Dieting in the Digital Age

Weight-Watchers-3

For most of his life, Rickey Glover was overweight. Glover, who is 6’1, weighed about 280 pounds in high school; in college, he was even heavier. Over the years, he tried different exercise programs, experimented with fad diets and took weight-loss pills. Nothing worked.

Then last spring he read a news story about cognitive behavioral approaches to weight loss that incorporated new technologies. He called Retrofit — one of the companies profiled in the article — the next morning. For a year, Glover, a married attorney, wore a monitor that tracked his eating, exercise and sleep patterns online. He had weekly Skype sessions with a registered dietician and a behavior coach. He regularly e-mailed with an exercise physiologist who monitored his weight via a wireless scale.

So far, Glover has lost more than 90 pounds. “I had a team of experts working for me and giving me suggestions,” he says. “They helped me look at the various options available and integrate healthy choices into my life. Some things they taught me were simple: I started running. I learned to ask for half portions at restaurants. After a while, it became second nature.”

Welcome to dieting in the digital age. In the face of technological innovations like activity monitors, wireless scales and cutting-edge video conferencing software, an increasing number of dieters are opting for mobile apps and other online plans that offer convenient, customized ways to count calories and stick to an exercise plan. As a result, the U.S. weight-loss industry, which Marketdata Enterprises estimates will reach $66.5 billion this year, is being radically transformed. Old-guard diet companies — including Weight Watchers, which relies heavily on a model of face-to-face support meetings, and Jenny Craig, which sells company-branded meals — are struggling.

“What we’re seeing here is classic disruptive innovation,” says John R. Kimberly, professor of management at Wharton. “Old-line companies are being deeply challenged by new technology and new competition.”

As new entrants have reinvented the diet and exercise industry, old-line companies must update their business models for this new era of hyper-connectedness if they want to survive, suggest industry experts. These companies need to integrate remote monitoring technology into their programs, thereby enabling customers to track their calorie intake and burn; expand their use of interactive software that enables customers to receive online support, and experiment with new ways to motivate people to exercise and eat right.

Weekly Weigh-ins and Daily Targets

Founded in 1963 by a homemaker in Queens, N.Y., Weight Watchers is perhaps the most recognized brand in the commercial weight-loss industry today. The program is based on accountability and community support. Members are weighed weekly and attend regular meetings where they find encouragement from a community of fellow dieters. To guide healthy eating choices, the company uses a system that assigns points to every food (taking into account that particular food’s protein, carbohydrate, fat and fiber content). Members get a daily target number so they know how much they should eat in order to lose weight safely. Customers pay an initial enrollment fee and are billed about $42 per month for meetings.

“What we’re seeing here is classic disruptive innovation.” –John Kimberly

“What historically has been the key to success for Weight Watchers is its face-to-face meetings,” says Kimberly. “The model is a little like Alcoholics Anonymous. Users find that social interaction is a beneficial way to help solve a personal problem.”

Jenny Craig is another powerhouse in the industry. Its program, which has a steep enrollment fee, is based on restricting calories, fat and portions using prepackaged meals. (The food costs about $12 to $18 per day.) Members also receive weekly one-on-one counseling sessions with a Jenny Craig consultant.

In recent years, however, both companies have run into difficulties. Weight Watchers reported a 15.6% drop in earnings last year, and its stock has lost half its value since March 2012. In August, David Kirchhoff, its CEO of four years, resigned abruptly to “pursue other opportunities.” Jenny Craig’s parent company, Nestle, does not disclose profits, but the company recently announced a new marketing strategy in light of disappointing results.

It’s not as though the market is shrinking. Two thirds of U.S. adults are overweight or obese, according to the Food and Research Action Center. It’s that customers are seeking other solutions. These range from full-service programs like Retrofit, which has plans that cost $128 a month, to free apps like MyFitnessPal and Lose It, which help users track food and exercise while also networking with friends, to FitBit, a $100 wireless device that measures personal data such as number of steps walked and sleep quality.

