The U.S. Food and Drug Administration approved a new antiwrinkle treatment that could be the most formidable challenger to date to market leader Botox.
Analysts say the drug, from Revance Therapeutics, poses a threat to the market-dominating anti-wrinkle treatment because it promises to last longer. Revance plans to market Daxxify as a luxury item and emphasize its longer duration than Botox and other toxins.
For about two decades, Botox, now sold by AbbVie Inc., has dominated the aesthetic-drug market it helped pioneer, racking up tens of billions of dollars in sales and successfully fending off challengers.
The FDA’s approval of Revance Therapeutics Inc.’s Daxxify introduces a new rival that doctors and analysts said could succeed carving out a big slice of a lucrative and fast-growing market by promising to last two months longer than Botox’s four months.
The FDA approved Daxxify, also known as daxibotulinumtoxinA, for the temporary improvement of frown lines in adults, Revance said Thursday.
The decision, analysts and doctors said, should touch off a fierce battle between upstart Revance and industry giant AbbVie, which acquired Botox as the centerpiece of a $63 billion deal for its manufacturer in 2020.
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“This marks what we think is the first real competitive threat to Botox,” said Cowen Inc. analyst Ken Cacciatore, who expect011s Daxxify to generate $1 billion in sales as early as 2030.
Botox, derived from the poisonous Botulinum toxin bacteria, blocks signals between nerves mand muscles, causing the muscles to relax. A doctor originally developed the drug to treat an eye disorder, before patients noticed it smoothed their wrink,m1 les.
The discovery prompted a company called Alle rgan to pursue Botox’s cosmetic use, which the FDA granted in 2002, launching a new market for p5mkroducts and procedures that enlarge lips, fill in cheeks and sculpt other body parts.
That aesthetics market was worth $14.6 billion worldwide last year, according to the Aesthetic Society, a professional society of plastic surgeons. Physicians in the U.S. performed about 4.4 million procedures involving Botox and two of its rivals in 2020, the American Society of Plastic Surgeons said.
The aesthetics market has been growing 10% annually, but could increase more rapidly over the next few years, according to McKinsey & Co., driven in part by a proliferation of med spas and social-media-inspired awareness among young people.
The Botox brand name has become a fixture in America’s cultural lexicon, like Band-Aid and Kleenex.
Despite facing a raft of competitors, Botox holds about 70% market share. The drug’s profitability attracted AbbVie, which sought the product as it girded for lower-priced competition for its top-selling drug Humira.
Botox sales totaled more than $4.6 billion last year, up more than $1 billion from the year prior as people working from home because of the pandemic sought to look good in video calls and returned to seeing their aesthetic doctors in person.
Botox is also approved for therapeutic uses. It lasts up to four months, according to the product’s website.
The Revance drug threatens to eat into Botox sales, which last year made up roughly 8% of AbbVie’s $56 billion revenues, behind only Humira’s roughly $20 billion in sales and the $5.4 billion from blood-cancer treatment Imbruvica.
To counter the threat, AbbVie has said it is investing more in its aesthetics business, spending more on R&D, consumer advertising and expanding its sales force in the U.S. as well as China, which the company said is a growing market.
AbbVie has said it is developing a toxin whose wrinkle-reducing duration could last longer than the approved version of Botox and a fast-acting one that has shorter duration.
AbbVie declined to comment.
Revance is taking a different tack than older Botox rivals like Dysport, made by France’s Ipsen Biopharmaceuticals; Xeomin, made by Germany’s Merz Group, and Evolus Inc.’s Jeuveau. The rivals primarily tried to compete on price, according to doctors and analysts.
Rather than discounting its drug to reach a mass market, Revance plans to market Daxxify as a luxury item to high-volume injectors in the U.S. and emphasize its longer duration than Botox and other toxins, Chief Executive Mark Foley said.
The company hasn’t disclosed pricing but has said it expects physicians to pay more than they do for existing toxins. As with other antiwrinkle toxins, doctors would purchase Daxxify directly from Revance and then bill patients, rather than insurers.
“We’re going to be introducing a product that we’re not trying to say is everything to everybody. Now, you can choose,” Mr. Foley said.
Daxxify will face big obstacles, doctors and analysts said, such as overcoming the loyalty of doctors and patients who are longtime Botox customers.
AbbVie can also sell Botox with its other aesthetic products like fat-removing CoolSculpting and dermal filler Juvéderm in exchange for discounts. And physicians will need to be trained to use Revance’s drug because it is prepared and administered differently than Botox.
In a survey of 25 physicians last year by Truist Securities Inc., nearly two-thirds said the new Revance drug would account for none to a small amount of their toxin usage, while most of the remaining physicians surveyed said it would account for a moderate amount of usage.
The FDA was slated to decide on Daxxify in 2020, but pandemic-related travel restrictions delayed the agency’s inspection of Revance’s manufacturing facility in Newark, Calif., according to the company. Several months after completing the inspection last summer, the FDA declined to approve the drug, which Revance said was due to manufacturing concerns.
After resolving those FDA concerns, Revance requested approval again and has since addressed all the agency’s subsequent issues, Mr. Foley said.
In a pair of late-stage trials studying about 600 total subjects, about a third of patients who received the product maintained either no or only mild wrinkles after about six months, according to Revance.
Similar results were reported by researchers in a subsequent open-label trial of about 2,700 subjects. No safety concerns were observed in the studies, according to the company.
COMMENTARY: The idea that you can market Daaxify as a "luxury" prescription facial injectable wrinkle remover makes me want to laugh. Differentiator strategy? The only point of differentiation that Daaxify can really claim is that it lasts two months longer than Botox. AbbVie has an answer for that: AbbVie already developed a longer-lasting version of Botox, so Daaxify's advantage will not last very long when they go head-to-head. Don't know the difference in price between Daaxify and Botox in order to say Daaxify can compete on price. New entrant into the market? I have never considered being new into a market a competitive advantage. Nobody really knows you. If the Revance Therapeutics, maker of Daaxify were part of Pfizer, I might worry.
Botox dominates the market for wrinkle remover facial injectables with a 70% share of the global market. It is well entrenched and Botox is the go-to wrinkle remover facial injectable drug by doctors. Marketing Daaxify as a "luxury" just does not compute with me. I wasn't aware that there was a "luxury" market segment for wrinkle remover facial injectables. Will dermatologists ask their patients, "Do you prefer the newer Daaxify or the more popular regular Botox or the newer advanced version of Botox that also lasts eight months?"
AppVie's Botox has huge advantages over new market entrants: well branded, loyal customers, better or superior product, distribution channels (doctors) all locked-up, huge product development team, and deep pockets to protect its market position. It's a Lovemark brand by any definition. Those are huge castle walls to climb and a huge moat to cross.
Sorry, Daaxify.
How Big is the wrinkle remover facial injectables market? Here are a few facts:
Factors driving the growth and use of facial injectable products to remove wrinkles are as follows:
Demand For Anti-Aging Aesthetics - A growing focus on physical appearance among consumers, especially among women, has led to an increased demand for facial injectables in recent years.
Increased Demand For Minimally Invasive Procedures - Consumer awareness regarding minimally invasive procedures due to various beauty campaigns being organized by key players in the market is also a driving factor for market growth.
COVID-19 Pandemic - The ongoing COVID-19 pandemic has increased the time spent on video calls. Known as the ‘Zoom Boom’, several adults are becoming more aware of their appearance. This has increased demand for cosmetic surgeries, with Botox being one of the most popular products preferred.
According to market research by Grand View Research, the global facial injectable market size was valued at USD $16.1 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 9.1% from 2022 to 2030.
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Vantage Market Research states that the global facial injectable market is driven primarily by new product launches and the market is estimated to reach USD $7.5 billion by the year 2028.
On the basis of product, the Anti-Aging Market is segmented into four segments:
Anti-Wrinkle.
Hair Color.
Ultraviolet (UV) Absorption.
Anti-Stretch Mark.
The Anti Aging sector is currently dominated by anti-wrinkle products, which account for the majority of sales. Anti-wrinkle products had the largest market share in 2021, and significant growth is expected by 2028. Because of the harmful effects of cosmetics and chemical-based products, natural products are predicted to expand at the fastest rate.
According to market research by Grand View Research, the U.S. facial injectable market size was valued at USD $5.6 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 9.1% from 2022 to 2030.
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The anti-aging market is segmented demographically into four segments:
Generation X.
Generation Y.
Generation Z.
Baby Boomers.
Generation X has dominated the Anti Aging industry in terms of revenue. Increased disposable income and a greater focus on physical appearance would both help the market flourish. Over the forecasted period, the demographic group Generation Y is likely to grow at a high rate. The target demographic is millennials who are familiar with high-end premium brands like Estée Lauder and Elizabeth Arden. Premium skincare brands are becoming increasingly popular among millennials.
Founded in 1998, Lululemon is a yoga and sports apparel company from Canada.
Although its first store was opened in 2000, the company sold $350 million worth of products in their 113 retail stores 8 years later.
In 2012, Lululemon was reported to have the third most productive retail stores in the US, only behind Apple and Tiffany & Co..
According to Nina Gardner, Lululemon’s community relations manager, the company achieved all this almost entirely via word-of-mouth, and with ads in only two publications:
We don’t do ads. All of our marketing is done word-of-mouth and grassroots Gardner said. The only place you’ll see ads is in ‘Yoga Journal’ and ‘Runner’s World,’ two national publications.
Let’s take a look at how a company that started off selling yoga pants managed to grow so big from leveraging on word-of-mouth:
1. Lululemon’s customers are eager to show off their inspirational-poster themed shopping bags, just as they might on Pinterest.
Lululemon is all about living an active life, evidenced by their goal to “sweat every day”, and other activities like breathing deeply, drinking plenty of water and going outdoors.
