978-1259278211 Case 7 Solution Manual Part 1

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Teaching Note: Case 7 – Weight Watchers International Inc.

Case Objectives

1. To investigate choice of competitive strategy in a crowded industry environment.

2. To examine how external and internal forces affect competitive strategy.

See the table below to determine where to use this case:

NOTE: There are both PRIMARY and Secondary chapters that can be used for this case. The

Chapter Use Key Concepts Additional Reading and/or

Exercises

PRIMARY

5: Business Level

Strategy

Competitive strategy; generic

NOTE see additional reading

2: External

Industry competition five forces;

NOTE financial &

SECONDARY

6: Corporate-Level

Strategy

Diversification; synergy; core

11: Strategic

Leadership

Leadership; learning organization

12: Managing

Innovation

Innovation; scope of innovation

Case Synopsis

Weight Watchers International Inc. had been a major player in the weight loss industry for over

fifty years. The company was known for its lifestyle approach to weight management and its

Despite fifty years of success in the weight loss industry, Weight Watchers was experiencing

some challenges and opportunities, including: competitive positioning issues, reinvigorating its

In competition with other weight loss players, Weight Watchers faced the challenge of

maintaining market position and reversing its financial decline: entering 2015 Weight Watchers

Intensifying competition in the weight loss industry coupled with the perception of a “stale”

brand image meant Weight Watchers had to reinvent itself. Accordingly, the company was

Teaching Plan

The Weight Watcher case can be used to set the stage for a discussion of business policy and

strategy in a practical real-world environment. Most students can see themselves or their friends

wanting to lose a few pounds, so the issues may be easy for them to visualize. Therefore, this

NOTE – this case can also be used to illustrate marketing strategy, so could accompany a course

in marketing communications or consumer behavior.

ICE BREAKER

This case can start with an icebreaker. Starting from the perspective of a customer may make it

easier for students to transition to a strategic analysis.

How many of you can see yourself (or your friends) having to lose a few pounds, either now or

in the future?

How many of you have heard of Weight Watchers? What other weight loss programs are you

aware of?

Based on what you know, which weight loss programs would you consider joining?

The instructor may want to put a list on the board of the other weight loss programs students

have heard of, including Weight Watchers, and then ask, for each program, how many students,

by a show of hands, would consider joining each one and why. List these numbers and reasons

It may be interesting to also further segment the students by gender and age – do any trends

emerge? Do men prefer one program over another? Do older women prefer a particular program?

It’s also possible some students are fans of health monitoring devices such as the FitBit, or are

intrigued by the personal coaching approach promoted by programs such as The Biggest Loser.

Before engaging in discussion, you might want to test student’s basic knowledge regarding the

Weight Watchers predominately uses the following operational model:

a. Selling pre-prepared meals

b. Providing online tools for do-it-yourself weight loss guidance

c. Holding meetings where members are given instruction and group support

d. All of the above

ANSWER: c This can be misleading. Weight Watchers does sell meals with the Weight Watcher

brand, but these are not part of a prepared meal plan such as used by Jenny Craig and

Weight Watchers’ primary target market is women.

a. Yes

b. No

ANSWER: b Although Weight Watchers started out as a women’s support network, increasingly

Summary of Discussion Questions

Here is a list of the suggested discussion questions. You can decide which questions to assign,

and also which additional readings or exercises to include to augment each discussion. Refer

back to the Case Objectives Table to identify any additional readings and/or exercises so they can

be assigned in advance.

1. How should Weight Watchers compete?

2. What are key forces in the general and industry environments that affect Weight

Watchers’ choice of strategy?

3. OPTIONAL QUESTION: How should leadership manage innovation in this industry, and

what are Weight Watchers’ options for growth?

