Weight Watchers Case Study

Problem:

Weight Watchers is struggling with customer retention and people hold misperceptions on the company’s offerings compared to that of other major competitors. Weight Watchers is directed toward women, however they offer products and services to fit the needs of men. Also, it is challenging for the company to create a forward-focused diet plan for mainstream users trying not to steer away from the initial mission, which is fostering success through group support.

External Environment:

Weight Watchers market segmentation strategy primarily targets women who are in the 25-55 age range. North America and other developed countries are facing staggering amounts of obesity, which make weight management an attractive industry for Weight Watchers.

Weight Watchers and other firms in similar industries are already well-establish and own most, if not all of the market share. Low economies of scale will be visible as new entrants will not be coming in on a large scale and do not risk strong reactions from competitors. Thus, any new entrant will require intense differentiation, and capital requirements to not only prove the entrant is a credible company, but also to even strike interest among competition. They should expect high switching costs because most of Weight Watchers products and services are customized and should not be combined with any other brands. New entrants should expect high barriers of entry and difficulty accessing distribution of channels as it is extremely difficult for new product to enter an industry with sharp retaliation from established competitors such as weight

Since most weight management tools provide similar products, thus, the buyer has a significant impact on bargaining power due to the numerous amount of products and services available.

Bargaining power of suppliers is low since there are alternative weight management platforms such as Jenny Craig, or Curves. The supplier is dominated by a few companies and is more concentrated than the industry it sells to. Also, with an industry as large as weight management, suppliers are more prone to exert power as a particular industry does not represent a significant fraction of its sales.

High intensity of rivalry can be expected among the numerous competitors of this industry. Most of the products have been around for a while now, so slow industry growth can occur with a lack of innovation. Augmented capacity can also become disruptive to the industry as economies of scale require that capacity must be added in large increments. Unless something is dramatically different, all of the weight management companies are competing for the same market