These values promote a very positive and healthy image, something that customers can relate to and aspire towards. And customers who shop at Lululemon are given tote bags that have the company’s manifesto emblazoned all over them:
Lululemon tote bags image by John Lucas, Postmedia News (Click Image To Enlarge)
The feel-good quotes on the bags serve as a form of “social snack“: something we look at to make ourselves feel better throughout the day.
By associating the brand with these values, customers would feel as if they’re “connecting with her best self” as they buy their yoga pants.
Word-of-mouth action tip: Make something about your product worth showing off to others.
2. Lululemon staff feel more like your yoga or gym buddies – they’ll happily talk to you more about yoga and goal-setting than their products.
Lululemon store staffers wear yoga pants so they feel more like yoga or gym buddies (Click Image To Enlarge)
Lululemon’s store employees “are encouraged to discuss exercise goals with customers and take into account their feedback written on chalkboards in the fitting rooms.” This ensures the staff are better equipped with more information to give personalized recommendations to every customer.
They are also instructed to dress like they were going for a workout, so customers would see them more as people you see in a gym or yoga class, rather than a store employee.
Plus, most people who work at Lululemon are athletic and fit individuals, so they have a lot in common with their customers. This relatibility and similarity makes them a lot more likeable, and customers are more comfortable trusting them.
And this building of relationships is exactly what Nina Gardner is trying to achieve:
"Making sure we’re really building those relationships (with customers) — that’s what really sets us apart from being just another retail store that’s opening up to sell clothes. Absolutely we sell clothes, but we are building relationships. We are supporting communities.”
Word-of-mouth action tip: Don’t rush into selling your products – connect with your customers like a friend, so they’ll like you more, and open up to you.
3. Retail stores transform into fitness and conversation hubs on weekends for free lessons, to give back and get people involved with the brand.
One of Lululemon's in-store yoga classes (Click Image To Enlarge)
For one of their stores in Burlingame, California hosts free yoga classes on Saturday mornings and Sundays, as well as a weekday run club. This practice originated from Lululemon founder Chip Wilson, who used his office space as a yoga studio at night to help pay for rent back in the day.
This, according to former CEO Christine Day, positions Lululemon stores as a “fitness and conversation hub”. It also increases customer engagement, encourages regular visits to the store, and keeps the brand constantlytop-of-mind.
What having similar-minded individuals for store employees and free fitness classes in-store does is – it evolves customers’ perception of the brand from being an apparel company to an entity that embodies your ideals, and a community to find like-minded people.
Christian Buss, a Wall Street analyst described Lululemon’s brand identity to a fitness partner:
"They’re selling a brand identity…the model that Lululemon is trying to build is, you’re pretty cool, we’ll be your partner in being your best possible self. And that kind of turns retail on its head."
Word-of-mouth action tip: Leverage your existing assets to contribute to your community.
4. Lululemon engages fitness trainers and athletes as brand Ambassadors to inspire and engage with their customers, so they can feel motivated to keep fit.
Nicole Katz from Yoga 216 is one of the many brand ambassadors of Lululemon (Click Image To Enlarge)
So if Lululemon organizes free yoga and fitness classes regularly all throughout the world, who exactly leads all those classes?
They are Lululemon’s brand ambassadors; yoga teachers and fitness trainers that have chosen embody the brand’s values and lifestyle.
These 1,500+ ambassadors host classes in Lululemon stores within their communities, and according to a yoga teacherfrom Australian fitness group OzSquad, get support from the brand to pursue any events and initiatives they desire.
Of course, they’re also outfitted with the Lululemon products, so they get to wear free gear while promoting their own yoga schools and the Lululemon brand.
Apart from local yogis and fitness trainers, world-class Olympic athletes are also part of the ambassador program, such as Olympic cross-country skier Sara Renner and Jaime Komer.
Word-of-mouth action tip: Celebrate and promote individuals who embody your brand values, so customers will think of you when they look at them.
Lululemon has always been a brand that connects their products with values that inspire their customers. People buy Lululemon pants because they agree with the values that Lululemon embodies and expresses.
And that can be a powerful thing, as branding expert and author Karen Postexplains,
"They’re selling emotion and happiness and joy and feeling good about yourself, … and when companies keep their eye on that in a more focused way, and less on the features of the product, their chances of being a successful brand just go through the roof."
Questions to ponder:
What are some values that your target customers live by?
Does your company embody and communicate those same values in your marketing?
How can you create a positive and engaging community, where your customers can interact with your brand?
COMMENTARY: Based in Vancouver BC, lululemon is known for their athletic apparel, including clothing for yoga, running and any other “sweaty pursuits.” Customers can not only buy clothing and merchandise but they can also sign up for in-store events ranging from workshops, runs and yoga classes, offered on a weekly basis and tailored to the local surroundings. To personalize the in-store experience, lululemon educators and community ambassadors can be found in every store to talk to customers about healthy living, yoga, exercise etc. The ambassadors program is composed of individuals who adhere to the same lifestyle and cultural ideals oflululemon, and can share their expertise with the local community.
Lululemon Athletica retail stores have taken the store and shopping experience to a new level. Julia Brunzell, Manager of Store Design at lululemon atheletica discusses the unique in-store experience that the brand provides.
“We are constantly listening to feedback about how guests experience our stores and how they function for our educators. Every store designer works in the stores to experience firsthand how the space is used, what works best for flow, product visibility and efficiency. In addition, we want every store to feel like a part of its community from the first day it opens; we invite our guests to hang out, chat with our educators and learn about local yoga/fitness studios. Every week, our stores push aside their product fixtures and open the store up to the community for a complimentary yoga class.
Our stores are designed to be conversation starters, while also being fundamentally warm, inviting, eclectic and accessible to everyone. Over the years our fixtures have become more streamlined, modern and modular which allows for flexibility and creativity with visual displays. We are known for our unique, creative and locally relevant storefront designs which range from making a big design statement to a fun reflection of the community we are joining. For example, our Burlington, VT location is a strong ski community so we used two gondolas as benches outside to create an eye-catching and locally relevant storefront. At our Houston Galleria mall location, we designed our storefront using glass windows that look like those from a space shuttle, a nod to the nearby Houston Space Centre.”
There have also been many changes within the lululemon brand. Recently, the brand has launched a new fast fashion clothing line, &Go. With apparel ranging from dresses to pants and tank tops, the line is set to be offered online and storewide. With this change comes another in the men’s clothing division. Lululemon is set to open a standalone men’s store by 2016. The brand offers a range of men’s clothing on its website, including jackets, hoodies, pants, socks and underwear. Finally, with lululemon’s latest expansion into the European market, it will be interesting to see how these developments continue to affect the stores and brands initiatives worldwide.
When Julie Brunzell was asked how these changes and expansions affect the store design concepts and whether consumers will begin to see larger stores, pop up shops etc. to showcase the new clothing lines, she said.
“As a company focused on innovation, we are always evaluating how we design our stores and with that comes continuous examination of layout principles, space planning, size and location. We aim to create community and shopping experiences that speak to our guests and settings which vary from city to city. Entrepreneurship is one of our core business values and as a business that is grounded in community, we enable and support store managers to have a hand in creating spaces that resonate with their guests and their community.”
Lululemon Store Of The Future
Lululemon just opened a new flagship store in New York City's Flatiron District. At 11,500 square feet, it's the brand's largest flagship location. Its Union Square location closed its doors.
The Flatiron District is home to many other stores that specialize in athleisure — Sweaty Betty and Athleta, to name a few. But that makes sense: The area has many of the most popular boutique fitness studios — Flywheel Sports, Exhale, SLT, Pure Barre, and two SoulCycle studios that are mere blocks apart.
And Lululemon is capitalizing on that. One of the new store's features, The Concierge, will dedicate floor space to helping shoppers beyond the sales floor.
The Concierge at Lululemon's Flatiron District store in Manhattan (Click Image To Enlarge)
The Concierge will recommend nearby classes and locations, so that the exercise-obsessed shoppers can don their new pants in class. To top that off, shoppers can book classes while they're shopping.
The Concierge will be a hangout spot — there will be a "community board" to help shoppers discover new places to run, new classes, and even new places to eat.
The Community Center located inside Lululemon's flagship store in the Flatiron District of Manhattan (Click Image To Enlarge)
Lululemon will make shopping a luxurious experience, with a coat check, water, a coffee bar, snacks, and a phone-charging station. You can also have your purchases delivered to your home, office, or hotel, so no need for lugging big Lululemon bags around during the day.
The company is focusing on expanding its already-strong community with a new space called Hub Seventeen. Hub Seventeen will be above the store's retail floor.
Carla Anderson, Lululemon's general manager of US retail, said in emailed comments.
"Our stores are inspired by community, from the design aesthetic and in-store guest experiences and classes to our ambassador and studio partnerships."
Chairs hang from the ceiling inside the Community Events Center of Lululemon's flagship store in the Flatiron District of Manhattan (Click Image To Enlarge)
The 5,000-square-foot space will be used for fitness classes, monthly dinners, concerts, art shows, and more.
Lululemon's stores already have yoga classes, but Hub 17 will take it up a notch.
Anderson said.
"While all of our stores offer in-store yoga and fitness class and events, Hub Seventeen is the first time we created a dedicated community space separate from the retail experience."
The Community Events Center inside Lululemon's flagship Flatiron District store includes an area for yoga exercise demonstrations (Click Image To Enlarge)
Don't worry, Lululemon acolytes — there's a vast retail floor.
The retail floor located inside Lululemon's flagship Flatiron District store (Click Image To Enlarge)
There's a great chance that many other forthcoming Lululemon stores will follow suit.
Anderson said.
"Our flagship stores in particular are designed to elevate the community in new and unique ways, often serving as a testing ground for new guest experiences and retail innovations."