Discussion Questions and Responses

1. How should Weight Watchers compete?

Referencing Chapter 5: Formulating Business-Level Strategies –

How firms compete with each other and how they attain and sustain competitive advantages go

to the heart of strategic management. In short, the key issue becomes: why do some firms

outperform others and enjoy such advantages over time? The viability of a firm’s success is

Weight Watchers had begun with a simple philosophy: a program that incorporated a food plan

and an activity plan, supported by a community system where the group provided love,

A business-level strategy is a strategy designed for firm or a division of the firm that competes

within a single business. Within the firm’s industry environment generic strategies include basic

types of business level strategies based on breadth of target market (industrywide versus narrow

See the types of competitive strategies, including the three generic strategies that are used to

overcome the five forces and achieve a competitive advantage:

●Overall cost leadership

oLow-cost-position relative to a firm’s peers

●Differentiation

oCreate products and/or services that are unique and valued

●Focus strategy

oNarrow product lines, buyer segments, or targeted geographic markets

Generic strategies are plotted on two dimensions: competitive advantage and strategic target. The

overall cost leadership and differentiation strategies strive to attain advantages industry wide,

Differentiation: This is traditionally where Weight Watchers had excelled, using differentiation

to maintain market share by building off its solid reputation. Weight Watchers’ approach to

Cost Leadership: Weight Watchers had been able to keep overall costs low amidst its use of a

differentiation strategy. Due to its rented space, non-reliance on infrastructure for much of its

Focus: Weight Watchers had been focused in its targeting of young- to middle-aged women in

Other options firms sometimes pursue include:

Combination of Differentiation and Cost Leadership, Combination of Focus and Cost

Leadership, Combination of Differentiation and Focus: While Weight Watchers had pursued a

Stuck in the Middle? Weight Watchers must ensure that it does not get stuck in the middle, and

does not sacrifice the benefits of its original focused differentiation strategy, while expanding its

As explained in the chapter, competitive parity means a firm’s achievement of similarity or being

“on par” with competitors with respect to low-cost, differentiation, or other strategic product

characteristics. Competitive parity on the basis of differentiation permits the cost leader to

Weight Watchers had always been able to control costs because of its flexible business model:

meeting costs were low, and the number of meetings could be adjusted according to demand. The

On the other hand, for those firms that choose differentiation, parity on cost requires that

differentiators must integrate operations at multiple points along the value chain, reducing costs

Competition for Weight Watchers International included both price competition and competition

from self-help, pharmaceutical, surgical, dietary supplement, and meal-replacement products, as

well as other weight-management brands, diets, programs, and products. Weight Watchers had

Weight Watchers was the pioneer of a differentiation strategy within the weight loss industry. It

had prospered with a focused differentiation strategy in the past – targeting women. Now, Weight

Watchers was attempting to branch out into broad-based differentiation, while also adapting to

NOTE – ADDITIONAL READING, WEB LINKS AND VIDEO:

Visit the Weight Watchers main website at http://www.weightwatchers.com/index.aspx

Here are videos showing how the Weight Watchers meetings work, from 2007, highlighting the

Winning Points system:

http://www.youtube.com/watch?v=4SftzmDQJmI (Part 1)

http://www.youtube.com/watch?v=hi4L_zJTkiA&feature=related (Part 2)

In 2007, Weight Watchers promoted an online weight loss support site specifically for men. See

the website here: http://www.weightwatchers.com/men/index.aspx

Weight Watchers has a branding and publishing arm that has been prolific over the years.

Including books written by spokespersons, Weight Watchers has a number of branded product

Weight Watchers is not the only program involving group motivational techniques. See the

following article for a report on the creation of a free online program called SparkPeople. This

online support site provides a networking site for like-minded people who help each other set

Other competitors to WeightWatchers can be evaluated at several online sites:

See ratings from U.S. News & World Report, Best diets methodology: How we rated 35 eating

There is some scientific evidence for the efficacy of a structured weight loss program such as

Weight Watchers. A study published in the Journal of the American Medical Association (JAMA)

in 2003 found that participants in the Weight Watchers program lost more weight than those who

Scientific evidence for promoting one diet over another has also not been conclusive. One 2005

study published in the Journal of the American Medical Association (JAMA) compared Weight

Watchers, Atkins, Zone, and Ornish diet plans and found that after one year all diets “modestly

A report from 2012, in conjunction with the journal Obesity, found that “commercial weight-loss

programs like Weight Watchers may be just as effective in losing weight as clinical programs,

After considering the above, why has Weight Watchers been able to compete for so long against

so many different companies?

Take a look at the case financial exhibits. Where does Weight Watchers appear to make the most

of its money, and what does this say about potential competition?