The 2011-2016 Outlook for Body Shaping and Skin Tightening Devices in the United States by ICONGroup


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									  The 2011-2016 Outlook for Body Shaping
  and Skin Tightening Devices in the United

                         Professor Philip M. Parker, Ph.D.
                       Chaired Professor of Management Science
                     INSEAD (Singapore and Fontainebleau, France)                                ©2010 ICON Group International, Inc.

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Neither ICON Group International, Inc. nor its employees or the author of this report can be held accountable for the
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agreement provisions at the end of this report.                                                    ©2010 ICON Group International, Inc.

                                          About the Author
Dr. Philip M. Parker is the Chaired Professor of Management Science at INSEAD where he has taught courses on
global competitive strategy since 1988. He has also taught courses at MIT, Stanford University, Harvard University,
UCLA, UCSD, and the Hong Kong University of Science and Technology. Professor Parker is the author of six
books on the economic convergence of nations. These books introduce the notion of “physioeconomics” which
foresees a lack of global convergence in economic behaviors due to physiological and physiographic forces. His
latest book is "Physioeconomics: The Basis for Long-Run Economic Growth" (MIT Press 2000). He has also
published numerous articles in academic journals, including, the Rand Journal of Economics, Marketing Science, the
Journal of International Business Studies, Technological Forecasting and Social Change, the International Journal
of Forecasting, the European Management Journal, the European Journal of Operational Research, the Journal of
Marketing, the International Journal of Research in Marketing, and the Journal of Marketing Research. He is also
on the editorial boards of several academic journals.

Dr. Parker received his Ph.D. in Business Economics from the Wharton School of the University of Pennsylvania
and has Masters degrees in Finance and Banking (University of Aix-Marseille) and Managerial Economics
(Wharton). His undergraduate degrees are in mathematics, biology and economics (minor in aeronautical
engineering). He has consulted and/or taught courses in Africa, the Middle East, Asia, Latin America, North America
and Europe.

                                          About this Series
The estimates given in this report were created using a methodology developed by and implemented under the direct
supervision of Professor Philip M. Parker, the Chaired Professor of Management Science, at INSEAD. The
methodology relies on historical figures across states. Reported figures should be seen as estimates of past and future
levels of latent demand.

Some of the methodologies and research approaches used in this report have benefited from the R&D Committee at
INSEAD, whose research support is gratefully acknowledged.                                                     ©2010 ICON Group International, Inc.

                     About ICON Group International, Inc.

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U.S.-owned and operated, ICON Group has published hundreds of multi-client databases and global/regional market
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Country Studies: Often managers need an in-depth, yet broad and up-to-date understanding of a country’s strategic
market potential and situation before the first field trip or investment proposal. There are over 190 country studies
available. Each study consists of analysis, statistics, forecasts, and information of relevance to managers. The studies
are continually updated to insure that the reports have the most relevant information available. In addition to raw
information, the reports provide relevant analyses which put a more general perspective on a country (seen in the
context of relative performance vis-à-vis benchmarks).

Industry Studies: Companies are racing to become more international, if not global in their strategies. For over 2000
product/industry categories, these reports give the reader a concise summary of latent market forecasts, pro-forma
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reports focus on a particular product and region (up to four regions per product), while others focus on a product
within a particular country.

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    Contents                                                                                         v