Courtesy of an article written by Samuel Hum appearing in Referral Candy and an article dated April 14, 2015 appearing in Mind and an article dated November 18, 2015 appearing in Business Insider
Lululemon, the maker of expensive yoga apparel, has just given their stretch pant department a complete overhaul. In addition to offering four brand-new designs, the Canadian retailer is now categorizing their leggings by "engineering sensation"—meaning that you can now shop the pants based on their feel as well as their style.
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These "sensations" (yep! that's what they're going with) exist on a spectrum ranging from Relaxed ("nothing in your way") to Tight ("locked and loaded") with four others of varying tightness in between. They've adapted their current selection of pants in accordance with these new categories and also added four new styles. These include the Align pant ($98) in the Naked sensation and the All The Right Placespant ($128) in Held-In.
This was all taken into consideration during the redesign, Lululemon’s design director Antonia Iamartino tells Refinery29. She says.
"A lot of the things that we had experienced with that in the past never should’ve happened, and we really learned a lot from that [translucent-pants recall] experience. We have new processes, new ways to monitor our fabrics, and new checks-and-balances to just really monitor and keep our eye on that. All of our new pants went through those same procedures and steps to have that not be an experience."
That will should comforting news for Luluheads. Finding out you're bearing it all during downward dog is never a pleasant sensation.
COMMENTARY: I last covered Lululemon in a blog post dated March 21, 2013, when the company announced that it was recalling $20 million of 'see-through' yoga pants. In spite of that scandal, Lululemon customers remain stubbornly loyal to the company.
Lululemon's shares crashed,dropped nearly 10 points on September 9 after it reported that profits fell from the year earlier.
Lululemon's net income fell to $47.7 million in the Q2 2015 ended Aug. 2 from $48.8 million a year earlier. Earnings per share, however, rose to 34 cents from 33 cents as there were fewer shares outstanding. Revenue grew about 16% to $453 million.
Analysts on average had expected earnings of 33 cents per share on revenue of $445.8 million.
But the company's possible fix for this problem might be helping competitors.
The price hikes come at a time when Lululemon is facing more competition than ever, Neil Saunders, managing director of industry research firm Conlumino told Business Insider.
Competitors like Gap's Athleta have entered the space in a big way (Click Image To Enlarge)
With emerging rivals like rapidly expanding Under Armour, Gap's Athleta, and shoe brand New Balance entering the women's athletic sector, Lululemon will have to stay on its toes to attract customers.
This means offering a value that is better than competitors.
Saunders explained to Business Insider.
"Five or so years ago, this would not have been so much of a threat. Now, with much greater levels of competition, this is a far riskier move. Higher prices run the risk of alienating some customers who can easily defect to other brands."
Lululemon's pants were already more expensive than many competitors. Now, most of its pants range from $88-$98, compared with $31-$89 for Athleta pants.
Courtesy of an article dated September 3, 2015 appearing in Fast Company Design and an article dated September 12, 2015 appearing in Business Insider and an article dated September 10, 2015 appearing in the Toronto Sun
The adjustable standing desk allows you to mix up your posture throughout the day, but top models cost as much as $1,600. (Click Image To Enlarge)
Clearly, it’s time to ditch the office chair, but standing desks can get pricey, especially the adjustable kind, which let you mix sitting and standing throughout the day.
On Kickstarter, StandDesk's basic model costs less than $400. (Click Image To Enlarge)
The company has raised more than 10 times its funding goal since April 2014. (Click Image To Enlarge)
StandDesk, a new standing desk model being launched on Kickstarter (where it has raised more than 10 times its target since April), is a cheaper solution. The basic model, which has a simple automated system to raise and lower the desk at the touch of a button, starts at less than $400. Not quite as cheap as a cardboard desk, but not $1,600 either.
The creators say the lower price comes from designing a custom motor that doesn’t have as much extra lifting power as other standing desks. It’s only designed to lift 225 pounds--enough to hoist your computer and desk gadgets, though maybe don’t put every textbook you own on it. It’s a clean, simple design with no frills, just a smooth tabletop and a small control panel. Considering that I spend my days curled over my desk in a bizarre yoga pose called, “becoming one with the laptop,” I’m on board.
The desk raises and lowers at the touch of a button. (Click Image To Enlarge)
Clearly, it’s time to ditch the office chair. (Click Image To Enlarge)
COMMENTARY: Steven Yu, the founder of StandDesk raised a total of $649,244 from 1,697 donors through Kickstarter. The goal was to raise $50,000, but StandDesk raised over 12 times that. Congrats to Steven Yu. The first batch of pre-orders from the Kickstarter campaign are scheduled for delivery sometime in September 2014.
According to the StandDesk website, you can still pre-order the StandDesk directly from them for $449.00 with FREE shipping. Delivery in the fourth quarter 2014. I assumed that these new pre-orders will be after the Kickstarter project donors receive theirs.
I like what Yu is doing. Let's just hope that he priced the StandDesk properly so they can generate a profit.
A startup originally accelerated within Ideo, PillPack is an end-to-end pharmacy and delivery service for pharmaceuticals that is using design to vastly simplify the process of swallowing pills each day. (Click Image To Enlarge)
Take all of the pills in your medicine cabinet that you have to track--the prescription drugs you need to remember to take two or three times a day, the multivitamins and fish liver pills you're not sure make a difference--and imagine that instead of all coming in separate bottles, they came packaged together in a pre-assorted, chronological ticker tape of medicine. Instead of keeping track of which medicines you need to take at which time, you just tear off a square packet from the roll and swallow all the pills inside.
You don't have to worry about pillboxes, reminders, or refills; PillPack takes care of all that for you. (Click Images To Enlarge)
This is the idea behind PillPack, a new service out of Somerville, Massachusetts, that aims to be the Amazon Prime of prescription medication. PillPack is using design to vastly simplify the process of swallowing pills each day. You don't have to worry about pillboxes, reminders, or refills; PillPack takes care of all that for you. All you need to do is tear off the latest M&M Fun Size packet and swallow what's inside when it tells you to.
The system PillPack uses isn't new. Long-term care facilities have been getting medicine for their patients in easy-to-distribute, presorted rolls for years to make life easier for nurses who have to juggle the confusing motley of medications taken by dozens of patients multiple times per day.
All you need to do is tear off the latest M&M Fun Size packet and swallow what's inside when it tells you to. (Click Image To Enlarge)
A long-term care pharmacy in Concord, New Hampshire--got swarmed with requests by friends and neighbors, who caught wind of the rolls of medication he was making for local medical facilities and started clamoring for him to put together pill packs for them, too.
Once you've signed up, PillPack will assemble your medication, presorting the medicines into individually sealed packets lined up chronologically; any interim medication you need while your first PillPack is being assembled is mailed overnight. You get new PillPacks every two weeks. (Click Image To Enlarge)
What makes the PillPack system so well designed is how idiot-proof it is. Getting started on PillPack is as easy as transferring your existing subscriptions from your local pharmacy: according to PillPack, the process takes less than five minutes.Once you've signed up, PillPack will assemble your medication, presorting the medicines into individually sealed packets lined up chronologically; any interim medication you need while your first PillPack is being assembled is mailed overnight. You get new PillPacks every two weeks. When you get your first shipment, all you do is tear off the first packet and swallow the pills inside at the date and time printed on the front. New PillPacks are automatically sent to you when you need them; four weeks before your last scheduled refill of a prescription, PillPack's pharmacists will follow up with your doctor for a renewal.
When you get your first shipment, all you do is tear off the first packet and swallow the pills inside at the date and time printed on the front. New PillPacks are automatically sent to you when you need them; four weeks before your last scheduled refill of a prescription, PillPack's pharmacists will follow up with your doctor for a renewal. (Click Image To Enlarge)
Patienta should not have to worry about taking their meds as the date and time are printed on each packet. Each packet is clearly printed with the medications inside. A label on the dispenser has images of the pill, with the name and instructions, so it's easy to know exactly what you're taking.
For now, PillPack is focusing on getting medicine to as many people's doors as possible--they still need pharmacy licensing in 19 states--but there's a lot of possibility for leveraging the data they have on patients to improve the PillPack experience. A dedicated app, says Parker, is the obvious next step, but there's also lot of excitement at PillPack about how they could integrate their service with future wearables such as the iWatch or Google Glass, such as by alerting customers when they haven't taken their pills.
PillPack works with most major insurance plans, and costs $20 per month on top of existing co-pays. At that price, says Parker, the service makes most sense for patients who take more than five pills a month, but even if you just need help remembering the aspirin a day, PillPack can help you keep the doctor away.
COMMENTARY: I can definitely see how PillPack could become very popular among seniors. It is very difficult for them to track their medications, and often miss their medications because they have to take so many of them, and often several times a day. The ability to pack all medications into one pack and tell the patient the day and time to take those medications eliminates a lot of the worry. PillPack also takes care of refills, scheduling them 8 weeks ahead of time, so that they are authorized by the doctor and can be filled promptly so that the patient never runs out. PillPack claims that they work with all the major healthcare insurance companies and drugs covered by Medicate Plan D. It costs the patient a flat $20.00 per month plus the co-pay from their insurance company. This is a much better way to manage refills, and I can definitely see the day when PillPack becomes the Netflix of prescription drugs. A one-stop place to refill all prescriptions, and know with absolute confidence that you will not miss your medications when you need to take them. It's all good, and I see big things for this company.
Courtesy of an article dated February 6, 2014 appearing in Fast Company Design
Blu eCigs spokesman Stephen Dorff (Click Image To Enlarge)
The first time you saw an electronic cigarette you may have thought it was a joke or a marketing ploy, the second time you may have felt it was becoming a fad, the third time you may have barely noticed at all. The fact is that non-burning, electronic nicotine delivery systems are worthy of some attention. Don’t believe that? Consider whyLorillard (third largest tobacco company) bought Blu Ecigs for $135 million.
Blu Ecigs brought in about $30 million revenue in 2011 and Blu Ecigs is sold in more than 13,000 retail outlets, including Walgreens and Sheetz.
