Weight Loss Industry Situation - Research Paper Example

Weight Loss Industry Situation Analysis Name Institution Name Date Table of Contents 1.0Situation Analysis 3 1.1 Market Analysis 3 1.2 Major Competitors and their Market Shares 4 2.0Use of BCG Model and Use of Ansoff Model 5 3.05C’ Approach Analysis 6 3.1 Product line 6 3.2 Collaborators 6 3.3 Customers 6 3.4 Competitors 7 3.5 Climate 7 4.0Macro Environment Forces 8 4.1 Political and Legal 8 4.2 Economic 8 4.3 Social and Culture 8 4.4 Technology 9 4.5 Environment 9 5.0Market Segmentation 10 5.1 Primary Segment 10 5.2 Secondary Segment 10 6.0Buyer Decision Process for the Segments under Investigation 10 7.0Segmentation Methods 11 7.1 Demographic Segmentation 11 7.2 Behavioural Segmentation 12 7.3 Geographic Segmentation 12 7.4 Psychographic Segmentation 13 8.0 Positioning Map 14 9.0Recommendation 14 References 15 Appendix 19 Appendix 1 19 Appendix 2 19 1.0 Situation Analysis 1.1 Market Analysis Body image and health are some of the factors that influences how and what consumers eat. Media Centre (2013) estimated that in 2013-14, the consumers spend $6.6 billion on health and weight loss industries. IBISWorld (2015) estimates, 64.7% of Australia’s adult population is either obese or overweight. Obesity is also attributed to the leading cause of premature illness and death in Australia. Thus, demand for health conscious is growing and the need for weight loss strategies is apparent. ABS (2014) through a survey carried in 2011-12, estimates that over 2.3 million Australians above 15 years have employed strategies to lose weight because of health reasons. From the data, 11% of the males aim to address weight problems while 15% are females seeking the same aims. Appendix 2 summarizes data based on age grouping of persons currently on a diet for the periods 2011-2012: the data indicates that persons between 51 and 70 years are the most under diet. Media Centre (2013) estimates that the health and weight loss will increase in the future and estimates that the consumers will spend more than $7 billion by 2018-19. The areas of growth come from clothing and footwear, fitness equipment and home gym, sporting goods, weight loss counselling services, weight loss products, gym memberships and persona training (Appendix 1). According to IBISWorld (2015), for the financial year 2015-2016, it is estimated that $613.6 million will be used on weight counseling services and other weight loss strategies. 1.2 Major Competitors and their Market Shares Due to the changing social-cultural requirements of health consciousness, the market has attracted numerous competitors. The following table summarizes some of the competitors in the industry. Competitor Market Share (Data from Allday, 2013) Services and products offered Nestle Australia Ltd (Jenny Craig, 2016) 16.7% The brand name is Jenny Craig, which was established in 1983, with more than 95 centres across Australia. The company provides prepared foods to the customers. Weight Watchers International Pty Limited (Weight Watchers, 2016) 10.1% The company runs more than 1,000 group meeting in which the participants are more than 70,000. The company provides both ready prepared foods and counseling services. It is estimated the company controls more than one-third of the frozen food market. Lite n Easy (Lite n Easy, 2016) 8.1% The company was established in 1989 and offers two traditional approaches to weight loss. The strategies are weight loss services and food. The company prepares food, which is later delivered to the customers. Tony Ferguson Weight Loss (Tony Ferguson Weight Loss, 2016) 3.7% The company combines nutritional and medical components to its service and product offerings. Some of the products consumers can include bars and snacks, supplements, meals, soups, and diet shakes. These products are obtained from Terry White Chemists. Cohen’s Weight Loss Clinic Australia (Cohen’s Weight Loss Clinic, 2016) 2.6% The company has numerous centres in Australia, and the company develops customized individual weight loss plans. The design is based on the hormone levels and tests. Even though it does not incorporate the exercise regime, the plans focus on quantities, food types and combinations of food types and quantities. Kate Morgan Pty Ltd (Kate Morgan Weight Loss Program, 2016) 2.1% The company offers both consultations and products. The weight loss consultations at based on affiliated chemists and meal replacement products are also offered. The members can join the program through a participating chemist or online. The multi-week packs the company provides incorporates cereals, soups, bars, and shakes. Figure 1 Competitor Analysis 2.0 Use of BCG Model and Use of Ansoff Model Ansoff model contains four aspects: penetration, product development, market development and diversification. The appropriate approach for weight loss industry is market penetration. The current products and services should be sold to the existing customers, and marketing strategies should be employed. For example, the use of promotions may highlight problems associated with weights and obesity and inform the customers about the importance of the products and services on offer (van Wijngaarden, Scholten and van Wijk, 2012). The current products and services can be adjusted through changing the packaging, changing pricing strategy or even adding features based on market research. The effectiveness of the strategy is premised on customers’ awareness of the products and targeting the customer behaviour may result in an increase in sales. According to the BCG Model, appropriate classification is the star since additional resources are required to penetrate and engage the market. The aim is to increase the market share through providing additional resources in processes such as research and development, promotion, and customer research requirements. The population awareness and the increase in customers championing health and body conditions continue to seek for health management strategies (van Wijngaarden, Scholten and van Wijk, 2012). Thus, increasing funding to engaging the customers through growing the brand position is a positive indicator of improving the business position relative to competing entities. Therefore, market share growth is important and companies have to employ strategies aimed at increasing the market share. 