Recently, I encountered a most interesting and timely article from Andrew Wood of Legendary Marketing on marketing strategy for the golf industry. Among the many things I observe regularly in my practice is golf courses and clubs that are improperly positioned in the market. Understanding how to properly position a specific facility is a complex and critical issue.
There are several dynamics to consider. Analysis of a club’s competition and market demographics can begin to draw a picture of where opportunity in the market exists. How many golf facilities are there? How many are private or public access? What are the quality & pricing levels? Opposite the supply side of the equation is demand. This is dictated by population levels, income characteristics and golfer participation. Climate is also a consideration since weather can limit the number of marketable tee times.
Identifying the correct market position for any facility can often mirror Mr. Wood’s excellent example of General Motors in Mr. Wood’s article. This concept was applied from a golf market perspective by my colleague Steve Fanning for an article in the Appraisal Journal in January, 2003, where three (3) golf market segments and twelve (12) sub-markets were identified as shown below:
Knowing which segment(s) of the market and understanding the culture of the submarket that is most likely to be available to support the club is the first step to formulating a “modus operandi” that caters to the available golfing population is the first step. If there are multiple golf facilities in the market it is critical to identify where opportunity in the market exists and “marry” that opportunity to the specific characteristics of the property.
Every viable golf course or club has a proper market position. As shown in the adjacent chart on market segmentation, there are numerous types of golf course operating models. Sometimes we find that courses are improperly positioned based on either targeting a crowded market segment, not having facilities to match the target market, or simply not providing the experience a specific market segment requires in terms of course quality, personal service, and amenities. During the golf boom of the 1990s, a disproportionate number of courses were developed in the upscale daily-fee, and residential private club segments. Many of these clubs have since been either closed or repositioned to better meet the opportunities that exist in the market. In some cases, courses built during this period grabbed market share from existing facilities because they offered more desirable and modern amenities and the older clubs either couldn’t keep up or chose not to enhance their facilities. Accordingly, numerous private clubs opened up to public fee play on some basis, and some have simply become daily-fee courses. Some of the upscale courses have reduced their fees to compete, and even some of the most private clubs had reduced or eliminated entrance fees and offered incentivized dues programs to generate membership development.
One wonders if private clubs in the US will adopt the model of many clubs in the UK which are heavily subsidized by visitor and public play. While in today’s COVID supercharged club market that’s not likely, but who knows if it’s sustainable? In recent years, private clubs have become more private and the most prominent segment targeted by current development is the uber upscale private market, often with entrance fees deep into six figures and some into seven figures.
There’s an old saying that “All politics are local.” The same holds true in golf course market analysis. The balance of supply and demand may well be (and often is) much different than state or national averages. It is important to note that a market analysis is not excessive or exclusive use of national golf industry statistics. The NGF, Pellucid, Golf Datatech, the National Golf Course Owners Association, the USGA, and the Professional Golfers’ Association (PGA) of America provide many useful statistics about the golf business in the United States. These organizations offer many useful products that can assist those performing market analysis. However, a proper market analysis is accomplished not by “cutting and pasting” national statistics, but rather by identifying a club’s competitive market, thoroughly surveying that market for the specific performance of market competitors, visiting the competition, and then measuring the size and depth of the market (and submarkets) and the potential impact on and of the specific club being analyzed. Included in this is consideration of a property’s proper market positioning. This clearly fits into the market delineation portion of the market analysis process because a club’s characteristics, location, and limitations determine which other clubs it may be in competition with. For instance, although they both may be golf courses, the 100-year-old, stabilized, established private club with all amenities simply doesn’t compete with the local municipal course providing affordable golf and limited services.
Understanding all the relevant factors is critical to properly positioning any club. Doing your homework can payoff in the long run.