Blu Ecigs by virtue of being acquired by Lorillard, now has the financial resources to aggressively market its brand of Blu electronic cigattes. Here's their TV commerial, "Rise From The Ashes," starring actor turned-eCig spokesman Stephen Dorff:
The electronic cigarette market as a whole, generates between $250 million to $500 million estimated annually—a small portion of the $100 billion US tobacco market. Still, A government survey found that 2.7% of U.S. adults had tried e-cigarettes by 2010, up from 0.6% a year earlier. Those rises in exposure for a niche product are the kind of statistics that potential trends are made of.
Meet White Cloud
This growth in interest is exactly what White Cloud Electronic Cigarettes are banking on. The Florida-based company started up in 2008, after company founders Michael Murray and Danielle & Matthew Steingraber were inspired by viewing e-cigarettes at a Las Vegas trade show.
White Cloud Cirpus 3X electronic cigarettes (Click Image To Enlarge)
Searching for a new business startup endeavor following a short-lived career in private collegiate funding services, the trio dove into the niche industry, acting as distributors for an established company before traveling to China to establish their own factory and set the foundation for their own company—White Cloud.
What sets e-cigarettes apart from other non-traditional nicotine delivery systems is that it has a high conversion rate, meaning that ‘smokers’ are less likely to return to regular cigarettes—a trend not enjoyed by other non-burning nicotine outlets like patches, Matthew Steingraber said. This could be because e-cigarettes look similar to cigarettes, feel the same in the hand and can be social (think cigarette breaks or grabbing a smoke outside while at a bar with friends). Because it’s non-burning, e-cigarettes don’t carry the same health risks as regular cigarettes, Steingraber said. Though nicotine is still not healthy, there’s no smoke, no ash and no tar.
“People smoke for nicotine but they die from the tar,” said Steingraber. All three company founders enjoy their own products, he said.
How Does White Cloud Compete?
Steingraber insists that what sets his company apart from the rest is a) longer product battery life, b) higher levels of nicotine than competitors, and c) An array of attractive flavors. The company won’t release revenue figures but said it has enjoyed 77% revenue growth year over year. The company is looking to franchising as a means of growth, shooting to establish itself in the more high-end e-cigarette space.
Growth of the Market
As for the future of White Cloud, the company is open to the idea of taking on minority investment as a means of speeding up growth—a concept they hadn’t considered prior to coming to the conclusion that the e-cigarette industry will make leaps in the coming year or so, on the back of a handful of new players and investment and development of products by big tobacco companies like Lorillard.
There are dozens of electronic cigarette producers, but at the moment the big competitors in the U.S. e-cigarette market include V2 Cigs, bluCigs, NJOY, 21st Century, Xhale02 and Green Smoke. Reynolds American Inc. has released e-cigarettes under the Vuse and Zonnic brands as well. In the coming year or so the market is likely to see a lot of new players as well as a lot of acquisition of established competitors, Steingraber said.
And why shouldn’t big tobacco embrace electronic cigarettes? If they do not, the niche brought to US shores from established markets in China could further harm an American tobacco market that has seen a steady reduction in consumption over the past 20 years.
How long can we really look at e-cigarettes as a niche? The product has shown an increase in exposure and adoption, the tobacco company has acknowledged them as a threat to business and, hey, the product already has celebrity endorsers like Robert Pattinson and Uma Thurman. This is definitely a battery-operated, addiction-based market to watch.
COMMENTARY: The diversification move by Lorillard, the third-largest U.S. tobacco company by sales, into battery-powered e-cigarettes—which turn heated nicotine-laced liquid into a vapor mist—coincides with aggressive moves by its larger rivals.Altria Group(Philip Morris), V2 Cigs,NJOY (King brand), 21st Century, Ehale 02, White Cloud (Cirpus 3X brand), XEO, and Reynolds American Inc. (Vuse and Zonnic brands) have been pushing more-established smokeless tobacco products, including snuff and snus, as cigarette volumes fall.
When Lorillard acquired privately-owned Charlotte, N.C.-based Blu Ecigs, the company had about $30 million in revenue in 2011 and was sold in more than 13,000 retail outlets, including Walgreens and Sheetz. It competes with dozens of other start-up brands, including NJOY, 21st Century and Xhale02, that are sold in stores and online.
Things are heating up in the electronic cigarettes market. In December 5, 2012, Bloomberg reported that Altria Group was interested in acquiring NJOY, a strategic response to Lorillard's acquisition of Blu eCigs.
Lorillard's strategic shift comes as the Food and Drug Administration weighs a possible crackdown on menthol-flavored cigarettes, which represent about 90% of Lorillard's revenue, owner of the popular Newport brand. The FDA already has banned all other cigarette flavors. It also plans to regulate e-cigarettes, saying they may pose health risks.
Size of E-Cigarette Market
E-cigarettes are still a tiny fraction of the $100 billion U.S. tobacco market. But the niche industry has grown rapidly since arriving from China five years ago. It now accounts for between $250 million and $500 million in annual sales, according to industry estimates. Bonnie Herzog, an analyst at Wells Fargo & Co., estimates that the market for e-cigs may rise to $1 billion in the next three years from $300 million in 2012.
Herzog told Bloomberg by telephone from New York.
“It is truly a wakeup call for Big Tobacco. If manufacturers can create something that tastes, looks, feels and smokes like a traditional cigarette with substantially less risk or harm, more consumers are going to try them and retailers are going to give them more shelf space.”
Lorillard says e-cigarette sales have been doubling every year and is betting the product will grow more quickly than other smokeless alternatives because they more closely mimic traditional cigarettes. E-cigarettes look similar to traditional cigarettes and users—often called "vapers"—also inhale nicotine.
Lorillard Chairman and Chief Executive Murray Kessler in an earnings conference call with investors in July 2012 said.
"I like it because you get all of the benefits of not having combustion, but on the other hand you are maintaining the behavior that cigarette smokers enjoyed."
Lorillard's sales slipped 0.6% to $1.53 billion and net income fell 10% to $223 million in the first quarter from the same period in 2011, heightening investor concerns about the tobacco industry's growth prospects.
Reynolds American, the No. 2 tobacco player and maker of Camel cigarettes, said Tuesday its first-quarter sales fell 2.9% to $1.93 billion and net income shrank 29% to $270 million. Altria, maker of Marlboro cigarettes and the industry leader, reports results Thursday.
Lorillard, which has been grabbing cigarette market share from its larger rivals in recent years, blamed the first-quarter sales decline on inventory fluctuations. The company said its domestic retail cigarette share rose 0.4 percentage point to an all-time high of 14.5% as its menthol share grew 1.0 point to 40.0%. Mr. Kessler reiterated Wednesday that he is "optimistic" the FDA won't slap big restrictions on menthol cigarettes.
Lorillard is trying to play catch up with its two larger rivals on the smokeless front after sticking resolutely to cigarettes for decades. Reynolds reported $158 million in first-quarter revenue at its American Snuff unit, led by its Grizzly and Kodiak moist-snuff brands. It also markets spit-free tobacco pouches called snus and oval-shaped lozenges called orbs.
Altria generated $1.63 billion in revenue from smokeless tobacco last year on the back of its Copenhagen and Skoal snuff brands, which it obtained after acquiring UST Inc. in a 2009 diversification push. Mr. Kessler headed UST before becoming CEO at Lorillard in September 2010.
Altria and Reynolds declined to comment on whether they plan to enter the e-cigarette market.
How E-Cigarettes Work
This video produced by ESmokeInPeace.com explains how E-Cigarettes work:
The following infographic created by Visual.ly provides a detailed explanation of how electronic cigarettes work, their benefits, price comparison versus regular cigarettes, durability versus regular cigarettes and other facts and statistics about smoking and smokers.
Click Image To Enlarge
E-Cigarette Prices
Prices for e-cigarettes vary greatly but can cost half as much as traditional cigarettes, which are heavily taxed. They can use batteries or USB chargers and come in several flavors; Blu Ecig makes cherry and piña colada varieties, among others.
Anti-E-Cigarette Advocacy Groups
An advocacy group associated with the American Cancer Society is asking the FDA to re-examine the safety of electronic cigarettes and whether they can actually help people quit.
Chris Hansen, president of the American Cancer Society Cancer Action Network (ACS CAN), said in a statement.
"E-cigarettes have not been scientifically shown to be effective tobacco cessation tools, yet some distributors are marketing them either directly or indirectly for that purpose."
Hansen pointed to an ad from Arizona-based NJOY, which ran during the Oscars. He said.
"E-cigarettes are often manufactured to resemble traditional cigarettes, and are available in fruit and candy flavors that are appealing to youth. The familiar appearance and enticing flavors could actually encourage kids to try traditional cigarettes, rather than avoid them."
FDA Regulation of E-Cigarettes
In 2012 the FDA said that it plans to regulate e-cigarettes after warning in 2009 that the product may pose health risks after detecting carcinogens and toxic chemicals. Lawmakers in a growing number of states want to extend smoking bans in public areas to include e-cigarettes, tax them the same as cigarettes and ban their sale on the Internet.
But some health experts say e-cigarettes help wean nicotine addicts off more harmful traditional cigarettes, which release most of their toxins through combustion and are linked to an estimated 443,000 deaths a year in the U.S. They also say e-cigarettes eliminate the dangers of second-hand smoke.
Courtesy of an article dated October 24, 2012 appearing in Forbesand article dated April 25, 2012 appearing in The Wall Street Journal , an article date December 5, 2012 appearing in Bloomberg, an article dated March 3, 2013 appearing in PC Magazine and an infographic appearing in Visual.ly
The weight loss industry is just huge, with the annual revenue of the US weight loss industrysome $61 billion. That means lots of businesses are cashing in on obesity, as 108 million people are on diets in the US alone at any point in time.
How lucrative is this business? Just look at how much celebrities are paid to endorse major weight loss programs. The fee is as high as $3 million, ABC News reports.
