Nutrisystem 2007 Annual Report Download - page 12

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In December 2007, we launched NutriSystem Advanced, our new weight-loss and health and wellness
platform. NutriSystem Advanced is a complete program that includes new proprietary ingredient blends to
support satiety and heart health. NutriSystem Advanced consists of over 100 food items, of which two meal
categories (lunch and dessert) contain one of the two new NutriSystem proprietary blends of heart-healthy
ingredients. Primary among these are OmegaSol™, a patent-pending combination of heart-healthy soluble fibers
and omega-3 fatty acids that work to help promote a healthy heart while losing weight, and NutriSol™, an
additional blend of soluble fibers that are naturally present in oats, fruits and whole grains and help reduce
hunger and control appetite. NutriSystem Advanced continues to build upon the Glycemic Advantage™ by using
“good carbs” in all of its foods. We have also worked to reduce the sodium content of the entire meal plan to an
average of 1800mg per day and will continue to actively work to lower it without sacrificing flavor. With the
changes made with the NutriSystem Advanced program, we are now fully compliant with the recommendations
set forth by the American Heart Association approach to a healthy lifestyle. The NutriSystem Advanced program
includes a personalized Results Kit that features a Mindset Makeover™ guide, an innovative approach to
behavior modification which is compliant with research standards and co-authored by a national and international
leader in the field of obesity research. This is an insightful and motivational behavior modification guide which
walks clients through the program and can act as an interactive tool for our counselors to use in order to better
facilitate communication and ultimately weight loss success for our clients. Renowned fitness experts Leslie
Sansone and Vaughn Hebron have added to the heart benefits of NutriSystem Advanced by creating exercise
DVDs exclusively for NutriSystem Advanced participants. The Results Kit also offers a customized meal
planner, online community access information, a Quick Start Guide and more.
Typically, our customers purchase monthly food packages containing 28 breakfasts, lunches, dinners and
desserts, which they supplement with fresh dairy, fruit, salad, vegetables and low-glycemic carbohydrate items.
Most customers order on an auto-delivery basis in which we send food to the customers on a monthly basis until
notified by the customer to cease shipments. With the Auto-Delivery program, a full day’s supply of entrees and
desserts is currently priced at about $10 to $11 a day. The food is shelf stable at room temperature, making it
relatively inexpensive to ship and store. On our website, customers can order food 24 hours a day, seven days a
week.
The features of our weight loss program address many of the most common limitations of traditional weight
loss programs, including high initiation and recurring membership fees, the inconvenience of traveling to weight
loss centers for scheduled appointments and lack of privacy. In addition, our prepared meals provide our
customers with a structured program in which they do not have to weigh or measure foods or count calories,
carbohydrates or points.
Marketing
Our primary marketing objective is to cost-effectively promote our established brand and to build sales of
our weight management program through our direct channel. We use a combination of online and traditional
offline advertising and promotional strategies to accomplish this objective.
Offline Advertising. Offline advertising is used to encourage qualified customers to call or visit our website
and increase awareness of the program. We reach our target audiences primarily through a combination of
television, print and direct mail advertising. We use unique toll-free numbers and URLs to individually track the
response of our advertisements. On television and in print, direct response-focused advertisements capitalize on
our brand name and focus on “before and after” comparisons and/or the program’s simplicity, convenience and
“good carbohydrate” features. Direct mail and outbound telemarketing are companions to the media advertising
and consist of mailings and calls to direct customers who have purchased or others who have signed up for access
to our services.
Online Advertising. Our online advertising strategy is based on driving high volume, cost-effective qualified
leads to the site with a focus on increasing both front and back end conversion through constant testing and
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