Table of Contents
1       INTRODUCTION                                                                             9
     1.1      Overview                                                                           9
     1.2      What is Latent Demand and the P.I.E.?                                              9
     1.3      The Methodology                                                                   10
        1.3.1   Step 1. Product Definition and Data Collection                                  11
        1.3.2   Step 2. Filtering and Smoothing                                                 12
        1.3.3   Step 3. Filling in Missing Values                                               12
        1.3.4   Step 4. Varying Parameter, Non-linear Estimation                                12
        1.3.5   Step 5. Fixed-Parameter Linear Estimation                                       13
        1.3.6   Step 6. Aggregation and Benchmarking                                            13
2       SUMMARY OF FINDINGS                                                                     14
     2.1   Latent Demand in The US                                                              15
3       FAR WEST                                                                                16
     3.1    Executive Summary                                                                   16
     3.2    Latent Demand by Year - Alaska                                                      18
     3.3    Cities Sorted by Rank - Alaska                                                      19
     3.4    Cities Sorted by Zipcode - Alaska                                                   19
     3.5    Latent Demand by Year - California                                                  21
     3.6    Cities Sorted by Rank - California                                                  22
     3.7    Cities Sorted by Zipcode - California                                               40
     3.8    Latent Demand by Year - Hawaii                                                      59
     3.9    Cities Sorted by Rank - Hawaii                                                      60
     3.10   Cities Sorted by Zipcode - Hawaii                                                   62
     3.11   Latent Demand by Year - Nevada                                                      64
     3.12   Cities Sorted by Rank - Nevada                                                      65
     3.13   Cities Sorted by Zipcode - Nevada                                                   66
     3.14   Latent Demand by Year - Oregon                                                      68
     3.15   Cities Sorted by Rank - Oregon                                                      69
     3.16   Cities Sorted by Zipcode - Oregon                                                   72
     3.17   Latent Demand by Year - Washington                                                  76
     3.18   Cities Sorted by Rank - Washington                                                  77
     3.19   Cities Sorted by Zipcode - Washington                                               83
4       GREAT LAKES                                                                             91
     4.1   Executive Summary                                                                    91
     4.2   Latent Demand by Year - Illinois                                                     93
     4.3   Cities Sorted by Rank - Illinois                                                     94
     4.4   Cities Sorted by Zipcode - Illinois                                                 105
     4.5   Latent Demand by Year - Indiana                                                     118
     4.6   Cities Sorted by Rank - Indiana                                                     119
     4.7   Cities Sorted by Zipcode - Indiana                                                  123
     4.8   Latent Demand by Year - Michigan                                                    128
     4.9   Cities Sorted by Rank - Michigan                                                    129
     4.10  Cities Sorted by Zipcode - Michigan                                                 136
     4.11  Latent Demand by Year - Ohio                                                        143
     4.12  Cities Sorted by Rank - Ohio                                                        144
     4.13  Cities Sorted by Zipcode - Ohio                                                     154
     4.14  Latent Demand by Year - Wisconsin                                                   166
     4.15  Cities Sorted by Rank - Wisconsin                                                   167
     4.16  Cities Sorted by Zipcode - Wisconsin                                                175                                            ©2010 ICON Group International, Inc.
    Contents                                                                                    vi

