Describes a situation faced by Mr. Ely Callaway, the 80-year-old founder, chairman, and CEO of Callaway Golf Co., in the fall of 1999. After a decade of stunning success with the marketing concept, Callaway suffered a significant loss and witnessed a steep decline in sales in 1998. Mr. Callaway had built a $800 million business by making a truly more satisfying product for the average golfer, making it pleasingly different from the competition and communicating the benefits to the consumer. The results in 1998 forced Mr. Callaway to reconsider the marketing program that had successfully supported the product until now.
In spring 1998, Pradeep Jotwani, vice president and general manager of the Consumer Products Business Organization of the Hewlett-Packard Co. (HP), was contemplating the increasing success of e-commerce and its implications for his division. The consumer products group had started selling refurbished printers through an Internet outlet center in December 1997, but Jotwani was now considering a move to sell new printers directly to consumers via this new channel. If he were to make such a move, he wondered which products to sell online at what prices, and how to communicate this strategy to the channel partners without damaging the existing distribution structure.