Kiven J. Molina Blogs: A CLOSER LOOK AT THE TOUR EDGE EXS DRIVER

Tour Edge is making a habit of performing well in MyGolfSpy’s annual Most Wanted testing. Considering price, performance, and longevity, it has arguably the most complete lineup of metalwoods on the market. Last year, the CBX fairway wood beat out the big names to assume the title of overall winner and this year, the EXS driver was declared the “Best Value.”

Let’s start with a common definition. The value in this context is a function of performance per dollar spent and is what Tour Edge wants consumers to consider with the “Pound for Pound Nothing Else Comes Close” tagline. As such, the primary question isn’t how did Tour Edge create a driver which had both a positive-strokes gained value (meaning, overall performance was as good if not slightly better than the average of the 24 drivers tested) and ranked in the upper-half for total distance – it’s how did it do that and come to market at $299 – and of equal importance, why did it need to?

There was a time, not long ago, when OEMs relied on a two-driver approach to satisfy the range of potential buyers. A higher priced flagship model alongside a more budget-friendly offering allowed companies to showcase both its best technology and a scaled-back version, without alienating the more price conscious golfer. For example, TaylorMade had its R-series (R7, R9, R11) to cover the top-end and paired it with a less expensive Burner, Burner SuperFast or RocketBallz option. Similarly, Callaway’s Xhot (2013) at $299 and Razr Fit Extreme at $399 served as its one-two punch.

Eventually, the $300 driver became $340 and then $380 before finally going the way of “YOLO” and the landline. In 2019 there’s still a little price separation at the top (e.g., TaylorMade M5/M6), but as OEMs climbed the price ladder and moved away from tiered pricing, there was a near uniform absence of a $300 driver for the mass market.

Tour Edge established a cult following with fairway woods in the mid-2000s, in part because it used more exotic materials (titanium faces) and more expensive manufacturing processes (combo brazing). Numerous tour players bagged Tour Edge fairway metals without any compensation, adding to the lore of the admittedly niche company. Brandt Snedeker used a CB4 model en route to winning the FedEx Cup and Tour Championship in 2012. Matt Kuchar, JB Holmes, Luke Donald, and Brian Gay all put Exotics by Tour Edge clubs in play, winning a combined ten times on the PGA Tour and making several Ryder Cup appearances.

Though its drivers have historically offered solid performance, Tour Edge struggled to gain any meaningful ground (retail market share) with drivers priced at or near the mainline brands. So, while it could have built a $450-$500 driver and continued to bang its head against the wall of insanity over and over, it made more sense to try and win at $300 rather than fight for table scraps against Callaway, Ping, Titleist, Cobra, and TaylorMade.

Price is at least half of the conversation when it comes to assessing how much value a product offers and by going with a $299 price point, Tour Edge suggests there are two primary buyers in the market. The first group is roughly 2 million in size and is a combination of early adopters (not price sensitive and tend to pre-order) and those who accept that driver prices have stagnated for some time and a price jump was overdue. OEMs are eager to capture as much of this pocket of golfers as possible because in part it signals to the rest of the market that whatever the new tech story is, it’s effective and worth purchasing.

The other 4 million or so are, according to Tour Edge, core golfers (15 HCP or less) who flat out won’t fork over $500+ for the latest and greatest, but still want a full buffet of technology and innovation – or at least as much as the can get for a couple hundred bucks less than the other guys. Citing statistics gathered from the 2019 MyGolfSpy Most Wanted driver test, taking retail cost and dividing it by average total distance, the EXS came out to $.78/yard. Drivers in the $450-$550 range had a cost per yard of $1.89-$2.20. It’s another way to try and quantify value, and while it’s not an all-encompassing statistic, it does give some indication as to the type of information which speaks to this core group of consumers. The takeaway here is while OEMs continue crafting an angle to sell consumers distance (Flash Face, Screw Face, Milled Face) a yard here or there on the course can be accompanied by a significant price hike. Take a couple of long steps across your living room and ask yourself this question: Is that space between worth $100? $200? $250?

It’s a fair question even if it’s born from an unconventional metric.

All of this is to say Tour Edge believes there’s a slew of ready and willing buyers who will eschew the category leaders who, by following PXG and others up the price ladder, left a significant void in the market – one which Tour Edge is more than happy to exploit.

WHY $299?

Consider Tour Edge’s conundrum. Option 1 – Play follow the leader and jump into the already crowded $500 market competing against companies with far greater market share, tour presence, and advertising budgets. Or option 2, follow the advice of baseball Hall-of-Famer, Wee Willie Keeler and “hit ‘em where they ain’t.”

