Nautilus 2005 Annual Report Download - page 10

Table of Contents
Consumer Finance Programs . We believe that convenient consumer financing is an important tool in our direct marketing sales efforts
and that the availability of financing induces many of our consumers to make inquiries and purchases when they otherwise would not.
Because our high-quality fitness equipment generally requires a substantial investment, over 90% of our direct segment customers use
either popular credit cards, such as VISA or MasterCard, or take advantage of the private Nautilus card, which is offered through a third party.
Consumer financing through our private Nautilus card has risen to 66% of direct channel sales in 2005, compared to 64% in 2004 and 43% in
2003. We believe these financing programs will continue to be an important and effective marketing tool for customers purchasing products
directly through our call center and product websites. Additionally this increase in consumer financing has an additional benefit to our
Company in that these consumers generally have additional credit available to purchase additional products.
Seasonality
The effectiveness of our direct marketing is influenced by seasonal factors. We have found that second quarter influences on television
viewership, such as the broadcast of national network season finales and seasonal weather factors, cause our spot television commercials on
national cable television to be less effective in the second quarter than in other periods of the year. In addition, during the spring and summer
consumers tend to do more activities outside including exercise, which impacts sales of fitness equipment that is used indoors.
Commercial Sales Channel and Marketing
We market and sell our Nautilus, Schwinn, and StairMaster commercial fitness equipment through our sales force and selected dealers
and retailers to health clubs, government agencies, hotels, corporate fitness centers, colleges, universities and assisted living facilities. Our
commercial sales force is focused on expanding the market position of our existing Nautilus, Schwinn, and StairMaster commercial product
lines through joint marketing programs with clubs, making fitness inviting for hotel guests and utilizing our knowledge from the Nautilus
Institute to improve our product offerings.
We position ourselves as “The Health & Fitness Innovators” to encourage our commercial market customers and potential customers to
think of us first when considering their fitness equipment and programming needs. Our strategy is to address the needs of the following three
key constituencies of today’s health clubs by creating joint programs:
• Club owners (customer satisfaction and profit)
• Club staff (continuing education and career development)
Advertising. We advertise in select trade publications, including publications that reach key industry stakeholders, as well as directly to
consumers. Specific placement is driven by marketing and product development events and ads are coded to assist us in measuring the
effectiveness of each individual ad with respect to our objectives of increasing brand awareness and sales leads.
Direct Mail Promotions. We maintain a database that includes contacts at thousands of commercial facilities and enables us to monitor
responses to direct mail promotions. All direct mail promotions are supplemented by a telemarketing effort to maximize customer response.
Nautilus Institute. In 2005, we created the Nautilus Institute, which is a Company sponsored initiative formed to encourage more people
to adopt a lifelong fitness habit by providing them with expert knowledge and guidance. This program will help people achieve lifelong fitness
by exploring proper nutrition for all body types,
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• Club users (improved health and fitness)