Nautilus 2004 Annual Report Download - page 8

Table of Contents
sales, compared to 43% in 2003 and 37% in 2002. 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/RETAIL BUSINESS SEGMENT
Commercial/Retail Sales 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 strengthening the market position of our existing Nautilus, Schwinn, and StairMaster commercial product
lines. Internationally, we market and sell our Nautilus, Schwinn, and StairMaster commercial fitness products through our foreign subsidiaries
and a worldwide network of independent distributors.
We also market a complete line of retail consumer fitness equipment, under the Nautilus, Bowflex, Schwinn, StairMaster, and Trimline
brands, through an independent network of more than 1,200 dealers, sporting goods retailers, wholesale clubs and specialty stores worldwide.
In addition to products already offered through our retail sales channel, we intend to continue bringing products previously sold exclusively
through our direct sales channel to retail. By leveraging the advertising dollars spent on direct marketing, we believe we can effectively sell our
direct to consumer products through our retail sales channel where the vast majority of consumers purchase fitness products. The direct
advertising not only generates revenue through direct to consumer sales, but it also creates brand and product awareness that lead to sales in our
retail sales channel.
Commercial Approach
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 three key
constituencies of today’s health clubs:
• Club owners (customer satisfaction and profit)
• Club staff (continuing education and career development)
Fitness Academy. The Fitness Academy was established in 1997 to provide programming and educational information to both consumers
and fitness professionals. To date, the Fitness Academy has provided training and certification to hundreds of fitness professionals in the
Schwinn Cycling Program and has recently added a range of strength training programs based on Nautilus training principles to its repertoire.
Many of these programs are targeted to special groups such as seniors, women and youth that are particularly important to the fitness industry
today.
Fitness Academy programs are designed to aid clubs in increasing profits by encouraging cost efficient group exercise classes; benefit
staff members by helping them increase their range of fitness education skills; and motivate members to stick with their exercise programs to
truly experience fitness results.
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• Club users (improved health and fitness)