Strategic Management Case Study: Weight Watchers Please read the attached case study carefully, understand it and answer the following questions (file attached) based on the case study. In particular,

WEIGHT WATCHERS INTERNATIONAL INC.*

In early 2017, Weight Watchers initiated a new “Beyond the Scale” advertising campaign that featured the entrepreneur and talk show host, Oprah Winfrey, claiming that she had lost 40 pounds by using the Weight Watchers program. Winfrey concluded her weight loss experience by emphasizing “It Works!”1

As it happens, this was not the first time Winfrey lost weight with Weight Watchers. Winfrey started investing in Weight Watchers in October 2015 and obtained an approximately 10 percent stake in the company by paying about $43 million. Three months later, in January 2016, she said that she was able to lose 26 pounds with the help of Weight Watchers’ program. Winfrey’s continual endorsements and investment had changed the direction of the company over the past two years as it had increased the number of subscriptions by 10 percent to about 2.8 million. It was believed her stake in the company could be worth $27.3 million more than her original investment, or $682,000 per pound lost.2

The company was in search of a new CEO after James Chambers resigned in September 2016.3 As a company running without a CEO, Weight Watchers had a good start for the New Year of 2017, expecting that Winfrey’s contribution could be sufficient to turn around the company. Furthermore, to boost membership, Weight Watchers was offering a “Lose 10 lbs on us” incentive: Anyone joining the program by Valentine’s Day, February 14, 2017, who lost at least 10 pounds within two months, would receive a $100 prepaid card or subscription credit toward their membership fee.4 Would this new campaign work to further boost the company’s weight-loss business? Would Oprah Winfrey’s support continue to boost the stock price and sales?

Winfrey’s involvement, corresponding boosts in stock prices, the advertising campaigns, and discount offers in 2016 were all part of a rebranding effort that ultimately had failed to impress investors. The price of Weight Watchers shares (ticker symbol: WTW) had been tumbling through 2016 into 2017, just when most might expect New Year’s resolutions to kick in and bolster the weight-loss stock. This price decline echoed the financial reality: seven straight quarters of declining sales.5 Although Weight Watchers had been working to update its image and offerings and was still able to boast a high gross profit margin. However, revenue and cash generation as well as the firm’s growth were significantly lower than the industry’s average. During the year 2016, Weight Watchers stock’s high volatility considerably impacted its overall valuation and reflected the altering market sentiment for the company.6 Clearly, Weight Watchers was in trouble.7

Weight Watchers had recently celebrated 50 years of success in helping people lose weight, and this celebration had come after some significant financial gains as well. In 2011 Weight Watchers had hit a new revenue record of $1.8 billion.8 In 2012 the company saw a slight reduction in revenue but still beat all pre-2011 numbers; however, by 2013 things started to slide. Weight Watchers, while still the undeniable industry standard bearer, had lost some of its luster.

Originally started in 1963 by Jean Nidetch as a women’s support group in her home, Weight Watchers International Inc. grew into a multibillion-dollar weight-loss goliath in four decades’ time. In December 2015 Weight Watchers launched a new food plan called the SmartPoints system. SmartPoints’ unique feature was that it was a scale for food management introduced to work along with a new weight management program “Beyond the Scale,” which emphasized weight loss by taking a holistic approach to a fit and healthy life style. Customers could make their personal SmartPoints budget according to their fitness goals and eat any type of food as long as it was within the consumption or calories limit allowed by their SmartPoints budget. Food with higher calories had lower SmartPoints value as compared to the food with lower calories. Previously, Weight Watchers had introduced the PointsPlus system, which replaced an even older calorie-counting system. Even though calories still counted, PointsPlus encouraged people to eat a wide variety of healthy foods—split between three meals plus snacks within an individualized calorie level. With a counting system based on dietary guidelines, dieters were encouraged to maximize their PointsPlus allowance by choosing more “Power Foods”—the healthiest, most filling foods, such as whole grains, lean meats, low-fat dairy, and unlimited quantities of fresh fruit and non-starchy vegetables.