One of the companies doing exceptionally well in the industry is Weight Watchers, a weight management system that has become a veritable way of life for millions of people across the globe—from the US and China to Europe and New Zealand. It's a case study of how savvy marketing can propel a company to the forefront of its industry.
Weight Watchers is clearly the dominant company among weight-loss centers and programs, banking north of $1.2 billion each year. It is at least three times larger than its primary competitors, Nutrisystem and Jenny Craig. Weight Watchers has some 8 million website visitors per month and 1.72 million paid online subscribers.
Below are Weight Watchers' Income Statements for the years December 31, 2009 through December 31, 2012:
Click Image To Enlarge
So what are the company's marketing secrets? Let's take a look at six savvy principles Weight Watchers has implemented to solidify its position at the top of the weight-loss stack.
1. Give them what they want, not what they need
We are driven by our desires. We buy expensive fast cars because we crave the "success" image associated with them, not because they are a sensible mode of transportation. We want iPhones because they are a status symbol, not because of the crystal clear voice reception. Same with Jimmy Choos, and Louis Vuitton bags. Sales of such products are all driven by wants.
Weight-loss products are no different. We may know that the key to losing weight is to cut out junk food and eat more vegetables. But that's not what we want. We want to be able to eat our donuts and drink our Frappuccinos. And, smartly, Weight Watchers lets us do that.
According to the Weight Watchers PointsPlus system, members have a daily PointsPlus total based on their gender, weight, and activity level, as well as a weekly PointsPlus allowance that allows for fluctuations in daily eating. For example, if you go out to a restaurant for dinner and surpass your daily PointsPlus allowance, you can dip into your weekly reserve without worry, so long as you don't surpass your weekly allowance as well.
That's a brilliant move on Weight Watchers' part. Essentially, the company is telling members,
"Go ahead and eat that donut or drink that Frappuccino. As long as you're within your PointsPlus limits, you'll lose weight."
2. Market the feelings, not the product
When people buy a product, they are paying not for what the product can do for them but what feelings it can give them. Entrepreneur Jeff Barnett explains.
"Consumers are ultimately paying for feelings."
Weight Watchers has figured out the ultimate feeling that dieters long for and has enabled it. What do dieters want? They want to feel good. They want to avoid pain. They want to enjoy the food they like. In short, dieters don't want to feel deprived. And that's what Weight Watchers communicates to its target audience through the voice of celebrity singer and spokesperson Jennifer Hudson, who dropped over 80 pounds:
Jennifer Hudson: "At this point I feel I can do anything, I feel good."
Jennifer Hudson: "I feel so comfortable in my jeans…it makes me love myself that much more…loving and free to eat what I love…loving and free to live my life"
3. Let them join for free
A "Join for Free" campaign is always friendly to prospective customers. Weight Watchers lets people attend a free meeting near them. If after the meeting they decide to sign up, they are allowed to receive educational materials. As market analyst Tony Rossel explains, this "opt in" strategy can result in up to a 30% conversion rate.
Consumers react well to this type of strategy because they feel no pressure; and once they see the educational materials and products at a meeting, they want them.
That contrasts with "force free" trials, in which people who didn't request something are given a free trial and then asked to pay after a certain period of time, or "negative option force free" trials, in which customers are asked for credit card information before they get the trial, and then must proactively cancel.
Both of those methods can leave a bad taste in the mouths of consumers since they are more pressure-filled.
4. Make the solution look complicated
Weight Watchers makes eating look complicated. Rather than relying on regular-old calorie-counting for foods, Weight Watchers now uses the PointsPlus system.
It used to rely on calories for its points totals. The problem was that fruits and junk food would be given the same amount of points if they had the same amount of calories (and you know which one is better for you to eat). The current PointsPlus program is much more complicated, and based on a sophisticated mathematical formula.
The company relied on its "nutrition specialists" to develop a system that takes into account how foods are broken down in the body. It all sounds too complicated for any layperson to figure out, so people feel they have to go to Weight Watchers, since the company has the inside scoop on weight loss.
In reality, the PointsPlus system is based on basic food and nutrition science. It's nothing new. Yet, serving a solution that sounds complicated, and more like a "discovery" rather than an old principle, makes customers feel they have to buy. It is a brilliant marketing strategy.
5. Create exclusive products
In addition to just promoting the PointsPlus system—the solution to being overweight—Weight Watchers offers exclusive products to facilitate the implementation of its solution. Those products make it easier for people to follow the program. For example, it sells PointsPlus calculators. It also makes available snack bars, yogurts, ice creams, and other foods that have the PointsPlus value right on the box.
Weight Watchers Smart Ones Classic Meals (Click Image To Enlarge)
Weight Watchers Smart Ones Smart Beginnings (Click Image To Enlarge)
Weight Watchers Smart Ones Smart Anytime (Click Image To Enlarge)
Weight Watchers Smart Ones Smart Creations (Click Image To Enlarge)
Weight Watchers Smart Ones Satisfying Selections (Click Image To Enlarge)
Weight Watchers Smart Ones Smart Delights (Click Image To Enlarge)
Moreover, it sells food scales that tell consumers the PointsPlus value of their food rather than the weight. People snap up these products because they make the Weight Watchers (complicated) system simple to follow, since they won't have to do any calculations or look up values on their own.
6. Actively court a new audience
Some 90% of dieters are women, as are 90% of Weight Watchers clients. However, the company has noticed growing interest among men to lose weight and so is capitalizing on that interest.
But Weight Watchers isn't pushing its bread and butter—center-based meetings—to men. Instead, it's promoting its online tools and mobile-based apps. Because men generally try to diet on their own, such as joining a health club, or controlling their food intake, Weight Watchers is anticipating that they will be more drawn to these tools than the meetings.
Weight Watchers Mobile app (Click Image To Enlarge)
To better target the men's market, Weight Watchers airs commercials during the NBA playoffs. Obviously, the male audience is worth the $1 million per minute advertisement cost.
NBA Player Charles Barkley is a spokesman for Weight Watchers, Before and After pictures (Click Image To Enlarge)
Overall, Weight Watchers has risen to the top of the weight-loss industry because it has been so smart in the marketing of its products. Other companies in this market—and even in other industries—can learn a valuable lesson from the granddaddy of weight loss programs by following these six marketing principles:
Give your customers what they want, not what they need.
Market the feelings, not the product.
Let them join for free.
Make the solution look complicated.
Create exclusive products.
Actively court a new audience.
COMMENTARY:
Weight Watchers Company Overview and Performance
Weight Watchers' smart use of televison commercials with famous celebrities with weight problems (Charles Barkley, Jessica Simpson, Jenny McCarthy, Jennifer Hudson and others) who benefited from Weight Watcher's weight-loss program, give the company instant creditability with its customers.
The high awareness and credibility of the Weight Watchers brand among all types of weight-conscious consumers—women and men, consumers online and offline, the support-inclined and the self-help-inclined—provide the company with a significant competitive advantage and growth opportunity. As the number of overweight and obese people worldwide grows, the company believes its global presence and brand awareness uniquely positions it to capture an increasing share of the global weight management market through its core meetings business and its WeightWatchers.com business.
In the 50 years since its founding, Weight Watchers has built its meetings business by helping millions of people around the world lose weight through sensible and sustainable food plans, exercise, behavior modification and group support. Each week, 1.5 million active members attend over 40,000 Weight Watchers meetings around the world, which are run by more than 10,000 leaders—each of whom has lost weight using its program.
The company is constantly improving its scientifically-based weight management approaches, and they are one of only a few commercial weight management programs whose efficacy has been clinically proven. Its strong brand, together with the effectiveness of its plans, loyal customer base and unparalleled network and infrastructure, enable them to attract new and returning members efficiently. Its customer acquisition costs are relatively low due to both word of mouth referrals and its efficient mass marketing programs.
Weight Watchers' has also demonstrated that it has strong management. It's packaged weight-loss meals have generated $1.8 billion in gross revenues and a gross profit margin of 59.27% for the year ending December 31, 2012. Incidentally, gross profit margins have increased consistently since the year ending 2009 when they were 52.0%. Total meeting fees for year ending 2012 were $934.9 million (51.2% of total gross revenues), a decrease of $55.4 million, or 5.6%, from $990.3 million in the prior year. Marketing expenses for year ending 2012 were $343.5 million, an increase of $51.2 million, or 17.5%, from the year ending 2011. After deducting total operating expenses, the company generated a pre-tax profit of $416.96 million in the past year -- an impressive 22.82% IBT.
Weight Watchers' operates both company-owned and franchised meeting centers. It's producs are distributed through a number of channels from independent sellers to major consumer retailers and supermarket chains.
In the year ending 2012, consumers spent $5 billion on Weight Watchers branded products and services, including meetings conducted by the company and its franchisees, Internet subscription products sold by WeightWatchers.com, products sold at meetings, licensed products sold in retail channels and magazine subscriptions and other publications.
How Weight Watchers Uses Social Media
Did you know that the first social media platform Weight Watchers used was MySpace in 2008? It then launched Facebook and Twitter in 2009. Today the company has both an internal team and an agency that provides social media support. SocialTimes recently caught up with Lee Hurley, vice president of social media at Weight Watchers to discuss the company’s social media goals, strategies, the platforms it uses, and the analytics program it’s thinking about building. Here are excerpts of the conversation:
How important is social media in terms of the mission of Weight Watchers?
It is actually a crucial part of it. We were pretty much a born social brand, a community from the start. So, the ultimate goal of the company is to really help people to adopt and sustain a healthy way of living for life…. So, [before] that largely happened offline when you saw somebody when you were offline and you were like, hey, you look amazing, what did you do? That’s where the Weight Watchers discussion started, and now with people posting photos and sharing their success, a large portion of that actually happens online. Moving to digital is a really important part of the mix.
What are Weight Watchers’ social media goals and strategies?
