You may never have heard of Bob Schnabel, but if you watch television, you’ve most likely seen the results of his work.
Schnabel, president and CEO of Canton-based Fitness Quest Inc., is an innovator in the world of infomercials — tuned into by an estimated 50 million households each week.
Infomercials — or direct response TV, as it is called in the industry — are commercials that include a phone number or Web site address and instruct consumers how to buy the advertised product immediately or, one might say, impulsively.
The idea is simple: visually and emotionally appeal to consumers in a short form (two to 30 minutes) or long form (60 minutes); create a sense of urgency that makes consumers believe they need this product immediately; and let them know they can get it for just a few easy payments of less than $40 each.
“Fitness Quest was the company that basically ran the first of these fitness product commercials,” says Schnabel.
His firm, previously known as Consumer Direct Inc., is one of the oldest and most successful marketers and distributors of home fitness and healthy living products in the United States. The company’s product lines include the Total Gym and Gazelle Glider, the Abdominizer, Jane Fonda’s Bench Step and Tony Little’s Ab Isolator.
Fitness Quest has survived nearly three decades in the business, through ever-changing consumer product lines, the introduction of the Internet and three owners. For Schnabel — an avid athlete who has been a team member in the Iditarod Dog Sled race across Alaska and climbed in the Grand Teton mountains — the company today is significantly different from when he joined in 1979 as a fledgling copywriter.
Fitness Quest employs nearly 150 people, and its products generate annual revenue in excess of $200 million. That success has come, in large part, from Schnabel’s competitive personality, keen eye for marketing and product development, and his willingness to venture into territory never considered by his competitors.
From employee to owner
Schnabel rose quickly through the ranks at Consumer Direct in positions including media director, vice president of marketing and, after 12 years, executive vice president. He built a reputation as a trailblazer, and was among the first in the industry to seek out and land celebrity endorsement contracts, inking such notables as Jane Fonda, Joe Montana and Sheena Easton. His efforts effectively changed the landscape of endorsements in response marketing.
In 1988, he led Consumer Direct from being solely a direct response company to mass retail distribution, breaking new ground with an approach to marketing that virtually all other direct response companies copied — and doubling sales and profits in three years.
But after a series of disagreements with the owner, Schnabel in 1992 left to form Schnabel & Associates Inc., a marketing and business consulting firm whose principal clients were Consumer Direct and the National Academy of Recording Arts and Sciences.
Following his departure, Consumer Direct ran into financial trouble, and two years later, his phone rang with a request from Stuart Hersch, president of Warner Vision, to return to the home fitness product company where he had made his name. Warner, an affiliate of Time Warner, had acquired many of Consumer Direct’s assets, including the trademark “Fitness Quest,” and Hersch offered Schnabel the opportunity to run the newly formed Fitness Quest as its president and CEO.
Suddenly, Schnabel, with only a high school degree, found himself with a high-profile executive job, with a stable corporate power bankrolling the operation.
“Things were good for me,” he says.
However, the courtship didn’t last.
Explains Schnabel, “There was some internal conflict in the Warner Music Group. New management came in, and here we are, this fitness company. They eventually said they didn’t want to be in the video business.”
In 1997, Schnabel and his management team found themselves at a crossroads. Fitness Quest was being sold, and Schnabel and his team lined up investment dollars from venture capital firm Brantley Partners and purchased the company.
Up-sells and three easy payments
You can only partially credit — or blame — Schnabel for the infomercials that inundate the airwaves. But Fitness Quest is soley responsible for the celebrity — and quasi-celebrity — endorsements of fitness products, which began with the Jane Fonda workout video and a unique deal engineered by Schnabel.
“We bought the video from Time Warner,” he says. “Then we sold the video with a piece of plastic and moved that product from TV to retail distribution.”
Thus was born Jane Fonda’s Bench Step.
Until then, Warner had sold about 350,000 copies of the video for $29.95 each. But once Schnabel added the bench step and $30 to the price, it sold more than 2 million additional units.
With that one bold move, Schnabel pioneered the add-on or up-sell concept — suggesting to the purchaser of a direct response product that he could add to his original purchase in some value-enhancing way, such as with a useful accessory or a deluxe, more fully-featured model — in the world of infomercial products. In 2000, up-sells added as much as 30 percent to the price of the sale of direct response products. And up-selling is just one of the firsts Schnabel attributes to Fitness Quest.