Although doctors and nutritionists gave the Points program (the original program) and the subsequent PointsPlus version a thumbs up,9 Weight Watchers’ then-CEO David Kirchhoff felt it wasn’t enough. Citing evidence from behavioral scientists, in 2012 Kirchhoff said he “realized that Weight Watchers needed to take into account social, environmental, and behavioral factors that led members to fail.”10 Weight Watchers had always believed in behavior change, encouraging people to beC-174 mindful of what they ate, and just counting calories, as the PointsPlus system did, was not enough.

In 2013, Weight Watchers created the “360-degree Program”—the “Points Plus program with a 21st-century makeover.” By monitoring the amount of carbohydrates, fats, fiber, and proteins in the food choices people made on a daily basis, and using current scientific research on why people eat what they eat, Weight Watchers could help guide members toward making healthier eating decisions in all sorts of situations.11 The 360-degree Program added two new components to tracking caloric intake: “spaces,” which included tips for how to handle eating situations in the different environments members might encounter, and “routines,” which encouraged members to create new habits for themselves—for instance, changing just three small behaviors a day, such as walking an extra five minutes, eating lunch at the same time, and drinking an additional glass of water. These 360-degree components—tracking, spaces, and routines—were even available as apps on the Weight Watchers website as well as on Apple and Android mobile devices. By adding the mobile apps and other online social networking support to the direct face-to-face support of the weekly meetings, Kirchhoff believed that Weight Watchers finally had a program that tied everything together and that people would be willing to pay for.12

However, in August 2013, Kirchhoff resigned in order to “pursue other opportunities.” This left the company floundering to reinvent itself in the Internet age, a time when community social support for weight loss could be provided virtually rather than at a physical weekly meeting. Also, the next generation of diet programs and online apps, like MyFitnessPal and the FitBit activity monitor, were providing this support basically for free, since the companies offering them didn’t need to charge meeting fees or employ trained support staff.13 In January 2014, new CEO Jim Chambers admitted, “The consumer has changed and we haven’t kept pace. We need to turn this company inside out.”14

The market for weight-loss products was growing, as obesity levels were on the rise in more and more parts of the world, and this made weight management an attractive industry for firms, especially deeply entrenched firms such as Weight Watchers. However, faced with increased competition from traditional rivals Nutrisystem and Medifast and other weight-loss programs such as Jenny Craig and the Biggest Loser franchise, Weight Watchers had to increase customer value and seek new target segments to preempt the competition and stay on top of its industry. In the highly competitive weight-management industry, Weight Watchers International had to remain cognizant of the major trends that had the potential to adversely affect industry and firm profitability and revenues. Those trends, as they related to Weight Watchers and the weight-loss industry as a whole, included the temporary emergence of fad diets; decreased effectiveness of marketing and advertising programs; the need for developing new and innovative products and services, many of which had to be delivered via online or mobile apps; the development of more favorably perceived or more effective weight-management methods (e.g., pharmaceuticals and surgical options such as the Lap-Band); and the threat of impairment of the Weight Watchers brand itself.15 The challenge for Weight Watchers was repositioning itself and creating a forward-focused diet plan for the 21st century while staying true to the mission initially established by Jean Nidetch, its founder. The brand needed to remain relevant and, at the same time, pursue additional medium- to long-term initiatives, such as reaching out to new market segments.16

History and Expansion

Jean Nidetch began Weight Watchers in an unlikely, and unintended, way. The origins of the company started when Jean invited six women into her home to help both herself and her neighbors and friends lose weight by communally discussing their weight-loss issues. Nidetch’s belief, which became the core of the Weight Watchers philosophy, was that anyone could be given a “diet” but the group and social setting of “talk therapy” was the true component not only to losing weight but also to keeping it off. She believed in fostering success through group support, and she created a simple reward system that included pins and tie bars to reward increments of weight loss. The idea was simple, yet very effective.17

