Weight Loss ProgramsWeight Loss ProgramsLauren Glasky, Nicole Nava, Ben Wainberg

AgendaAgenda

Industry OverviewMajor PlayersPrimary Advertising MethodsRaw Data AnalysisRecommendations

Why Weight Loss Program Industry?Why Weight Loss Program Industry?

Growing industry because:

Industry OverviewIndustry Overview

Industry Overview - DefinitionIndustry Overview - Definition Multi-billion dollar industry

Provide nonmedical services to clients to assist them in losing weight or maintaining a desired weight.

Services typically include individual or group counseling; menu and exercise planning; and weight and body measurement monitoring.

Industry operators may also sell food supplements and other weight reduction products.

This industry does not include fitness centers, health resorts and spas or medical or surgical weight reduction services.

Industry Overview - ActivitiesIndustry Overview - Activities

Who are the main competitors?Who are the main competitors?

Industry Overview & StructureIndustry Overview & Structure

HHI = 1,915.74

Four Firm Concentration = 67%

Number of Businesses = 24,901

Industry Overview - Barriers to EntryIndustry Overview - Barriers to Entry IBISWorld rates the degree of barriers to entry as: low and steady

Industry Overview – Technology & SystemsIndustry Overview – Technology & Systems

Level of Technology Change has been Medium

Greater use of telephone and online services to deliver advice, ordering, etc.

◦ More companies operate delivery-based weight loss services through an online platform

Industry Overview - Industry AssistanceIndustry Overview - Industry Assistance

Level of Industry Assistance and the trend is Medium and increasing

Tax deductions available for individuals who have conditions (i.e. heart disease, hypertension) that could benefit from weight loss treatment.

Industry Overview - Industry PerformanceIndustry Overview - Industry Performance

Life Cycle Stage: Moderate growth

Industry Overview - CompetitionIndustry Overview - Competition Competition is high and increasing

Industry Overview - Key Success FactorsIndustry Overview - Key Success Factors

Industry GrowthIndustry Growth

Annual growth 07-12 = -2.4%

Expected Annual Growth 12-17 = 2.5%

2012 Revenue = $2.7 billion

2012 Profit = $313.3 million

Factors of weight loss program consumptionFactors of weight loss program consumption

Google Trends: 2004 - PresentGoogle Trends: 2004 - PresentGoogle Trends: Analyzing 2010Google Trends: Analyzing 2010

Major Market SegmentationMajor Market Segmentation Women are the largest purchasers of industry services

◦ Make up over 85.0% of members◦ 70 million people are on a diet – 20 million are men

However, higher percentage of American men are overweight or obese Spending on weight loss services also varies depending on a consumer’s age.

Business LocationsBusiness Locations

The Southeast◦ 26.9% of industry establishments ◦ Highest obesity rates: Kentucky,

Louisiana, Mississippi and Oklahoma all have obesity rates over 30.0%.

Mid-Atlantic◦ 17.6% of industry establishments ◦ Region has slightly higher-than-average

per capita income level, making consumers more likely to spend on discretionary services.

West◦ ~16.5% of industry establishments◦ California, alone has 13.2%

Great Lakes◦ 13.4% of industry establishments

Dependent on population levels, as well as obesity rates and disposable income levels

Business LocationsBusiness Locations

RegulationsRegulations Regulation in the industry is Medium and Steady

◦ The FTC regulates laws related to advertising, disclosures to consumers, privacy, consumer pricing and billing arrangements.

◦ Individuals under legal age require parental or guardian before beginning a professional weight loss program

Major PlayersMajor Players

Major PlayersMajor Players

Weight Watchers

Nestle (Jenny Craig)

Nutrisystem

Weight WatchersWeight Watchers

Market Share = 39.4% Began in NY in 1963 As of 2012, has 1.3 million members Meeting fees make up over 54.0% of the company's

revenue Sells products (bars, snacks, cookbooks, food and

restaurant guides) – 15.4% of revenue Internet revenue – 22.0% of revenue

Jenny CraigJenny Craig

Market Share = 11.6% Founded in 1983 in Melbourne, Australia Now owned by Nestle Has provided services to more than 5 million members Offers 80 entrées and snacks to clients Sells videos, cookbooks and exercise accessories Consultants offer advice and encouragement to members

NutrisystemNutrisystem

Market Share = 15.1% Established in 1971 Typical customer is female and about 50 years old Offers home-delivery meal program with low-calorie and

portion-controlled meals Counselors are available to answer questions and make

recommendations to clients (online tools and counseling)

Primary Advertising Primary Advertising MethodsMethods

Informative AdvertisingInformative Advertising

PriceEaseDisclaimersMethods of Access

◦ Website◦ Phone Number

Science and Health

Science in Weight Loss AdsScience in Weight Loss Ads Nutrisystem uses the science of the "glycemic index" to

differentiate "good carbs" from "bad carbs"

Celebrity EndorsementsCelebrity Endorsements

Weight WatchersWeight Watchers "Expect Amazing" Campaign"Expect Amazing" Campaign

Use of celebrity endorsements (Jennifer Hudson, Jessica Simpson)

Mention new "Weight Watchers 360" program which is "built for human nature"

Relate to people who have failed at diets before

Mention typical "non-diet" foods that you can eat on the program

Expect Campaign

Average People TestimonialsAverage People Testimonials

Include Emotional Stories

Try to relate to audience they are targeting

Explain Product Attributes through narrative

"The I'm only human and I did it Project""The I'm only human and I did it Project"

A compilation of video blogs from average people (and celebrity endorsers) giving unedited and unfiltered testimonials of their successes with Weight Watchers.

