Think Small: The Battle Facing Challenger Brands

Ever wonder why market leaders stay market leaders?

Sure, sheer size is a significant factor: the bigger you are, well, the bigger you are. But in many businesses, and especially in golf, it’s rare to see major shifts in the status quo unless you widen your lens and look at it over decades. There are always exceptions, but unless a market leader has a series of irredeemable faceplants, things don’t change much year over year.

For instance, roughly ninety percent of all drivers sold come from the Big 5 of Callaway, TaylorMade, Titleist, PING, and Cobra, and it’s been that way for years. They’re the safe choices – you know if you buy one of those, your buyer’s remorse will be minimal. Do Srixon, Mizuno, Wilson, Bridgestone, or even direct-to-consumer brands such as Hogan or Sub70 make good drivers? Yep, but how many of us go out on a limb when it comes to spending $300 to $500 for a driver? Safe has its advantages.

And then there’s confirmation bias – that wholly illogical but far too common attitudinal leap from “I use this because it’s the best,” to “it’s the best because I use it.”

So, how can a Challenger Brand buck the status quo and get your attention as a legit alternative? Outspending the big boys is not an option, so it often comes down to finding a sweet spot in the price/value matrix and being more than a little different when it comes to consumer outreach.

Price Makes a Statement

When it comes to golf equipment pricing, many of us are card-carrying members of Torch and Pitchfork Nation, ready to storm the castle when an OEM releases new equipment at prices we find offensive. This week’s PXG announcement serves as Exhibit A.

But at the same time, those same card-carrying members of Torch and Pitchfork Nation ignore – and often ridicule – lower-priced alternatives as cheap.

Price makes a statement. High prices, while we don’t like them, make a positive, salutary statement of high quality, while low prices make a negative, derogatory statement. How can something of such a low price be any good? The old adage if it sounds too good to be true often applies, regardless of whether or not it’s true.

An interesting case-study in this exercise is the Cincinnati-based Precision Pro.

Clay Hood and his partners started Precision Pro five years ago as a low-priced, me-too product, just to see if there was an opportunity on the low end of the range finder market.

“Our very first product was to compete on price,” Hood tells MyGolfSpy. “We worked with a manufacturer to source a product, and it let us see if there was a market. At the time, there weren’t any other companies out there selling products for under 200 bucks.”

Did Precision Pro put a scare into Bushnell, Nikon, or Leupold? Not hardly, but the company did find an appetite for lower-priced alternatives.

“We definitely found some interest,” says Hood. “It gave us confidence there was a market for someone who didn’t have a big name but did have a lower price. As far as I know, we were the first product you could buy at a retail shop for under $200.  But within six months, Nikon, Leupold, and Golf Buddy came out with products in that price range.”

“That was more scary than the initial startup. It was like, ‘my gosh, that didn’t last very long.’” – Clay Hood, Precision Pro

Hood admits even though Precision Pro is more established in the market now, they still fight the perception of being relatively unknown and, therefore, cheap.

“The perception is companies like Bushnell or Nikon must be better, because I’ve heard of them before,” he says. “But we did a good job of building the company through the fundamentals of the brand and through customer service, and it got us to a point where we could capitalize on it.”

Inexpensive vs. Cheap

So how do consumers wade through the apparent contradiction between price and performance or, put another way, between low-priced vs. cheap and crappy?

“When we first started, that was the question,” says Hood. We’d go into retailers and they say these products cost $300, why is yours $100 less? It was tough to explain back then, nowadays it’s easier.”

This is where creativity and a disciplined business plan come into play. Wilson, for example, has a small PGA Tour staff. Yes, they added U.S. Open Champ Gary Woodland this year, but staffer Troy Merritt left. Bridgestone focuses its Tour spend on ball contracts rather than equipment deals, with Tiger and Bryson the shining stars. Kuchar and Couples both game Bridgestone clubs, but you’d never know it by looking at Bridgestone’s website.

“We charge a lower price, so we don’t do some of the things bigger companies might do,” says Hood. “We don’t hire Rickie Fowler to hold our range finder, we don’t pay Tour caddies and we don’t do ads on Golf Channel.”

If you’re old enough to remember Volkswagen’s revolutionary Think Small branding campaign of the 1960’s, you understand Challenger Brands have to present themselves differently and creatively, and those differences have to matter to a significant segment of the market.  Challenger Brands can survive indefinitely – and profitably – without creative differentiation, but they stand little chance of crashing the big boy party.

“We do product development a little differently than a bigger company would,” admits Hood. “We work on the consumer side. We talk with customers regularly and we play golf with them. I want to talk with the end-user on the golf course and see what they’re trying to get done, what their pain points are around these products. I’ll email someone on our customer list I’ve never met and say ‘I’d love to chat with you or play some golf – can you play nine holes?’ People are usually pretty open to that.”

“We work on the need side. We don’t do R&D trying to find some magic bean. We try to find out what the customer is actually looking for out of this product, what kind of job they want done and then we work on how to take technology that already exists and help solve that.” – Clay Hood, Precision Pro

Still, the question of inexpensive vs. cheap remains, and it’s fair to ask what a customer is risking when choosing a lower-priced, lesser-known option. The obvious point of differentiation – often made by the marketing departments of the more expensive players – is consistent quality. It’s not an invalid argument because tolerances and consistency do cost money. But so do added features.

“When you have engineers, who are just working on products, they’ll say ‘these things are cool, let’s do these,’” says Hood. “Well, the customer doesn’t care what’s cool. They don’t care what you can do; they care about can you solve their issue?”

