Why TaylorMade Should Not Release A New Driver

It could. Its certainly a slippery slope. Was talking to a friend about something similar last night. Mostly about the inventory side of things. I told them let's go to our Golf Galaxy or Local shop. We can count how many TM drivers of old stock are there. Then we can look for something like an X Hot, Big Bertha or BB Alpha. I told him that he would see a difference if we did that. Although not turning this in to a TM V Cally thing.

The discussion is a good one. They have hurt retailers badly. SLDR S release was a big slap in the face to them. However I think that if they have 1 really good new product, and a bunch of old stock, a person who can't bite the bullet on the top product will filter down to a more comfortable price. If they are a golf fan, there is a chance they grew tired of the previous years message and will move to try another brand.


All this said, I know my uncle went and bought a new driver last summer. He plays 3-5 times a year. Went in a store hit a few options and walked out with Jetspeed(hits it well too). Price was a factor for him as I think it was 129 at the time.

All very interesting and true. That is the big question. If someone goes into a store and is in a budget of lets say $300, and TaylorMade does not have a new driver (for 2016) at that range do they turn to other brands? Not sure I know the answer to that, but it is a good discussion.
 
Really nice article JB. The abundance of TaylorMade products at our local stores has actually been a turnoff to me the past few years. It always made me wonder "what is wrong with this model that they already have the next one out and the old model significantly reduced?". They almost need a clean slate. As good as the M1 is and with the amount of buzz it has created it's a great foundation to "start over".
 
I can see where TM wants to release a driver, to go "in line" with the M1 but to hit a different price point ( $299? $399?). At the same time, the article makes so much sense in terms of retailers inventory and the fact that TM just keeps pumping out driver after driver after driver. At what point will a retailer just start to limit what TM offerings are being brought in for sale? Hard choice to make, but for some of the smaller businesses and the amount of old inventory they have on hand, it might be a reality for a lot more than people would think.

TM has an issue on their hand, and it's not with the M1...it's with the volume of equipment they pushed out every month and what to do with it.
 
Some very solid points Josh. I think if there is a time for TM to get back into the game (financially) they need to lean on this release and let it run a while longer. Absolutely correct that they need to learn about past mistakes and embrace the fact that inventory control will go a long way in bringing back some of the shine they've lost.
 
Great read JB. Several great points made and one that hopefully Taylormade has considered.


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Great write up Josh, that first pic had me chuckling, I forgot about the puppet version of their staffers!
 
This is a really good idea. You can go into a shop and see 4 to 5 TM drivers at different price levels, so why add yet another and detract attention from what you're already struggling to get rid of? Just keep stocking M1 and burn through that slow moving inventory until things are a little more reasonable.

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Great article josh, it's something I'm pretty confident all THPers will agree with that TM needs to calm down on releases and hopefully the M1 is the first
 
Love that you hit on this. The issue here goes way beyond the fact of having a quality product. Its having too much inventory. Any manufacturer who does well will tell you that inventory is waste and thats lost profit. Basic Lean Manufacturing philosophies

Beg to differ on the applicability of Lean Manufacturing to a retail scenario. This is something I am quite familiar with as I have run a company that manages inventory levels for retailers and consult with a number major retailers on exactly this problem.

Lean manufacturing works great with certain demand which one encounters when one makes an item. So, if I have a Toyota coming down the line at 11:34AM and it needs 4 tires and wheels, having those items there, just-in-time, is very efficient.

The problem with retail is that demand is not certain, it is stochastic. That is it varies. If one does a lot of analysis, one can develop a demand pattern (a probability distribution) of demand. While aggregate demand (region/country for a month or so) can be relatively predictable, the inventory decision at a particularly retail POS is quite variant. Rather than a Normal distribution at the aggregate, at a POS the demand is best approximated with a Negative Binomial Distribution and the MAPE (Mean Average Percent Error) of a forecast for a coverage period (the period of time between deliveries which store inventory is needed to service demand) is in excess of 100%.

All that means is that retailers must maintain significant safety stock (weeks of supply) to be in-stock and service customer demand in order to make sales. What exacerbates the problem is when one has multiple variants (think sizes in shoes) which split demand and require safety stock at each size point in order to service demand. For the M1, all the variations in shafts create a lot of that characteristic (although the ability to split the heads from the shafts can potentially mitigate that problem with some creative inventory strategies).