TaylorMade ($550), Titleist ($500), Callaway ($530), Ping ($500), Cobra ($450) and Wilson ($500) all essentially target a similar buyer. At $400, Mizuno’s ST190 is a solid performer, and thanks to Keith Mitchell, it too can claim a win on the PGA Tour this season.

That said, at $299, the Tour Edge EXS enjoys a price-point monopoly. There isn’t another 2019 driver that offers the combination of performance and price within a $100 and yet, the question persists – how did Tour Edge get here?

The Cliff’s Notes version is it built a $400 driver and sold it for $300. It’s a great strategy and all, but as a standalone product, the math doesn’t add up. The stock shaft is Mitsubishi’s Tensei CK Blue (retails aftermarket at $130) and the tech story reads much like that of drivers priced several hundred dollars more: carbon composite crown, adjustable weighting, variable face thickness and a slip-stream sole for enhanced aerodynamics. Given the costs of production and an out-the-door price of $299, it doesn’t offer much in the way of profit for retailers or Tour Edge.

Golf retailers generally operate on thin margins to begin with, so Tour Edge first had to convince its major accounts that the pricing made sense. Regardless of cost, a product that doesn’t sell isn’t good for OEMs or retailers. To that end, Tour Edge painted a similar picture (albeit with likelier fancier graphics) showing evidence of that critical mass of golfers who, at least on paper, would flock to the EXS once it became clear just how much latent value it offers.

Additionally, by differentiating to such a degree based on price, it simplifies the conversation in terms of what makes the EXS driver unique from higher priced options (the primary talking point is same performance, much lower price) and according to Tour Edge’s research, a $299 driver from Tour Edge wouldn’t cannibalize sales of market leaders Callaway and TaylorMade because each is ultimately selling to a different golfer.

So, Tour Edge is treating the EXS as a bit of a loss-leader (not hugely different than the gallon of milk which goes on sale to get you in the grocery store). It’s taking a substantial hit on upfront margins on an admittedly underpriced driver with the hope that it will pull consumers into the brand and lead to additional sales of fairway woods and hybrids. Thus far, EXS driver per unit sales have outpaced any other Tour Edge driver release. That’s to be expected at $299, but ancillary sales seem to imply the strategy is working as fairway woods and hybrids have experienced a fortuitous early-season bump as well.

But this price point isn’t without risk and Tour Edge is aware that at $299 some consumers will feel it’s sending a mixed message as it rides the exceedingly fine line between affordable and cheap. It’s a departure for Tour Edge which has generally maintained premium pricing with its Exotics line of clubs. Prior to dropping the price by $50, the CBX and CBX T3 fairway woods retailed at $349. Even so, the current CBX 119 sits at the $299 – the same price as the EXS driver.

For now, there’s roughly a $200 chasm between Tour Edge’s first-class driver and the going industry rate of $550+. So how will Tour Edge maintain class-leading value while avoiding the pitfalls associated with most inexpensive products? Tour Edge founder, David Glod, likes to say, “The proof is in the hit” and so long as Tour Edge can get in the fitting conversation at the major retailers, Glod is confident that the results will speak for themselves and ultimately ring the register in Tour Edge’s favor. The hope is this will create a grassroots, word-of-mouth, marketing campaign which keeps Tour Edge on the low-end of the mainstream rather than the top-end of economical also-rans.

TOUR VALIDATION

At the professional level, the EXS has been well received with no fewer than six PGA Tour Champions players putting it in play this season. The tour made up of players 50+ years old provides a compelling look at what the EXS has to offer at a level where there’s still plenty of prize money on the table. Because equipment sponsorships aren’t nearly as lucrative – and thus, players aren’t as pressured to have the latest model in play, there’s plenty of bags with equipment several generations old. Such was the case for Duffy Waldorf and his 2016 TaylorMade M2 driver. Some players are notorious tinkerers, while others wait for a club to break before thinking about replacing it, but there’s little incentive to make a switch unless there’s a clear and undeniable benefit. Waldorf wasn’t in the market for a new driver, but he already bagged Tour Edge’s CBX 119 fairway and hybrid, so more as a “hey, why not” he put the EXS through the paces. The data was clear. The EXS gave Waldorf seven additional yards of carry and more consistent ball speeds and launch conditions. The switch was a no-brainer, and as is the case for tour players, cost never factored into the decision.

Tour Edge isn’t making any distance claims or trying to sell consumers on wonky physics or recycled engineering terms, but there’s plenty of evidence to suggest that in a year where just about every OEM turned up prices and churned out compelling stories on face technology and faster ball speeds, Tour Edge may have done more for the average consumer than any other OEM.

Sometimes you get what you pay for. On rare occasions, you get a little more.