“That’s how you wind up with a cheap launch monitor attached to a GPS unit. It’s interesting and it’s something you can do, but does the customer really care about that? Do they need it? I’m not certain.”

In other words, just because you can doesn’t mean you should.

The Specialization Rationalization

The biggest difference between Wilson and, say, PING or TaylorMade is the latter are golf-specific companies, while Wilson is a sporting goods company that makes gloves, balls and the sticks to hit those balls with, and that includes golf equipment.

Is that a positive thing or a negative thing? In reality, it’s probably neutral, but as golfers, we process information through our own lenses and from our own points of view. For a company such as Precision Pro, range finders are all they do, while its main competitors are in the riflescope and camera businesses.

“Based on the market research we’ve done, we’re probably number three, behind Bushnell and Nikon,” says Hood. “We’re not a hunting company and we’re not a camera company. We’re out here playing golf with our customers on a regular basis. That gives us an advantage in understanding, not just from a product standpoint, but also from a branding standpoint: what kinds of messages resonate? What does a customer really want?”

But alas, size does matter in business. You won’t see technology breakthroughs from Precision Pro: it simply doesn’t have the manpower or the money. They’re not going to create something that’s never been seen or done before.

“We’re not doing tons of R&D in hopes of discovering something new,” admits Hood. “We look at existing technologies, like Bluetooth and GPS and things like that, and we’re looking to apply those technologies to a product that will make it more useful to the customer.”

“We’re a small company – 11 people – but everyone here is a golfer. We work with third party companies here in the U.S. on the engineering side and with our people overseas to get units built. We’re working on the need end to help the customer, and we have some new stuff we’ve been working on we’re real excited about, stuff that’s come from our customer interviews.” – Clay Hood, Precision Pro

There’s another danger facing the Challenger Brand, and that’s being painted with the same brush as cheap, foreign knockoffs. It’s not hard to source a product out of China, put your name on it and sell it in North America. The range finder market, in particular, is rife with products fitting that category, which are mostly sold online.

Take a gander at Amazon and you’ll see multiple brands selling exactly the same product, just with different prices and different names. It’s a hodgepodge.

“There are basically three or four factories overseas that make these white label products, and it can be hit or miss,” says Hood. “They’re cheap – they have to be cheap – but you’re never quite sure what you’re going to get. You may get a good one, you may get a bad one. If you get a bad one, what’s your recourse?”

Hood admits the first Precision Pro product was exactly that – a white label product with the Precision Pro name – to test the market.

“We very quickly found the quality was not what we thought it needed to be: a lot of products dying quickly, a lot of returns. I don’t think it negatively affected us, but that’s one thing about business: often people don’t complain to you, they just complain about you and don’t come back. I think we’ve worked through that and now have a very good reputation for quality and customer service.”

Size Does Matter

Challenger brands don’t have to become a Big Boy to be successful, they just need to be a worthwhile endeavor for ownership. In other words: adequately profitable. That requires discipline and staying away from technology just for technology’s sake. Challenger brands may break new ground, but it’s almost always consumer-focused.

“A lot of these newer, high-tech things may come from someone who may or may not be a golfer,” says Hood. “That’s not how you get to good products.”

If you were to cut one open, you wouldn’t see much of a difference between a Precision Pro rangefinder and a unit from one of the larger brands: it’s all wires, circuits, lenses and such. You may – may – be able to see an optical difference.

“I look through one of our products, it’s sharp and it’s clear,” says Hood. “I look through a Bushnell product – it’s clear and it’s sharp. If you’re an optics geek you could maybe tell, but we service the average, everyday golfer who plays maybe a couple of times a week. We stay away from adding things that are, in my mind, arbitrary.”

“If you’re a bigger company and you want to grow, you need to have a product that touches the higher price point, because there may be people who will buy it,” contends Hood. “So, you come up with features that may or may not be all that useful. If you’re Nikon, you have a high-end product using camera technology that’s applied to vibration reduction to help pick up the flag. Bushnell is doing some things with weather and elements and stuff, and that could be interesting, and they have displays that adjust from red to black. That may be nice to have, but what we want to do is help golfers hit more greens.”

So what, then is the real difference between a $500 to $600 unit and something in the $250 range?

Features – specifically speed and precision. The bottom line is size does matter if you’re willing to pay the freight. In this year’s MyGolfSpy Range Finder Buyer’s Guide, the top five performers were from Bushnell, Nikon, and Garmin, while Precision Pro’s NX7 Pro Slope rangefinder finished sixth, a half a point behind the fifth-place Garmin. The biggest differences? Speed (the NX7 ranked 12^thoverall), accuracy (7^thoverall) and optics (also 7^thoverall).

The other big difference, of course, is price. The NX7 Pro Slope sells for $250, while the similarly featured Bushnell Tour V4 Shift runs $400. More feature-laden offerings – the Nikon CoolShot Pro Stabilized, the top-ranked Bushnell XE, and the Garmin Approach Z80 – range in price from $480 to $600.

For a golfer able – and willing – to spend $400 to $600 on a rangefinder, there are performance advantages to be had. How noticeable those advantages are, or how beneficial they are, is entirely up to the individual to decipher. On the other hand, are those performance advantages worth the extra $150 to $350? Again, only the individual golfer can decide, and it’s impossible to discount the value of a known, safe name brand.

So, let’s put it to you, fellow GolfSpies: where do you draw the price/value line? How much is a known name brand worth to you, and what can tip the scales in favor of a challenger brand?