Market Opportunity
Overview
In a market survey conducted by ProGrip, more than one-third of respondents claimed they had suffered a golf-related injury, and 87 percent of those suffered maladies of the hand, wrist, or elbow. Medial Epicondylitis ("Golfer's Elbow") and injuries to the hand and wrist are often associated with repetitive shock and vibration. In addition to contributing to injuries, the shock and vibration associated with striking the ball or ground can detract from a golfer's enjoyment of the game. In fact, 73 percent of respondents said that shock and vibration detracted from their enjoyment and performance of the game. Using appropriate equipment, such as an effective anti-vibration grip, can reduce the likelihood of injury, increase enjoyment of the game, and enhance a golfer's performance.
The rapid evolution of technology in the golf equipment industry accelerates the rate at which golfers purchase new clubs and other equipment, and it has also created a market that is very accepting of new technologies. Although there are three parts to every golf club (the head, the shaft, and the grip), the vast majority of research and development and innovation have focused on the head and the shaft. However, 94 percent of golfers surveyed stated that their grips play an important role in their enjoyment of the game. In terms of innovation that has occurred in the grip market, manufacturers have offered simple, materials-based products (such as the Flynt grip) instead of focusing on design solutions. Anti-shock products that do currently exist are frequently expensive, invasive to the club, add weight, or not particularly effective. In support of this, 87 percent of golfers surveyed indicated their interest in a new anti-shock grip design and only 7 percent claimed that their grips are effective at reducing shock and vibration. To address this underserved market, ProGrip's Impress grip contains an innovative, proprietary design that affordably solves the problem of harmful shock and vibration, that can improve sports health, that increases overall performance, and that enhances a golfer's enjoyment of the game.
Market Size and Segmentation
For true lovers of the game, golf is not simply a sport—it's an obsession. In the U.S., 26.7 million golfers—including more than one of every six adults—currently play golf. Approximately 51 percent are considered core golfers, and nearly half of this core segment are avid golfers, defined as those who annually play at least 25 rounds. In addition, there are an estimated 2.9 million golfers between the ages of 5-17, a segment that plays more rounds of golf (and will continue to play for years to come) than the average adult golfer.
Golf Participation in the U.S.
Due to the large size of the market and the wild popularity of the sport, golfers are a closely researched and clearly identifiable group. The following information illustrates some summary statistics regarding golf participation in the U.S. in 2000, as published by the National Golf Foundation.
| U.S. Core and Junior Golfers on the Rise | ||||||
| (in thousands) | ||||||
| Golfer | 1996 | 1997 | 1998 | 1999 | 2000 | CAGR |
| Core (avids and moderates) | 11,350 | 13,499 | 13,870 | 13,730 | 13,675 | 4.80% |
| Occasional | 11,626 | 10,619 | 10,410 | 10,680 | 10,960 | -1.50% |
| Junior (12-17) | 1,761 | 2,356 | 2,147 | 2,036 | 2,065 | 4.10% |
| All Golfers | 24,737 | 26,474 | 26,427 | 26,446 | 26,700 | 1.70% |
| Rounds Played | 477,000 | 547,000 | 528,000 | 564,000 | 586,000 | 5.30% |
| Golf Facilities | 14.3 | 14.6 | 14.9 | 15.2 | 15.5 | 1.90% |
| Golf Courses | 15.7 | 16 | 16.4 | 16.7 | 17.1 | 2.20% |
We are encouraged by the dramatic increase in the number of core golfers—that is, those golfers aged 18 and above who play eight or more rounds per year. The core golfer segment has shown tremendous growth over the last five years, increasing by over 20 percent, or at a compound annual rate of 4.8 percent. Of this core segment, over 46 percent are "avid" golfers, defined as those who annually play at least 25 rounds. Although avid golfers comprise the smallest player segment (25%), they account for over 50 percent of all golf-related spending.
We are also encouraged by the rapid growth in the number of total rounds played by golfers annually. The more rounds a golfer plays, the more rapidly his or her golf grip will suffer excessive wear and, ultimately, the more frequently he or she will have to re-grip.