As an experience good, these ads strive to enhance perceived quality and credibility of the service

Targeted AudiencesTargeted Audiences

Young WomenMothers

Men

Targeting Moms: "We Know Moms" CampaignTargeting Moms: "We Know Moms" Campaign

Launched by Jenny Craig with actress Nicole Sullivan

Targeting Men: Weight Watchers for MenTargeting Men: Weight Watchers for Men

Feature celebrity NBA player Charles Barkley

Frequent use of humor

Mention of typical "man foods" such as beer, wings, pizza

Break stereotype that diets are for women

Humor AdsHumor Ads

Less common

Used more for ads targeting men

Charles Moment

Emotional BenefitsEmotional Benefits

Important for an Experience Good

ConfidenceHappinessReclaimed YouthLove Life

Typically used in testimonials and are important for an Experience Good

Valerie Bertinelli for Jenny CraigValerie Bertinelli for Jenny Craig

Product PlacementProduct Placement

Food AppealsFood Appeals

Visuals

Recipes

Branded Food

Sex AppealSex Appeal

Before and After

Improved Sex Life

Nutrisystem CampaigNutrisystem Campaignn "A Different Approach" "A Different Approach"

One testimonial: ◦ "Since nutrisystem, my sex life is excellent."

Another ad questions:◦ "Has your sex life slowed down or come to a screeching

halt?"

Internet AdvertisingInternet Advertising

Website with Online Tracking and tools

Special Online Ads only and Video Blogs

Online Calculators

Weight Watchers’ Weight Watchers’ Ana Gasteyer Online CampaignAna Gasteyer Online Campaign

Exclusive online campaign featuring celebrity comedian

Different approach from the usual uplifting, inspirational spokespeople that are normally used

Social MediaSocial Media

Comparative AdsComparative Ads

Weight Watchers Comparisons◦ 'No Counting!'

Nutrisystem Comparison Website

Advertising ExpendituresAdvertising Expenditures

Weight Watchers ◦ 2012 Advertising and

Marketing Expenditures $27,437,000 (Source: Mergent Online)

◦ 2012 Ad-to-Sales Ratio of 18.31%

Raw Data AnalysisRaw Data Analysis

Advertising Strategy Data AnalysisAdvertising Strategy Data Analysis

1. Collecting Raw DataWatch a variety of commercials to get a feel of the

industry and possible strategies◦ create a comprehensive list of these strategies with a

coding mechanism

0= no use of the strategy1= use of the strategy

Continuous count method also used for product characteristics

Advertising Strategy Data AnalysisAdvertising Strategy Data Analysis

2. Watch Advertisements◦ Weight Watchers= 10 Ads◦ Jenny Craig= 10 Ads◦ Nutrisystem= 7 Ads

Coding scheme was employed while we watched the ads

3. Analysis of the Raw Data collected

Results from Analysis- Weight WatchersResults from Analysis- Weight Watchers

Weight Watchers differentiates itself from competitors by more often employing these strategies in ads:◦ Real People◦ No mention of actual pounds lost◦ Mobile App Mentioned◦ Musical ads◦ Humor ads◦ Targets Men

Results from Analysis- Jenny CraigResults from Analysis- Jenny Craig

Jenny Craig differentiates itself from competitors by more often employing these strategies in ads:◦ Testimonials◦ Waist size/dress size mention◦ Use of emotional stories◦ Support System◦ Targets Mothers

Results from AnalysisResults from Analysis -- NutrisystemNutrisystem

◦ Celebrities◦ Average pounds lost was over

20 lbs◦ Website mentioned◦ High Product Characteristics

count◦ Mention of "non-diet" foods◦ Disclaimers◦ Before and Afters

◦ Mention of benefits other than weight loss

◦ Price ◦ Special Offers◦ Own Branded Food Mentioned◦ Ease of Use◦ Visual of Foods◦ Science of weight loss◦ Variety

Nutrisystem differentiates itself by more often employing these strategies in ads:

Celebrity

Real People

Targets MenTargets Mothers

Waist Size Mention

Price

HumorEmotional Stories

Mentions Health Benefits

Mention Non-Diet Foods

Support SystemEase of Use

Investment and Investment and Advertising Advertising

RecommendationsRecommendations

Investment StrategyInvestment Strategy

As with any investment, one must evaluate their portfolio and risk/return preferences

That said, of the three, we would invest in Weight Watchers◦ US based (Nestle based in Switzerland)◦ Performing well and growing (less risky than Nutrisystem)◦ Most flexible option to fit into everyday life

Recommended Advertising StrategiesRecommended Advertising Strategies

Appeal to Older people◦ Nutrisystem expected to expand food system

and advertise the nutritious nature for aging bodies

Appeal to Children◦ Obesity in children is a growing epidemic.◦ According to the CDC, it has more than

doubled in the past 30 yearsAppeal to Men

◦ Higher percentage of American men are overweight or obese than adult women

Questions?Questions?

The EndThe End