5       MID-ATLANTIC                                                                      183
     5.1    Executive Summary                                                             183
     5.2    Latent Demand by Year - Delaware                                              185
     5.3    Cities Sorted by Rank - Delaware                                              186
     5.4    Cities Sorted by Zipcode - Delaware                                           187
     5.5    Latent Demand by Year - District of Columbia                                  187
     5.6    Cities Sorted by Rank - District of Columbia                                  189
     5.7    Cities Sorted by Zipcode - District of Columbia                               189
     5.8    Latent Demand by Year - Maryland                                              190
     5.9    Cities Sorted by Rank - Maryland                                              191
     5.10   Cities Sorted by Zipcode - Maryland                                           197
     5.11   Latent Demand by Year - New Jersey                                            203
     5.12   Cities Sorted by Rank - New Jersey                                            204
     5.13   Cities Sorted by Zipcode - New Jersey                                         213
     5.14   Latent Demand by Year - New York                                              223
     5.15   Cities Sorted by Rank - New York                                              224
     5.16   Cities Sorted by Zipcode - New York                                           246
     5.17   Latent Demand by Year - Pennsylvania                                          269
     5.18   Cities Sorted by Rank - Pennsylvania                                          270
     5.19   Cities Sorted by Zipcode - Pennsylvania                                       283
6       NEW ENGLAND                                                                       296
     6.1   Executive Summary                                                              296
     6.2   Latent Demand by Year - Connecticut                                            298
     6.3   Cities Sorted by Rank - Connecticut                                            299
     6.4   Cities Sorted by Zipcode - Connecticut                                         304
     6.5   Latent Demand by Year - Maine                                                  309
     6.6   Cities Sorted by Rank - Maine                                                  310
     6.7   Cities Sorted by Zipcode - Maine                                               314
     6.8   Latent Demand by Year - Massachusetts                                          318
     6.9   Cities Sorted by Rank - Massachusetts                                          319
     6.10  Cities Sorted by Zipcode - Massachusetts                                       327
     6.11  Latent Demand by Year - New Hampshire                                          336
     6.12  Cities Sorted by Rank - New Hampshire                                          337
     6.13  Cities Sorted by Zipcode - New Hampshire                                       341
     6.14  Latent Demand by Year - Rhode Island                                           344
     6.15  Cities Sorted by Rank - Rhode Island                                           346
     6.16  Cities Sorted by Zipcode - Rhode Island                                        347
     6.17  Latent Demand by Year - Vermont                                                348
     6.18  Cities Sorted by Rank - Vermont                                                349
     6.19  Cities Sorted by Zipcode - Vermont                                             351
7       PLAINS                                                                            354
     7.1    Executive Summary                                                             354
     7.2    Latent Demand by Year - Iowa                                                  356
     7.3    Cities Sorted by Rank - Iowa                                                  357
     7.4    Cities Sorted by Zipcode - Iowa                                               360
     7.5    Latent Demand by Year - Kansas                                                364
     7.6    Cities Sorted by Rank - Kansas                                                365
     7.7    Cities Sorted by Zipcode - Kansas                                             367
     7.8    Latent Demand by Year - Minnesota                                             370
     7.9    Cities Sorted by Rank - Minnesota                                             371
     7.10   Cities Sorted by Zipcode - Minnesota                                          376
     7.11   Latent Demand by Year - Missouri                                              382                                       ©2010 ICON Group International, Inc.
    Contents                                                                               vii

     7.12      Cities Sorted by Rank - Missouri                                      383
     7.13      Cities Sorted by Zipcode - Missouri                                   388
     7.14      Latent Demand by Year - Nebraska                                      394
     7.15      Cities Sorted by Rank - Nebraska                                      395
     7.16      Cities Sorted by Zipcode - Nebraska                                   396
     7.17      Latent Demand by Year - North Dakota                                  398
     7.18      Cities Sorted by Rank - North Dakota                                  399
     7.19      Cities Sorted by Zipcode - North Dakota                               399
     7.20      Latent Demand by Year - South Dakota                                  401
     7.21      Cities Sorted by Rank - South Dakota                                  402
     7.22      Cities Sorted by Zipcode - South Dakota                               403
8       ROCKIES                                                                      404
     8.1   Executive Summary                                                         404
     8.2   Latent Demand by Year - Colorado                                          406
     8.3   Cities Sorted by Rank - Colorado                                          407
     8.4   Cities Sorted by Zipcode - Colorado                                       410
     8.5   Latent Demand by Year - Idaho                                             414
     8.6   Cities Sorted by Rank - Idaho                                             415
     8.7   Cities Sorted by Zipcode - Idaho                                          416
     8.8   Latent Demand by Year - Montana                                           418
     8.9   Cities Sorted by Rank - Montana                                           419
     8.10  Cities Sorted by Zipcode - Montana                                        420
     8.11  Latent Demand by Year - Utah                                              421
     8.12  Cities Sorted by Rank - Utah                                              422
     8.13  Cities Sorted by Zipcode - Utah                                           425
     8.14  Latent Demand by Year - Wyoming                                           428
     8.15  Cities Sorted by Rank - Wyoming                                           429
     8.16  Cities Sorted by Zipcode - Wyoming                                        430
9       SOUTHEAST                                                                    431
     9.1    Executive Summary                                                        431
     9.2    Latent Demand by Year - Alabama                                          433
     9.3    Cities Sorted by Rank - Alabama                                          434
     9.4    Cities Sorted by Zipcode - Alabama                                       438
     9.5    Latent Demand by Year - Arkansas                                         442
     9.6    Cities Sorted by Rank - Arkansas                                         443
     9.7    Cities Sorted by Zipcode - Arkansas                                      445
     9.8    Latent Demand by Year - Florida                                          448
     9.9    Cities Sorted by Rank - Florida                                          449
     9.10   Cities Sorted by Zipcode - Florida                                       463
     9.11   Latent Demand by Year - Georgia                                          478
     9.12   Cities Sorted by Rank - Georgia                                          479
     9.13   Cities Sorted by Zipcode - Georgia                                       484
     9.14   Latent Demand by Year - Kentucky                                         490
     9.15   Cities Sorted by Rank - Kentucky                                         491
     9.16   Cities Sorted by Zipcode - Kentucky                                      494
     9.17   Latent Demand by Year - Louisiana                                        498
     9.18   Cities Sorted by Rank - Louisiana                                        499
     9.19   Cities Sorted by Zipcode - Louisiana                                     502
     9.20   Latent Demand by Year - Mississippi                                      506
     9.21   Cities Sorted by Rank - Mississippi                                      507
     9.22   Cities Sorted by Zipcode - Mississippi                                   509
     9.23   Latent Demand by Year - North Carolina                                   512                                  ©2010 ICON Group International, Inc.
 Contents                                                                                   viii

