Nautilus 2001 Annual Report Download - page 9

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appropriate. If these initial tests are successful, we then air the spot commercials and infomercials on an accelerating schedule of additional
cable networks.
MEDIA BUYING. An important component of our direct marketing success is our ability to purchase quality media time at an affordable price.
The cost of airing spot commercials and infomercials varies significantly, depending on the network, time slot and, for spot commercials,
programming. Each spot commercial costs between $25 and $25,000 to air, and each infomercial costs between $600 and $55,000 to air. We
currently purchase the majority of our media time on cable networks, through which we reach more than 70 million homes.
We do not currently purchase media time under long-term contracts. Instead, we book most of our spot commercial time on a quarterly basis
and most of our infomercial time on a monthly or quarterly basis, as networks make time available. Networks typically allow us to cancel
booked time with two weeks advance notice, which enables us to adjust our advertising schedule if our statistical tracking indicates that a
particular network or time slot is no longer cost effective. Generally, we can increase or decrease the frequency of our spot commercial and
infomercial airings at almost any time.
INTERNET. We expect the Internet to continue as an increasingly important part of our direct- marketing strategy. For example, we are
promoting our web sites in spot commercials and infomercials in an effort to further stimulate electronic product inquiries and eCommerce
transactions. We presently advertise our products on third-party web sites on a limited basis. Our site is loaded with informative customer
testimonials and allows consumers to view our video online and obtain more information about our products. We currently operate two direct
marketing-oriented web sites. The first, www.bowflex.com, focuses on our Bowflex line of home exercise equipment. The second,
www.nautilussleepsystems.com, focuses on our Nautilus Sleep Systems. In an effort to expand and enhance our web presence, we have added
dedicated web site development and management personnel.
OPTIMAL USE OF DIRECT MARKETING DATABASE
Since 1994, when we initially started testing our target markets, we have consistently invested significant resources in order to build a
comprehensive direct marketing database. Our database has allowed us to monitor customer responses and effectively utilize information to
adapt our marketing strategy to better target such customers. We track the success of each of our spot commercials and infomercials by
determining how many viewers respond to each airing of a spot commercial or infomercial. We accumulate this information in a database that
we use to evaluate the cost-effectiveness of available media time. In addition, we believe the database enables us to predict with reasonable
accuracy how many product sales and inquiries will result from each spot commercial and infomercial that we air. We also believe we can
effectively track changing viewer patterns and adjust our advertising accordingly.
CONVERSION OF DIRECT-MARKETED PRODUCT INQUIRIES INTO SALES
CUSTOMER SERVICE CALL CENTER AND ORDER PROCESSING. We operate our own customer service call center in Vancouver,
Washington, which operates 18-23 hours per day and receives and processes all infomercial-generated and customer service-related inquiries
regarding our Bowflex and Nautilus Sleep Systems products. We have developed a skill-based call routing system that automatically routes
each incoming call to the most highly qualified inside sales agent or customer service representative available. The appropriate representative
then answers product questions, pro-actively educates the potential customer about the benefits of our product line, promotes financing
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2002. EDGAR Online, Inc.