“We were the first with three easy payments of, say, $19.95,” he says. “It revolutionized the payment concept.”
He also claims his marketing gurus came up with the “As seen on TV” concept, an integral part of Fitness Quest’s multichannel marketing approach that adds to direct response TV with Internet sales, widespread retail availability at stores including Target, Kmart and Sears, and sales through catalogers like Spiegel and Sharper Image.
“(Now) we are in all the major sporting good stores,” Schnabel says. “It’s a cradle-to-grave marketing and distribution strategy. It allows us to introduce successful products and lengthen their viability in the marketplace.”
The Total Gym
Direct response TV is responsible for overnight sensations such as the George Foreman Grill, which sells millions of units in both the direct response and retail markets. Direct response TV also provides almost instantaneous feedback about the effectiveness of the product and marketing strategy, a tool that Fitness Quest has used to build long-term marketing and branding campaigns.
“Many companies sell 300,000 units, and then they are out,” Schnabel says. “We have a different foundation. We are trying to promote the brand.”
To accomplish that, Fitness Quest markets and distributes more than 1,000 pieces of fitness equipment at any given time. The average lifespan of an infomercial is nine to 18 months, but brands like the Total Gym and the Gazelle have outlasted many of their counterparts.
“This year, we just hit 1 billion consumer dollars spent on our Total Gym product,” says Schnabel.
The Gazelle line, endorsed by Tony Little, this year is closing in on $500 million worth of total units sold.
The company’s products come from sources including individual inventors, product partnerships and an in-house development department. It invests between $2.5 million and $3.5 million each year in product and development costs.
In return, Schnabel counts on high returns from his marketing and distribution system. His approach is not always to get in and sell big quickly, but to increase the effectiveness and longevity of the brand and add products under a well-branded line.
This is achieved by “thorough market research based on the company’s database of existing and potential customers,” he says.
In fact, one key to Fitness Quest’s success has been its ability to continually identify, develop and market new products and introduce innovative enhancements of its existing product lines.
Fitness Quest’s team has also developed its own proprietary software to measure the cost-effectiveness of specific cable channels, times and programs. The software calculates consumer response rate per advertising dollar and lets them know if they’re committing dollars to the right places.
Cultural revolution
Another driving force behind Fitness Quest’s growing success, Schnabel says, is the exercise revolution.
“All the science and research tells us to exercise more,” he says. “And, we are always learning to move the body in new and unique ways.”
According to the company’s promotional literature, “Fitness Quest benefits from favorable trends that are taking place in the direct marketing and fitness industries.” That’s a bit of an understatement. Direct response TV generated sales of $142 billion in 2002, with sales projected to hit $218 billion in 2007, according to the Direct Marketing Industry 2003 report. And exercise products and health/weight items are the most popular items sold via direct response TV.
The home exercise equipment market was worth an estimated $5.8 billion in 2000, and is expected to grow 7 percent to 10 percent by 2010. That project growth is what Schnabel is banking on as he looks toward marketing a new line of New Balance exercise equipment.
The New Balance line will be available in higher-end retail outlets and begin at a higher price point than Fitness Quest’s other product lines, Schnabel says.
“Different products have different demographics,” he says. “The exercise equipment is like the auto industry. It’s, in part, about getting you from point A to point B. But depending on how much you want to spend, depends on what kind of equipment you’re willing to pay for.”
What Schnabel and the rest of the fitness equipment industry are banking on is that exercise, and specifically home exercise, is going to become more of a need for the aging baby boomer generation. In response to that growing demographic, Fitness Quest introduced the BOSU, a half sphere air-filled balance product that retails for $129 and takes advantage of the yoga/Pilates balance strengthening exercises.
“It’s the hottest trend in health clubs these days,” Schnabel says, adding that the low-impact BOSU is his personal favorite, “because I’m old.”
Schnabel says exercise trends come and go, and with them, some of Fitness Quest’s products.
“The magic exercise product doesn’t exist,” Schnabel says. “We all gravitate toward a quick fix. It’s human nature. But I also don’t think exercise should be all about pain. It’s about moving your body. You have to enjoy it and make it part of your everyday life.”
How to reach: Fitness Quest Inc., (330) 478-0755 or www.fitnessquest.com
