Performance Indicator

Case Memo: Performance Indicator

There are a variety of reasons why manufacturers were hesitant to sign a contract with Performance Indicator to license the new technology.

First, most manufacturers expressed concern at being the first to utilize the technology due to uncertainty about the competitive response from Titleist, the clear market leader. Manufacturers reasoned that introducing a new innovation might backfire due to a strong response from Titleist. While these relatively smaller manufacturers were interested in the technology, they would rather be quick followers instead of the first innovators. Manufacturers reasoned that introducing a new innovation might backfire due to a strong response from Titleist.

Second, Titleist expressed various concerns with the technology. Titleist wanted to understand the impact of this technology on their profitability. They wanted to see their sales impact (instead of the overall market revenue impact calculated in Exhibit 5), in addition to the cost implications of both the technology and the licensing agreement. One issue with developing the technology first is that you bear the entire cost (manufacturing costs and a $0.72 / dozen balls licensing fee), but the benefit will be distributed throughout the industry from the additional new balls purchased. but the benefit will be distributed throughout the industry from the additional new balls purchased.

Finally, manufacturers were concerned with the consumer reaction, potential brand implications, and other pressing matters within the company. Customer and brand risks associated with implementing the technology (e.g., seeing a gray ball with the Titleist logo) served as a deterrent. Additionally, urgent issues within the company (e.g., financing concerns) made implementing this technology lower importance.