One big one is extending our service strategy to social. So, that’s timely brand-to-consumer engagement, which is providing ongoing support and motivation. Through Twitter, Facebook, even on our website, we get questions every day. The other one is really continuing to innovate on increasing social sharing by allowing people to share what they’re learning, doing and loving on the program. We create pretty much exclusive content in social, whether it’s tips, quotes, success stories, recipes.
On our Facebook page, even though we put out a ton of content – we post usually three times a day. There are thousands of people posting all the time, connecting with each other, answering each other’s questions.
Have there been any specific social media campaigns or types of content that are more popular that you’ve seen more engagement from?
For the “I’m Only Human and I Did it Project,” which we only launched in December, we’re getting a lot of positive responses for that. This is real people sharing their stories of struggles before Weight Watchers and what their life was like, and then the success they have found at Weight Watchers, on YouTube. We have had over 2 million views of those videos.
Weight Watchers has over 1.2 million fans on Facebook and nearly 200,000 on Twitter (Click Image To Visit Facebook)
We had a social media campaign calledLose-A-Palooza, which had gotten tons of engagement and very large reach.
We have a program called Lose for Good, and we have done that for the past five years in the fall. As members and subscribers lose weight, Weight Watchers donates up to $1 million to Action Against Hunger and Share Our Strength. Lose-A-Palooza was a one-day social media event to help bring awareness and engagement with that program. For that day, every single engagement we were donating $1. That was widely successful, and I think largely because it was tapping into things that people ordinarily do. We have done live chats with [fitness and health expert] Jennifer Cohen. We were streaming exercises on our Facebook page, and then we did a live chat with her after, which got a lot of engagement.
What tools do you use to measure social media campaigns?
For monitoring and publishing, we have NetBase and Spredfast. We track a lot of our links through Atlas. We look at a lot of tracking that way because that goes all the way to conversion. We are constantly looking at tools to help with efficiency and effectiveness in terms of publishing and hooking into develop a true social CRM model.
I think ultimately we are looking to build an analytics program that would actually tell us, our people who engage with us on social, are they losing more weight, are they more successful? Everything that we’re doing on Twitter and Pinterest and Facebook – even with all the tools that we currently have today – aren’t going to give us that pass-along and word-of-mouth amplification. So, we are looking at different ways of helping us get to the true answers of ROI broadly.
You mentioned Pinterest – Weight Watchers is also on Pinterest, right?
Yes. We have a presence on Pinterest. Recipes I think are the No. 1 thing. Food is very important. We also have inspiration boards and such, but recipes are the most popular.
Is Weight Watchers looking at any other social media platforms?
We have a presence on Tumblr. Last year, we had a contest – 365 Reasons to Believe – and they are all archived on Tumblr. For us, it’s not just about what are the new platforms, but, how do we have a meaningful presence? With Instagram, it’s how might we do a campaign leveraging ambassadors and influencers there versus just having a Weight Watchers Instagram page, because that may not make the most sense.
Brain cancer cells magnified under a microscope (Click Image To Enlarge)
Cancer is a leading cause of death in many wealthy countries, and its toll is rising in poorer regions. A 2012 study in The Lancet Oncology predicted that from 2008-2030, cancer incidence will rise 75 percent globally and will double in the least developed countries. Explore this data visualization to learn more.
COMMENTARY: Developed nations like the U.S. and those in Europe have higher cancer rates than those in developing and under-developed countries. There has to be a correlation between wealth and cancer, but what is it?
Courtesy of an article dated December 15, 2012 appearing in Visual.ly
The NFC court is a modular, rapidly deployable, outdoor gym (Click Image To Enlarge)
WE KNOW OBESITY IS AN EPIDEMIC, BUT GYM MEMBERSHIPS ARE EXPENSIVE. SO MAYBE WHAT WE NEED ARE NEW GYMS.
There are a lot of reasons not to go to the gym. The membership is pricey. It’s far away. You have no idea how to use half the equipment anyway. It’s yet another place you’re going that’s inside.
The National Fitness Campaign’s (NFC) court, designed by NewDealDesign, challenges each of these barriers to working out at a gym. It’s a low-cost, open-air space that is constructed in factories, then modularly assembled on-site in just half a day. The idea is that any community could set up, customize, or relocate a gym in a public space--without any money at all. Communities can actually request a gym to arrive for free, and locals needn’t buy memberships.
The NFC court uses passive equipment structures--resistance training--to enable workouts without lots of weights and complicated moving parts (Click Image To Enlarge)
The NFC court's most innovative aspect may be its business model -- The gym is free to bring into a community. Corporations subsidize the cost (Click Image To Enlarge)
How? The NFC courts are corporately subsidized. The platform is pursuing a model in which businesses can use the space as an advertisement, subsidizing community fitness while scoring some solid PR in the process. It’s actually an old idea, one that started by Mitch Menaged back in 1979. It was quite successful. The decade-long, international campaign reached 4,000 cities in three countries. Now, Menaged, along with Sam Lucente, is launching the idea again, updated with 30 years of innovation. The first NFC has arrived in San Francisco already, and more than a dozen others are planned for the area in 2013.
The design concerns of such a project are numerous.
Materials had to be durable enough to withstand outdoor weather.
The components had to be easily transported, assembled, and even rearranged.
The equipment had to offer a full body workout for all fitness levels.
Off-the-shelf solutions wouldn’t work, so NewDealDesign brought on seven personal trainers to help develop and test what’s all-new (or highly modified) equipment. What they quickly decided on was to ditch weights--they’re heavy, and they’d be difficult to tether to the platform--and rely on a body’s own mass for resistance training. But while exercises like pull-ups may offer a great workout, not everyone can do a pull-up. The solution? Make exercises tweakable by designing equipment to work with various postures and grips. Then, put many of the hardest exercises along the structure’s single wall.
The NFC court does not charge memberships, meaning it doesn’t cost anyone $50 a month to not use their gym membership (Click Image To Enlarge)
The NFC court comes with a podcast, developed by personal trainers, that will take you through the whole workout circuit (Click Image To Enlarge)
NewDeal Director Gadi Amit explains.
“The wall was a major enabling factor, allowing us to hang devices, but also give a few steps for people who are weaker or not trained enough to come onboard and enjoy the space. You can lessen the stress level by standing on slats, then slowly reduce the support of your legs.”
Menaged and Lucente developed prototypes in a basement near NewDealDesign’s HQ, also bringing in trainers to constantly test and assess the designs. Once the NFC was complete, the trainers turned the circuit workout into a seven-minute podcast, so any couch potato can show up to be guided through each exercise by a virtual personal trainer. The idea is kind of like a museum audio tour, that is, if museums could give you 20-inch biceps.
COMMENTARY: I like the NFC court's overall simplistic, modular and modern design, durability, and ability to provide the user with a complete body workout. This is not an exercise court designed to build bulging muscles, but to provide a good, solid aerobic workout that each individual can customize for their specific needs, requirements and limitations. The free cost is a big plus. This sort of remends you of some of the beach exercise courts that I have seen in Rio De Janeiro around Leblon and Ipanema beach. If NFC can get enough corporations to buy into the advertiing concept, I think they can gain traction very quickly.
I loved the using San Francisco's Marina Green as a backdrop to demonstrate the NFC court and test bed. It's a great place to hangout and soak in the liberal San Francisco culture. If they can incorporate free WIFI at each NFC court, then they will really have a social watering hole. Just love it.
Courtesy of an article dated December 12, 2012 appearing in Fast Company Design
Shareholders in bedding companies are shell-shocked from the mattress wars this morning as Tempur-Pedic, citing increased competition, “aggressive” marketing campaigns and price-slashing, yesterday revised its outlook downward for the year while also projecting a falloff in same-quarter profits, which will be announced June 30. The company’s stock price plunged 49%, dragging down competitors such as Select Comfort (down 21%) and Sealy (5%) in the process.
That, despite the fact that “the overall financial picture for Select Comfort appears different from that of Tempur-Pedic's,” blogged the Minneapolis Star-Tribune’s Janet Moore as she observed the plunges mid-morning yesterday. Select Comfort, which is based in nearby Plymouth, Minn., posted its 13th consecutive quarterly profit in April and last month, COO Shelly Ibach, who has heavy experience in retailing, took over as CEO, Moore points out. But Tempur-Pedic had been on a roll, too.
“The company's sales had grown over 27% over the past two years, primarily due to demand from aging Baby Boomers, who have been sold on the health benefits of Tempur-Pedic's high-priced foam-based and other specialty mattresses. But Wednesday's forecast indicated that rivals have finally learned to compete in a market that the company had practically created and owned for most of the past two decades.”
You may remember Tempur-Pedic’s lavish and successful print and television direct marketing campaigns from the past but the battle of the foam mattresses is fully engaged on the retail floor nowadays.
“Major manufacturers like Sealy and privately-held Serta Inc. have all rolled out non-spring offerings over the past couple years.”
Serta's iComfort memory-foam mattresses, launched last year, have been a particular success in part because of their cheaper price, analysts say.
S&P Capital IQ analyst Jim Yin wrote in a note yesterday that’s cited byBarron’s Theresa Revis.
"It appears that competition caught up to Tempur-Pedic much faster than we expected in the specialty bedding segment, which calls into question the company's brand."
In downgrading the stock from Buy to Hold, Yin said,
"We expect Tempur-Pedic to lose market share in the specialty segment."
Indeed, Tempur-Pedic CEO Mark Sarvary told analysts in a conference call after citing in a press release.
"We did not expect the competitive environment to change this fast due to an unprecedented number of new competitive product introductions.”
But, Savary said,
“We remain very confident in our … growth potential and our strong brand, and as a result remain committed to our long-term strategic plan."
Yin writes that a recent downgrading of the stock by Stephens analyst Eric Hollowaty looks “prescient” based, as it was, not only on what he thought were overly aggressive earnings estimates by other analysts but also a
“promotional pricing atmosphere that could potentially spark a ‘race to the bottom’ among memory foam mattress makers."