The problem TaylorMade has created for retailers with short product lifecycles is that filling the supply chain with the necessary safety stock to service demand well creates a lot of excess inventory that has to be liquidated when the next cycle comes along. If that happens too quickly, the amount of sales at full revenue are relatively small compared to the amount of markdowns it takes to clear the systemic inventory that is in place. When the cycle is too quick, it is a guaranteed way for a retailer to lose money and they avoid stocking unless the manufacturer gives them some back-end protection which most manufacturers won't do.

There are a couple of ways a manufacturer can mitigate the inventory commitments that a retailer needs to make. First, make sure the lifecycle is long enough to generate enough gross margin dollars that when it's time to liquidate the excess inventory those dollars more than pay for the markdowns. Also, make sure that when the end-of-life is approaching that retailers can sell of the systemic inventory and get down to reasonable levels before starting the markdown process. Second, if one can get into a fit an fulfill model. That is get the customer fit and then order the fitted driver from the manufacturer, that reduces the amount of inventory that is needed to support sales and is much more efficient. That model works well in certain golf channels but doesn't fit the bigbox world which is not setup to do fittings very well (and whose customers generally want immediate fulfillment).

IMO, TM has to slow down their cycle rate or the retailers will not stock them deeply. From what I am seeing with the M1, the stocks are relatively thin where I have looked and I suspect it is from retailers who have been burned by TM being cautious.
 
Beg to differ on the applicability of Lean Manufacturing to a retail scenario. This is something I am quite familiar with as I have run a company that manages inventory levels for retailers and consult with a number major retailers on exactly this problem.

Lean manufacturing works great with certain demand which one encounters when one makes an item. So, if I have a Toyota coming down the line at 11:34AM and it needs 4 tires and wheels, having those items there, just-in-time, is very efficient.

The problem with retail is that demand is not certain, it is stochastic. That is it varies. If one does a lot of analysis, one can develop a demand pattern (a probability distribution) of demand. While aggregate demand (region/country for a month or so) can be relatively predictable, the inventory decision at a particularly retail POS is quite variant. Rather than a Normal distribution at the aggregate, at a POS the demand is best approximated with a Negative Binomial Distribution and the MAPE (Mean Average Percent Error) of a forecast for a coverage period (the period of time between deliveries which store inventory is needed to service demand) is in excess of 100%.

All that means is that retailers must maintain significant safety stock (weeks of supply) to be in-stock and service customer demand in order to make sales. What exacerbates the problem is when one has multiple variants (think sizes in shoes) which split demand and require safety stock at each size point in order to service demand. For the M1, all the variations in shafts create a lot of that characteristic (although the ability to split the heads from the shafts can potentially mitigate that problem with some creative inventory strategies).

The problem TaylorMade has created for retailers with short product lifecycles is that filling the supply chain with the necessary safety stock to service demand well creates a lot of excess inventory that has to be liquidated when the next cycle comes along. If that happens too quickly, the amount of sales at full revenue are relatively small compared to the amount of markdowns it takes to clear the systemic inventory that is in place. When the cycle is too quick, it is a guaranteed way for a retailer to lose money and they avoid stocking unless the manufacturer gives them some back-end protection which most manufacturers won't do.

There are a couple of ways a manufacturer can mitigate the inventory commitments that a retailer needs to make. First, make sure the lifecycle is long enough to generate enough gross margin dollars that when it's time to liquidate the excess inventory those dollars more than pay for the markdowns. Also, make sure that when the end-of-life is approaching that retailers can sell of the systemic inventory and get down to reasonable levels before starting the markdown process. Second, if one can get into a fit an fulfill model. That is get the customer fit and then order the fitted driver from the manufacturer, that reduces the amount of inventory that is needed to support sales and is much more efficient. That model works well in certain golf channels but doesn't fit the bigbox world which is not setup to do fittings very well (and whose customers generally want immediate fulfillment).

IMO, TM has to slow down their cycle rate or the retailers will not stock them deeply. From what I am seeing with the M1, the stocks are relatively thin where I have looked and I suspect it is from retailers who have been burned by TM being cautious.
Agree to a point, but if inventory levels are too hard to predict, why is TM the only ones burying themselves to the extent they are?
 
Agree to a point, but if inventory levels are too hard to predict, why is TM the only ones burying themselves to the extent they are?

