Golf Ball Industry Annual Sales - U.S.
Challenge:
How Would You Size Up the Market?
Challenge:
Annual Sales / Market Size of the Golf Ball Industry in the U.S.
Challenge Questions:Just how much money are
What tools, methods and assumptions would you use if you had to provide a client with a solid figure?
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| Don't ask him...he's clueless! |
I have seen various different figures for the domestic sale of golf balls in the United States. Since most golf ball manufacturers are privately held companies they do not have to disclose detailed sales info.
I, kind of, found an easy route and would definitely verify these figures if either providing this estimate to a client or using to analyze entry into the industry. A recent interview on CNBC, with the founder of a new hollow core golf ball company, mentioned annual sales to be just north of $1 billion and projected 5 year growth nudging it closer to $1.5 billion. I have included, below, estimates others have come up with nearly 3 years ago (2011) that put the figure below $1 billion ($750M). However, the figures used to arise at this estimate are seriously flawed, in my opinion. Projecting how many golf balls are sold each year in the USA isn't exact. However, as you'll see below, beginning with the total population of the country is not the angle I would consider using first. Also, I would certainly include the explosive growth in the resale/ used/ recycled golf ball market.
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| Diving For Market Share |
The Scenario...
Having had no time to do background research, you sit on a plane wondering what is the annual market size for golf balls in the U.S. and what factors drive demand for gold balls. Your plane will land in less than fifteen minutes. How do you go about figuring out these questions?
Proposed Projections/ Solutions:
Annual Domestic Golf Ball Sales
4 Responses to What is the Market Size for Golf Balls in the U.S.?
1. Reply - Anuj says: April 20, 2011 at 11:17 pm I’m surprised to see we you have not considered certain vital aspects for market sizing: Why aren’t we considering competition in the current market? If total market size is $750 Mn, I believe 20-25% should anyways be reduced as competition. Secondly, as in the US, the weather is extreme, few months it could be all covered with snow, the sale of golf kits/accessories would definitely go down. I would appreciate your feedback/comments
2. Reply - Sarah H. says: September 4, 2011 at 7:41 pm For market sizing case, you don’t have to consider competition. You’re asked to estimate the total maximum market size for certain products, or the total annual demand for that product. No need to consider market share I think. Your second point is good. However, I think the suggested solution already takes that into account and gives an estimation of “average golfer plays twenty times per year”.
3. Reply - Chief says: January 11, 2011 at 11:45 am I think the answer given above is grossly over-estimated and assumptions aren’t very sound.
Take US population = 300 Million.
Segment population by Age group, golf penetration per age group and percentage that can afford a golfing hobby per age group. Assume uniform distribution across age groups and life expectancy of 80, so that e.g. 20 – 40 year olds account for 25% of population.
0 – 20 year olds: assume 0% golf penetration. 0 golf players 20 – 40 year olds: 10% penetration, 30% can afford this hobby. This gives 2.3 Million players. 40 – 60 year olds: 30% penetration, 40% can afford hobby. This gives 9 Million players. 60 – 80 year olds: 20% penetration, 20% can afford hobby. This gives 3 million players.
Therefore, 14 million players in total. Assume avg person buys 10 golf balls per year. Therefore, 140 million golf balls sold per year for personal consumers of golf.
Now, take into account golf ball purchases by golf clubs. Assume 100 golf clubs per US state (50 states). Therefore 5000 clubs. Assume avg club gets through 100 golf balls per month. Golf balls sold to clubs per year = 100 * 12 * 5000 = 6 million.
Total US golf ball sales per year = 140 + 6 = 146 million. Round up to 150 million.
Assume pack of 10 golf balls cost $50 on average.
US market size for golf balls = (150 million/10) * 50 = $750 Million per year.
4. Reply - mlopat says: November 30, 2012 at 5:24 am This is a better estimate but this is still quite arbitrary. Golf balls are typically sold in dozen’s and the prices range from $10 to $60/doz. The distribution on the pricing / sales of balls is far from uniform. For example, Titleist sells a lot of it’s premium balls at $60/doz but they also sell a large amount of their low end product. Golf Clubs and Ranges are buying a terrible grade of ball and are certainly not paying $50/doz. Without a lot of research, the numbers just won’t make sense and would make any consultant look like a fool if they opened up their mouth in front of the client and were off.
How would you go about sizing up the golf ball industry? Good (or bad ideas) are welcome below in "Comments" section:)
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