Hollowaty asked.
"What price will Tempur-Pedic have to pay to be the last company standing?”
Last month, Tempur-Pedic said it that it would discount up to 17% off the suggested retail price of its popular Cloud Supreme mattress set during a sale set to run from May 16 to July 8. Citing the “unusual” nature of the promotion, Raymond James' analyst Budd Bugatch said at the time that,
“It could lend weight to critics who say that competition in the mattress business has gotten tougher while raising questions about demand for Tempur-Pedic's pricier products.”
According to an Associated Press story running in Bloomberg Businessweek. In the past, Tempur-Pedic has been more likely to give away pillows or foundations rather than cut the price on the mattress itself.
While we’re on the subject of discounting, if you grew up in the New York metropolitan area from the Fifties through the Seventies, you probably have a memory or two of E.J. Korvette, which sort of was Walmart before Walmart was Walmart. It even had groceries in some of the larger stores, Wikipedia informs us, (but not at the former Saks it occupied on 34th Street). The founder of the chain, Eugene Ferkauf, died Tuesday in Manhattan at 91.
Douglas Martin’s well-crafted obit in the New York Times this morning reads.
"Ferkauf was one of the first businessmen to grasp the emergence of a new breed of postwar consumer. Seeing a population of Americans financially better off, impatient to get on with their lives after World War II and susceptible to the advertising shown on the latest new thing, their television sets, he concluded that victory belonged to the very bold."
At its peak, there were 58 Korvette stores nationally,according to Wikipedia. Martin says.
“Prices at the nominally membership-only stores were 10 to 40% below more conventional competitors.”
Ferkauf sold his share in the company in 1966 for more than $20 million with much of his fortune later donated to charities. The chain, mismanaged in the face of competition, went out of business in the early 1980s.
Martin also explodes a popular urban –- “or perhaps suburban” –- myth of where the name “E. J. Korvette” came from. It did not stand for “eight Jewish Korean War veterans,” after all.
Martin writes.
“The ‘E’ comes from the first letter of his first name, the ‘J’ from that of Joe Swillenberg, an old Tilden [High School] friend who became a top company executive. Korvette is a deliberate misspelling of corvette, a reference to a class of naval ship, not the car.”
COMMENTARY: This is a great example of what happens when a company underestimates its competition or fails to continue to innovate to improve existing products or design new products in order to maintain its competitive edge. Tempur-Pedic appears to have failed on both counts. Tempur-Pedic has dominated the memory foam mattress segment for nearly two decades, but it now appears that this incredible run is about to end.
On Wednesday, June 6, 2012, shares of Tempur-Pedic International Inc (NYSE:TPX) plunged 47% after management slashed the company’s full-year sales and earnings guidance. Due to increasing competitive pressures in the specialty mattress market, the company expects sales to be flat in 2012, coming in at around $1.43 billion versus the company’s prior forecast of $1.6 billion to $1.65 billion. This compares with analyst estimates of $1.64 billion in sales.
Additionally, the company now expects earnings of just $2.70 per share, which falls far below the Street view of $3.93 per share. Since the company’s devastating report, shares of TPX have continued to flounder; it appears that this stock will be treading water for some time while the company rethinks its growth strategy.
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The above announcement by Tempur Pedic management that it expected "sales to be flat in 2012" and that sales for the year 2012 are expected to be "coming in at around $1.43 billion instead of the $1.6 billion to $1.65 they forecasted," have severely impacted the price of Tempur Pedic's stock (see above graph).
According to to an article dated June 11, 2012 by Louis Navellier, Editor, Blue Chip Growth appearing in Investor Place, Mr. Navellier blames Tempur Pedic's misfortunes on poor fundamentals. He says.
"On the fundamentals side, Tempur-Pedic does well in terms of cash flow and return on equity, and does decently in terms of sales growth, operating growth and earnings growth."
"However, there is plenty of room for improvement in terms of earnings momentum, earnings surprises as well as analyst earnings revisions. TPX receives a B for its Fundamental Grade and a D for its Quantitative Grade (which indicates the current level of buying pressure for the stock)."
Mr. Navellier did not specifically address the root causes of Tempur Pedic's poor fundamentals, which is finance geek speak for "failure to execute," "poor management decision-making," "not controlling expenses," "not innovating to keep ahead of the competition," and so forth. However, here's my take on what I think is really going on.
Failure To Innovate - Tempur Pedic has failed to innovate in order to keep ahead of the competition by introducing greatly improved or technologically advanced products. Tempur Pedics' innovations have been primarily incremental like the launch of the TEMPUR-Cloud and TEMPUR-Simplicity collections. These innovations are mostly defensive, because competitors are able to match them in very short order. Tempur Pedic needs a breakthrough innovations that create true value for customers and stakeholders alike.
Management Blindsided - Tempur Pedic's CEO appears to have been completely caught off-guard when he said, "We did not expect the competitive environment to change this fast due to an unprecedented number of new competitive product introductions.” FACT: There are now over 80 companies offering memory foam mattresses. Did Salvary honestly believe that the onslaught of that many competitors would not eventually peck away at its market share? It just makes one feel like Salvary is a ships captain who fell asleep on the bridge and Tempur Pedic is now sailing without any real direction or final destination.
Mature Industry - The memory foam mattress segment has reached maturity, is highly fragmented, with too many competitors offering similar mattress choices that are almost indistinguishable from those offered by Tempur Pedic.
Industry Commodization - The memory foam mattress segment is showing signs of industry commoditization with competitors offering similar products and competing almost entirely on the basis of price. Price discounting has become standard practice in this segment. Discounting maybe necessary as a defensive strategy in the short-term, but if Tempur Pedic continues to resort to regular discounting, customers will expect deals, and this will destroy the company's reputation as a supplier of premium quality mattresses and hurt the company's revenues and earnings in the long-term. This is not a win-win for anybody, and Tempur Pedic, being the market leader in the memory foam segment has the most to lose in this type of competitive environment.
Outsourcing To China - Tempur Pedic produces all of its mattresses in its plants located in the U.S. and Europe to meet the needs of its customers in North America and Europe. Sales to China were about $5 million or less than 1% of total sales, but the company believes it can increase this to $50 million in 2012. This could be a good time for Tempur Pedic to consider oursourcing production to meet the needs of the huge Chinese market. This would make it less susceptible to foreign currency fluctuations especially in the Eurozone, lower its manufacturing costs, and allow it to distribute its products to the huge local Chinese market.
Blue Ocean Strategy Needed - The rules of the game that competitors play by in the memory foam mattress market segment have changed since Tempur Pedic pioneered memory foam mattresses due to intense competition, discounting, a lack of product differentiation, and evidence of industry commoditization. Tempur Pedic needs to stop playing by the old rules, and start setting the rules of competition. It needs to lead instead follow the pack. In short, Tempur Pedic needs a Blue Ocean Strategy that ends the practice of trying to beat the competition, but focuses instead on making the competition irrelevant by creating a leap in value for buyers and the company, thereby opening up new and uncontested market space and making the competition irrelevant. In a Blue Ocean Strategy scenario, value innovation is based on the view that market boundaries and industry structure are not 'given' and can be reconstructed by the actions and beliefs of industry players. Tempur Pedic has certain advantages over the vast majority of its competitors: extensive knowledge of memory foam technology, patents, a well known brand name, economies of scale, vast distribution value chain, broad range of product offerings and access to international markets. However, instead of confining itself solely to the bed mattress market, it should expand the market for memory foam products into untapped markets where high quality, comfort, and ergonomics are important to the customers and they are willing to pay premium prices. Potential new markets include:
Office furniture (ergonomic office chairs).
Home furnishings (ergonomic chairs and sofas).
Passenger airlines (ergonomic passenger seats).
Infant transportation (baby carriers and automobile toddler seats).
No Bold or Decisive Strategic Moves - The inability of management to pivot or make bold and decisive strategic moves to fend off competition. Tempur Pedic went public in 2003, but it wasn't until 2007 that it made an acquisition (Canadian distributor). Tempur Pedic has made no major leaps in memory foam mattress technology. Most of its moves have been defensive and incremental. It is best known for buying back its own shares in order to propup its stock price. If this is the best that Tempur Pedic can do, it's a pathetic effort.
Increase Research & Development - Tempur Pedic spent about $10 million or less than 1% of sales on research and development. The company must increase its R&D to at least 5% of sales in order to innovate, execute its Blue Ocean Strategy, leapfrog the competition and create the products of the future. I would rather see it spend capital on R&D where it can contribute to value innovation than buying back its shares.
Tempur-Pedic Company Overview
Tempur-Pedic competes on the basis of technological innovation, high-quality mattresses, premium prices and offering a sleeping experience that is out of this world. Its visco-elastic foam technology was developed by NASA during the 1970s to help cushion astronauts during liftoff. The foam is used to manufacture premium mattresses, pillows, and related products that sell in some 80 countries. The company's TEMPUR and Tempur-Pedic brand names are featured by retailers (furniture, department, specialty stores), direct-response efforts and the Internet, health care channels (chiropractors, medical retailers, hospitals), and third-party distributors.
Market Positioning - Tempur-Pedic has positioned itself as a world leader in specialty sleep. Focused on developing, manufacturing and marketing advanced sleep surfaces that help improve the quality of life for people around the world.
Key Business Drivers - Demand for the company's products is driven by significant growth in its core market of Baby Boomers, increased awareness of the health benefits of a superior quality mattress and the broadening appeal of its new products.
