Second Final Business Analysis Project Assignment
TA: Jason Steinberg (jss467)

Product:
GNC offers a diverse array of health and wellness products that all promote consumer weight loss, strength gain, and increased athletic ability. GNC Pro Performance AMP Amplified 100% Whey Protein is one of the firm’s top-selling products and is the most popular whey protein offered by GNC. This particular line of whey protein benefits all consumers from athletes and fitness enthusiasts to the average buyer looking to lose weight and improve overall strength and conditioning. GNC Pro Performance AMP Amplified 100% Whey Protein serves as both a daily meal replacement and as a supplement for workouts to aid in muscle recovery and development. The hydrolysates in the whey protein help the body’s cells process, store, and release amino acids in order to accelerate time needed for the body to recuperate. This is important for athletes who are straining their bodies regularly and need to be functioning well at a cellular level. Whey protein hydrolysates meet daily protein requirements and maximize muscle growth, helping to satiate feelings of hunger thus cutting fat and lowering body fat percentage in consumers. GNC Pro Performance AMP Amplified 100% Whey Protein is offered in chocolate and vanilla flavors to satisfy customers’ tastes and preferences, thereby appealing to a wider range of people and prospective buyers.
One of GNC’s biggest competitors is Bodybuilding.com, an online retailer that offers very similar products. One of the leading whey protein brands on Bodybuilding.com is Cellucor, a product that contends greatly with GNC Pro Performance AMP Amplified 100% Whey Protein. Comparatively, GNC’s weigh protein contains 8 grams* of Branched Chain Amino Acids, while Cellucor only contains 5.5 grams* (*grams per scoop of whey). These BCAAs must be ingested as they are the basis of protein and the nine essential amino acids that the human body cannot create itself. GNC offers a higher quality product than Bodybuilding.com with its higher levels of BCAAs. Additionally, Cellucor is offered in ten different flavors, which is rather high for whey protein products. Having so many different options might appeal to more people, but could be daunting to first-timers who are not sure of what they are looking for. Too many alternatives can dissuade consumers from making purchases, and since GNC only offers two flavors, they are removing a lot of stress that shopping often creates.

Price:
The United States nutritional supplements retail industry is a large, highly fragmented and growing industry, with no single participant accounting for a majority of total retail sales. Consequently, competition is based primarily on the quality and price of goods sold. GNC.com values GNC Pro Performance AMP Amplified 100% Whey Protein at $37.97 for a 2-pound quantity compared to the regular, in-store price of $47.99. Although these prices are more expensive compared to Bodybuilding.com’s sale and regular prices of $29.99 and $39.99, as previously stated, GNC’s product contains higher nutritional value that justifies additional costs. However, GNC only charges costumers about half the amount that Bodybuilding.com charges to ship products. Facing strong competition from other health and wellness retailers, GNC operates using a membership pricing strategy that allows the firm to generate most of its revenue through membership fees and increased sales of discounted products. Through GNC’s Gold Card Membership program, customers who become members can purchase GNC Pro Performance AMP Amplified 100% Whey Protein for only $30.38, a significant difference from the product’s sale and retail prices. This improves customer loyalty, brand reputation, and customer traffic with repeat purchases. GNC currently operates with 7.1 million active gold card members in the United States and Canada. These members spend on average 2 times more than the everyday consumer, and represent about 80% of the company’s total sales. This membership pricing strategy has proven quite effective for GNC and can be classified as a form of Everyday-Low Pricing, achieving long-term profitability through high volume sales. Retail is GNC’s most lucrative sector of sales, and in particular, GNC Pro Performance AMP Amplified 100% Whey Protein among other diet and sports nutrition products makes up about 44% of retail revenue. These products contributed $953.7 million to GNC’s overall retail revenue of $1.939 billion in 2014.

Place:
Interested buyers can find GNC Pro Performance AMP Amplified 100% Whey Protein online or in-store at one of 8,900 locations in 50 countries worldwide. GNC stores are found in malls and other commercial shopping centers which helps increase costumer attraction. Rather than only attracting customers seeking health and wellness products exclusively, being located in high-traffic areas increases the likelihood of drawing in new customers. As potential buyers peruse the shelves of GNC, they feel prompted to purchase more than the originally sought out product. GNC recently expanded to China, starting with one store in 2011 in Shanghai and spread to nearly 100 stores by 2014. Prior to this expansion, most goods were sold to China via the Internet. With the option to buy locally, Chinese customers now have the ability to side-step shipping costs and are further exposed to the GNC brand name. GNC has also developed a business model that involves a partnership with Rite Aid. This store-within-a-store model offers one stop shopping for people hoping to find a multitude of products related to health and wellness while also satisfying their everyday shopping needs. This model also decreases the costs GNC must cover on rent and employee expenses. There are about 2,100 GNC locations within Rite Aid, accounting for 26.8% of total stores. These stores might only account for 2.5% of total revenue, but have significantly higher profit margins than other GNC providers. The store-within-a-store model increased operating margins by 3.6% because it decreased the amount of money spent on wages and building costs.

Promotion:
GNC’s online website presents a variety of promotion strategies that entice site visitors to purchase products. The GNC Pro Performance AMP Amplified 100% Whey Protein itself is heavily advertised site-wide and can be found though various methods including searching for products by popularity, price and sale options. The product is also promoted as a recommendation that pairs well with other products such as GNC Triple Strength Fish Oil 1500 and GNC Mega Men® Sport. This form of promotion not only increases sales for GNC Pro Performance AMP Amplified 100% Whey Protein, but related products as well. GNC also provides online and Gold Member sales options, saving customers money with reduced prices as well as tempting buyers with special offers such as reward points and discounts after a certain amount of money has been spent. These forms of promotion not only increase revenues for GNC, but also endorse brand loyalty and recognition.
GNC has also developed a line of products specifically for women. This is a clever marketing strategy because it differentiates goods and makes women feel as if they have a product of their own, while enticing them to spend money on weight-loss or fat burning products. Even though the products might not be significantly different, the color pink and the presence of the word “women” on the label increases interest from a whole new demographic: A demographic that may have felt intimidated by the products before the addition of the new line. Furthermore, GNC has a strong media presence and sends daily reminders to its email list about current sales and offers. These sorts of promotion and advertising methods expand brand awareness and persuade consumers to look into and potentially purchase products they might not have otherwise known about or been interested in. Basic and more influential promotion techniques have allowed GNC to expand its customer base as well as magnify product awareness and devotion.