The basic concept of the Weight Watchers plan consisted of two components: the Weight Watchers program and the group support. The program was essentially a food plan and an activity plan. The food plan was intended to provide people with the educational tools they needed for weight loss as well as to provide control mechanisms so that individuals could find their way to healthier food choices. The company radically simplified the food selection process involved in dieting by assigning each food a corresponding point value, which eliminated the need to tally calories.18

Nidetch accomplished what she set out to do and much more. Weight Watchers, originally targeting primarily women, ages 25 to 55, experienced a rapid expansion. Of the behemoth that Weight Watchers came to be, Nidetch said, “My little group became an industry. I really didn’t mean it to—it was really just a club for me and my fat friends.” She continued by commenting on something a lecturer once said: “It’s a place where you walk in fat and hope nobody notices you, and four or five months later you walk out thin and hope that everyone sees you.” Nidetch believed that the love, information, companionship, and commiseration of fellow overweight individuals were the key components in an effective formula many people needed to succeed at weight loss.19

What Weight Watchers evolved into was a globally branded company providing weight-management services worldwide. By 2017, the company had about 1 million members who attended above 32,000 Weight Watchers meetings around the world organized by more than 9,000 leaders who had successfully lost weight using Weight Watcher programs.20 Expansion and the onset of the dot-com era had inevitably led to the creation of WeightWatchers.com, an Internet-based version of the Weight Watchers plan. Weight Watchers wasC-175 selling a wide range of branded products and services, including meetings conducted by Weight Watchers International and its franchisees (and the products sold at the meetings), subscriptions to WeightWatchers.com, licensed products sold by retailers, magazine subscriptions, and various publications.21 In addition, the company had put its name and point values on a variety of food products sold in supermarkets, such as Progresso soups,22 and it had created a separate Weight Watchers menu for certain restaurants.23

Reflecting the growing popularity of online apps and activity monitors for weight control, at the end of 2014 Weight Watchers announced that its members could sync with third-party open APIs such as Fitbit and Jawbone for a more complete and integrated weight-loss experience. Also in 2014, as part of a new technology strategy, Weight Watchers acquired Silicon Valley–based weight-loss start-up Wello, an app that enabled people to attend fitness classes or one-on-one fitness training through any Internet or webcam-enabled device. This acquisition was part of Weight Watchers’ strategy to compete in “an increasingly digital weight loss market.” As explained by CTO Dan Crowe:

[Weight Watchers will] become a 21st-century technology organization, engineered for the digital era, whose innovative technology fundamentally improves the way people manage their weight, health and wellness. We will be agile service-oriented, data-driven, cloud-enabled and efficient. We will be a model for digital technology in the markets in which we compete and we will be a magnet for talented innovators both inside and outside the company.24

Supporting the long-term strength of the brand, in 2017 Weight Watchers was ranked at the top for “Best Weight-Loss Diet,” “Best Commercial Diet Plan,” and “Easiest Diet to Follow,” and number four for “Best Diet Overall” by U.S. News & World Report.25

Industry and Competitive Environment

Weight Watchers International had experienced stock price volatility in the past, as had the majority of its competitors, 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. However, there had yet to be a widely supported “magic pill” or surgical option to weight management. In the absence of a safe and effective pharmaceutical or surgical alternative for weight loss, Weight Watchers and its competitors faced a weight-management industry characterized not only by competition and threats, but by opportunity as well.

