General Factors and Industry Environments That Affect Weight Watchers Inc - Essay Example

?Running Head: WEIGHT WATCHERS INC. Weight Watchers Inc. – Case Study Summary of the Case Study: Weight Watchers is one of the most well known name in the weight management industry.  This industry is now highly fragmented as well as diversified. Competition in this industry is very much intense at present but it is also to be noted that the companies are not directly fighting with each other. From the case study it is very clear that the industry is prone to rapid and continuous change.  Low carbohydrate diets, gastric bypass surgery, and calorie counting apps are just a few of the changes that have hit the diet industry in the past 10 years. The main competitors of Weight Watcher are Nutrisystem, Jenny Craig and eDiets. According to the report the weight management industry came to light in the late 1990s., from 2006 onwards there is a promising upwards trend in the world diet control market. Generally there are two distinct kinds of strategies associated with the diet control industry, one is the strategy for long term growth of the organization and the second one is retention of the customer base to maintain their involvement . During the span of last 20 years, there is a continuous trend of the growth in the population. With the growing trend of population obesity as well as overweight also increased during this time span. The importance of the physical exercise , awareness of health benefit , loosing weight all these parameters now have a huge demand in the world population. So along with the time, the weight management industry is also growing along with the time. But in the recent time, there are also some negative impact in the weight management industry. According to the report, the industry rose to $ 59.7 billion in the year 2009 which was only about 2% growth YOY. But it was failing to close in with historical 6% growth rate. (Taber et.al, 2010, p. 8). There are also different challenges associated with the growth of weight watchers. Being one of the leading organizations in the market it is now facing a tough competition from others, moreover it is also facing a challenge to develop a forward focus diet plan for the 21st century. According to this report, during the year 2011, Weight Watchers tried to represent themselves in the markets of USA and abroad. Their focus also shifted from women centric to cover all the gender across the society, launching new and innovated diet program to capture the market potential. General Factors and Industry Environments that Affect Weight Watcher’s Choice of Strategy The weight Watcher’s business strategy is based on different parameters like the any top organization. Being a top performing company in this sector their strategy was also very up to date and for a long span of time they remain the sole dominant force in this field. To decide on the strategy, they rely on following points. They believe in giving to the customer what they want not what they need, they have designed their strategy based on marketing the feelings of loosing weight not the product. Different factors like creating exclusive products for different age groups, different weight groups. At the very beginning the main focus of the organization was to target the women to reduce and maintain their weight as the obesity was one of the key disease in the country. To reach up to the maximum number of people, they have designed online course material as well as several live campaigns in different places to ensure that they can reach up to the every corner of the society for every class. General factors which are associated with their strategy are like giving their customer what they want in a scientific and standard way so that customer remains interested in their services. Their customer centric approach increased the customer base drastically. The general factors and the environment related to the strategy of the organization is governed by porter’s five force model. Hill and Jones (2010), in their analysis mentioned Porter’s five force model as a back bone behind any organization's strategy. Those five factors are: risk of entry of the potential competitor, threat from established competitors, buyer’s power of bargaining, suppliers bargaining power and threats of substitute. ( Hill and Jones, 2010, pp. 42-43). Following is the relation of the five factors with the performance of Weight Watchers. 1. Threat of New Entry: Government Policy – For the last few years , Obesity is a big problem in the United States which is now becoming a government and healthcare issue. Weight Watcher has played an important role in developing a new national awareness program of healthy eating, change in the lifestyle and weight control. Weight Watcher was asked by the US government to address at different conferences which were organized for the development of Dietary Guidelines for the country. So they got an advantage and preference over the others in this sector. Business Diversification: To fight with the new organization, along side with weight management the organization started to focus on the health insurance business. Weight Watchers decreased their prices not only because they focused on their consumer base , but because they want to give more focus on the health insurance business. Different Employers are giving incentives to their employees to use weight watchers for health insurance purposes. 2.   