With 87 percent of the core segment male, and with over two-thirds of the households earning $50,000 or more, core golfers represent an attractive, and demographically identifiable, primary target market. ProGrip will initially be targeting this core golfer segment, with particular focus paid to avid golfers. The segment is educated, committed to the game, and informed regarding trends in golf technology. However, despite the core golfers' financial wherewithal, many have recently been delaying the purchase of new golf clubs and other equipment, preferring instead to preserve their current set of clubs. Therefore, golfers have been re-gripping their clubs at a higher rate, leading to a 5 percent growth in grip sales despite a contraction in the overall golf equipment industry. Thus, the timing is ideal for an innovative and lower-priced anti-vibration solution such as the Impress grip.
Future growth in the industry will be fueled by two trends, 1) increasing interest from nontraditional golfers, and 2) shifting population trends. We point out the consistently high number of new players of golf each year. Attracting roughly 2.2 million new golfers annually, the sport has witnessed resurgence in popularity. Young, exciting, and successful personalities like Tiger Woods and Sergio Garcia, and international grudge matches like the Ryder Cup, have helped give rise to tremendous interest and participation in golf. According to the NGF, the total number of Junior golfers increased by over 4 percent per annum in the past five years. In addition, the successes of the Ladies Professional Golf Association (the "LPGA") Tour and such female golfers as Annika Sorenstam of Sweden have increased the appeal of the sport to women. These markets are expected to be particularly receptive to the comfort and athletic health benefits of ProGrip's Impress grip.
More than most other sports, golf stands to benefit from upcoming favorable demographic trends. In particular, over the next several years: 1) the aging of Baby Boomers (those born between 1946 and 1964) and 2) the emergence of the Echo Boom generation (those born between 1977 and 1995) will impact the sport of golf. As golfers age, they tend to play golf more often and spend more money on the sport, particularly in the over-50 age group. In addition, they become more health conscious and become more susceptible to such ailments as arthritis. Accordingly, because a majority of Baby Boomers are entering their 40s and 50s, the company expects interest in and spending on golf to increase along with a greater need for golf products that provide greater comfort in addition to performance enhancement. Further, because Echo Boomers are beginning to enter their 20s, the age most golfers begin to play the sport, the company believes they will further increase their participation in and spending on golf.
The Golf Grip Industry
Every time a golfer buys a new club, he or she buys a new golf grip installed on the club. In addition, golfers purchase replacement grips for their clubs as the original grips age or become worn from use. According to ProGrip's survey, golfers re-grip their clubs on average every six months to a year. Annually, golfers spend approximately $22 billion on equipment and fees in the U.S. Global golf grip sales are estimated to be $350 million, of which $140 million represents grip sales in the U.S. Roughly two-thirds of grip sales are to OEMs with the remainder being sold in the aftermarket for club re-grips. Golfers typically pay between $1.50 and $5.50 per club to re-grip them, exclusive of labor, and golfers carry on average 12 clubs in his or her bag.
Market Research
In addition to secondary research from a variety of sources, ProGrip conducted two primary research studies to ascertain golfers' needs and preferences, reactions to the Impress grip, and purchase intentions. The studies included a golf grip market survey involving 151 respondents and comparative consumer trials of 30 golfers.
Market Survey
ProGrip administered a market survey to 151 golfers. The survey was administered at two Golfworld stores in Atlanta, Georgia. The sample is considered representative of the core market segment for golf equipment and accessories. (See "Demographics" below.) Respondents were asked a series of 42 questions to determine demographics, skill level, golf-related injuries, equipment usage and satisfaction, preferred characteristics, and price sensitivity. The data was manually entered into a spreadsheet and analyzed with statistical software. Following is a summary of the analysils.
Demographics
89 percent of respondents were male, 11 percent were female. The median household income was between $60K and $80K, with 18 percent representing the less than $40K segment and roughly 17 percent representing the greater than $125K segment. Nearly 63 percent of respondents were between the ages of 30 and 60. 15.2 percent rated themselves beginners, 51 percent as intermediate, 32.5 percent as advanced, and 1.3 percent as professional. The demographics correspond to those of the target core golfer segment.
Golfers Who Re-Grip
79.5 percent of respondents said they re-grip their clubs every two years or more frequently. 52.3 percent said they re-grip annually, and 14.6 percent said they re-grip their clubs every 6 months.