     9.24   Cities Sorted by Rank - North Carolina                                    513
     9.25   Cities Sorted by Zipcode - North Carolina                                 519
     9.26   Latent Demand by Year - South Carolina                                    525
     9.27   Cities Sorted by Rank - South Carolina                                    526
     9.28   Cities Sorted by Zipcode - South Carolina                                 529
     9.29   Latent Demand by Year - Tennessee                                         533
     9.30   Cities Sorted by Rank - Tennessee                                         534
     9.31   Cities Sorted by Zipcode - Tennessee                                      538
     9.32   Latent Demand by Year - Virginia                                          542
     9.33   Cities Sorted by Rank - Virginia                                          543
     9.34   Cities Sorted by Zipcode - Virginia                                       547
     9.35   Latent Demand by Year - West Virginia                                     551
     9.36   Cities Sorted by Rank - West Virginia                                     552
     9.37   Cities Sorted by Zipcode - West Virginia                                  554
10      SOUTHWEST                                                                     556
     10.1   Executive Summary                                                         556
     10.2   Latent Demand by Year - Arizona                                           557
     10.3   Cities Sorted by Rank - Arizona                                           558
     10.4   Cities Sorted by Zipcode - Arizona                                        561
     10.5   Latent Demand by Year - New Mexico                                        564
     10.6   Cities Sorted by Rank - New Mexico                                        565
     10.7   Cities Sorted by Zipcode - New Mexico                                     566
     10.8   Latent Demand by Year - Oklahoma                                          568
     10.9   Cities Sorted by Rank - Oklahoma                                          569
     10.10 Cities Sorted by Zipcode - Oklahoma                                        571
     10.11 Latent Demand by Year - Texas                                              574
     10.12 Cities Sorted by Rank - Texas                                              575
     10.13 Cities Sorted by Zipcode - Texas                                           589
     11.1   Disclaimers & Safe Harbor                                                 603
     11.2   ICON Group International, Inc. User Agreement Provisions                  604                                   ©2010 ICON Group International, Inc.
 Summary of Findings                                                                                                     9


This study covers the latent demand outlook for body shaping and skin tightening devices across the states and cities
of the United States. Latent demand (in millions of U.S. dollars), or potential industry earnings (P.I.E.) estimates are
given across some 10,200 cities in the United States. For each city in question, the percent share the city is of it’s
state and of the United States is reported. These comparative benchmarks allow the reader to quickly gauge a city
vis-à-vis others. This statistical approach can prove very useful to distribution and/or sales force strategies. Using
econometric models which project fundamental economic dynamics within each state and city, latent demand
estimates are created for body shaping and skin tightening devices. This report does not discuss the specific players
in the market serving the latent demand, nor specific details at the product level. The study also does not consider
short-term cyclicalities that might affect realized sales. The study, therefore, is strategic in nature, taking an
aggregate and long-run view, irrespective of the players or products involved.