Obesity was on the rise in the developed countries, especially in North America, and by 2014 weight loss, including the overall health and fitness industry, constituted a $64 billion-a-year industry in the United States alone.26 Although Americans’ dieting had dropped from 31 percent at the peak in 1991 to only 19 percent in 2014,27,28 this did not mean there were no profits to be made. In part due to an improving economy and a growing awareness of men as a target group, the weight-loss industry alone was projected to grow from $2.4 billion in 2013 to over $2.7 billion by 2018.28 In addition, the obesity problem was not confined to the United States, and this made geographic expansion a possibility for weight-loss firms. Worldwide, the World Health Organization estimated 2.3 billion people to be overweight by 2015 and more than 700 million obese.29 Overall, the statistics proved there were still opportunities, and therefore competition, in the weight-loss industry.

Weight Watchers was attempting to reinvent itself while still paying close attention to the moves of its weight-loss rivals. Competition for Weight Watchers International included both price competition and competition from self-help, pharmaceutical, surgical, dietary supplement, and meal-replacement products, as well as other ­weight-management brands, diets, programs, and products.30 The main competitors for Weight Watchers had traditionally included Jenny Craig, Slim-Fast, NutriSystem (NASDAQ: NTRI), and Medifast, as well as programs from fitness gurus such as The Biggest Loser star Jillian Michaels.31

Over the years, among the commercial plans, Weight Watchers had consistently earned the highest overall rating, according to various surveys, because of its nutritionally based diet, weekly meetings, and weigh-ins for behavioral support. In 2017, according to U.S. News & World Report, Jenny Craig’s prepackaged-food diet plan came in second with its rapid weight loss and easy-to-follow features, followed by the HMR Program. Other traditional competitors, Nutrisystem and Medifast, came in much further down the list. Going into 2015, competitors included those listed in Exhibit 1.

EXHIBIT 1 Competitors for Weight Watchers

* Ratings are from U.S. News & World Report, Best diets methodology: How we rated 38 eating plans, January 4, 2017.32

One important factor in all these diets was the extent to which they were do-it-yourself efforts. Many of the successful diets, including the DASH and Mayo Clinic diets, required consistent self-control without any external support system. Obviously, Weight Watchers was different in this respect, as were Jenny Craig and Nutrisystem.

Another differentiating factor was cost. The cost of plans in which people bought their own food depended, of course, on each person’s food choices. The cost of the commercial plans also varied widely. Weight Watchers’ cost depended on whether the member chose to attend weekly in-person meetings or use only the online tools. A monthly pass to unlimited in-person meetings could cost up to $39.95, which also included access to eTools. Or members could pay per meeting; meetings were $10 to $15 per week. For new online members, a per-month plan was $19.95 plus a one-time registration fee of $29.95. None of the costs included food. With Jenny Craig, the initial registration fee could exceed $400, and a week’s worth of Jenny’s Cuisine might cost at least $100. Nutrisystem, which had basically fallen off the survey charts due to complaints about costs and the poor taste of the food, had a 28-day Select Plan, which included 10 days of frozen meals and 18 days of pantry food, and generally cost between $240 andC-176 $300. Packaged diets such as Slim-Fast didn’t have a personal support system, but food supplements could be customized to achieve a “satisfied feeling” that reduced regular food intake. An 8-pack of shakes cost about $20.54, and 24 snack bars cost about $17.

One major advantage Weight Watchers had was the extent of research done on its results. Two studies published in 2012 found that Weight Watchers was just as good as clinical weight-loss programs under a physician’s control and that some Weight Watchers participants lost more than twice as much weight as individuals following clinical advice.33 A physician from the Mayo Clinic said, “It’s only natural that the weekly weigh-ins and ‘group spirit’ of programs such as Weight Watchers would prove more effectiveC-177 than occasional guidance from a doctor or nurse, since research has shown that dieters are more likely to stick with weight-loss programs that stress accountability.”34

Business Model

Revenues for Weight Watchers International Inc., as shown in Exhibit 2, were principally gained from meeting fees (members paid to attend weekly meetings), product sales (bars, cookbooks, and the like, sold as complements to ­weight-management plans), online revenues (from Internet subscription products), and revenues gained from licensing (the placement of the Weight Watchers logo on certain foods and other products) and franchising (franchisees typically paid a royalty fee of 10 percent of their meeting fee).35 The costs of running meetings were low, with part-time class instructors paid on a commission basis, and many meeting locations were rented hourly in inexpensive local facilities such as churches. This lean organizational structure allowed wide profit margins.36 Meeting fees were paid up front or at the time of the meeting by attendees, resulting in net negative working capital for Weight Watchers—an indication of cash-flow efficiency.37

EXHIBIT 2 Weight Watchers’ Revenue Sources ($ millions) 
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Source: Weight Watchers 10K filings.

