Nutrisystem 2006 Annual Report Download - page 11

I
n addition to the health risks, there are also cultural implications for those who are overweight or obese. U.S.
consumers are
i
nun
d
ate
d
w
i
t
hi
magery
i
nme
di
a,
f
as
hi
on, an
d
enterta
i
nment t
h
at
d
ep
i
cts t
h
et
hi
n
b
o
d
yast
h
e
id
ea
l
type.
D
espite the high percentage of overweight or obese individuals in the U.S., the popularity of dieting would
seem to indicate consumers’ desire to be thin. According to Gallup surveys, approximately
6
2 million people in
the United States were on a diet durin
g
200
6
. Approximatel
y6
million participated in commercial wei
g
ht loss
programs and 49 million conducted some form of self-directed diet. We believe the NutriSystem Nourish
program
i
swe
ll
pos
i
t
i
one
d
to attract
b
ot
h
types o
fdi
eters
.
Competitio
n
Th
ewe
i
g
h
t
l
oss
i
n
d
ustry cons
i
sts o
f
p
h
armaceut
i
ca
l
pro
d
ucts an
d
we
i
g
h
t
l
oss programs, as we
ll
as a w
ide
v
ariet
y
of diet foods and meal replacement bars and shakes, appetite suppressants and nutritional supplements
.
T
he weight loss market is served by a diverse array of competitors. Potential customers seeking to manage their
we
i
g
h
t can turn to tra
di
t
i
ona
l
center-
b
ase
d
compet
i
tors suc
h
as We
i
g
h
t Watc
h
ers, Jenny Cra
i
gan
d
LA We
i
g
ht
Loss, online diet-oriented sites such as eDiets.com and Wei
g
htWatchers.com, self-administered products and
programs such as Atkins and the South Beach Diet and medically supervised programs.
We believe that the principal competitive factors in the weight loss market are:
•
the availabilit
y
, convenience and effectiveness of the wei
g
ht reduction pro
g
ram
;
•b
ran
d
recogn
i
t
i
on an
d
trustwort
hi
ness;
•
new
p
roducts;
•
pro
g
ram pricin
g
; and
•
t
h
ea
bili
ty to attract an
d
reta
i
n customers t
h
roug
h
promot
i
on an
d
persona
l
re
f
erra
l.
B
ase
d
on t
h
ese
f
actors, we
b
e
li
eve t
h
at we can compete e
ff
ect
i
ve
l
y
i
nt
h
ewe
i
g
h
t management
i
n
d
ustry. We,
h
owever, have no control over how successful competitors will be in addressin
g
these factors. B
y
providin
ga
well-recognized food-based program using the direct channel, we believe that we have a competitive advantag
e
i
n our mar
k
et.
O
ur Products and
S
ervices
For 30 years, t
h
e Nutr
i
System name
h
as
b
een recogn
i
ze
d
as a
l
ea
d
er
i
nt
h
ewe
i
g
h
t
l
oss
i
n
d
ustry. We prov
ide
a
comprehensive wei
g
ht mana
g
ement pro
g
ram, consistin
g
primaril
y
of a pre-packa
g
ed food pro
g
ram an
d
counseling. Trained counselors are available an average of 17 hours per day, seven days per week to answer
quest
i
ons an
d
ma
k
e recommen
d
at
i
ons to
h
e
l
p eac
h
customer ac
hi
eve
hi
sor
h
er we
i
g
h
t
l
oss goa
l
s. Customers
support, encoura
g
e and share information with each other throu
g
h hosted chat rooms and bulletin boards. These
services are com
p
lemented with relevant information on diet, nutrition and exercise, which is
p
rovided on ou
r
we
b
s
i
te an
d
ema
il
e
d
to our customers wee
kl
y
.
I
n Decem
b
er 2003, we
i
ntro
d
uce
d
Nutr
i
System Nour
i
s
h
, our current
li
ne o
f
pre-pac
k
age
d
, port
i
on-
controlled foods sold under the NutriS
y
stem brand. Our NutriS
y
stem Nourish pro
g
ram consists of over 130 foo
d
items that are designed to rank low on the Glycemic Index, thereby providing dieters with a balanced intake of
“goo
d
” car
b
o
h
y
d
rates, prote
i
ns an
df
ats. Nutr
i
System Nour
i
s
h
a
l
so
f
eatures new, easy-to-use exerc
i
se an
d
behavior modification pro
g
rams. Dieters also receive our checkbook-sized meal planner, dinin
g
out
g
uide and
f
ood catalog
.
T
ypically, our customers purchase monthly food packages containing 28 breakfasts, lunches, dinners an
d
d
esserts, w
hi
c
h
t
h
ey supp
l
ement w
i
t
hf
res
h
m
ilk
,
f
ru
i
tan
d
vegeta
bl
es. Most customers or
d
er on an Auto-
d
e
li
ver
y
basis in which we send food to the customers on a monthl
y
basis until notified b
y
the customer to ceas
e
shipments. With the Auto-delivery program, a full day’s supply of entrees and desserts currently is priced at
a
bout
$
10 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 da
y
, seven da
y
s a week.
5