1. Company Description and Background
a. Weight Watchers was created by Jean Nindetch in 1963 when she began to invite her friends and neighbors so that they can discuss their weight loss issues and how they could lose weight successfully. The basic concept of WW plan consisted of two components: the WW program and group support. Comprised of a food plan and an activity plan. WW eliminated counting calories by introducing a point system.
c. 2017 about 1 million members who attended 32,000 WW meetings around the world organized by more then 9,000 leaders who had successful lost weight using WW.
d. Record high revenue 2011 $1.8 billion, in 2012 a slight reduction occurred but beat all pre-2011 numbers, in 2013 is when business began take a turn for the worse.
e. December 2015, WW launched a SmartPoints system which was a scale for food management. It was introduced to work along with a new weight management program called “Beyond the Scale.” Even thought doctors and nutrition’s approved the program, then-CEO David Kirchhoff felt it wasn’t enough because the programs didn’t take into account social, environmental and behavioral factors that led members to fail at their weight loss journey. Shortly after in August 2013, CEO Kirchhoff resigned in order to “pursue other opportunities” which left WW struggling to adjust their business strategy in the Internet Age.
2. Problems Posed In The Case
a. CEO Jim Chambers resigned in September 2016 afterward a tumultuous year with stock prices dropping 54% that year alone and seven straight quarters of declining sales.
b. Next generation diet programs and online apps like MyFitnessPal and FitBit were providing the same services for free of charge. CEO Chambers admitted that “consumers have changed and that WW hadn’t kept the pace.”
c. As obesity levels increased worldwide, the market for weight loss products was growing exponentially, however, WW had to increase customer value and seek new target segments to fend off competitors from traditional rivalry’s like Nutrisystem, Slim Fast, Medifast, Jenny Craig and the Biggest Loser.
d. Emergence of fad diets
e. Decreased effectiveness of marketing and advertising programs
f. The need for developing new and innovative products and services that could be delivered online or via mobile apps
g. WW International faced stock price volatility because of rival weight management options such as the over-the-counter weight-loss drug Alli launched by GlaxoSmithKline in June 2006 and the development of Allergan’s Lap-Band device.
h. Worldwide Health Organization estimated 2.3 billion people to be overweight by 2015 and more than 700 million obese.
i. The development of effective weight-management methods i.e. pharmaceuticals, surgical options such as the Lap-Band.
3. Financial Analysis
a. In 2017, revenue was 1.3 billion and in 2018 revenue was up by 5.77% at 1.5 billion.
4. Strategic Options
a. During the dot-com era they created a WW.com where they sold a wide range of branded products and services including meetings, subscriptions, licensed products sold by retailers, magazine subscriptions and various publications.
b. In addition, the company put its name and point values on a variety of food products sold in super markets such as Progresso soups
c. WW also created a separate WW menu for certain restaurants.
d. In 2014, as a part of new tech strategy WW announced that members could sync third-party open API’s such as Fitbit and Jawbone for an integrated weight-loss experience.
e. In order to stay competitive in a digital market, WW acquired Silicon Valley based weight-loss start up Wello in 2014, which was an app that allowed people to attend fitness classes or one-on-one fitness training through any Internet or webcam-enabled device.
f. Reliance on variable cost structure had enabled the company to maintain high margins.
g. WW at work program
5. Opportunities
a. Obesity was on the rise in developed countries especially in North America and by 2014 the weight loss, health and fitness industry constituted a $64 billion-a-year industry in the US alone. The number of Americans dieting dropped from 31 percent at the peak of 1991 to 19 percent in 2014.
b. Improving economy and mean are new target group
Conclusion and Reflection
Points program introduced in 2010
Dropped celebrity spokesperson Jessica Simpson and Jennifer Hudson to provide a sense of regular people dealing with regular weight issues. Not realistic as real people’s before-and after transformations.
Expanded to men and growing Hispanic population.
Business-to-business model by partnering with major health care plans and large self-insured corps which offered subsidized WW memberships to eligible members and employees.
2017, Oprah lost 40 lbs. started investing in WW in 10 2015 and obtained 10% stake in company by paying 43million. Increased number of subscriptions by 10% and her stake in company is worth $70,300,000
QueenMoon
WeightWatchers.docx
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