This study does not report actual sales data (which are simply unavailable, in a comparable or consistent manner in
virtually all of the cities in the United States). This study gives, however, my estimates for the latent demand, or the
P.I.E., for body shaping and skin tightening devices in the United States. It also shows how the P.I.E. is divided and
concentrated across the cities and regional markets of the United States. For each state, I also show my estimates of
how the P.I.E. grows over time. In order to make these estimates, a multi-stage methodology was employed that is
often taught in courses on strategic planning at graduate schools of business.


The concept of latent demand is rather subtle. The term latent typically refers to something that is dormant, not
observable, or not yet realized. Demand is the notion of an economic quantity that a target population or market
requires under different assumptions of price, quality, and distribution, among other factors. Latent demand,
therefore, is commonly defined by economists as the industry earnings of a market when that market becomes
accessible and attractive to serve by competing firms. It is a measure, therefore, of potential industry earnings (P.I.E.)
or total revenues (not profit) if the United States is served in an efficient manner. It is typically expressed as the total
revenues potentially extracted by firms. The “market” is defined at a given level in the value chain. There can be
latent demand at the retail level, at the wholesale level, the manufacturing level, and the raw materials level (the
P.I.E. of higher levels of the value chain being always smaller than the P.I.E. of levels at lower levels of the same
value chain, assuming all levels maintain minimum profitability).

The latent demand for body shaping and skin tightening devices in the United States is not actual or historic sales.
Nor is latent demand future sales. In fact, latent demand can be either lower or higher than actual sales if a market is
inefficient (i.e., not representative of relatively competitive levels). Inefficiencies arise from a number of factors,
including the lack of international openness, cultural barriers to consumption, regulations, and cartel-like behavior on
the part of firms. In general, however, latent demand is typically larger than actual sales in a market.

For reasons discussed later, this report does not consider the notion of “unit quantities”, only total latent revenues
(i.e., a calculation of price times quantity is never made, though one is implied). The units used in this report are U.S.
dollars not adjusted for inflation (i.e., the figures incorporate inflationary trends). If inflation rates vary in a
substantial way compared to recent experience, actually sales can also exceed latent demand (not adjusted for
inflation). On the other hand, latent demand can be typically higher than actual sales as there are often distribution
inefficiencies that reduce actual sales below the level of latent demand.

As mentioned in the introduction, this study is strategic in nature, taking an aggregate and long-run view, irrespective
of the players or products involved. In fact, all the current products or services on the market can cease to exist in
their present form (i.e., at a brand-, R&D specification, or corporate-image level) and all the players can be replaced                                                         ©2010 ICON Group International, Inc.
    Summary of Findings                                                                                              10

by other firms (i.e., via exits, entries, mergers, bankruptcies, etc.), and there will still be latent demand for body
shaping and skin tightening devices at the aggregate level. Product and service offerings, and the actual identity of
the players involved, while important for certain issues, are relatively unimportant for estimates of latent demand.


In order to estimate the latent demand for body shaping and skin tightening devices across the states and cites of the
United States, I used a multi-stage approach. Before applying the approach, one needs a basic theory from which
such estimates are created. In this case, I heavily rely on the use of certain basic economic assumptions. In particular,
there is an assumption governing the shape and type of aggregate latent demand functions. Latent demand functions
relate the income of a state, city, household, or individual to realized consumption. Latent demand (often realized as
consumption when an industry is efficient), at any level of the value chain, takes place if an equilibrium is realized.
For firms to serve a market, they must perceive a latent demand and be able to serve that demand at a minimal return.
The single most important variable determining consumption, assuming latent demand exists, is income (or other
financial resources at higher levels of the value chain). Other factors that can pivot or shape demand curves includ
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