Nautilus 2004 Annual Report Download - page 12

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Table of Contents
COMPETITION
Direct Business Segment
Home Fitness Equipment
. The market for our Bowflex strength and cardiovascular fitness products is highly competitive. We believe the
principal competitive factors affecting this portion of our business are product price, innovation, quality, brand name recognition, financing
options, and customer service. Our direct marketed brands compete directly with a large number of companies that manufacture, market and
distribute home fitness equipment. Our principal direct competitors include ICON Health and Fitness (marketing products under the brand
names Powerflex, Crossbar, Health Rider, NordicTrak, Image, ProForm, Weslo, and under license, Reebok, Weider and Gold’s Gym) and
Fitness Quest (through its Gazelle, Total Gym, and SlamMan brands).
Commercial/Retail Segment
Commercial Fitness Equipment. The market for commercial fitness equipment is highly competitive. Our Nautilus, Schwinn, and
StairMaster brands compete against the products of numerous other commercial fitness equipment companies, including Life Fitness (a
division of Brunswick), Cybex, Star Trac, Precor (owned by Amer Group, PLC), and Techno Gym. We believe the key competitive factors in
this industry include price, quality, durability, diversity of features, financing options, product service network, and product innovation.
Retail Fitness Equipment. Strong competition exists with respect to the retail fitness equipment market. Our Nautilus, Schwinn, Bowflex,
StairMaster and Trimline brands compete against the products of numerous domestic retail fitness equipment companies including ICON
Health & Fitness (marketing products under the brand names Weslo, Crossbow, Crossbar, Health Rider, NordicTrak, ProForm, Image and,
under license, Reebok, Weider and Gold’
s Gym), Life Fitness, Star Trac, True Fitness Technology, HOIST Fitness Systems, Horizon Fitness (a
division of Johnson Health Tech), Cybex, Fitness Quest, and Precor. The principal competitive factors in the retail fitness equipment industry
include price, quality, brand name recognition, customer service and the ability to create and develop new, innovative products.
We believe that our combination of recognized brand names, innovative products, high quality products, multiple distribution channels,
brand marketing awareness programs, and dependable customer service allows us to remain competitive in our current markets.
STRATEGY
Our mission is to be a complete provider of products to the health and fitness industry and help people achieve a fit and healthy lifestyle
through proper exercise and nutrition. At the core of this mission is an internal initiative called FIT #1, which is the foundation of our plan to
create long-term stockholder value.
FIT #1 stands for Financial rigor, Innovation, Trust and a drive to be #1 in the categories in which we compete. These are the core
strategic elements around which we plan to structure our activities, enabling us to refocus our efforts and continue our growth. Financial rigor
means we must ensure accurate and streamlined financial and forecasting processes. Innovation means we must apply creative solutions to both
research and development and business operations. Trust means we must ensure we are taking care of our customers and stockholders and
doing everything we can to serve them.
In 2003, we conducted a thorough due diligence process, in which we interviewed our internal team, spoke with industry consultants, and
conducted the most comprehensive market research study in our history in order to help identify and realize our growth opportunities. We have
targeted several areas as significant opportunities for growth, including leveraging our research and development capabilities to launch new
products and repositioning our strength and cardiovascular products to better meet customer demand and shopping patterns. We also seek to
improve operating efficiencies and cash flow by streamlining operations and maximizing business synergies, such as brand equity, sales
channels and marketing resources.
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