Nutrisystem 2014 Annual Report Download - page 10

sleep apnea and depression. However, there is evidence that weight loss may reduce the risk of developing these
conditions, as well as improve the health and quality of life of people who have these conditions. Our clinical
trial results suggest and analyses of real world customer results confirm that people who stay on the Nutrisystem
program for at least three months have a high probability of achieving clinically meaningful weight loss.
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. Studies suggest that there is rampant discrimination against people with obesity. Despite the high
percentage of overweight and obese individuals in the U.S., the popularity of dieting appears to indicate
consumers’ desire to be thin.
Competition
The weight loss industry is very competitive and consists of pharmaceutical products and weight loss programs,
digital tools and wearable trackers, 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,
online diet-oriented sites, self-directed dieting and self-administered products such as prescription drugs, over-
the-counter drugs and supplements, as well as medically supervised programs. Our identified peers and
competitors include, but are not limited to, Atkins Nutritionals, Inc., eDiets.com, Jenny Craig, Medifast, Inc. and
Weight Watchers International, Inc.
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 and innovative offerings;
• 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 loss industry. We, however,
have no control over how successful competitors will be in addressing these factors. By providing a well-
recognized food-based weight management program using the direct channel, we believe that we have a
competitive advantage in our market.
Our Products and Services
For more than 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,
digital tools and counseling. Typically, our customers purchase monthly food packages of frozen and ready-to-go
food containing 28 days of breakfasts, lunches, dinners, snacks and desserts, which they supplement with fresh
fruits, vegetables and dairy. Most customers order through our Auto-Delivery feature. 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 online and via Nutrisystem
social media channels. These services are complemented with relevant information on diet, nutrition and physical
activity, including a personalized “My Daily 3®” physical activity program and expert guides with tips to help
customers succeed on the program. Additionally, NuMi, our digital product that integrates with wearable fitness
devices and health platforms, is offered to our customers free of charge.
Our Nutrisystem®program consists of more than 150 portion-controlled items that serve as the foundation of a
low Glycemic Index diet. Our program is portioned for weight loss and offers a balance of carbohydrate,
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