SMART Goals
Specific. Fitbit needs to establish itself as the market leader in the fitness tracker products available in the UAE market. Within the first year of launch, Fitbit needs to be partner within all major e-commerce retailers and establish Fitbit stores in major shopping centres of cities such as Dubai, Abu Dhabi, and Sharjah. These partnerships and company-owned and franchise stores will help Fitbit to easy sell their devices to interested customers.
Measurable. The goal is to exploit the available opportunities in the UAE fitness market. Fitbit needs to capture at least 10 percent of UAE’s population in the long term (5 year period) and in the short term goal (12 months) is to capture around 4-5 percent of the market. Assuming one Fitbit per individual, Fitbit needs to sell 360,000 to 450,000 units within 12 months and around 900,000 units in long term.
Attainable. The total population of UAE is just above 9 million (Trading Economics, 2016). In the US market, one out of five has some sort of fitness device. The UAE market is different, but it is possible that at least one out of five might use Fitbit or related devices. The goal is to capture half of the UAE fitness tracking device market, which can be challenging, but Fitness is the market leader with unique technology and exemplary product.
Realistic. The goal of capturing 450,000 units within one year is on the high end, but achievable due to the reputation of the Fitbit brand in the market. The long term is to reach sales of 900,000 units, which is logical as Fitbit needs to maintain its market leadership in a highly lucrative UAE market.
Timely. Time limits have been set for capturing a specific percentage of the market share in the short term and long term.
Key Performance Indicators
Target revenue. In terms of revenue, Fitbit should retain similar per unit sale as they have maintained in the global market. The revenue can be calculated by using Fitbit unit sales and revenue statistics. Fitbit sold 21.35 million units in FY 2015 and US $1.86 billion in FY 2015 (Fitbit, 2016; Statista, 2015). This means the average sale price per unit for a Fitbit is around $87. This way, the short term goal is to make USD 38-40 million the in the short term and USD 75-80 in the long term in the UAE market.
Profitability. For entering and succeeding the UAE market, Fitbit needs to spend heavily on both conventional expenses such as production, design, distribution, marketing, other operational expenses and pay preferred dividend and they also need to invest in product launches and sales growth. All these expenses will cut the profitability of Fitbit in UAE, even when their sales are surging. Despite all these expenses, Fitbit should still make small amount of profit in the first year of its launch in the UAE market. But, it should not be more than the 5 percent other have made in the global market in FY 2015 as the company keeps investing the growth surge (Wells & Armental, 2016).
Break-even Analysis. On the basis of their current performance in the global market and brand name, Fitbit is one of the few tech companies that is able to break-even after all costs are included. Within the first year, Fitbit is expected to break even, but it is possible that they might never be able to have a profit margin above 10-15 percent. In the UAE market, Fitbit should expect to maintain the same standards as there is an increasing interest in the fitness devices in the UAE market. The level of obesity in the UAE and the increasing interest of the UAE government to improve the health of their citizens provide fitness related devices such as Fitbit an opportunity to enter the attractive UAE market.
Payout. Fitbit does not plan to pay dividend to investors in the near future, but they have been paying preferred dividend to shareholders (Fitbit, 2016). The company is expected to pay preferred dividend in coming years as well, which will cut into the profit margin of the company. Even though the UAE market is highly attractive, Fitbit would follow the same standards as they cannot afford to pay dividend to shareholders in its current formative years. Over time, it is possible as Fitbit becomes a global brand and launches new products, Fitbit would provide a dividend to its shareholders, but it is expected that these years are well into the future.
Non-financial. One of the goals of Fitbit in the UAE market would be to ensure they beat out competition from Apple Watch that has been gaining of the Fitbit in the global market. Also, Fitbit needs to ensure that the company is able to develop a positive reputation in the UAE market by investing in brand building activities such as social media, celebrity endorsers, and other PR exercises. Reducing management and employee turnover, developing relationship with best e-commerce retailers, and setting up an efficient distribution network in the UAE market is other important goals of Fitbit.
References
Fitbit. (2016, 22 February). Fitbit Reports $712M Q415 and $1.86B FY15 Revenue; Guides to $2.4 to $2.5B Revenue in FY16. Retrieved 11 June 2016 from, https://investor.fitbit.com/press/press-releases/press-release-details/2016/Fitbit-Reports-712M-Q415-and-186B-FY15-Revenue-Guides-to-24-to-25B-Revenue-in-FY16/default.aspx
Fitbit. (2016). Investor FAQ. Retrieved 11 June 2016 from, https://investor.fitbit.com/overview/investor-faq/default.aspx
Trading Economics. (2016). United Arab Emirates Population. Retrieved 11 June 2016 from, http://www.tradingeconomics.com/united-arab-emirates/population
Statista. (2016). Number of Fitbit devices sold worldwide from 2010 to 2015 (in 1,000s). Retrieved 11 June 2016 from, http://www.statista.com/statistics/472591/fitbit-devices-sold/
Wells., G & Armental., M. (2016, 4 May). Fitbit Sales Climb, but Expenses Eat Into Profit. Retrieved 11 June 2016 from, http://www.wsj.com/articles/fitbits-profit-hurt-by-sharply-higher-expenses-1462396022
