Nautilus 2013 Annual Report Download - page 6

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In our Retail business, we strive to develop long-
term relationships with key retailers of sports or fitness equipment. The primary objectives of
our Retail business are (i) to offer a selection of products at key price-points; and (ii) to utilize the strength of our brands and long-
standing
customer relationships to secure more floor space with our Retail customers for our products.
Our long-term strategy involves:
PRODUCTS
We market quality cardiovascular and strength fitness products that cover a broad range of price points and features. Our products are designed
for home use by individuals with varying exercise needs. From the person who works out occasionally to the serious athlete, we have products
that will help them achieve their fitness objectives.
While we offer our full product assortment to our Direct customers through our Internet websites and our catalogs, we generally differentiate the
product models offered in our Direct and Retail sales channels. Currently, our Bowflex
®
TreadClimber
®
and MAX Trainer
TM
product lines are
offered for sale primarily through our Direct sales channel.
Approximately 69%
of our revenue in 2013 was derived from sales of consumer cardio products. While we continue to be a leader in the
consumer strength product category, we believe the much larger market for cardio products offers us greater opportunity for growth.
BUSINESS SEGMENTS AND GEOGRAPHIC INFORMATION
We conduct our business in two segments, Direct and Retail. For further information regarding our segments and geographic information, see
Note 14, Segment and Geographic Information, to our consolidated financial statements in Part II, Item 8 of this report.
SALES AND MARKETING
Direct
In our Direct business, we market and sell our products, principally Bowflex
®
cardio and strength products, directly to consumers. While we are,
and plan to continue to be, a large direct marketer of strength products in the United States, our advertising emphasis has shifted toward cardio
products, especially the Bowflex
®
TreadClimber
®
,
as cardio products represent the largest component of the fitness equipment market and a
growing part of our business. Sales of cardio products represented 84% of our Direct channel revenues in 2013, compared to 81%
in 2012 and
71% in 2011.
Our marketing efforts are based on an integrated combination of media and direct consumer contact. In addition to television advertising, which
ranges in length from 30 seconds to as long as three minutes, we utilize Internet advertising, product websites, inquiry-
response mailings,
catalogs and inbound/outbound call centers. Marketing and media effectiveness is measured continuously based on sales inquiries generated,
cost-per-
lead, conversion rates, return on investment and other performance metrics and we strive to optimize the efficiency of our marketing
and media expenditures based on this data. Almost all of our Direct customer orders are received either on our Internet websites or through
company-owned and third-party call centers.
2
• creatively marketing our equipment, both directly to consumers and through our Retail customers, while leveraging our well-
known
brand names;
•
enhancing our product lines by designing fitness equipment that meets or exceeds the high expectations of our customers;
•
utilizing our strengths in product engineering to reduce product costs;
•
continuing our investment in research and development activities aimed at acquiring or creating new technologies;
•
increasing our international Retail sales and distribution; and
•
increasing royalty revenues from the licensing of our brands and intellectual property.
• Nautilus
®
is our corporate umbrella brand and is also used to differentiate certain specialized cardio, ellipticals and bike products.
• Our Bowflex
®
brand represents a highly-
regarded line of fitness equipment comprised of both cardio and strength products, including
the TreadClimber
®
and MAX Trainer
TM
specialized cardio machines, treadmills, PowerRod
®
and Revolution
®
home gyms, and
SelectTech
®
dumbbells.
• Our Schwinn
®
brand is known for its popular line of exercise bikes, including the Airdyne
®
,
and ellipticals.
• Our Universal
®
brand, one of the oldest and most recognized names in the fitness industry, currently offers a line of kettlebell weights
and weight benches.