What was perhaps most important about Weight Watchers’ business model was its flexibility. The number of meetings could be adjusted according to demand and seasonal fluctuations. The business model’s reliance on a variable cost structure had enabled the company to maintain high margins even as the number of meetings over the same time period was expanded. When attendance growth outpaced meeting growth, the gross margins of Weight Watchers typically improved. Since fiscal year 2005, Weight Watchers International had maintained an annual gross margin in the operating segment of 50 percent or more.38 Weight Watchers’ business model yielded high profit margins as a result of the company’s low variable expenses and low capital expenditure requirements. By allowing its meetings to be held anywhere, Weight Watchers kept its capital costs low—unlike Jenny Craig, which maintained its own centers with food inventories. This model also allowed Weight Watchers to gain entry into the workplace at wellness-minded companies via its Weight Watchers at Work Program.39 Exhibits 3 to 5 show financial statements of the firm.

EXHIBIT 3 Income Statements ($ millions) 
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Source: Weight Watchers 10K filings.C-178

EXHIBIT 4 Balance Sheets ($ thousands) 
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Source: Weight Watchers 10K filings.C-179

EXHIBIT 5 Cash Flow Statements ($ millions) 
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Source: Weight Watchers 10K filings.C-180

Innovation

Domestically and abroad, Weight Watchers was fortunate enough to build on a foundation of five decades of weight-management expertise that had allowed the company to become one of the most recognized and trusted brand names among weight-conscious consumers worldwide.40 The innovation initiatives at Weight Watchers were focused on three main objectives: (1) rejuvenating the brand through more effective marketing, (2) providing more customer value by introducing new products, and (3) broadening the customer mix by targeting new customer segments.

The Brand

With regard to its brand, Weight Watchers was fortunate that consumers considered its brand credible and effective. The brand image was reinforced by involvement of Oprah Winfrey advocating the effectiveness of Weight Watchers diet programs by sharing her personal experience over several months. However, the company needed to more adequately differentiate its lifestyle-based approach from the strictly dieting orientation utilized by many of its competitors. In a focus group for Weight Watchers, a woman who had considered joining expressed concern that her weight would be called out in public and that she would have to tell her whole weight-loss struggle as if she were at an Alcoholics Anonymous meeting. Thus, one of the primary challenges for Weight Watchers was to correct such misperceptions as to what Weight Watchers actually was.41 Weight Watchers had the challenge of dispelling concerns that the meeting experience was something akin to a Biggest Loser weigh-in and competition.

The second thing that Weight Watchers was trying to do was to reenergize the brand with more effective and differentiated marketing. Weight Watchers believed that its advertising needed to accomplish three basic tasks. First, it had to be noticed when it was seen. Second, on noticing it, people had to associate the advertising with the Weight Watchers brand. Third, it had to accomplish both the first and the second aims while communicating something new about Weight Watchers that would cause consumers to reconsider Weight Watchers as their solution—a plan at which they could be successful.42 Though the company had experienced success in the first two tasks, communicating something new to consumers still seemed like a long shot. Weight Watchers had to actively emphasize the innovative things that it was doing in order to overcome consumers’ preconceived notions. The company needed to show its consumers that its approach was different from the other diets out there to unleash the power that Weight Watchers believed had become a little dormant in its brand. Weight Watchers also had to consider the potential of marketing to relay relevant information that would appeal to a wider net of demographic groups.