Effect of Shock and Role of Grips
73.3 percent of all respondents claimed that shock and vibration detracted from their enjoyment of the game. Additionally, 72.5 percent of all respondents claimed that shock and vibration reduced their performance. 94 percent of all respondents claimed that their golf grips played an important role in their enjoyment of the game, and 72 percent of those claimed the role was very important.
Anti-Vibration Equipment Effectiveness and Awareness
59 percent of respondents have tried gloves to reduce shock and vibration, but only 31 percent of those who have used gloves say they were effective at reducing shock and vibration. Of those who have used shaft inserts (33.8% of the sample), only one-third said they were effective in reducing shock. Nearly half of respondents have used graphite shafts, but only about half of those claimed they were effective at reducing shock and vibration. Oversized clubs were used by 41.1 percent of respondents, with about 44 percent of the users claiming effectiveness in shock reduction. Finally, of those who have tried grips currently on the market that claim to reduce vibration (22.5% of the sample), less than one-third of them said they were effective. Of those who were aware of anti-vibration grips currently on the market, less than half (47%) identified the Flynt grip as an anti-vibration grip, 11 percent identified Mercury, 5 percent identified GolfLife, and 5 percent identified Plex. (Figures do not add up to 100 because some respondents did not identify a specific brand of grip.)
Price Sensitivity and Purchase Intent
Currently, golfers in the target segment claimed to spend $6.22 per club, on average, to re-grip their clubs. The same segment claimed they were willing to pay, on average, $4.44 for a new anti-vibration grip. The difference between current spending and willingness to pay is due to 1) respondents' reluctance to admit a higher willingness to pay, and 2) to labor costs associated with re-gripping for those in the sample who do not re-grip their own clubs. Adjusting for labor costs and percentages of those who did not re-grip themselves, a new anti-shock grip priced at $4.79 would be priced attractively for the target segment.
Ranking of Golf Grip Attributes Used in Purchase Decision
The survey asked respondents to rate the importance of six attributes of golf grips: quality, price, material, appearance, technology, and brand. The results in the table below indicate the most significant discriminator is product quality. Product technology, however, was the second most significant attribute. Material, appearance, price, and brand were rated third through sixth, respectively. The results suggest flexibility in pricing and brand with respect to product quality and technology. (In other words, golfers would pay more for a high quality product that uses the latest technology and would readily switch brands.)
| Golfers Ratings of Attributes Importance in Selecting a Golf Grip | ||||||
| Grip Quality Rating | Grip Price Rating | Grip Material Rating | Grip Appearance Rating | Grip Technology Rating | Grip Brand Rating | |
| Note: Ratings were on a scale of 1 (not important) to 4 (high importance). | ||||||
| Valid | 151 | 151 | 151 | 151 | 151 | 151 |
| Missing | 0 | 0 | 0 | 0 | 0 | 0 |
| Mean | 3.87 | 2.94 | 3.51 | 3 | 3.68 | 2.64 |
Consumer Trials
ProGrip administered a controlled trial to 30 golfers at the driving range located at Golfworld's corporate headquarters in Atlanta, Georgia. The trial consisted of each golfer taking as many swings as he or she liked with each of three golf clubs. The clubs were identical with the exception of the grip. The grips included a standard Lee grip, a GolfLife Comfort grip (a comfort grip also identified as an "anti-shock" grip by market survey respondents), and the prototype Impress grip. Upon completion of the trial, each golfer was asked to complete a comparative survey of several observed attributes, and to add comments with respect to the ProGrip grip.
Descriptive Statistics
The Impress grip outperformed the standard grip (Lee) and the anti-vibration grip (GolfLife) decisively in all areas. In terms of comfort, the ProGrip grip scored an average 4.62 on a scale of 1 to 6. The score was 20 percent higher than the GolfLife anti-vibration grip and 58 percent higher than the Lee standard grip. The Impress grip scored 4.39 for control, 21 percent higher than GolfLife and 39 percent higher than Lee. A score of 4.66 on performance was 23 percent higher than GolfLife and 45 percent higher than Lee. In terms of preference, the Impress grip scored 4.61, which was 23 percent higher than GolfLife's score and 54 percent higher than Lee. Most telling was the rating for shock reduction: ProGrip's score of 4.93 was 31 percent higher than GolfLife and 87 percent higher than Lee.