Key Market Differentiators - TEMPUR® material distinguishes the company's products from those of its competitors. Viscoelastic pressure-relieving material was originally developed by NASA in 1971 in an effort to relieve astronauts of the G–force experienced during lift-off and NASA subsequently made this formula publicly available. The key feature of the company's pressure-relieving TEMPUR® material is its high-quality, high-density, temperature sensitivity. It conforms to the body, becoming softer in warmer areas where the body is making the most contact with the pressure-relieving TEMPUR® material and remaining firmer in cooler areas where less body contact is being made. As the material molds to the body’s shape, the body is supported in the correct anatomical position with the neck and spine in complete therapeutic alignment.
Recognized Global Brand - The company sells its products in approximately 80 countries primarily under the TEMPUR® and Tempur-Pedic® brands. The TEMPUR® brand has been in existence since 1991 and its global awareness is reinforced by its high level of customer satisfaction, as demonstrated by the recognition received by Consumer Reports, the Arthritis Foundation, the NASA Space Foundation, Good Housekeeping and Consumers Digest.
Vertically Integrated Manufacturing and Supply Chain - The company produces all of its proprietary TEMPUR® material in its own manufacturing facilities in the U.S. and Europe in order to maintain precise product specifications and ensuring a high level of quality and performance that is unmatched by its competition.
Products
TEMPUR® Mattresses - The company's mattresses are composed of proprietary multi-layer, temperature sensitive, pressure-relieving TEMPUR® material. TEMPUR® mattresses come in four collections:
TEMPUR-Cloud Collection - Comes in three models (TEMPUR-Cloud Luxe, TEMPUR-Cloud Supreme and TEMPUR-Cloud).
TEMPUR-HD Collection- Comes in three models (GrandBed, AlluraBed and RhapsodyBed).
TEMPUR-Contour Collection - Comes in three models (TEMPUR-Contour Signature, TEMPUR-Contour Select and TEMPUR-Contour).
TEMPUR-Simplicity - Comes in one model currently (TEMPUR-Simplicity) providing affordability. Comes in soft, medium and firm feel.
Pillows - The company's pillows provide plush and pressure-relieving comfort as the temperature sensitive material molds to the body.
Other Products - This category includes foundations used to support our mattress products, adjustable beds and many other types of offerings including a variety of cushions and other comfort products.
Distribution Channels - The company primarily sells at wholesale through three distinct channels: Retail, Healthcare and Third party. The company also sells at retail direct-to-consumers.
Retail - Includes furniture and bedding retailers, specialty stores and department stores, among others.
Healthcare - Includes medical supply, furniture and equipment retailers serving patients requiring special sleep support due to spinal injuries or chronic ailments.
Third Party - Includes third party distributors that can serve markets that are currently outside the range of its wholly-owned subsidiaries or distribution channels.
Direct-To-Consumer - The company sells its mattresses and other products direct-to-consumer utilizing TV infomercials with an toll-free 800 number and inbound call centers to take orders.
Operating Reporting Segments - The company reports operating results based on two segments: North America and International. These reportable segments are strategic business units that are managed separately based on the fundamental differences in their geographies.
North American - This segment consists of two U.S. manufacturing facilities and our North American distribution subsidiaries. The North America segment generated 71% of gross revenues at the end of 2011.
International - This segment consists of our manufacturing facility in Denmark, whose customers include all of our distribution subsidiaries and third party distributors outside the North American operating segment. The International segment generated 29% of gross revenues at the end of 2011.
Sales by Distribution Channel - The company sells the vast majority of its products through retailers. For the years ending December 31, 2011 and December 31, 2010, sales through retailers were 87.8% and 86.2% respectively. The company's sales by distribution channels for the years ending December 31, 2011 and December 31, 2010 were as as follows:
Sales by Product - Two-thirds of the company's sales are mattresses. For the years ending December 31, 2011 and December 31, 2010, mattress sales were 66.5% and 66.5% respectively. The company's sales by product for the years ending December 31, 2011 and December 31, 2010 were as follows:
Financial Performance - The company's Statement of Income for the year ending December 31, 2011 and prior two years and financial highlights are listed below:
Net Sales - Net sales for the year ended December 31, 2011 increased to $1.4 billion from $1.1 billion, an increase of $312.5 million, or 28.3%.
Gross Profit - Gross profit for the year ended December 31, 2011 increased to $743.1 million from $555.4 million for the same period in 2010, an increase of $187.7 million, or 33.8%. Gross profit margin for the year ended December 31, 2011 was 52.4%, as compared to 50.2% in the same period of 2010.
Selling and Marketing Expenses - Sales and marketing expenses increased to $276.9 million for the year ended December 31, 2011 as compared to $199.7 million for the year ended December 31, 2010, an increase of $77.1 million, or 38.6%. Selling and marketing expenses as a percentage of Net sales increased to 19.5% in 2011, compared to 18.1% for 2010. Our advertising expense for the year ended December 31, 2011 was $148.8 million, or 10.5% of Net sales, compared to $96.6 million, or 8.7%, for the same period in 2010, an increase of $52.2 million, or 54.0%.
General Administrative and Other Expenses - G&A and and other expenses as a percentage of Net sales was 8.9% for the year ended December 31, 2011 as compared to 9.9% for the same period in 2010. G&A and other expenses increased to $125.7 million for the year ended December 31, 2011 as compared to $109.8 million for the year ended December 31, 2010, an increase of $15.9 million, or 14.5%. The increase in G&A and and other expenses are primarily a result of increased salaries and associated expenses of $11.1 million and fees associated with financing programs in our Direct sales channel of $2.3 million, both of which were driven by our strong operating performance.
Income Befor Income Taxes - Income before income taxes for the year ended December 31, 2011 increased to $328.4 million from $230.9 million for the same period in 2010, an increase of $97.5 million, or 42.2%. North America Income before income taxes for the year ended December 31, 2011 increased to $224.6 million from $137.7 million for the same period in 2010, an increase of $86.9 million, or 63.1%. International Income before income taxes for the year ended December 31, 2011 increased to $103.8 million from $93.2 million for the same period in 2010, an increase of $10.6 million, or 11.4%.
Net Income - Net income for the year ended December 31, 2011 increased to $219.6 million from $157.1 million for the same period in 2010, an increase of $62.5 million, or 39.8%. Net income for the year ended December 31, 2011 was 15.5%, as compared to 14.2% in the same period of 2010.
State of the Bed Mattress Industry
According to industry research firm IBISWorld, the adjustable bed and mattress manufacturing industry was surprisingly stiff during the five years through the end of 2012. According to the ISPA there are now over 400 bed mattress manufacturers. The threat of substitutes is very high and competition is intense. Manufacturers faced difficult challenges, especially from shifts in residential investment and falling disposable income. New product innovations and increased efficiency slightly sustained revenue during this volatile period. Nevertheless, in the five years up to 2012, IBISWorld estimates that revenue will decline at an average annual rate of 3.0% to $1.6 billion. However, this decline has not been gradual or steady. Like most producers of household goods, adjustable bed and mattress manufacturers experienced revenue growth during the real estate boom, followed by a decline when the housing market collapsed.
Lower income levels hampered demand during the past five years, as consumers were less likely to invest in more-expensive adjustable beds and mattresses. Nevertheless, the improved housing market, higher incomes and new technologies in industry products will support growth over the next five years. In particular, the aging population will aid demand, as these consumers typically demand adjustable beds and mattresses more than the younger demographic
The U.S. bedding industry recorded just a 0.2% unit sales gain last year but saw a 7.7% jump in the value of wholesale bedding shipments, the International Sleep Products Assn. reported.
The highlights and lowlights of ISPA's final report for 2011 were as follows:
Specialty sleep segment significantly outperformed the innerspring segment.
Specialty sleep mattress units soared 24.3% in 2011.
Specialty sleep mattress unit sales market share rose to 13.8% in 2011 from 11.2% in 2010.
Specialty sleep mattress sales dollars market share rose to 29.4% in 2011 from 25.2% in 2010.
Innerspring mattress units recorded a 1.9% decline in 2011.
Specialty mattresses sales jumped 29.5% in 2011.
Innerspring mattress sales gained only 2.6% in 2011.
The strong growth of the specialty sleep mattress segment was the second year of market share gains.
The ISPA noted that the overall growth last year was not enough to restore all of the ground lost during the bedding recession.
The ISPA said.
"In 2011, the mattress industry continued the upward trend started in 2010, and posted increases in both unit shipments and wholesale dollar value. U.S. mattress producers shipped 34.9 million units in 2011, an increase of just 0.2% over 2010, and the second yearly unit increase since 2005. Remarkably, the value of mattress shipments showed a 7.7% increase in 2011, the second yearly increase in dollar value since 2007."
"Even with the healthy increase in dollar value registered in 2011, this figure was slightly above the 2008 total sales value, and below (7.6%) 2007 sales, which to date is the industry's highest sales year. Unit shipments in 2011 were slightly below the 2008 total shipments, and well below (20.2%) the 2005 figure, which to date is the industry's highest unit shipments year."
Average unit prices for all mattresses and foundations increased by 7.5% from 2010 to 2011. The average unit price for specialty mattresses increased last year by 4.2%, to $559.23, and for innerspring mattresses by 4.7%, to $210.47, ISPA said.
ISPA's final report on 2011 performance is based on the reports of the 18 companies participating in ISPA's monthly Bedding Barometer reports, and a mail and phone survey of other U.S. bedding producers.
The report reveals that the companies participating in the Bedding Barometer surveys had a 10% dollar gain last year and a 2.1% unit gain. Those companies accounted for about 76% of the industry's dollar total and about 66% of the unit total.
In contrast, the other bedding producers, a group generally consisting of smaller bedding makers, posted a dollar gain of just 1.3% last year and saw their units decline by 3.1%, the ISPA report said.
Memory Foam Mattress Market
Memory-foam mattresses are far and away the fastest-growing segment of the $4.6 billion wholesale market for U.S. mattresses. Memory foam's market share has shot up from 14% to nearly 20% in just the past eight years. Mattress shoppers are weighing the risk -- bad sex -- against the promise -- good sleep -- and are voting with their eyelids: They choose to snooze.
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