Customers are flocking and private equity is flowing. In August, FitBit raised $43 million in venture capital funding, bringing its total financing to $96 million. Also that month, MyFitnessPal — which has 40 million users — said it raised $18 million in its first round of funding. (According to the company, it is profitable and supported by advertising.) Meanwhile Retrofit has raised $10.7 million.

The industry stalwarts “failed to re-imagine what was possible and to understand how this business could be reinvented,” according to Jeff Hyman, CEO of Retrofit. “And just as in other industries, like banking or publishing, when the leading companies fail to reinvent, someone does it for them.”

Industry observers note that Weight Watchers and Jenny Craig have been slow to embrace new technology. Jenny Craig only this year announced a long-term strategic plan to roll out a suite of online weight-loss options. As part of this shift, the company will close 101 centers — about 15% of its retail centers — across North America. And while Weight Watchers does have an online plan for customers which includes digital tools and message boards, the company doesn’t, by and large, use video conferencing software or other kinds of equipment that could give dieters personalized online support.

“It’s clear that Weight Watchers has made some mistakes,” says Charles Taylor, professor of marketing at Villanova University, citing a survey last year by Marketdata Enterprises which found that 83.3% of dieters favor “do-it-yourself” weight-loss programs accessed from home (either online or by phone). “People have busy lifestyles,” he says. “Weight Watchers needs to adapt its model to the online environment and get better at using videoconferencing technology that allows people to support each other even from afar.”

Expanding its use of technology will also help the company build its “brand community,” Taylor adds. “You want consumers to feel [that they are] part of a Weight Watchers community — that they have a relationship with the brand and with each other.”

Of course, not every customer wants or needs more online services. While some members find online tools an improvement, others view them as a reasonable substitute for in-person contact, and still others see them as an inadequate replacement. “The basis of the meetings is the social norming and group support they provide,” says Kevin Volpp, director of the Center for Health Incentives and Behavioral Economics at Wharton. “Many people like that format, and clearly a lot of people value that social component. There is a role for different types of approaches for different populations.”

Market segmentation is a critical piece of the solution. Segmenting customers will enable a company to target different categories of consumers who perceive the value of particular products and services — in this case digital tools — differently. “Weight Watchers needs to segment its customer base to help it identify the customers for whom face-to-face meetings are essential and the ones for whom a mobile application would work just as well,” says Wharton’s Kimberly.

Gamification as Business Strategy

When it comes to market segmentation in the weight-loss industry, perhaps the biggest differentiating factor is motivation. What drives people to make smarter food choices and exercise regularly differs dramatically from customer to customer. And indeed, the weight-loss industry is a special category — one that’s analogous to smoking cessation.

“There’s a Mark Twain quote that goes something like: ‘Giving up smoking is the easiest thing in the world. I know, because I’ve done it thousands of times,’” says Wharton’s Kimberly. “There is the intellectual awareness that smoking is bad for you, just like overeating is bad for you. Yet there is an inability to stick with the program. You can diet and exercise and make a lot of progress and then bingo, you’re back eating a hot fudge sundae and you need to start over.”

“We know a lot about how to help people improve a single decision, but it’s harder to get people to form good habits.” Katherine Milkman

Here, Weight Watchers and Jenny Craig might take their cue from some of the most successful new weight-loss technologies that incorporate elements of gamification into their business models. That is, they use motivational and social techniques from video games to create engaging and enjoyable experiences for customers.

In many respects, Weight Watchers has already been doing this for years, says Matthew Grennan, professor of health care management at Wharton, noting that Weight Watchers’ strengths seem to have been in creating a simple ‘gamified’ (points, goals, levels) and ‘social’ (weigh-ins and meetings) business around changing behavior.

The digital tools available now — including apps, wearable devices and wireless scales that enable users to track their eating and activity, virtually ‘weigh in’ and interact socially with other members — are complementary to the Weight Watchers business model, he says. “With the Weight Watchers brand and installed base of members, it has some tremendous advantages it could leverage in a foray into more digital services.”

