Nutrisystem 2011 Annual Report Download - page 11

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, online diet-oriented
sites, self-directed dieting and self-administered products such as the over-the-counter drugs and other medically
supervised programs.
We believe that the principal competitive factors in the weight loss market are:
• the availability, convenience, privacy 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 40 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, online
tools and counseling. Trained counselors are available to answer questions and make recommendations to help
each customer achieve and maintain his or her weight loss goal. Customers support and encourage each other and
share information through hosted Internet 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. Additionally, online and smart phone weight management tools are available to our
customers. These tools include the interactive Mindset Makeover®guide, a behavior modification program that
was co-authored by an international leader in the field of obesity research and is offered to our customers free of
charge. This insightful and motivational guide walks clients through the program and can serve as an interactive
tool for our counselors to use to facilitate communication and enhance weight loss success for our clients.
Our Nutrisystem program consists of over 130 portion-controlled items that serve as the foundation of a low
Glycemic Index diet. The Glycemic Index is a measure of the quality of carbohydrates in foods and foods on the
lower end of the index are generally considered “good” carbohydrates. Our program is portioned for weight loss
and offers a balance of carbohydrate, protein and fat that meets national dietary guidelines. We have also worked
to reduce the sodium content of our meal program. Including grocery additions, our plans contain 1800-2200
milligrams of sodium per day, consistent with national guidelines, and tailored versions of the plans are available
that deliver as low as 1500 mg/day. In contrast, the average American consumes 2800-4000 milligrams of
sodium per day. We constantly strive to meet or exceed nutritional guidelines as they are updated.
In December 2011, we launched SUCCESS, our most comprehensive program to date. It is designed to help
take the weight off and keep it off through frequent, portion-controlled, balanced nutrition and low Glycemic
Index eating. The SUCCESS program offers our largest ever assortment of signature fresh-frozen meals
including new artisanal Chef’s Table™ dinner entrees, developed by Nutrisystem’s Celebrity Chef Culinary
Council using revolutionary advanced steamer technology; new chocolate, vanilla, strawberry and coffee
advanced protein shakes; the introduction of a personalized “My Daily 3™” physical activity program; and
increased personalization and flexibility through transition and maintenance plans that help consumers manage
their weight on their own.
7