Weight Watchers' winning marketing strategy.

Weight Watchers overcame great competitive forces by recognizing the key to success is not following a brand management strategy, but in developing customer loyalty.

(The following article was compiled from a video interview conducted by Direct Marketing magazine Publisher Emeritus, Henry "Pete" Hoke, with a special Weight Watchers Food team, including Jay Abraham, vice president of marketing: Greg Morency, product manager, event/member marketing; and Glenda Murphy, general manager of frozen and novelty food business.)

You are a packaged goods manufacturer. The competition is heating up and eating away at your sales. What do you do? Most companies flood the market with point-of-purchase displays, coupons in free-standing inserts and other promotions which may temporarily boost sales but do not necessarily build brand loyalty.

The Weight Watchers food line, owned by H.J. Heinz, was not immune to the competition. During the late 1980s and early 1990s competitors like Healthy Choice, Stouffers Lean Cuisine and Kraft emerged with low-calorie foods and began nibbling at Weight Watchers' profits. The company's six-year strong growth period began to decline while the "light food category" hit its stride.

Couple this with the emergence of diet centers like Jenny Craig and NutriSystem--which compete with Weight Watchers International classrooms nationwide (many of which are also owned by H.J. Heinz)--and the pie was divided into smaller slices with more players. Simultaneously, the number of classroom attendees reflects upon Weight Watchers foods sales. Thus, if classroom sizes drop, so do food sales--by a grand 30 percent.

Weight Watchers overcame this problem not by mass marketing and managing brands, but by managing relationships. Weight Watchers launched special marketing program for the thousands of weekly classroom members with the goal of driving retail store traffic. By doing this the company was able to overcome a downturn and achieve a 66 percent increase in incremental volume per participating member. The program reportedly paid for itself in 90 days. The key has been database marketing, something many packaged goods marketers have been eyeing but few have mastered.

The H.J. Heinz Equation

H.J. Heinz purchased Weight Watchers in 1978 and received control of the rights to much of the classroom business which had served weight-conscious people since 1963, as well as the rights to the Weight Watchers trademark. The prepared foods were being produced by various companies under licensing agreements made with Jean Nidetch, Weight Watchers founder.