Threat of Substitutes Switching Cost – Although there are lots of organization in the weight loss industry, but Weight Watcher work ethics is to help people make changes in their lifestyle. Like others , they also want to have profit in the business, but due to their innovative ideas. Weight Watchers is around for more than 50 years. Weight Watchers realize the growth in health insurance and develop their strength based on brand and reputation. So for them threats of the substitutes is less. 3. Bargaining Power of Suppliers Presence of Substitute Inputs – Being the industry leader, Weight Watchers always have strong control on their suppliers.. They can turn to any alternative using their market leader position.  4. Bargaining Power of Customers Brand Identify- To fight with the bargaining power of the customer, Weight Watchers used their brand value and brand identity.. Weight Watcher uses many celebrities to market their brand to consumers. 5. Rivalry Among Existing Competitors This is the main concern for Weight Watchers as different new workout plans and diet products are always launched in the market. Few are even adopting the Weight Watchers’ formula for counting points and creating calculators. Although these processes have been patented by Weight Watchers but still a different organization developing the same kind of strategies based on the same work formula which in turn decrease the popularity of the Weight Watcher’s popularity. To combat this organization now started to focus on different other services to combat this . Advantages of Weight Watchers: Weight loose and management industry is a very huge one with an annual turnover of over $ 61 billion. In USA only, almost 108 million people are on diets. The earnings from the weight loss programs are as high as $ 3 million. (Denoes, 2013) Weight Watchers is the leading organization in this sector. Being the oldest one in this industry it has a larger market base to capitalize on the business. The main advantage of this organization is strong and large customer base. Word of mouth popularity is a huge advantage for this organization. Their variety of product and services also helped them to hold a strong position in the market. They have designed their product based on the choices of the customer, reschedule or organize their habit without affecting their choice which has worked as an advantage for them. Another key advantage of the organization is strategy of promoting the feelings not their product. Their main aim is to promote the importance of weight management among the obesity hit people which by default increase the demand for their services. Financially the organization is very strong as they have enough financial power from the very beginning as they were the sole participants in this market and no one was there to compete. Moreover they have designed their product in such a way that customers can choose their own. Structurally also the organization is very strong as they have enough number of staff to reach more number of people across the places with their offerings. Future Strategies: Presently there are lots of competitors in the market of weight management as the obesity disease has its impact all across the globe. To keep their hold in the market Weight Watchers forced to redesign their strategies, make it more up to date, innovative . Initially they were more concentrated on the women's market but now they have to focus on the other areas like child obesity and men’s weight management. Secondly they have to customize their plan’s based on the requirement of the customers, as the choices of food as well as activities is not same all across the globe. So the operating cost is different in different parts and therefore they must redisgin their pricing strategy. Thirdly they must focus on additional parts like different add on services (gym/health and body management) to promote their offerings more. Fourthly, they have to focus on cutting down the other cost associated with their offerings to ensure the higher profit ratio. In today’s tough competitive market it is very important to offer something very unique as well as distinct to be a step ahead of the competitors. Giving a different customized offering, rebate, free health check up, all these will help them to promote their plan. Building brand value also very important, and therefore organization has to focus on advertisement and different promotional activities to promote their offerings in places where the internet is not so popular. Roadshow, print media all these can be a major help for them. A continuous evolution in the old product line as well as promoting a new variety of options will give them the market penetration everywhere and therefore they can maintain their market dominance. They can focus on the 3 P’s for the success in the future, these are : Points: highlight the benefits of the Weight Watchers lifestyle to restore the brand; Programs: Make use of social media and online initiatives to cover and attract a wider audience. Promotion: Using the organization spokeswoman to its advantage by growing advertising. They must promote their offerings as not a diet but as a lifestyle for health and a better life. Finally a strategic tie up with different organizations that have daily reach to the person's life will help them to promote themselves all across the globe and will help them to increase their valuation. References Denoes M. (2013), A Weight Watchers Case Study: How Smart Marketing Pays Off, Marketingprofs, retrieved on 28th November, 2013 from http://www.marketingprofs.com/articles/2013/10422/a-weight-watchers-case-study-how-smart-marketing-pays-off Hill, C & Jones G. (2010), Strategic Management - Theory: An Integrated Approach, Cengage Learning. Read More