Nutrisystem 2009 Annual Report Download - page 12

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more than the typical 28 days of food. Most customers order through our Auto-Delivery feature. Our program is
currently priced for as little as $11 per 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.
Our food items have accounted for 99% of our revenues for each of the years ended December 31, 2009,
2008 and 2007, respectively. No other product or service has accounted for more than 1% of consolidated
revenue in any of the last three years. In January 2008, we expanded operations into Canada and in October
2009, we announced our Nutrisystem J Diet in Japan. Approximately 98% of our revenues for both the years
ended December 31, 2009 and 2008 were generated in the United States.
Marketing
Marketing is a core competency that drives sales and builds the Nutrisystem brand. We have strong
expertise in all facets of both offline and online marketing and utilize 360-degree, integrated marketing to drive
profitable revenue in an efficient, effective way.
Offline Marketing. We believe Nutrisystem is one of the leading and most efficient offline direct response
advertisers in the industry. We deploy a hybrid of proven direct response techniques to: 1) build brand equity and
awareness; 2) encourage qualified customers to call or visit our website; and 3) deliver profitable sales. We track
response to each advertisement through unique toll-free numbers and URLs and we deploy multi-channel
campaigns to target new customers that include Internet, television, print, direct mail and telemarketing efforts.
To reactivate lapsed customers and upsell to those already on our program, we utilize a combination of direct
mail and telemarketing efforts which complements our other media advertising.
Online Marketing. Our online marketing strategy focuses on driving high-volume, cost-effective, qualified
leads to our website with an emphasis on increasing both front-end and back-end conversion through constant
testing and optimization. We are continually exploring new online opportunities as the market evolves, but focus
the majority of our efforts on search optimization (paid and natural), affiliate management, portal relationships,
large ad networks, strategic partnerships, targeted display media and internal/external email campaigns.
Public Relations. The consumer and business media outreach programs accentuate Nutrisystem as a leader
and innovator in the weight loss category. Our public relations strategically complement offline and online
marketing to increase top-of-mind awareness for Nutrisystem, as well as to foster positive word-of-mouth, in
order to enhance purchase consideration of our product. The Nutrisystem brand, our marketing and product
innovations, as well as celebrities who have lost weight on our program are regularly featured in top-tier media
outlets such as: The Today Show, USA TODAY, People Magazine, Larry King Live, Access Hollywood, E! News
and Forbes.com. We typically compensate our spokespersons based on their initial weight loss on our program
and maintenance of the weight loss over time.
Ecommerce
As a leading ecommerce company and brand, we constantly strive to employ the latest tools and technology
in order to drive increased performance of online customer conversion, retention and reactivation. We utilize our
ecommerce platform to drive a highly-customizable and personalized user experience, as well as to effectively
and efficiently manage day-to-day ecommerce business operations. In addition, we combine internal resources
with external agencies in the development of our website information architecture, user interface and user
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