The Program

To increase customer value, Weight Watchers had introduced programs that provided members with more flexibility and satisfaction. One innovation was a Monthly Pass payment option. When a member became a Monthly Pass subscriber, he or she participated in an eight-month recurring billing commitment in exchange for complete access to the full range of product offerings. So the underlying benefit was customization—members could utilize the different options as they saw fit in meeting their weight-loss needs. And it seemed to work. People on the Monthly Pass were losing 30 percent more weight since the pass’s implementation. Further, there was a higher attendance intensity for Monthly Pass holders than for those who paid per meeting.43 If members canceled their Monthly Pass because of not reaching the goal weight, and then later regained weight, they knew that they could always return to Weight Watchers because the plan had worked in the past.

PointsPlus, introduced at the end of 2010, was a revision of the traditional Points program. The revised program was designed to educate and encourage people to make choices that favored foods the body worked harder to convert into energy, resulting in fewer net calories absorbed. Users were encouraged to focus on foods that created a sense of fullness and satisfaction and were more healthful; they were nudged toward natural foods, rather than foods with excess added sugars and fats, but were allowed flexibility for indulgences, special occasions, and eating out. While calorie counting had been the foundation of many weight-loss programs, including the Weight Watchers’ original Points system, the new PointsPlus program went beyond just calories to help people make healthful and satisfying choices. It took into account the energy contained in each of the components that made up calories—protein, carbohydrates, fat, and fiber—and it also factored in how hard the body worked to process them (conversion cost) as well their respective eating satisfaction (satiety).44

The next program innovation, introduced in December 2012, was the 360-degree plan. This plan built on the PointsPlus program, with members still encouraged to track their food intake with numbers based on the content of protein, fiber, carbohydrates, and fat. In addition, however, the program helped participants make better food-related decisions and did more to incorporate physical activity. For instance, an optional physical activity monitor, called Active Link, could track physical movements. This monitor, costing $40 plus a $5 monthly charge, measured all activity and converted it into PointsPlus values. Also, members were encouraged to use more of the Weight Watchers smartphone apps and website tools during the meetings while participating in hands-on demonstrations such as learning to estimate portion sizes. Other new tips included teaching people to better manage food environments at home, at work, on their travels, or at restaurants. According to Karen Miller-Kovach, chief scientific officer for the company, the emphasis on controlling food in the spaces where people live and work was based on research on “hedonic hunger—the desire to seek out high-sugar, high-fat foods that bring pleasure . . . you have to control your environment to avoid that drive.”45

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Furthermore, Weight Watchers Personal Coaching included on-demand 24/7 Expert Chat with Weight Watchers–certified coaches to “Help with the Hard Part” of managing weight loss. Supporting this program was a new ad campaign that dropped the celebrity spokesperson, formerly Jessica Simpson or Jennifer Hudson, in favor of showing regular people dealing with difficult food choices. The point was “not to pass judgment on anyone eating in an unhealthy way, but rather to demonstrate that Weight Watchers understands that eating can be emotionally charged . . . that at the end of the day, we get it and we’re here to help.” One former Biggest Loser contestant felt that Weight Watchers’ new approach could “cause a stir in the category” and agreed that celebrity before-and-after pictures aren’t realistic, while using real people shows “what it’s really like for the millions with weight issues.”46

As mentioned earlier in this case, in December 2015, Weight Watchers launched its newest food plan, called the SmartPoints system. Customers could make their personal SmartPoints budget according to their fitness goals and eat any type of food as long as it was within the consumption or calories limit allowed by their SmartPoints budget. Food with higher calories had lower SmartPoints value as compared to the food with lower calories.47 Customers could set daily or weekly targets using the SmartPoints system to set and achieve personal dietary goals.