Probably somewhat to do with them also having the highest sales volume. I'd be really interested to know what their % of inventory is versus total sales, and how it compares.
 
Agree to a point, but if inventory levels are too hard to predict, why is TM the only ones burying themselves to the extent they are?

This is very much correct. Release rate has less to do with issues than that of inventory control. We have seen other companies with a number of releases, that have not had the negative impact at the shelves. In todays climate, a company in an industry such as this must be good at forecasting or suffer the issues on the shelf.
 
Very nicely written article. It was enjoyable to read.

I personally think an m2 (if it is really a cheaper version that appeals to the golfers that M1 does not work for) would actually be a good idea for Taylor Made.

And as to all those hear that think TM is only company that has old inventory sitting on the shelves they are mistaken. I was just at 2 local golf shops yesterday and I saw Cobra Bio Cell drivers, Cally Alpha and BB and Adams XTD drivers all still on the shelves. Yes TM has been really bad about over producing but they are not the lone Ranger in this situation.

And I am NOT defending TM at all, just saying this is a problem for all the companies.
 
Agree to a point, but if inventory levels are too hard to predict, why is TM the only ones burying themselves to the extent they are?

Personally, I don't have any info that informs me of why they've done this. Speculatively, from my experiences with other retailers and manufacturers, my guess is that they had aggressive growth plans and built to those plans. When the industry slowed down, they were aggressive with pushing the channels and also accelerated their bringing product to market to try to meet those plans. Eventually, they ran out of push. If they are smart, they will retrench and re-size their operation and product strategy to the environment. There are some signs of this (downsizing staff). If they start to lengthen out the lifecycle, that will be another sign.

BTW, if one can lengthen the cycle, then one can bring the price point down somewhat as well. First, the efficiencies gained (production, inventory, marketing) create less need for margin dollars. Second, by bringing the price point down, it can expand the market. Maybe that can be done with some creative promotions, etc. The challenge with a longer lifecycle is maintaining excitement. That's one of the alluring things about launches. I will say if Day keeps bombing the M1, winning with the M1, stayin gat the top of the world rankings, that's the kind of stuff that can create excitement that lasts a while.
 
Very nicely written article. It was enjoyable to read.

I personally think an m2 (if it is really a cheaper version that appeals to the golfers that M1 does not work for) would actually be a good idea for Taylor Made.

And as to all those hear that think TM is only company that has old inventory sitting on the shelves they are mistaken. I was just at 2 local golf shops yesterday and I saw Cobra Bio Cell drivers, Cally Alpha and BB and Adams XTD drivers all still on the shelves. Yes TM has been really bad about over producing but they are not the lone Ranger in this situation.

And I am NOT defending TM at all, just saying this is a problem for all the companies.

Cobra is a different animal, because we are talking about (in years past) 1% of driver sales, so in all aspects not at the same level at retail. Adams is owned by Taylormade, so that is another TaylorMade product on shelves. As for Callaway, they have had many releases, but in all honesty, have not suffered the same issue at the retail level that this company has for the last 24 months.

That is not a knock on the brand, in fact throughout the article it was praise of their new flagship product, but rather a shelf and rack space issue. When you have SLDR S, JetSpeed, AeroBurner and R15 all with high expectations (not as high for SLDR S as it was a cheaper SLDR) and all fall flat of those expectations, you are left with a lot of product on top of the already still there Stage 2 and R1 products.

When the doom and gloom reporting about the industry was going around earlier in the year, there is a reason that the largest retailer was mentioning only one company. I think that M1 has shown that it can right the ship for the brand, and I fear the "M2", puts them right back in the same situation.
 
Personally, I don't have any info that informs me of why they've done this. Speculatively, from my experiences with other retailers and manufacturers, my guess is that they had aggressive growth plans and built to those plans. When the industry slowed down, they were aggressive with pushing the channels and also accelerated their bringing product to market to try to meet those plans. Eventually, they ran out of push. If they are smart, they will retrench and re-size their operation and product strategy to the environment. There are some signs of this (downsizing staff). If they start to lengthen out the lifecycle, that will be another sign.