Developing a deeper understanding of what inspires us to play, and want to win, video games provides a clue to what might inspire us to stick to a healthy eating and exercise program, suggests Bill Gribbons, a professor at Bentley University’s McCallum Business School. “There are some people who are self-motivated, who compete with no one but themselves. They are captivated by ‘the game’ — reaching new levels and earning points. Then there are other people who are driven by competition with others. They thrive on knowing that others are watching them and judging their performance. They want accountability. Other people like social media. They want to feel supported, and they want to feel a sense of community.

“At the end of the day, it’s going to come down to motivation and unique value delivered to serve real human needs,” he says. “[The product needs to offer a service] that ultimately changes people’s behaviors and motivates them to achieve their health goals.”

Forming Good Habits

Katherine L. Milkman, a Wharton professor of operations and information management who specializes in behavioral decision making, has conducted several studies on what compels people to exercise and eat healthy. Her findings help explain the popularity of weight-loss apps. “We know a lot about how to help people improve a single decision, but it’s harder to get people to form good habits,” she says. “Our goal has been to find a way to make people enjoy exercise so they keep coming back, and to help people change their eating habits so that they make healthier choices on a regular basis and not just one time.”

In one of her experiments, for example, she found that people who exercised while listening to a thrilling audio book were more likely to find the exercise enjoyable and to want to exercise more often. It makes sense: If people are engaged while exercising, they get hooked. “In this case, they wanted to come back to listen to a novel, but in the case of an app, people might be attracted to come back because they rack up points, and it feels like a fun game” rather than a chore, Milkman states.

In a separate experiment, Milkman studied how people shop online for groceries. She found that people who buy food a week in advance were more likely to select healthy options than those who were buying groceries for nearer-term delivery, e.g., tomorrow. “It’s easier to resist the instant gratification provided by junk food and exert self-control when making choices about the future,” she says.

A mobile app that tells you how many calories a cupcake has right before you might eat it and exactly how long you’ll have to run to burn those calories off could similarly help people resist instant gratification. “It’s an in-the-heat-of-the-moment intervention that is well matched to the problem of impulsivity,” she says. “If you had to wait until you could make it to a Weight Watchers meeting to get the feedback required to make a healthy choice, you might be out of luck.”

To compete in the digital era, traditional weight-loss companies like Weight Watchers and Jenny Craig have a number of challenges, experts suggest. They must incorporate remote monitoring technology into their diet plans, increase the use of interactive software that enables clients to receive online help and investigate new ways to motivate people to exercise and eat right using gamification.

The optimal strategy for accomplishing these tasks is up for debate. As the larger, more established enterprises, Weight Watchers and Jenny Craig grapple with the eternal question: Build or buy, says Wharton’s Volpp. Should they develop their own approach? Or should they acquire or partner with the leading competitor? “Their challenge is to morph their business model in ways that allow them to retain their core customer base while at the same time attract customers for whom the new [technologies] are appealing.”

Citing Knowledge@Wharton

Close


For Personal use:

Please use the following citations to quote for personal use:

MLA

"Dieting in the Digital Age." Knowledge@Wharton. The Wharton School, University of Pennsylvania, 04 October, 2013. Web. 21 December, 2014 <http://knowledge.wharton.upenn.edu/article/dieting-digital-age/>

APA

Dieting in the Digital Age. Knowledge@Wharton (2013, October 04). Retrieved from http://knowledge.wharton.upenn.edu/article/dieting-digital-age/

Chicago

"Dieting in the Digital Age" Knowledge@Wharton, October 04, 2013,
accessed December 21, 2014. http://knowledge.wharton.upenn.edu/article/dieting-digital-age/


For Educational/Business use:

Please contact us for repurposing articles, podcasts, or videos using our content licensing contact form.

 

Join The Discussion

One Comment So Far

Tamara White

wow. great, It is useful information. Thank you!