Again, as mentioned earlier, in 2017 the company started a new weight management program called “Beyond the Scale” for its North American customers. This new program was advertised by Oprah Winfrey, who claimed the effectiveness of the program based on personal experience, saying “It Works.” The new Beyond the Scale weight management program went beyond the emphasis on weight loss by taking a holistic approach to a fit and healthy life style. The focus was more toward living a happier and healthier life by staying more active.

The Customer

Innovation at Weight Watchers also involved broadening the customer mix and targeting new customer segments. Weight Watchers was expanding beyond its target consumer market of women, ages 25 to 55.48 In an attempt to appeal to other demographic groups, such as men and the Hispanic community in the United States, Weight Watchers retooled its offerings and approach to appear more relevant to weight-loss consumers who sought different methods of weight management.

The company was committed to work to better serve the growing Hispanic population. For example, it had improved its Spanish-language meeting materials and increased the number of Spanish meetings offered.49 Men, another attractive market segment, appeared to be more the self-help type and were not as much in favor of a group-support experience.50 Weight Watchers meetings had been attended mostly by women, with men making up only 5 percent of members. Morgan Stanley analyst Catherine Lewis said, “Weight Watchers has a pipeline of unpenetrated and underpenetrated markets,” and thus was testing home weight-loss services for men.51

To attract this segment, Weight Watchers Online, the step-by-step online guide to following the Weight Watchers plan, was intentionally customized for men and their unique set of weight-loss challenges.52 The WeightWatchers.com for Men customization was born of the realization that Weight Watchers needed to be more culturally relevant to more groups of people who wanted different things.53 For instance, a research study showed that about 70 percent of men were overweight and about 30 percent of men were obese. Yet, according to the study, only 28 percent of men were actively engaged in weight loss. Weight Watchers sought to provide the weight-loss answer for men by applying its 40 years of experience to its customized Internet offerings for men.

While the fundamental concepts of weight loss—eat less and exercise more—were the same for both genders, the approach to weight loss for each gender was different. As Chief Scientific Officer Miller-Kovach noted, “Men and women are biologically and emotionally different, and multiple variables factor into how each loses weight.” However, the same underlying motivators for weight loss were shared between the genders: “appearance and health.”54 Thus, while the preferred means might be different, the desired end was the same. Weight Watchers Online for Men allowed men to follow the Weight Watchers plan and get food and fitness ideas, as well as other content and resources, tailored specifically to them. These products afforded Weight Watchers a new opportunity to appeal to a large market segment that might not have otherwise considered giving the program a try.55 The percentage of men as a percentage of the Weight Watchers’ total market had been on the rise. Weight Watchers was pleased with the results of the male-focused products and continued working to identify the proper levers for building that part of the business.56 One of those levers was spokesman–sports legend Charles Barkley, whose humorous approach was intended to appeal to the everyday man.

Questions Remain

Following the onslaught and subsequent demise of fad diets such as the low-carbohydrate-focused Atkins Challenge and South Beach Diet, Weight Watchers had attempted to reinvent itself in several ways. It began to look beyond its core market of women to include men, and it expanded its business model to include not only in-person meetings but also online weight-management tools. Weight Watchers also was transitioning into a business-to-business model by partnering with major health care plans and large self-insured corporations, which offered subsidized Weight Watchers memberships to eligible members and employees. Weight Watchers was actively promoting its larger health message. Colin Watts, senior vice president of health solutions and global innovation, pointed out:

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The American Journal of Preventive Medicine indicates that obesity has become an equal, if not greater, contributor to the burden of disease than smoking, and with alarming predictions for 2030, it’s more important than ever to provide practical solutions that are not only proven effective, but that are also accessible and scalable.57

Weight Watchers intended to be that provider.

The question remains, will Weight Watchers be effective in staying true to the core of Jean Nidetch’s goals, while still expanding to different target groups, different dieting platforms, and different means of offering them? Only time will tell, but one thing is certain: The weight-loss industry is not going away, and members of Weight Watchers’ senior management continue to have many tough decisions to make.