GNC Multipronged strategy to drive growth

When it comes to buying health improving supplements the first brand comes to every fitness freaks’ mind is GNC(general nutrition centers). From beginning as a single store on wood street in down town Pittsburgh in 1935 today GNC holds 8300 retail stores through the united states and more than 50 international markets(Okyle, 2016). GNC experienced an amazing success over the years because of consistent dedication and hard work. The most important thing behind this success is the strategic positioning of the brand. Whether it is their live well campaign, well recognized stores in big shopping malls or the trust they have developed among the customers GNC have been on top of the list (McGinley, 2012). GNC follows vertically integrated system which starts with buying raw materials, after that manufacturing products and in the end selling finished goods (McGinley, 2012). The finished goods are distributed through multi channels business model which includes retail, franchise and manufacturing/wholesale channels.

revenue graph

 

Fig-1 GNC revenue in 2014 and 2015(President, 2016)

Retailing

GNC retailing stores include the corporate stores and “GNC.com”. According to fig-1 the revenue of GNC (general nutrition corporation) in year 2014 and 2015 was 2.6 billion and out of that 1.9 billion came through retailing channel(President, 2016). GNC as a company very focused on retail of health and nutrition products which clearly shown in their sales as well. Main retailing products are vitamins, minerals and other supplements. The main location for GNC retail stores are the big shopping malls and downtown. There are two major reasons behind this success. The first one is the customer service approach GNC adopts at its retailing which is really helpful for customers. They have well trained staff who knows very well about the products and understand their customers’ needs. As it is a health related business so the customers are very cautious of what they are buying so that’s why they prefer going to retail stores so they could discuss products with experts. The second thing is the online retailing where GNC have big range of products and provide a very wide information about each product so they the customers normally go to online page and go through the products information available and order their required product. GNC uses Omni channel which is managed by Dunnhumby and the reason is simple to engage online and in-store customers (Berthiaume, 2013).

Franchising

Franchising has been an important element in GNC success over the years and that’s why it is ranked number one vitamin retail franchise by Entrepreneur magazine for 25 years consecutively (Centers, 1997). In 2015 the revenue through franchises was 0.45 billion. GNC put lot of focus on franchising the brand so that’s why they provide all the information from start to end which is how to apply for franchise, what will be the cost and at the same time they also provide training for new franchisee to operate in the best way to be successful in the business. If someone goes on GNC franchising site (gncfranchising.com) following are the training options offered in detail (Centers, 1997b).

  • Start-up assistance
  • Financing option
  • Operating and in-store training
  • Continuing support

One thing GNC makes sure by doing all this is that product development and quality assurance go hand in hand for a successful product and that’s why GNC believes that before they hand over their name to someone they should train them to high standards which they hold themselves.  Now by looking at the franchise history in fig-2 GNC kept on raising its number and reason behind that is the incentives like 50% off first franchise fee and the training and business supervision they provide(Okyle, 2016).

franchising

Fig-2 (Okyle, 2016)

Manufacturing/wholesale (third party)

Now the third channel is the manufacturing or wholesale segment. In 2015 the revenue generated through this segment was 0.235 billion (President, 20160. In this category GNC produce and sell variety of products for a very huge third party. High margin contracts are the drivers of this segment and GNC develop these by long term relationships with successful companies. GNC have the capacity to produce more than 15 billion product per year which is result of growing demand. This has been a very effective channel for GNC products that’s why GNC is doing business with companies like Pfizer, Bausch & Lomb and Bayer. GNC products for third party are sold through different channels like Rite Aid, Sam’s club, pet smart and “drugstore.com” (McGinley, 2012).

Now by going through the distribution channels which GNC adopted to reach out its customer, I would say they managed very well to answer the age-old question which is “how do I get my stuff to where consumer want to buy it” (Iacobacci, 2013). product placement is one of the most important elements of doing business and GNCs’ products are exactly at the place where customers want.

 

Bibliography

Berthiaume, D. (2013) GNC uses dunnhumby for omni-channel segmentation. Available at: http://www.chainstoreage.com/article/gnc-uses-dunnhumby-omni-channel-segmentation (Accessed: 10 May 2016).
Centers, G.N. (1997a) GNC training & support. Available at: https://www.gncfranchising.com/why-franchise/training-support (Accessed: 10 May 2016).
Centers, G.N. (1997b) Why franchise with us. Available at: https://www.gncfranchising.com/why-franchise (Accessed: 13 May 2016).
Iacobucci, D. (2013) MM4. United States: South-Western College Publishing.
McGinley, A. (2012) Available at: http://uoinvestmentgroup.org/wp-content/uploads/2012/04/GNC.pdf (Accessed: 13 May 2016).
Okyle, C. (2016) GNC franchising franchise information. Available at: https://www.entrepreneur.com/franchises/gncfranchising/282377 (Accessed: 16 May 2016).
President, S.V. (2016) General nutrition corporation’s (GNC) revenue in 2014 and 2015, by segment (in million U.S. Dollars). Available at: http://www.statista.com/statistics/309033/revenue-of-gnc-by-segment/ (Accessed: 13 May 2016).
By
sherafgan khan
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