3.0 5C’ Approach Analysis 5Cs are the five key areas, which are involved in marketing decisions for a company. These key areas are company (product line), climate, collaborators, customers and competitors: 3.1 Product line The company has the capacities to meet the needs and requirements of the customer. For example, the company has the technical expertise and right product line. The company is innovative and continuously develops products based on customers’ needs and expectations (IJzerman and Steuten, 2011). The packaging, human resource, and other resources are available that advances the requirements of the company (Joshi, Singh, and Sidhu, 2012). Thus, the product line is appropriate, and since the weight loss industry is big, it means that the company can also target the international market. Nevertheless, some of the products are average in quality, and further research is required to create competitive products. 3.2 Collaborators Collaboration is important, and the company utilizes supply chains to accomplish the operations of the company (Srdjevic, Bajcetic, and Srdjevic, 2012). The company has partnered with different suppliers for the raw materials and distribution network (Mohammad et al., 2011). The company has entered into agreements and contracts with the producers of the health food products while agreements also exist with the distributors such as chemists and supermarkets. 3.3 Customers The company understands the need and requirements of the customers and is able to satisfy the customer requirements. The company has continuously invested in the retail channel, the quantity of purchases strategies, and other studies associated with frequency of purchase and market segments (Kolios and Read, 2013). The strategy is premised on 4Ps, and customer research is used to further understand the requirements of the customers. In addition, the customer preferences, needs, and wants are understood, and continuous research ensures the company is updated on customer behaviour. 3.4 Competitors In the weight loss industry, competition is fierce because the customers require immediate result products and services. Different companies come with different products, and the urge to change the products is high (Gillam and Siriwardena, 2013). Since the customers require immediate results, it means the customers aims to acquire products from companies that have an effective promotional strategy (Buschmann et al. 2009). The strengths of the competitors include the availability of resources, strategic partnerships while the weaknesses include poor customer interaction and ineffective marketing strategies based on 4Ps. 3.5 Climate The weight loss industry operates in an area that is conducive based on context. For example, the political system has not created challenges to inhibit the effectiveness of the business (van Wijngaarden, Scholten and van Wijk, 2012). The business is required to adhere to the general regulations in business operation and management. The society continues been aware of the importance of health, and health products are received positively in the society. The technological environment enables the business to engage with the customers, and even the customers can acquire the products online. Hence, the climate is conducive for weight loss industry and the companies within the industry. 4.0 Macro Environment Forces Different tools and frameworks exist that can be used in studying macro environment. The tool utilized for the current study is the PESTLE: 4.1 Political and Legal The government has created numerous regulations and legislative that guide general business operations including the requirement for permits and licenses (Mohammad et al., 2011). In 1997, the government developed the Weight Management Industry Code of Practice and was amended in 2013 through incorporating the code of Weight Management Council Australia. The Therapeutic Goods Administration enforces other factors associated with the weight loss industry. The marketers can utilize the platform to ensure the organizations operates based on laws and create marketing campaigns and product/service provision based on the legislations and regulations (Kolios and Read, 2013). 4.2 Economic The economic situation is growing, and consumers have disposal income. The customers are able to acquire the products easily (Joshi, Singh, and Sidhu, 2012). The stability of macro environmental variables also enables the business to operate effectively. The government has also created effective conditions such as taxation regimes, which reduces the cost of business operations (Mohammad et al., 2011). The cost of the raw materials and associated fundamentals supports the business operations and economic requirements. 