Nutrisystem 2008 Annual Report Download - page 9

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In addition to the health risks, there are also cultural implications for those who are overweight or obese.
U.S. consumers are inundated with imagery in media, fashion, and entertainment that depicts the thin body as the
ideal body type. Despite 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.
Competition
The weight loss industry is very competitive and consists of pharmaceutical products and weight loss
programs, as well as a wide variety of diet foods and meal replacement bars and shakes, appetite suppressants
and nutritional supplements. The weight loss market is served by a diverse array of competitors. Potential
customers seeking to manage their weight can turn to traditional center-based competitors such as Weight
Watchers and Jenny Craig, online diet-oriented sites, self-administered products such as the over-the-counter
drug Alli and programs such as the South Beach Diet and medically supervised programs.
We believe that the principal competitive factors in the weight loss market are:
• the availability, convenience and effectiveness of the weight reduction program;
• brand recognition and trustworthiness;
• media spending;
• new products;
• program pricing; and
• the ability to attract and retain customers through promotion and personal referral.
Based on these factors, we believe that we can compete effectively in the weight management industry. We,
however, have no control over how successful competitors will be in addressing these factors. By providing a
well-recognized food-based program using the direct channel, we believe that we have a competitive advantage
in our market.
Our Products and Services
For more than 35 years, the NutriSystem name has been recognized as a leader in the weight loss industry.
We provide a comprehensive weight management program, consisting primarily of a pre-packaged food program
and counseling. Trained counselors are available 24 hours per day, seven days per week, to answer questions and
make recommendations to help each customer achieve his or her weight loss goal. Customers support, encourage
and share information with each other through hosted chat rooms and bulletin boards. These services are
complemented with relevant information on diet, nutrition and exercise, which is provided on our community
website and emailed to our customers bi-weekly.
In December 2007, we launched NutriSystem Advanced, our new weight-loss and health and wellness
platform. NutriSystem Advanced is a complete program that includes ingredients such as soluble fibers and
omega-3 fatty acids to support satiety and heart health. NutriSystem Advanced continues to build upon the
Glycemic Advantage®by using “good carbs” in all of its foods. We have also worked to reduce the sodium
content of the entire meal plan to an average of 1800mg per day and will continue to actively work to lower it
without sacrificing flavor. With the changes made with the NutriSystem Advanced program, we are now fully
compliant with the recommendations set forth by the American Heart Association approach to a healthy lifestyle.
The NutriSystem Advanced program includes a personalized Results Kit that features a Mindset Makeover™
guide, an innovative approach to behavior modification which is compliant with research standards and
co-authored by a national and international leader in the field of obesity research. This is an insightful and
motivational behavior modification guide which walks clients through the program and can act as an interactive
tool for our counselors to use in order to better facilitate communication and ultimately weight loss success for
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