BTW, if one can lengthen the cycle, then one can bring the price point down somewhat as well. First, the efficiencies gained (production, inventory, marketing) create less need for margin dollars. Second, by bringing the price point down, it can expand the market. Maybe that can be done with some creative promotions, etc. The challenge with a longer lifecycle is maintaining excitement. That's one of the alluring things about launches. I will say if Day keeps bombing the M1, winning with the M1, stayin gat the top of the world rankings, that's the kind of stuff that can create excitement that lasts a while.
All fine and dandy but its all hypothetical and they arent doing it. OEM's will only continue to shorten release cycles until they all agree to lengthen them. And thats from the mouth of someone behind a major OEM
 
Great article! Maybe they should spend some more time with shafts and fitting tools to help people fit into their M1 driver. Seems like a better way to spend their money than diluting their product line. IMHO!
 
Very true about Cobra, of course I dont understand why they have such a small percentage because the make great products.

I mentioned the Adams because the XTD driver was produced before the sale, but I know what you mean.

I honestly think there is no good answer, its almost a lose lose situation for manufacturers now days. If you don't produce a lot, people will complain when an order goes to back order status, if you over produce then people will complain that there is to much.

Perhaps we should just blame e-bay for all the problems :D

P.S. I really thought your article was good and in no way a comparing of one company to another, just honest thoughts which is nice

Cobra is a different animal, because we are talking about (in years past) 1% of driver sales, so in all aspects not at the same level at retail. Adams is owned by Taylormade, so that is another TaylorMade product on shelves. As for Callaway, they have had many releases, but in all honesty, have not suffered the same issue at the retail level that this company has for the last 24 months.

That is not a knock on the brand, in fact throughout the article it was praise of their new flagship product, but rather a shelf and rack space issue. When you have SLDR S, JetSpeed, AeroBurner and R15 all with high expectations (not as high for SLDR S as it was a cheaper SLDR) and all fall flat of those expectations, you are left with a lot of product on top of the already still there Stage 2 and R1 products.

When the doom and gloom reporting about the industry was going around earlier in the year, there is a reason that the largest retailer was mentioning only one company. I think that M1 has shown that it can right the ship for the brand, and I fear the "M2", puts them right back in the same situation.
 
Very true about Cobra, of course I dont understand why they have such a small percentage because the make great products.

I mentioned the Adams because the XTD driver was produced before the sale, but I know what you mean.

I honestly think there is no good answer, its almost a lose lose situation for manufacturers now days. If you don't produce a lot, people will complain when an order goes to back order status, if you over produce then people will complain that there is to much.

Perhaps we should just blame e-bay for all the problems :D

P.S. I really thought your article was good and in no way a comparing of one company to another, just honest thoughts which is nice

Its all about good conversation brother.
 
Well damn it, since we are on the net I thought one of us was suppose to get #butthurt :p

Its all about good conversation brother.
 
With the amount of shafts offered with the M1 do you think it would benefit them to have tier pricing based on what shaft you choose instead of paying the premium price? I would have to believe that there are plenty of price differences in the shafts to offer a $399, $449 and $499 M1. Why should you pay for the premium shaft if you are fit to one that isn't as costly. I am aware that this could add confusion to the process but it might be worth a shot.
 
The M1 is an obvious hit and it is the shot in the arm that TaylorMade NEEDED! If they throw the next new one out now, like you mentioned being before the PGA show, I don't know. I have to agree that I think that would be an issue for them. I don't think it would be crazy to offer some upgradable personalization to the driver, but don't throw a new one out, just to throw a new one out.
 
The idea in concept makes sense but when you have to many low priced options I feel like it waters down your brand and brings your overall product down a noctch to the point where customers dont perceive there is any value in the product even at a reduced price.
 
Great article Jb and you hit the nail right on the head - nearly 7 drivers in less than a year is a bit outrageous...

However now with the M1 and the Major win it is getting a ton of traction.

Stick with this one for now and see where it takes you - no need to release another driver till people start wondering when the next one will come out.

For the uneducated consumer yes, there are alot of options when it comes to TM drivers - but its almost confusing and with the release cycle they were currently using TM can essentially lose credibility.
 
Enjoyed the editorial, and it seems to speak to the issues that have been raised a good bit over the last few years with TMAG.

I enjoyed the article.
A healthy TMAG would be nothing but a positive for the industry.

Completely agree with this. As much crap as folks, including myself, tend to give them, having a thriving/healthy TMAG would certainly be a benefit to the golf equipment industry and golfers alike.
 
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