4.3 Social and Culture According to Media Centre (2013) the consumers are becoming more aware of healthy diet and consumers are driving towards preservative free, natural and organic foods. The communities and societies understand the threats of obesity and the solution is weight loss. The contributing factor to obesity are poor dieting meaning the customers continue to eat healthy products (Amer and Daim, 2010). The negative perception of obese individuals forces these individuals to participate in activities and strategies to address the weight problems. 4.4 Technology In the most segments of the industry, the use of technology is low even though some companies have established an online presence (van Wijngaarden, Scholten and van Wijk, 2012). The organizations utilize technologies to maintain competitiveness and improved services through selling membership, advertise their services and development of online communities. Technologies are also used in the development of dietary regimes, supplements and new drugs (Amer and Daim, 2010). Technological systems are also used in research and development on human growth hormones and new non-prescription weight loss supplements. The technologies are also used in promoting weight loss products and customer engagement. The markets can utilize the technologies to seek and engage with the customers and also utilize the platform to sell the products directly (Zalengera et al. 2014). The marketers can also engage with other planners in the organization to develop more products targeting the requirements of the customers. 4.5 Environment The aim of the weight loss industry is to advance sustainable measures in ensuring the customers consume healthy foods and participate in healthy activities. Similarly, the processes used to create the foods involves aspects of sustainability (Phillips, 2011). The environment concerns may occur due to transportation and disposal of the wastes. Most of the food are packed in plastic containers, which are hard to recycle or pollute the environment easily (Zalengera et al. 2014). The legislations on sustainability are aimed at improving the operational environment through championing sustainable measures, and awareness of environment protection. 5.0 Market Segmentation Segmentation is important because it enables a company to strategy create strategies and assigns resources. The following are the market segments: primary and secondary segment 5.1 Primary Segment The primary segment is the individuals facing challenges associated with obesity and excessive weights. These segments aim to ensure their bodies are restored by engaging in activities supporting weight loss (Cary and Roberts, 2011). In addition, these consumers receive negative communication and views from the public. Scrutiny from the public and health concerns forces the primary segment to seek weight loss services, products, and strategies. 5.2 Secondary Segment The secondary market targets individuals with potential weight-related problems (Kolios and Read, 2013). These consumers understand these threats and consequences of excessive weight and seek solutions in advance. The target is the public who prefers prevention rather than treatment of the problem. 6.0 Buyer Decision Process for the Segments under Investigation In buyer decision process, the appropriate framework is the problem/need recognition, information search, evaluation of the alternatives, purchase decision and post purchase behaviour (Zalengera et al. 2014). The weight loss consumers follow the steps in acquiring the products. For example, a consumer identifies the problem as obesity. The customer then starts searching for information to identify the available solutions of the problem. Some of the solutions that the customer has to evaluate include use of medicine, participation in physical exercise, and adjusting the diet (Amer and Daim, 2010). The customer then decides the appropriate weight loss strategy and determines the method of acquiring the products. The customer then utilizes the products and based on the timelines of the products in terms of use; the customer starts to gauge the effectiveness of the products. The customer may appreciate the products or have a negative perception of the product. If the weight loss strategy was effective or indicates the presence of positive outcome, the customer may continue using the product resulting in brand loyalty. However, the unsatisfied customer may start seeking for alternative products or alternative solutions to the problem. 7.0 Segmentation Methods 7.1 Demographic Segmentation Females Aged 30 – 45 Years It is the period when the females have children and may be faced with additional complications. Information on restoring the original bodies before births and balancing with the requirements of family and work would be used to engage these customers. Females Aged 15 – 29 years Dieting enables an individual to maintain a good appearance. This age is sensitive to an individual and determines the love life of an individual. Effective diet management ensures the individual maintains appropriate appearance. Hence, images of “good” appearance individuals in the promotions are used to engage and attract the customers. Males Aged 50 – 70 years These customers have waist problems and waist related complications. Highlighting weight related problems and day to day problems are the basic of strategy development. 7.2 Behavioural Segmentation Eating First Food The strategy targets consumers who prefer fast food because of work complications. The alternative products such as the packaged food will be used as an alternative to the fast food. Hence, the consumers’ experiences similar products with the same comfort e.g. eating while working. Frequent Physical Exercises In complementing the food, the customers are encouraged to participate in physical activities. The component is included in the counseling period, and the benefits of physical activities highlighted. 