to a better action plan to ensure that they do not lose their present customers and they get more clients through referrals out of outstanding service.
Golf Driving Ranges and Family Fun Centers Industry in the US, September 2017. Retrieved from: www.ibisworld.com
Topgolf International, Inc. "Topgolf." 2018. 2 May 2018. .
Topgolf. "Reinventing the game." 2012. 2 May 2018. .
This sample could have been used by your fellow student... Get your own unique essay on any topic and submit it by the deadline.
Hire one of our experts to create a completely original paper even in 3 hours!