The widespread adoption of the technology would change several aspects of the new ball market. Analyzing form the Value Creation point of view, we can anticipate the following changes. Consumer benefit (B) will increase, by a limited amount, as the consumer will now be able to identify the degradation level of each ball. They will not have to rely on visual assessment of the ball which was highly unreliable. They will also be protected from degraded balls that are sold in the used balls market. However, it is debatable if the consumer base will be able to recognize this newly created value that adds quality to their game, since the perception is that the ball quality can be judged visually.
In essence, there is value creation but the customers may take time to recognize it. The cost of producing one unit(C) would increase slightly, though not by a very large amount.
There would also be a surge in the demand for new balls because of the reduction in the supply of used balls. This is an impactful change as it modifies the market structure and changes the demand curve. First let us look at what happens in the used ball industry. Here, the value proposition of final product goes up significantly. Before the introduction of PI technology if you bought a dozen used balls, you would probably end up with a mix of degraded, partially degraded and good quality balls. Now, if degraded balls start turning grey then you are in fact sure that the balls you are buying are not degraded. There is a significant customer value addition to the industry product, or a spike in B. But there is a reduction of the supply of used balls as fewer balls are now to be found on the courses. This simply reduces the size of this used ball industry by almost half. Also, the cost of each old ball found of the course will go up due to the reduction in supply. Thus C increases. Also, this combination of added consumer surplus and less supply would make the demand curve steeper and more inelastic. The only logical choice for maintaining revenues for used ball manufacturers would be to increase price (P) to capitalize on the new value proposition and increase margins to make up for lost volume (Q).
Coming back to the new ball market, there would be fewer substitutes in the market, and these would be more expensive and more reliable than before. Also, the overall size of the new ball industry would increase. The demand curve would slope steeper decreasing price elasticity, and shift outwards to reflect a total volume increase and increased consumer surplus. Thus the new ball manufacturers would be able to increase prices (P) without decreasing their volumes (Q) (perhaps even increasing their volumes at the same time). They will be able to thus CAPTURE
a. the value created by the new technology and
b. the new demand created by reducing the value of competing product(used balls)
The overall volumes of the firms and the profit per unit both are likely to go up after widespread adoption.