7.3 Geographic Segmentation The areas targeted are the NSW and Victoria regions between of revenue, the number of establishments and populations. The aim is to enter the market with a differentiated product while also targeting a market that has a high number of customers or prospective customers. Figure 2 Geographic Data Source (Allday, 2013) 7.4 Psychographic Segmentation Health and Appearance The health and appearance of the customers are brought into consideration. Factors such as community and public perception are used to encourage the customers to incorporate weight loss. 8.0 Positioning Map Figure 3 Positioning Map Since the company employs non-food and food approaches, the company is positioned between the Weight Watchers International Pty Limited and Lite n Easy. The counseling through numerous platforms ensures more customers are engaged, and their weight loss issues can be addressed as the period continues. Hence, it is possible to determine whether the processes are effective and formulation of measures to improve the weight loss processes. 9.0 Recommendation The following are the recommendations for the company: Improving the promotional strategy through highlighting the importance of the product Engage the manufacturers of the foods on reduction in overhead costs resulting in reduced prices Collect information from customer to review the effective and perception of the company’s products and services References Allday, A. August 2013. Weight Loss Services in Australia. IBISWorld Industry Report S9512. Amer, M. and Daim, T.U., 2010. Application of technology roadmaps for renewable energy sector. Technological Forecasting and Social Change, 77(8), pp. 1355-1370. Australian Bureau of Statistics. 2014. Australian Health Survey: Nutrition First Results - Foods and Nutrients, 2011-12. Available at: http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/4364.0.55.007~2011-12~Main%20Features~Dieting~500 [Accessed 23 August 2016] Buschmann, A.H., Cabello, F., Young, K., Carvajal, J., Varela, D.A. and Henríquez, L., 2009. Salmon aquaculture and coastal ecosystem health in Chile: analysis of regulations, environmental impacts, and bioremediation systems. Ocean & Coastal Management, 52(5), pp. 243-249. Cary, J. and Roberts, A., 2011. The limitations of environmental management systems in Australian agriculture. Journal of Environmental Management, 92(3), pp. 878-885. Cohen’s Weight Loss Clinic. 2016. Homepage. Available at: http://www.cohens.com.au/ [Accessed 22 August 2016] Gillam, S. and Siriwardena, A.N., 2013. Leadership and management for quality. Quality in Primary Care, 21(4), pp. 253-259. IBISWorld. August 2015. Weight Loss Services in Australia: Market Research Report. Available at: http://www.ibisworld.com.au/industry/default.aspx?indid=1704 [Accessed 23 August 2016] IJzerman, M.J. and Steuten, L.M., 2011. Early assessment of medical technologies to inform product development and market access. Applied Health Economics and Health Policy, 9(5), pp. 331-347. Jenny Craig. 2016. Homepage. Available at: http://www.jennycraig.com/ [Accessed 22 August 2016] Joshi, M., Singh Ubha, D. and Sidhu, J., 2012. Intellectual capital disclosures by Indian and Australian information technology companies: A comparative analysis. Journal of Intellectual Capital, 13(4), pp. 582-598. Kate Morgan Weight Loss Program. 2016. Homepage. Available at: https://katemorgan.com.au/ [Accessed 22 August 2016] Kolios, A. and Read, G., 2013. A political, economic, social, technology, legal and environmental (PESTLE) approach for risk identification of the tidal industry in the United Kingdom. Energies, 6(10), pp. 5023-5045. Lite n Easy. 2016. Homepage. Available at: http://www.liteneasy.com.au/nova/index.aspx [Accessed 22 August 2016] Media Centre. 31st October, 2013. Australians set to spend $6.6 billion to battle the bulge. Available at: http://media.ibisworld.com.au/2013/10/31/australians-set-spend-6-6-billion-battle-bulge/ [Accessed 23 August 2016] Mohammad, M., Mann, R., Grigg, N. and Wagner, J.P., 2011. Business Excellence Model: An overarching framework for managing and aligning multiple organisational improvement initiatives. Total Quality Management & Business Excellence, 22(11), pp. 1213-1236. Phillips, L.D., 2011. What is strategy? Journal of the Operational Research Society, 62(5), pp. 926-929. Srdjevic, Z., Bajcetic, R. and Srdjevic, B., 2012. Identifying the criteria set for multicriteria decision making based on SWOT/PESTLE analysis: A case study of reconstructing a water intake structure. Water Resources Management, 26(12), pp. 3379-3393. Tony Ferguson Weight Loss. 2016. Homepage. Available at https://www.tonyferguson.com/ [Accessed 22 August 2016] van Wijngaarden, J.D., Scholten, G.R., and van Wijk, K.P., 2012. Strategic analysis for health care organizations: the suitability of the SWOT‐analysis. The International Journal of Health Planning and Management, 27(1), pp. 34-49. Weight Watchers. 2016. Homepage. Available at: https://www.weightwatchers.com/au/ [Accessed 22 August 2016] Zalengera, C., Blanchard, R.E., Eames, P.C., Juma, A.M., Chitawo, M.L. and Gondwe, K.T., 2014. Overview of the Malawi energy situation and A PESTLE analysis for sustainable development of renewable energy. Renewable and Sustainable Energy Reviews, 38, pp. 335-347. Appendix Appendix 1 Source: Media Centre (2013) Appendix 2 Source: (Australian Bureau of Statistics, 2014) Read More